Sharp Stevenson and Hare Pty Ltd v Federal Commissioner of Taxation [1927] HCA 10

158 HIGH COURT

[HIGH COURT OF AUSTRALIA.]

SHARP, STEVENSON & HARE PRO- ; PRIETARY LIMITED. . .

AND

THE FEDERAL COMMISSIONER OF ; SAAN eee eee ee 2

H.C. or A. War-time Profits Tax—Assessment—Capital of business—* Trading profits inves 1927. in the business" —War-time Profits Tax Assessment Act 1917-1918 (No. 3 ay 1917—No. 40 of 1918), sec. 17 (1). F

ables Agreements had been entered into between the appellant, which

'Mar, 1. trading company, and four persons, who held substantially the whole shares in the appellant, by which each of the four persons was emplo

Sypwey, the appellant in its business and by which each was to be paid a weekly April 11. and a further sum representing as to two of them one-third each, and.

Isaacs, Higgins, the other two one-sixth each, of the net profits of the appellant. It was ae provided that the shares of the profits were to be payable in such m Starke JJ.

and at such times as the directors might direct. From time to time were passed at the annual meetings of shareholders that the net profits be placed to the credit of the various shareholders' deposit accounts in of the agreements entered into, and that the amounts on deposit payable in such manner and at such times as the directors should direct, until paid or satisfied should carry interest at a certain rate on the balance. Deposit accounts in the names of the four persons were kt the books of the appellant in which from time to time were their respective shares of the profits and from time to time payments

made out of the accounts by the authority of the directors, but considera sums always remained to the credit of those accounts. In respect war-time profits tax assessment for the year 1918-1919 the appellant that for the purpose of calculating the pre-war standard of profits 0 business a sum representing the total of the amounts standing to the of these deposit accounts on 31st December 1917 should be treated as of the capital of its business.