English, Scottish & Australian Bank Ltd v Commissioner of Taxation (Cth) [1969] HCA 24

High Court of Australia Kitto J. English, Scottish & Australian Bank Ltd v Commissioner of Taxation (Cth) [1969] HCA 24

ORDER Appeal dismissed with costs.

Cur. adv. vult.

June 5 Kitto J. delivered the following written judgment:—

The appellant, the English Scottish and Australian Bank Limited, appeals under s. 187 (b) of the Income Tax Assessment Act 1936 Cth, as amended, against an assessment of the income tax payable in respect of income which it derived in the year ended 30th June 1966. The question in the appeal is whether the appellant's assessable income includes an amount of £100,000 which in the relevant year it received as a dividend from its wholly-owned subsidiary, the E. S. & A. Savings Bank Limited, which I shall call the savings bank.

The appellant is a company incorporated in the United Kingdom. It carries on business in Australia but is a "non-resident" for the purposes of the Income Tax Assessment Act by reason of the definitions of that expression and of "resident" in s. 6 (1). Accordingly, by force of s. 44 (1) (b) and unless there is some special provision to the contrary, its assessable income includes dividends paid to it by the savings bank out of profits derived by the savings bank from sources in Australia. In fact the dividend in question was paid wholly out of such profits. The appellant's contention that nevertheless the dividend is not included in its assessable income is based upon a special provision in the Agreement between the Government of the United Kingdom and the Government of the Commonwealth of Australia which is in the First Schedule to the Income Tax (International Agreements) Act 1953-1963 Cth. By virtue of that Act the Agreement has the force of law (s. 5), and its provisions have effect notwithstanding anything inconsistent with it in the Income Tax Assessment Act (s. 4 (2)).