National Mutual Life Association of A/asia Ltd v Commissioner of Taxation (Cth) [1970] HCA 51

High Court of Australia Gibbs J. National Mutual Life Association of A/asia Ltd v Commissioner of Taxation (Cth) [1970] HCA 51

ORDER Appeal allowed with costs. Assessment remitted to Commissioner for adjustment in accordance with reasons for judgment.

Cur. adv. vult.

Gibbs J. delivered the following written judgment:—

Dec. 9 Gibbs J

This is an appeal by the National Mutual Life Association of Australasia Ltd. ("the taxpayer") against an assessment of income tax payable in respect of the year ended 30th September 1964, an accounting period adopted with the leave of the Commissioner under s. 18 of the Income Tax and Social Services Contribution Assessment Act 1936-1963 Cth ("the Act"). By the assessment the Deputy Commissioner disallowed claims for two deductions which the taxpayer contends ought to have been allowed under s. 88 of the Act, viz. (1) a claim for £141,806 ($283,612) being a proportionate part of the amount of expenditure in making, with the written consent of the lessor, improvements not subject to tenant rights on land of which the taxpayer is a lessee situated at Featherstone Street, Wellington, New Zealand; and (2) a claim for £10,746 ($21,492) being a proportionate part of the amount of a premium paid in respect of land known as Austral House situated at Basinghall Avenue, London, in the United Kingdom, of which the taxpayer is the lessee.

The provisions of s. 88 (1) and (2) of the Act are as follows:

(1) Where a taxpayer has paid any premium in respect of land, premises or machinery used for the purpose of producing assessable income, and in the year of income—

(a) he is the lessee of the land, premises or machinery; or

(b) in the case of a premium paid for the surrender of the lease, he would have been the lessee had the lease been transferred to him and he had not been entitled to the reversion,