McGain v Commissioner of Taxation (Cth) [1966] HCA 34

High Court of Australia Barwick C.J. Menzies and Owen JJ. McGain v Commissioner of Taxation (Cth) [1966] HCA 34

ORDER Appeal dismissed with costs.

Cur. adv. vult.

The Court delivered the following written judgment:—

May 20 Barwick C.J., Menzies and Owen JJ.

This is an appeal against a judgment of Taylor J. dismissing a taxpayer's appeal against a gift duty assessment made in respect of four transactions between J. C. McGain deceased during his lifetime and a family company, John McGain Pty. Limited, in which he was a shareholder and of which he was governing director. The transactions in question took place when J. C. McGain was about eighty-seven years of age.

The first transaction was the sale by McGain to the company of land, including factory premises, worth in all £21,500 for the sum of £21,500 payable as to £500 on 8th May 1959 when the land was to be, and was in fact, transferred, and the balance over fifty years at the rate of £420 annually. It was stipulated that no interest should be paid upon outstanding balances.

The second transaction was the sale by McGain to the company of plant, etc. and stock upon the factory premises sold as aforesaid worth in all £9,614 8s. 6d. for the sum of £9,614 8s. 6d. payable as to £500 on 8th May 1959 and as to the balance over a period of fifty years at the rate of £182 annually. It was stipulated that no interest should be paid upon outstanding balances.

The third transaction was a loan by McGain to the company of £2,000 repayable over a period of fifty years by instalments of £40 a year. In the agreement for loan, it was stipulated that no interest should be paid upon outstanding balances.

The fourth transaction was a loan of £4,500 repayable in equal yearly instalments of £110, the first to be paid on 31st March 1960. In the agreement for loan, it was stipulated that no interest should be paid upon outstanding balances.