Commissioner of Taxation (Cth) v Dixon [1952] HCA 65

High Court of Australia Dixon C.J. McTiernan, Williams, Webb and Fullagar JJ. Commissioner of Taxation (Cth) v Dixon [1952] HCA 65

ORDER Question in the case stated answered: Yes. Costs of the case stated reserved for the Justice disposing of the appeals.

Cur. adv. vult.

The following written judgments were delivered:—

Dec. 11 Dixon C.J. and Williams J.

The question in the case stated is in effect whether a sum provided by an employer to make up during the war the difference between the military pay of an employee who had enlisted and the pay that he would have received in his civilian occupation forms part of the soldier's assessable income. The taxpayer was, up to 12th July 1940, employed as a clerk by Macdonald, Hamilton & Co., a firm of shipping agents. His remuneration was £245 14s. 0d. per annum. On 12th July 1940 the taxpayer voluntarily enlisted for service in the Australian Imperial Forces and served both in Australia and overseas from shortly after that date until 13th December 1945, when he was discharged from the Army. The year of income under assessment is that ended 30th June 1943, and during that year Macdonald, Hamilton & Co. paid the taxpayer £104 to make his military pay up to the amount which he would have received had he been in their employ. On 22nd December 1939 Macdonald, Hamilton & Co. had sent a circular notification to the members of their staff concerning the policy with respect to their staff which they proposed to follow during the war. It included the following paragraph: "In regard to those members of our staff who may enlist for home defence or service outside Australia, for the duration of the War, we shall also endeavour to make up the difference between their present rate of wages and the amounts they will receive from the Naval or Military Authorities, but of course circumstances may compel us to review this decision at some later stage". This notification was inserted in their Staff Memorandum Book and there the taxpayer read it before he enlisted. Shortly before his discharge on 13th December 1945 he ascertained that Macdonald, Hamilton & Co. wished him to resume work with them and on 2nd January 1946 he commenced his duties with that firm. He had not, however, at any time given them an undertaking that he would return to their employ upon completion of his war service, nor had they given him an undertaking that they would re-employ him upon completion of his war service. Having regard to the foregoing facts, the commissioner included the amount of £104 in the taxpayer's assessable income for the year ended 30th June 1943. The taxpayer brought in objections and, upon them being disallowed, requested that they should be referred to a Board of Review. The Board of Review decided that the amount provided by the employers as the difference between military pay and the pay the soldier would have received had he remained in their service did not form part of the taxpayer's assessable income. From that decision the commissioner has appealed to this Court.