Renmark Fruitgrowers Co-operated Ltd v Commissioner of Taxation (Cth) [1969] HCA 56

High Court of Australia Menzies J. Renmark Fruitgrowers Co-operated Ltd v Commissioner of Taxation (Cth) [1969] HCA 56

ORDER Appeal dismissed with costs.

Cur. adv. vult.

Nov. 17 Menzies J. delivered the following written judgment:—

The taxpayer appellant has, for the year ended 30th September 1966, been assessed to income tax on the footing that it is to be deemed not to be a co-operative company in respect of that year. The only question for determination is whether the Commissioner was correct in so assessing tax. The relevant sections of the Income Tax Assessment Act 1936-1966 are as follows:

117. In this Division, "co-operative company" means a company the rules of which limit the number of shares which may be held by, or by and on behalf of, any one shareholder, and prohibit the quotation of the shares for sale or purchase at any stock exchange or in any other public manner whatever, and includes a company which has no share capital, and which in either case is established for the purpose of carrying on any business having as its primary object or objects one or more of the following:—

(a) the acquisition of commodities or animals for disposal or distribution among its shareholders;

(b) the acquisition of commodities or animals from its shareholders for disposal or distribution;

(c) the storage, marketing, packing or processing of commodities of its shareholders;

(d) the rendering of services to its shareholders;

(e) the obtaining of funds from its shareholders for the purpose of making loans to its shareholders to enable them to acquire land or buildings to be used for the purpose of residence or of residence and business.

118. If, in the ordinary course of business of a company in the year of income, the value of commodities and animals disposed of to, or acquired from, its shareholders by the company, or the amount of its receipts from the storage, marketing, packing and processing of commodities of its shareholders, or from the rendering of services to them, or the amount lent by it to them, is less respectively than ninety per centum of the total value of commodities and animals disposed of or acquired by the company, or of its receipts from the storage, marketing, packing and processing of commodities, or from the rendering of services, or of the total amount lent by it, that company shall in respect of that year be deemed not to be a co-operative company.