Nicholas v Commissioner of Taxes (Vic) [1940] UKPCHCA 2

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63 CLR] OF AUSTRALIA. 191 (PRIVY COUNCIL.] NICHOLAS . ' : 4 : A 2 . APPELLANT ; AND THE COMMISSIONER OF TAXES (VICTORIA) Responpenr. ON APPEAL FROM THE HIGH COURT OF AUSTRALIA.

Income Tax (Vict.—Special tax—Unemployment-relief tax—Assessable income— Prayy Bonus shares—Capitalization of profits— Dividend . . . profit or bonus" Cownctt. —"Credited, paid or distributed" —Unemployment Relief Tax (Assessment) 1940. Act 1933 (Viet.) (No. 4171), sec. 4—Income Tax Act 1935 (Vict.) (No. 4309), =

April 2.

sec, 2 (1) (9).

Where a company in Victoria applies its accumulated profits in satisfaction "iq att

of an issue of fully-paid-up bonus shares to its shareholders in proportion to ya

their holdings, the amount thus credited from profits to each shareholder in $4nkey, Lord respect of his bonus shares is a "dividend . . . profit or bonus" credited Lond, Russell of to him within the meaning of sec. 4 of the Unemployment Relief Tax (Assess- Lord Romer. ment) Act 1933 (Vict.) and sec. 2 (1) (g) of the Income Tax Act 1935 (Vict.)

and, accordingly, for the purposes of special income tax and unemployment-

relief tax must be included in his assessable income. Inland Revenue Commissioners vy. Blott, (1921) 2 A.C. 171, distinguished, James v. Federal Commissioner of Taxation, (1924) 34 C.L.R. 404, referred to.

Decision of the High Court: Commissioner of Taxes (Vict.) v. Nicholas, (1938) 59 C.L.R. 230, affirmed.

Apprat from the High Court to the Privy Council.

This was an appeal by George Richard Nicholas, a taxpayer who had objected to an assessment for Victorian income tax (special tax) and unemployment-relief tax, from the decision of the High Court

{ of Australia in Commissioner of Taxes (Vict.) v. Nicholas (1), reversing a decision of the Supreme Court of Victoria (Full Court) (2) on a case stated by a judge of county courts to whom the taxpayer's objection had been transmitted.