Deputy Federal Commissioner of Taxation (SA) v W M Kuhnel and Company Limited [1925] HCA 43

37 C.L.R.] OF AUSTRALIA. 141

{HIGH COURT OF AUSTRALIA]

THE DEPUTY FEDERAL COMMISSIONER )

OF TAXATION FOR SOUTH AUSTRALIA 5 ATPEEEANTS AND WM. KUHNEL & COMPANY LIMITED . . Responpenr.

ON APPEAL FROM THE SUPREME COURT OF SOUTH AUSTRALIA.

War-time Profits Tax—Assessment-—Profits of company—Deduction—Commonwealth H.C. or A. income tax—Shareholder a company—Trustee—War-time Profits Tax Assessment 1.995, Act 1917-1918 (No. 33 of 1917—No. 40 of 1918), sec. 15 (4), (5)—Income Tax Ow Assessment Act 1915-1916 (No. 34 of 1915—No. 39 of 1916), secs. 26, 27 (2). ADELAIDE,

In determining the deduction, from the profits for the accounting periods S¢Pt- 29, 30.

1916-1917 and 1917-1918 of a company, provided for by sub-sees. 4 and 5 of yternourwe, see. 15 of the War-time Profits Tax Assessment Act 1917-1918, of Commonwealth y,. income tax paid in respect: of those profits, according to the method laid down in Kuhnel & Co. Ltd. v. Deputy Federal Commissioner of Taxation (S.A.)y ERX CI: (1923) 33 C.L.R. 349: the amount of the income tax which, in pursuance of Te sec. 15 (5) (c) of that Act, would have been payable by a company, which is a shareholder in the taxpayer company and holds its shares in trust for beneficiaries, if the share of the profits credited or paid to it had been its only income, must be estimated on the basis (i.) that the rate at which income tax was payable by a company was that fixed by the relevant Income Tax Act and (ii.) that under sec. 27 (2) of the Income Tax Assessment Act 1915-1916 a certain deduction was to be made from the income tax payable by a trustee ; but the deduction allowed for income distributed to beneficiaries pursuant to sec, 27 (2) must be confined to the distributions made in the respective accounting periods, Kuhnel & Oo. Ltd. v. Deputy Federal Commissioner of Taxation (S.A.), (1923) 33 C.LR, 349, explained.