Warner Brothers First National Pictures Pty Ltd v Federal Commissioner of Taxation [1945] HCA 44

ghva-73 6 4-37

H.C. or A, Taxation—Company—War-time profits—Taxable profits—" Capital employe

1945. Ww SypNey, Now. Dec. 19.

Williams J.

HIGH COURT i

[HIGH COURT OF AUSTRALIA.)

WARNER BROTHERS FIRST NATIONAL se 5 PICTURES PROPRIETARY LIMITED '

AND

THE FEDERAL COMMISSIONER OF TAXA-

TION Rusponpe

"Employed in Australia" —« Accumulated profits" —Subsidiary company Australia—Moneys remitted on loan to parent company in United St America—Interest thereon paid to subsidiary company—War-time (Oo a Tax Assessment Act 1940-1941 (No. 90 of 1940—No. 56 of 1941), 8. 3, 24 (

In order to ascertain the "capital employed " for the purposes of s. the War-time (Company) Tax Assessment Act 1940-1941, the definition of words as appearing in s. 3 of the Act must be read into each of the ad and deductions required to be made by s. 24 (1).

From its accumulated profits a subsidiary company in Australia to its parent company in the United States of America, on loan, a sum averaged over the accounting period, amounted to £146,676. Interest

as part of its assessable income,

Held that the said sum was not "capital employed" within the mea of s, 24 of the War-time (Company) Tax Assessment Act 1940-1941.

Appeat from the Board of Review.

Warner Brothers First National Pictures Pty. Ltd. appealed to tl High Court against a decision by the Board of Review d an objection by the company arising out of its assessment under tl War-time (Company) Tax Assessment Act 1940-1941 for ¥

company tax in respect of its taxable income derived during the ended 30th June 1941. ;

j

72 C.L.R.] OF AUSTRALIA.

13:

Section 24 (1) of the Wartime (Company) Tax Assessment Act H. C. or A.

1940-1941 provides, so far as material, that, subject to s. 25, the capital employed in any accounting period should, for the purposes of the Act, be ascertained by adding :—(a) the capital paid up in money or by other valuable consideration, averaged over the account- ing period ; (6) accumulated profits, averaged over the accounting period, including amounts standing to the credit of the profit and loss account at the commencement of the accounting period but not including any profit of the accounting period; (c) any reserve, averaged over the accounting period, which had been created out of premiums received on the issue of shares ; (¢) the amount by which the value prescribed by sub-s. (2), (3), or (4) of s. 24 as the value of any asset to which that sub-section applied exceeded the value of that asset as appearing in the accounts of the company at the commence- ment of the accounting period or, if no such value appeared in the accounts of the company at the commencement of the accounting period, the amount prescribed by that sub-section ; and deducting therefrom—({i) the amount by which the value of any asset to which sub-s. (2), (3), or (4) applied as appearing in the accounts of the com- pany at the commencement of the accounting period exceeded the value of that asset prescribed by that sub-section; (ii) any capital, averaged over the accounting period, the income (if any) from which was not or would not be taken into account in assessing the income of the accounting period under the Income Tax Assessment Act; and (iii) any capital, averaged over the accounting period, invested in shareholdings in any other company.