Jones v Commissioner of Taxation (Cth) [1963] HCA 17

High Court of Australia McTiernan J. Jones v Commissioner of Taxation (Cth) [1963] HCA 17

Cur. adv. vult.

July 17 McTiernan J. delivered the following written judgment:—

This matter is an appeal by Mr. E. C. T. Jones against an assessment under the Income Tax and Social Services Contribution Assessment Act. The objection in the matter is directed to the assessment of the appellant's share of the income of a partnership. The relevant entry in the appellant's income tax return is: "Share in partnership of L. C. Stevenson, I. E. Stevenson, E. C. T. Jones and K. I. Jones trading as S. J. Motors and Dandy Sports Depot— 1st May 1958 to 30th June 1958. £236". I. E. Stevenson is the wife of L. C. Stevenson: K. I. Jones is the wife of E. C. T. Jones. In preparing the assessment the Commissioner added £731 to the sum of £236 in order to arrive at the amount of taxable income derived by the appellant from the business carried on by this partnership: further, the Commissioner allowed a concessional deduction of £143 in respect of the appellant's wife. The assessment of tax on the income of a partner is governed by the provisions of Div. 5 of Pt III of the Income Tax and Social Services Contribution Assessment Act. In this case the material provisions are: Section 90: "In this Division—"net income" in relation to a partnership, means the assessable income of the partnership, calculated as if the partnership were a taxpayer, less all allowable deductions except the concessional deductions and losses of previous years;" The section also defines "partnership loss". Section 91: "A partnership shall furnish a return of the income of the partnership, but shall not, except as provided in this Division, be liable to pay tax thereon." Section 92: "(1) The assessable income of a partner shall include his individual interest in the net income of the partnership of the year of income, and his individual interest in a partnership loss incurred in the year of income shall be an allowable deduction."