Hughes v Federal Commissioner of Taxation [1958] HCA 3

98 C.L.R.] OF AUSTRALIA.

[HIGH COURT OF AUSTRALIA.]

HUGHES . : gi : é . fs - APPELLANT ;

AND

THE FEDERAL COMMISSIONER OF a

TARAMIONS 5 ee fe RESPONDENT.

Income Tax—Assessment—Assessable income—Taxpayer—British subject—Resi-

dent in Australia—Malayan tin companies—Resident in Malaya—Shares owned by taxpayer—Profits of companies—Dividends—Sources out of Australia —Chargeable income—Set-off —Deduction—Malayan income tax—Credit— Income Tax and Social Services Contribution Assessment Act 1936-1953, (No. 27 of 1936—No. 81 of 1953), ss. 6 (1), 44 (1), 45, 196 (2)—Income Tax Ordinance 1947-1953 (Malaya), 8s. 10 (1), 12, 26, 36, 39, 40, 42, 68, 89.

During the year ended 30th June 1954 the appellant taxpayer, a resident of Australia, owned shares in three companies all of which were residents in the Federation of Malaya. In that year of income the companies declared dividends out of profits derived in the Federation. The Malayan Income Tax Ordinance 1947, as amended, imposed company tax and entitled a com- pany resident in the Federation to deduct from dividends tax at the rate paid or payable by the company ; it provided that whether or not a deduction was made the company should furnish each shareholder with a certificate setting forth the amount of the dividend actually paid to the shareholder and the amount of tax which the company had deducted or was entitled to deduct in respect of the dividend. The Ordinance provided that in his return the tax- payer should put in the gross amount that is the dividend declared before deduction of tax ; he was then entitled to a set-off of the amount set forth in the certificate. In fact, each of the companies deducted tax and in accord- ance with the above provisions the appellant taxpayer set out in his return the sum of the dividends he actually received and the amounts stated in the certificates and against his tax there was set off the amounts stated in the certificates as deducted. In his return under the Income Tax and Social Services Contribution Assessment Act 1936-1953 (Cth.), the appellant included in his assessable income the full amount of vach of the Malayan dividends as declared before deduction of tax, and in respect of that full amount claimed a credit under s. 45 of the Act. The respondent commissioner assessed the appellant upon the amount of the dividends he actually received, that is after deduction of tax by the companies, and no credit under s. 45 was allowed. voL. xcvim—23