Federal Commissioner of Taxation v Austin [1932] HCA 55

H. C. oF A.

1932. ——

MELBOURNE, Oct. 4.

Sypyey, Nov. 21.

Gavan Duffy C.J., Rich, Starke, Dixon and Me'Tiernan a.

HIGH COURT [1932.

(HIGH COURT OF AUSTRALIA.} THE FEDERAL COMMISSIONER OF TAXATION APPELLANT ;

AND

AUSTIN WILLIAM AUSTIN . , % . RESPONDENT.

ON APPEAL FROM THE SUPREME COURT OF VICTORIA.

Income Tax (Cth.)—Assessment—Rate of tax—Average tax—Retirement of taxpayer from occupation—Income of taxpayer permanently reduced to an amount which is less than two-thirds of average taxable income—No taxable income received for one year—Method of determining rate of tax—Income Tax Assessment Act 1922- 1929 (No. 37 of 1922—No. 11 of 1929), sec. 13 (9).

Sub-sec. 9 of sec. 13 of the Income Tax Assessment Act 1922-1929 contains the following provisions :—" Where a taxpayer establishes that, owing to his retirement from his occupation, or from any other cause, his taxable income has been permanently reduced to an amount which is less than two-thirds of his average taxable income, he shall be assessed, and the provisions of this section shall thereafter apply, as if he had never been a taxpayer in a previous year. For the purposes of this sub-section, 'average taxable income' means the average taxable income by reference to which the taxpayer's rate of tax would be calculated apart from the provisions of this sub-section, if there were excluded from his assessable income of the average years any income received by him from sources from which he does not usually receive income."

During the year ending 30th June 1926 a taxpayer retired from his occupation. His taxable income derived in that year was unaffected, but, in the next year, he had no taxable income and accordingly was not assessed for the ensuing financial year which began on Ist July 1927. During that year he derived a considerable taxable income upon which he was assessed for the financial year beginning Ist July 1928, but he did not obtain the benefit of sub-sec. 9. His taxable income derived during that year, viz., the year ending 30th June 1929 proved less than two-thirds of his average taxable income calculated for the five preceding years ending with the commencement of that year, but