Esquire Nominees Ltd as Trustee of Manolas Trust v Commissioner of Taxation (Cth) [1973] HCA 67

High Court of Australia Gibbs J. Barwick C.J. McTiernan, Menzies and Stephen JJ. Esquire Nominees Ltd as Trustee of Manolas Trust v Commissioner of Taxation (Cth)

ORDER Appeal dismissed with costs. Usual order as to exhibits. Appeal allowed with costs. Order that the assessment be set aside and further order that the matter be remitted to the Commissioner to be dealt with in accordance with the reasons of this Court.

Cur. adv. vult.

1972, May 31 Gibbs J. delivered the following written judgment:—

This is an appeal under s. 187 (b) of the Income Tax Assessment Act 1936 (as amended) Cth ("the Act") against an assessment made by a Deputy Commissioner of Taxation of the tax payable by Esquire Nominees Ltd. ("the appellant"), as trustee of Manolas Trust, on income derived during the year ended 30th June 1969. No return of income was lodged by the appellant as such trustee and the Deputy Commissioner made a default assessment by which he treated as taxable an amount of $30,910 received as a dividend during the year of income. The assessment purported to be made under s. 99 of the Act on the footing that the amount of $30,910 was the net income of a trust estate to which no beneficiary was presently entitled.

It is not disputed that on 30th April 1969 the appellant, as trustee under a deed of settlement dated 24th April 1969 which set up a trust described as "Manolas Trust", received $30,910.57, the amount of a dividend declared by another company, Mitchell Credits Ltd., on one fully paid B class share of $0.01 which the appellant held in that company. Under the deed of settlement no beneficiary was presently entitled to the income represented by the amount of the dividend. Both the appellant and Mitchell Credits Ltd. were incorporated in Norfolk Island. The question for decision is whether the appellant was rightly assessed to tax on this income.