John Fairfax & Sons Pty Ltd v Commissioner of Taxation (Cth) [1959] HCA 4

High Court of Australia Dixon C.J. Fullagar, Kitto, Taylor and Menzies JJ. John Fairfax & Sons Pty Ltd v Commissioner of Taxation (Cth) [1959] HCA 4

ORDER Question referred to the High Court in the case stated by the board of review answered that the legal expenses mentioned in the said question were not an allowable deduction. Order that the taxpayer pay the costs of the reference to the High Court.

Cur. adv. vult.

The following written judgments were delivered:—

Feb. 27, 1959 Dixon C.J.

In this case I would but for one consideration content myself with expressing my general concurrence in the judgments of Fullagar and Menzies JJ. which I have had the advantage of reading. That consideration lies in the significance which I think attaches to the manner in which s. 51 of the Income Tax and Social Services Contribution Assessment Act 1936 (as amended) is framed. Because of that I desire to add one or two observations as to the necessity of adhering to the principles upon which that provision is founded. The provision itself was carefully framed in the consolidation of 1936 and in such a way as to show an appreciation of the more general questions that had arisen under the previous corresponding provisions (ss. 23 (1) (a) and 25 (3) of the Act of 1922-1934) and of the manner in which they had been dealt with judicially. In s. 51 can be discerned as I think a purpose of giving effect to the general principles that had been worked out: cf. Ronpibon Tin N.L. and Tongkah Compound N.L. v. Federal Commissioner of Taxation [1] .

1. (1949) 78 C.L.R. 47, at pp. 55-57.

Perhaps the most important thing to notice in sub-s. (1) is the character of the phrase "except to the extent to which they are losses or outgoings of capital, or of a capital nature". Its character is that of an exception which necessarily presupposes the possibility of the subject matter excepted falling under the description that precedes it. In other words it is supposed by the sub-section that a loss or outgoing incurred in gaining or producing the assessable income or in carrying on a business for that purpose may nevertheless be a loss or outgoing of capital.