Stanton v Commissioner of Taxation (Cth) [1955] HCA 56

High Court of Australia Dixon C.J. Williams, Webb, Fullagar and Kitto JJ. Stanton v Commissioner of Taxation (Cth) [1955] HCA 56

ORDER Question in the case stated answered: No. Costs to be costs in the appeal.

Cur. adv. vult.

The Court delivered the following written judgment:—

Oct. 24 Dixon C.J., Williams, Webb, Fullagar and Kitto JJ.

This is a case stated under s. 198 of the Income Tax and Social Services Contribution Assessment Act 1936-1953. The appeal in which the case is stated is against an assessment based on income derived by the taxpayer during the twelve months ended 30th June 1953. The commissioner included in the assessable income a sum of £2,832 on the footing that it was received by the taxpayer as or by way of royalty paid in respect of certain timber.

Section 26 (f) of the Assessment Act provides that the assessable income of a taxpayer shall include any amount received as or by way of royalty. The word "royalty" is not defined by the Act and the question in the case is whether the payments which the commissioner has included in the assessment of income possess the attributes connoted by that word as it stands in the Act.

The facts upon which the matter depends may be briefly stated. It appears that the taxpayer who is a grazier was entitled as tenant in common with another grazier to a piece of land upon which stood a quantity of pine timber and of hardwood timber. On 12th September 1951 they entered into an agreement in writing with a sawmiller who was desirous of purchasing certain of the timber. In the agreement they were described as the vendors and the sawmiller as the purchaser. The first clause stated that the vendors thereby sold and the purchaser thereby purchased five hundred thousand super feet of millable pine timber and two million five hundred thousand super feet of millable hardwood timber with the right to cut and remove the timber from the land. If trees were less in girth than certain measurements they were excluded. The second clause provided that the price should be £17,500, of which £7,500 was apportioned to the pine timber and £10,000 to the hardwood timber. Of the price £500 was to be paid as a deposit and £17,000 by equal quarterly payments of £1,416 13s. 4d. without interest. The amount of £2,832 which the commissioner claims to be a royalty and has included in the taxpayer's assessable income forms his proportion (no doubt half) of the payments made under the agreement by the purchaser during the year of income.