Ruhamah Property Company Limited v Federal Commissioner of Taxation [1928] HCA 22

Appl Cons Comr meh ied Oh on Renton 28m" Oise, ae:

BERT 80 i ese emeood ALR Vanlagg td de fer foldings V iB Gk BYR 9S Planning

He Sarna, epanutir 408 GERA 152 148 HIGH COURT (1928.

{HIGH COURT OF AUSTRALTA.]

RUHAMAH PROPERTY COMPANY LIMITED APPELLANT;

AND

THE FEDERAL COMMISSIONER OF

RESPONDENT. TAXATION . 5 H. 0. or A. Income Tar—Assessment—Board of Review—Appeal to High Court—Question of 1928, law—Company formed by father for purpose of division of his property—Family ~~ company—Sale of assets—Realization of assets—Profits of business—Income BRISBANE, Tax Assessment Act 1922-1927 (No. 37 of 1922—No. 32 of 1927), sec. 51 (6). Tune 26, 27. ne By sec. 51 (6) of the Income Tax Assessment Act 1922-1927 it is provided Sypyey, that a taxpayer may appeal to the High Court from any decision of the Board of Review " which, in the opinion of the High Court, involves a question of law." Gavan Dufty, M., the owner of certain real property, in order to make additional provision Starke JJ. for his family formed a company to which he transferred the property, the

objects of the company being to acquire the property by way of gift from M. and also to acquire, purchase and resell land, including the property acquired by gift. 'The shares in the company were held by M. and the members of his family. No money was paid for the shares; and the company acquired no other property and did nothing in the way of business except collect the rents and profits of and make repairs to the property so acquired. M. died, having bequeathed his shares to his children, and one of his sons died some months later. Another family company also formed by M. having financed the pay- ment of the duties payable on the estates of M. and the deceased son, the first-mentioned company sold the property and deposited the proceeds of the sale with the other company. A Board of Review decided that the company, in selling the property, had carried on an operation of business in carrying out a scheme of profit-making—the majority of the Board deciding that as there was a power of sale in the company a sale pursuant to the power must be in pursuance of a business operation in carrying out a scheme of profit-making,