Shepherd v Commissioner of Taxation (Cth) [1965] HCA 70

High Court of Australia Barwick C.J. Kitto and Owen JJ. Shepherd v Commissioner of Taxation (Cth) [1965] HCA 70

ORDER Questions asked in the reference answered as follows:

1. Whether the taxpayer by the Deed referred to in paragraph 5 hereof effectively assigned to the persons named therein in the proportions therein set forth, all his right title and interest in and to an amount being ninety per centum of the royalties which in fact accrued during the period of three years from the 23rd day of July, 1957, under the agreement made on the 12th day of March, 1954 referred to in paragraph 2 hereof.

Answer "Yes".

2. Whether the sum of £6,031 or some and what part thereof, referred to in paragraph 9 hereof formed part of the taxpayer's assessable income for the year ended 30th June, 1958.

Answer "No".

Costs of the reference to be paid by the respondent.

Cur. adv. vult.

The following written judgments were delivered:

Dec. 17 Barwick C.J.

Reference by a Taxation Board of Review pursuant to s. 196 of the Income Tax and Social Services Contribution Assessment Act 1936-1957 (the Act) of questions of law arising in a reference by the Commissioner of Taxation of an objection by a taxpayer to an assessment made by the Commissioner under the Act.

The taxpayer is the grantee of letters patent in respect of improved castors. He granted a licence to a manufacturer in Victoria to manufacture the castors upon terms inter alia that the licensee covenanted to pay him monthly during the continuance of the licence a royalty of five per cent of the gross sale price of castors manufactured by or on behalf of the licensee which had been sold during the preceding month.

On 23rd July 1957, whilst both the letters patent and the licence to manufacture were in force, the taxpayer executed a deed poll in the following terms: I George Frederick Shepherd of 11 Manor St. Brighton in the State of Victoria Engineer Do Hereby Assign absolutely and unconditionally to the persons hereinafter named and described and in the proportions hereinafter specified all my right title and interest in and to an amount equal to ninety per centum of the income which may accrue during a period of three years from the date of this assignment from royalties payable by Mark Cowen of 370 Orrong Road Caulfield in the said State manufacturer under a Deed made on the twelfth day of March 1954 between myself the said George Frederick Shepherd and the said Mark Cowen in respect of a license granted by me to the said Mark Cowen to make use exercise and vend castors under and in accordance with the Inventions protected by Letters Patent of the Commonwealth of Australia No. 122566 in respect of an Invention entitled "Improved Castor" and Letters Patent of the Commonwealth of Australia No. 136548 in respect of an Invention entitled "Improvements Relating to Castors" and Letters Patent of the Dominion of New Zealand No. 99930 for an Invention entitled "Improvements relating to Castors".