Deputy Commissioner of Taxation v Truhold Benefit Pty Ltd [1985] HCA 36

High Court of Australia Gibbs C.J. Mason, Wilson, Brennan, Deane and Dawson JJ. Deputy Commissioner of Taxation v Truhold Benefit Pty Ltd [1985] HCA 36

ORDER Demurrer overruled. Remit the matter to the Supreme Court of Queensland.

Cur. adv. vult.

The following written judgments were delivered:—

June 11 Gibbs C.J., Mason, Wilson, Deane and Dawson JJ.

This matter was removed by the defendant company into this Court from the Supreme Court of Queensland under s. 40(1) of the Judiciary Act 1903 Cth. It concerns the validity of s. 6(2) of the Taxation (Unpaid Company Tax) Assessment Act 1982 Cth ("the Act"), that question being raised by the defendant upon demurrer.

The Act provides for the assessment and collection of taxes intended to recoup the revenue for company tax which was lost as a result of the adoption of schemes which left companies without assets to pay the taxes for which they were liable. The general nature of the legislation is described in MacCormick v. Federal Commissioner of Taxation [1] . In that case it was held that the Act was a law with respect to taxation within the meaning of s. 51(ii) of the Constitution.

1. Ante, p. 622.

Because of the decision in MacCormick v. Federal Commissioner of Taxation, the mode of taxation adopted by the Act is not attacked in this case, but s. 6(2) is said to lie outside the power to make laws with respect to taxation and to be invalid as a consequence.

Under the relevant legislation, which includes both the Act, which is an assessment Act, and two taxing Acts, recoupment tax is imposed when, pursuant to a scheme as defined, shares in a "target" company have been sold with the result that the company is unable to pay overdue company tax. The type of recoupment tax which is relevant for present purposes is vendors recoupment tax. This tax is imposed upon a vendors taxable amount, which may comprise either a primary taxable amount or a secondary taxable amount, or both.