Griffiths Hughes Proprietaries Ltd v Commissioner of Taxation (Cth) [1950] HCA 14

High Court of Australia Williams J. Dixon, McTiernan, Webb, Fullagar and Kitto JJ. Griffiths Hughes Proprietaries Ltd v Commissioner of Taxation (Cth) [1950] HCA 14

ORDER Appeals dismissed with costs.

Cur. adv. vult.

The following written judgment was delivered by:—

June 2, 1950 Williams J.

These are appeals by Griffiths Hughes Proprietaries Ltd., a company incorporated in the United Kingdom, from its assessment for war-time company tax in respect of the accounting periods ended 30th June 1941 and 30th June 1942. The appeals are from a decision of the Board of Review which confirmed the assessments of the respondent. The appeals come to this Court under s. 196 of the Income Tax Assessment Act 1936-1940 which is one of the sections incorporated in the War-time (Company) Tax Assessment Act 1940-1942 by s. 34 of the latter Act. Under s. 196 there must be a question of law involved in the decision of the Board before this Court has jurisdiction to entertain the appeal. It was not contended that there was not such a question on these appeals.

In order to state the question it will be necessary shortly to set out the material facts. The appellant is a holding company within the meaning of s. 3 of the War-time (Company) Tax Assessment Act with two subsidiary companies, E. Griffiths Hughes Ltd., a company incorporated in the United Kingdom, and E. Griffiths Hughes Pty. Ltd., a company incorporated in Australia. On 28th November 1941 the appellant duly elected under s. 17 of the Act to have its subsidiary companies treated as branches of the holding company. Section 17 (1) is in the following terms:—"A holding company may elect, in the manner and within the time prescribed, to have all its subsidiary companies treated as branches of the holding company and thereupon those subsidiary companies shall, for all the purposes of this Act, be treated as branches of the holding company and no separate assessment shall be made in respect of any of those subsidiary companies." War-time company tax is imposed upon the amount by which the taxable profit as defined by the Act derived by any company exceeds the percentage standard. The taxable profit of a company is its taxable income of the accounting period less certain deductions. The percentage standard is an amount equal to the statutory percentage (in this case five per cent) of the capital employed or deemed to be employed during the accounting period. The capital employed is ascertained in accordance with s. 24 of the Act. The manner in which this section works has been discussed in Warner Bros. First National Pictures Pty. Ltd. v. Federal Commissioner of Taxation [1] and Bankers and Traders' Insurance Co. Ltd. v. Federal Commissioner of Taxation [2] , and I shall not repeat what was there said. The capital in question is the commercial capital of the company and one of the assets constituting that capital can be the goodwill of the company. Section 24 (2) (e) of the Act provides, however, that where the asset is goodwill which has not been purchased by the company, the value of the asset shall be taken to be nil.