Bankers and Traders' Insurance Company Limited v Federal Commissioner of Taxation [1946] HCA 39

73 C.L.R.] OF AUSTRALIA.

[HIGH COURT OF AUSTRALIA.}

BANKERS AND TRADERS' INSURANCE |

COMPANY LIMITED : 4 . sf APPELLANT ;

AND

THE FEDERAL COMMISSIONER OF TAXA-

TONS 7 z ; : ' i : i RESPONDENT.

Taxation—Company—War-time profits—Taxable profits— Capital employed" — " Employed in Australia "—Business carried on in foreign countries-—Securities deposited in those countries—Interest therefrom included in taxable income— War-time (Company) Tax Assessment Act 1940-1944 (No. 90 of 1940—No. 29

of 1944), ss, 3, 24 (1).

In ascertaining for the purposes of the War-time (Company) Tax Assessment Act 1940-1944, the capital employed by a resident company in an accounting period, the Commissioner, by the joint operation of s. 3 and s, 24 of that Act, is entitled to deduct capital of the company employed by it outside Australia notwithstanding that such capital gains or produces income in the accounting

period assessable under the Income Tax Assessment Act 1936-1945.

So held by Rich, Starke, Dixon and McTiernan JJ. (Latham C.J. dissenting).

Warner Bros. First National Pictures Pty. Ltd. v. Federal Commissioner of

Tazation, (1945) 72 C.L.R. 134, by majority, approved.

A company carried on various classes of insurance business in Australia and elsewhere. It invested in Government securities and, apparently, when occasion required, it used them for the purpose of depositing or charging funds with governments abroad as a condition of carrying on business in the country where the deposit was so made. 'The interest, therefrom was included in the company's income assessed to Federal income tax. Of four deposits so mado one, consisting of Metropolitan Water, Sewerage and Drainage Board Dollar Bonds, was brought to Australia from America for purpose of safe custody,

Held, by Rich, Starke, Dixon and McTiernan JJ., that the capital represented by (a) the Metropolitan Water, Sewerage and Drainage Board Dollar Bonds was; and (b) the other three securities was not, " capital employed in Aus- tralia" by the company within the meaning of the War-time (Company) Tax