Brohier v Commissioner of Taxation (Cth) [1966] HCA 10

High Court of Australia McTiernan A.C.J. Kitto and Owen JJ. Brohier v Commissioner of Taxation (Cth) [1966] HCA 10

ORDER Questions in the reference to be answered as follows:

1.

(a) No.

(b) No.

2. No.

Costs of the argument of the reference before the Full Court of the High Court to be paid by the appellant taxpayer.

Cur. adv. vult.

The following written judgments were delivered:—

March 3 McTiernan A.C.J.

This matter consists of a reference by a board of review, made upon the request of the taxpayer pursuant to s. 196 (2) of the Income Tax and Social Services Contribution Assessment Act 1936-1962 Cth. The questions which are the subject of the reference arose before the board when they were entering upon a review of the assessment issued to the taxpayer of the tax payable by him on the income of the year ended 30th June 1962. His objection to the assessment was that the Commissioner of Taxation refused the claim for a credit under s. 45 of the above-mentioned Act. The material part of the section is as follows: "(1) Where a dividend paid by a company which is a resident of a country outside Australia is included in the assessable income of any year of income of a taxpayer who is a resident of Australia, and the taxpayer has paid either directly or by deduction from the dividend income tax in respect of that dividend for which he was personally liable under the law of that country, the taxpayer shall, subject to sub-sections (6), (7) and (8) of this section, be entitled to a credit". The taxpayer is a resident of Australia. The claim was made in respect of dividends received by him during the year of income ended 30th June 1962 from companies resident in Ceylon of which respectively he was a shareholder. The taxpayer stated in his tax return that the amount of the total dividends was Rs 1,425 and that he was entitled to a credit under s. 45 on the footing that the whole amount was the assessable income under the law of Ceylon and the tax chargeable was a sum equal to twenty per centum of the dividends. The equivalent of Rs 1,425 in Australian currency was £130. The Commissioner sent, with the notice of the assessment issued to the taxpayer, an alteration sheet showing that the total amount of the dividends as returned was reduced by £44 and the total income made up of these dividends was assessed at £86. The sum of £44 is described in the alteration sheet as being "less tax paid at source" (33 1/3 per cent). The equivalent of £44 in Ceylon currency was Rs 475/01. Thus, the taxpayer claimed the credit on the basis that a dividend of £130 was paid and he was personally liable under Ceylon law to income tax in respect of that amount, but the Commissioner assessed the dividend which was assessable income in Australia at £86.