Charles v Commissioner of Taxation (Cth) [1954] HCA 16

High Court of Australia Dixon C.J. Kitto and Taylor JJ. Charles v Commissioner of Taxation (Cth) [1954] HCA 16

ORDER Appeal from decision of the Board of Review allowed with costs. Order that the assessment be varied by reducing the taxable income by £390 and that the tax be recalculated accordingly.

Cur. adv. vult.

The Court delivered the following written judgment:—

April 23, 1954 Dixon C.J., Kitto and Taylor JJ.

The appellant was assessed to income tax and social services contribution under the Income Tax Assessment Act 1936-1948 Cth. in respect of his income derived during the year ended 30th June 1949. An objection to the assessment was disallowed by a deputy commissioner and subsequently by a Board of Review. From the Board's decision an appeal was brought to this Court and was referred by Webb J. to the Full Court. It is that appeal which is now before us.

The appeal concerns an amount of £390, portion of a sum of £830 which the appellant received in the relevant year as a certificate holder in what is known as the Second Provident Unit Trust. £440 of that sum consisted of the appellant's share of dividends and interest received on capital investments of the Trust, and it was treated both by the appellant and by the commissioner as retaining in the hands of the appellant its original character of income from property. The balance, the £390 now in question, came partly from profits which had been made on realizations of capital investments of the Trust, and partly from the proceeds of sale of "rights" in respect of new share issues which had arisen in respect of shares held as capital investments of the Trust. Both parties to the appeal attached significance to the distinction between the two amounts in respect of source, the appellant contending that the £390 was in his hands a receipt of a capital nature and not liable to be included in the computation of his assessable income, and the commissioner contending that the £390 was profits of a business, or (alternatively) profits arising from the carrying on or carrying out of a profit-making undertaking or scheme within the meaning of s. 26 (a) of the Income Tax Assessment Act, and accordingly possessed from the beginning, and continued to have when it reached the hands of the appellant, the character of income from personal exertion.