Executor Trustee and Agency Company of South Australia Limited v Federal Commissioner of Taxation [1932] HCA 25

v Dist

Harmer 21 Zeta Force

PiyLidv 625° Commissioner S35 \TR 277 EXECUTOR TRUSTEE AND AGENCY COM-

HIGH COURT (1932.

[HIGH COURT OF AUSTRALIA.]

PANY OF SOUTH AUSTRALIA LIMITED ; mie

AND

THE FEDERAL COMMISSIONER OF TAXATION ResponpEnt. —

H.C. or A, Income tax (Cth.)—Assessment—Trustee—Will—Life tenant and remainderman—

1932. Ww

MELBouRNE, March 15.

Sypxey, Aug. 4.

Gavan Duffy C.J, Rich,

Starke, Dixon, Evatt and

McTiernan JJ.

Prohibition against accepting premium for lease—Acceptance of premium authorized by Supreme Court—Direction that premium be treated as rent under lease paid in advance and to be apportioned between life tenants and remaindermen —Some remaindermen presently entitled—Whether trustee liable for tax for any part of the premium as income for year in which received—Averaging provisions— Whether applicable—Income Tax Assessment Act 1922-1929 (No. 37 of 1922— No. 11 of 1929) secs. 13, 31.

The appellant was the trustee for the testatrix, who by her will directed her trustee to stand possessed of her residuary trust moneys and her real estate upon trust to pay the income of one equal sixth part to each of her six daughters for life, and from and after the death of her said daughters or any of them to hold the share of the daughter so dying upon trust for the child or children of the daughter so dying, who being a son should attain the age of twenty-one years or being a daughter should attain that age or marry, in equal shares. 'The testatrix gave power to lease any hereditaments for a term not exceeding ten years at such rent as the trustee should think fit, without taking anything in the nature of a fine or premium therefor. The six daughters survived their mother. Three were still alive, but three died before Ist July 1927. Each daughter married in the lifetime of the mother and had children who were living at the death of the testatrix. The children of the daughters who had died were alive on Ist July 1927, and had attained the age of twenty-one years or had married. In March 1928 the Supreme Court of South Australia authorized the trustee to accept a tender of a lease for a certain hotel property, being part of the trust estate, for a term of seven years at a weekly rental of £6, and a premium of £3,300, and the Court directed that the premium of £3,300 be treated by the trustee as rent under the lease paid in advance and be