J Rowe & Son Pty Ltd v Commissioner of Taxation (Cth) [1971] HCA 80

High Court of Australia Walsh J. Barwick C.J. McTiernan, Menzies and Gibbs JJ. J Rowe & Son Pty Ltd v Commissioner of Taxation (Cth)

ORDER Appeals dismissed with costs. Assessments confirmed. Usual order with respect to exhibits. Appeal dismissed with costs.

Cur. adv. vult.

1970, Dec. 18 Walsh J . delivered the following written judgment:—

These three appeals against assessments of income tax payable by the appellant company relate respectively to the years which ended on 30th June 1965, 30th June 1966 and 30th June 1967. I shall refer to those years as the 1965 year, the 1966 year and the 1967 year.

The appellant (the company) conducts a retail store in the City of Toowoomba in which it sells household goods including furniture, furnishings and electrical appliances, such as television sets and refrigerators. It began about 1947 to offer goods on terms of low deposits and extended periods of payment and later it introduced a policy of requiring no deposit. Up to the end of 1959 the usual method of effecting these transactions was to use hire purchase agreements. From 1960 to 1st December 1964 a different method was adopted. Goods selected by a customer were sold by the company to an associated company and sold by the latter company to the customer. The company lent to the customer an amount equal to the price of the goods, repayable with interest by instalments over a period. The money so lent was paid immediately by the customer to the associated company as the price of the goods. The company took from the customer a bill of sale over the goods.

From 1st December 1964 another system was used. One reason given for its adoption was the avoidance of difficulties caused by legislation regulating money-lending. A customer agreed to buy goods at a price which, in my opinion, may properly be called a "cash price". But it was arranged also that payment might be made over an agreed term ranging from three months to five years. A document was completed and signed by the customer. It was called an offer to purchase. Its form may be explained by describing the contents of one such document tendered in evidence (Ex. 3). The name and address of the customer and the date appear on the document. There is a notation which means that the term of the agreement is to be twelve months. Under the heading "Schedule" descriptions are given of six different items of furnishings and opposite each are figures which show a price for the goods although not described as a price. At the foot of the schedule figures are written which show the total of those itemized prices, which on Ex. 3 is $90.62. Beneath the schedule appear the printed words: