Commissioner of Taxation (WA) v Boulder Perseverance Limited [1937] HCA 61

baad Ree

58 C.L.R.] OF AUSTRALIA. 223

{HIGH COURT OF AUSTRALIA.)

THE COMMISSIONER OF TAXATION

(WESTERN AUSTRALIA) } ampersane ;

RESPONDENT, AND BOULDER PERSEVERANCE LIMITED . . RESPONDENT. APPELLANT,

ON APPEAL FROM THE SUPREME COURT OF WESTERN AUSTRALIA.

Dividend Duty (W.A.)-—Assessment—Deductions—Mining company—Profit-sharing 44.0, of A. notes—Profits payable to note holders—Dividend Duties Act 1902-1924 (W.A.) (No. 32 of 1902—No. 35 of 1924), secs. 6, 7.

'The Dividend Duties Act 1902-1924 (W.A.) is not confined to the taxation of the profits of a company that are available to shareholders and to no one else : its purpose is to tax the ultimate net profit made by the company without regard to its application or destination. 'The Act is not concerned with the © "7°" mode in which the fund of final net profit is applied or divided under con. 7" 9- tractual or other arrangements made by a company with shareholders or others San ©. 4 . venturing capital in the business in the expectation of deriving profits according \ to the success of the company's operations. A division of this ultimate fund under such agreements or arrangements differs from the payment to a manager or other officer of a remuneration calculated upon profits or earnings : the

MELBOURNE,

performance of services so remunerated forms a necessary part of the opera- tions which bring the net fund of profit into existence, and payment for those services is a prior charge upon the earnings of the business before the ascertain- ment of the fund of net profit available for division under the contractual arrangements between those supplying capital on terms of sharing the fund.

To carry on its business and to provide working capital a company raised a sum of £50,000 by means of profit-sharing notes. The notes bore interest

H.C. or A.