Commissioner of Taxation (Cth) v Adelaide Electric Supply Co Ltd [1950] HCA 38

High Court of Australia Latham C.J. McTiernan, Webb, Fullagar and Kitto JJ. Commissioner of Taxation (Cth) v Adelaide Electric Supply Co Ltd [1950] HCA 38

ORDER Appeal dismissed.

Cur. adv. vult.

The following written judgments were delivered:—

Oct. 30 Latham C.J.

This is an appeal from an order of Dixon J. determining a question relating to the ascertainment of the paid-up capital of the Adelaide Electric Supply Company Limited, a company incorporated in Great Britain, for the purposes of the application of the War-time (Company) Tax Assessment Act 1940-1944. His Honour has held that the capital of the company, so far as it was paid up before 1928 in English pounds, should, for the purposes of the Act, be converted into Australian money at the rate of £A125 for £E100. The commissioner, on the other hand, contends that inasmuch as there was no difference in value between the Australian pound and the English pound at the time when the capital in question was paid up, and inasmuch as all the capital has been used in Australia in the acquisition of assets for the purposes of the business of the company, the capital should be calculated as existing in Australian money to the amount subscribed.

The War-time (Company) Tax Assessment Act 1940-1944 provides for the imposition of a tax upon the taxable profit derived by a company calculated in the manner prescribed in the Act. The taxable profit is the excess over the percentage standard of profits. The percentage standard of profits is five per cent of the capital employed or deemed to be employed by the company (as defined by the Act) during the accounting period, that is (as was held in Bankers & Traders' Insurance Co. Ltd. v. Federal Commissioner of Taxation [1] ) the capital employed or deemed to be employed in Australia. The greater the amount of such capital the greater the allowance made under the percentage standard and therefore the lower the tax: see the Act, ss. 3, 13, 19, 20, 24.