Automatic Totalisators Ltd v Commissioner of Taxation (Cth) [1968] HCA 81

High Court of Australia Kitto, Taylor and Menzies JJ. Automatic Totalisators Ltd v Commissioner of Taxation (Cth) [1968] HCA 81

ORDER Answer questions as follows:

(a) Yes.

(b) (i) No.

Costs of the case stated reserved for the Justice disposing of the appeal.

Cur. adv. vult.

The Court delivered the following written judgment:—

Dec. 11 Kitto, Taylor and Menzies JJ.

The Commissioner of Taxation included in the assessable income of the appellant for the year ended 30th June 1964 the sum of £25,226 16s. 0d., being a payment made during the year by the Commissioner to the appellant under s. 16G of the Pay-roll Tax Assessment Act 1941-1963 Cth. The appellant objected to this inclusion, and Taylor J. has stated a case asking whether he was bound to find that the payment did form assessable income of the appellant or whether he was at liberty to find that it was not a receipt in the nature of income. The answers turn upon the character of the receipt in the hands of the taxpayer.

The taxpayer, at all times material, carried on the business of precision engineers and the manufacturing of totalisators. As an employer it was liable to and did pay pay-roll tax which was allowed as a deduction in its assessment under the Income Tax and Social Services Contribution Assessment Act 1936-1964 Cth, which we shall call the Act. It exported some of its goods and, because of increases in export sales in 1962 and 1963 over and above the aggregate in export certificates issued by it, the taxpayer became entitled to what s. 16C of the Pay-roll Tax Assessment Act described as "a rebate in respect of the tax imposed on wages paid or payable" in respect of some of the years there specified, viz. 1960 and the next seven succeeding financial years. This rebate was, in accordance with the formula set out in s. 16C (2) of the Pay-roll Tax Assessment Act, calculated at £25,226 16s. 0d., and, pursuant to a claim therefor, this sum was paid to the taxpayer by the Commissioner pursuant to s. 16D. It is not, we think, necessary to examine the formula further than to point out that it brings into account what may perhaps be described as the net increase in export sales of a year, the gross receipts of the year and the amount of tax that would have been payable without any rebate by reference to exports. The source of the power to enact Div. 2 of the Pay-roll Tax Assessment Act—Rebate of Tax by reference to Exports—may be both par. (ii.) and (iii.) of s. 51 of the Constitution. In the circumstances we do not find it necessary to come to a conclusion about that legislative source; the legislation is clearly within power.