Dalgety Downs Pastoral Co Pty Ltd v Commissioner of Taxation (Cth) [1952] HCA 54

High Court of Australia Webb, Fullagar and Kitto JJ. Dalgety Downs Pastoral Co Pty Ltd v Commissioner of Taxation (Cth) [1952] HCA 54

ORDER Questions asked in the stated case answered as follows:—

(1) No.

(2) Does not arise.

Case remitted to the Chief Justice with these answers. Costs, costs in the appeal.

Cur. adv. vult.

The Court delivered the following judgment:—

Oct. 27 Webb, Fullagar and Kitto JJ.

This is a case stated by the Chief Justice in an appeal against the assessment by the Deputy Commissioner of Taxation in Western Australia of the income tax payable by the appellant under the provisions of the Income Tax Assessment Act 1936-1948 in respect of income derived during the year which ended on 30th June 1949.

The appeal followed upon the disallowance of an objection by which the appellant complained that in making the assessment the deputy commissioner had not treated as an allowable deduction certain losses of previous years totalling £5,356, which the appellant contended were allowable as a deduction by virtue of s. 80 of the Act. That section first defines (in sub-s. (1)) the circumstances in which a loss is deemed to be incurred in any year for the purposes of the section; and it then provides (in sub-s. (2)) that so much of the losses incurred by a taxpayer in any of the seven years next preceding the year of income as has not been allowed as a deduction from his income of any of those years shall be allowable as a deduction in accordance with certain provisions not presently material.

In the case of the appellant the circumstances had arisen in which losses were deemed by virtue of s. 80 (1) to have been incurred for the purposes of the section in certain years including the years ended 30th June 1944 and 30th June 1945 respectively, and the amounts of £3,550, being part of the loss incurred in the former of those years, and £1,582, being the whole of the loss incurred in the latter of those years, were not allowed as a deduction from the appellant's income of any year prior to the year of income now in question. In that year of income the appellant had an assessable income of £24,906. From that assessable income the appellant would have been entitled, by virtue of sub-s. (2) of s. 80, to a deduction of the aggregate of the abovementioned amounts of £3,550 and £1,582, namely £5,132, apart from the provisions of sub-s. (5) of that section. But the appellant was at all material times a private company within the meaning of Div. 7 of Pt. III. of the Act; and in the case of such a company sub-s. (5) provides that, notwithstanding any other provision of the section, no loss incurred in any year prior to the year of income shall be an allowable deduction, unless the company establishes to the satisfaction of the commissioner that, on the last day of the year of income, shares of the company carrying not less than twenty-five per centum of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than twenty-five per centum of the voting power on the last day of the year in which the loss was incurred.