Countess of Bective v Federal Commissioner of Taxation [1932] HCA 22

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[HIGH COURT OF AUSTRALIA.]

THE COUNTESS OF BECTIVE 5 3 . APPELLANT ;

AND

THE FEDERAL COMMISSIONER OF TAXATION ReEsponDENT.

Income Tax (Cth.)—Assessment—Sum paid to taxpayer by trustees of a trust in favour of taxpayer's daughter—Whether sum rightly included in assessment of taxpayer.

MELBOURNE, 'The Commissioner of Taxation included in the assessable income of the June 21, 22

appellant a sum of money which had been paid to her by the trustees of a 30. trust established during his lifetime by her late husband in favour, primarily, of their infant daughter. The money was paid under a provision requiring the trustees, until the child attained fifteen years of age, to pay to the taxpayer the net annual income of the trust for the child's maintenance, education and support.

Dixon J.

Held, that, upon the proper construction of the trust instrument, the assessment was wrong in including the entire sum received by the taxpayer under the settlement as her assessable income, and thatit should include none of the taxpayer's actual expenditure upon the purpose for which she received the income.

Effect of different forms of gifts for maintenance considered.

Tt is a general rule that guardians of infants, committees of the person of lunaties, and others who are entrusted with funds to be expended in the maintenance and support of persons under their care are not liable to account as trustees ; but a guardian is not permitted to receive moneys for maintenance without liability to account except upon the condition that he discharges his duty adequately to maintain.

Apprat from the Federal Commissioner of Taxation.

This was an appeal from an assessment to income tax in respect of income derived by the appellant during the year ended 30th June 1930.