Commissioner of Taxes (Qld) v Ford Motor Company of Australia Pty Ltd [1942] HCA 16

Dist Foll

prey Dist De Domenico te Condgm Inc De Gailbum oui eal yMeCin Ugo 138 Co-op y NSW. Coopy NSW, Co-op Co Lid ieecst sib») LR 237 PRBS? PER S70? Sp GPa, ECR GOD 66 C.L.R.] OF AUSTRALIA.

THE COMMISSIONER OF TAXES aes

[HIGH COURT OF AUSTRALIA.]

LAND) * : ais APPELLANT 3;

RESPONDENT,

AND

FORD MOTOR COMPANY OF eer ResponDENr.

PROPRIETARY LIMITED APPELLANT,

>

ON APPEAL FROM THE SUPREME COURT OF QUEENSLAND.

Income Tax (Q.)—Company—Rate of tax—Capital of company—Deduttion in respect HO op A.

of goodwill—Sale by Canadian company to Australian company—Hxclusive right to sell certain products in Australia—Business not previously carried on in Australia by Canadian company—Business carried on for some years by Australian company—Deduction of whole amount representing yoodwill—Transfer of trade marks—Trade Marks Act 1905-1936 (No. 20 of 1905—No. 75 of 1936), sec. 58 —The Income Tax Assessment Act of 1936 (Q.) (1 Edw. VIII. No. 32), sec. 34.

Under sec. 34 (1) of The Income Tax Assessment Act of 1936 (Q.) the rate of income tax payable by a company is determined by thé percentage which the profits of the company bear to the capital of the company invested in assets which were used during the year of income in the production of assessable income. Under sec. 34 (4) (c) of the Act, in determining the capital of the company for the purpose of the Act there may be deducted so much of tho amount of any goodwill appearing as an asset in the company's accounts as in the opinion of the Commissioner should reasonably be deducted.

Prior to 1925 the system adopted for the marketing of Ford products: iv Australia was that the manufacturer, a Canadian ¢gompanyy sold the prodycts to persons in Australia, who resold them. The Canadian company did not

By an agreement entered into in 1925 the carry on business in Australia, VoL, LXVI,