Cons Pa Commissioner if v Sahhar. 1985) 59 LR H.C. or A. 1958. we Busspane, June 27; Sypyey, Aug. 1. Fullagar J. HIGH COURT {HIGH COURT OF AUSTRALIA.) CROWE " Z 7 3 . % ' ' AND COMMISSIONER OF TAXATION . : Income Tax (Cth.)—Assessable income—Allowable deduction—Insurance p on life of taxpayer—Taxpayer member of partnership of four—Policy one of effected by partnership on the separate lives of partners—Sums assured to the four partners their executors administrators and assigns as tenants in —Premiums paid to insurance company by partnership's bank in p bank order given by the partnership—Debited to partnership bank acco partner debited in books of partnership with amount of premium paid on policy on his life—Income Tax and Social Services Contribution Act 1936-1954, s, 82H (1) (a) (i). A partnership effected four life insurance policies, one on each of the live its partners, for the benefit of all four partners, their executors and assigns as tenants in common. The premiums were paid to the in: company by the partnership's bank in pursuance of an order given partnership and debited by the bank to the partnership account. the partners was debited in the books of the partnership with the the premium paid on the policy on his life. One of the partners deduction from her income the amount of the premium with which been debited in the books of the partnership. Held, that the premium paid on the policy on the life of a partner ws an allowable deduction from the income of that partner under s. of the Assessment Act 1936-1954 because it was not paid by the was paid and payable by the partnership, and that fact could not be or affected by any antecedent or subsequent agreement among the part Wilson v. Simpson (1926) 2 K.B. 500, followed. Semble, a taxpayer is not entitled to a deduction under s. 82H (1) unless the premium is not only paid by him but payable by him by a contract of insurance between him and an insurer. Appeat under the Income Tax and Social Services Co Assessment Act 1936-1954. Crowe (hereinafter called the taxpayer) effected four i policies for £2,500 each, one on each of the lives of the four OF AUSTRALIA. on the life of the taxpayer provided that "in consideration the payment by the member named in the first column of the ule hereunder of the premium specified in the second column the said Schedule on the days specified in the third column of the said Schedule in each year during the life of the Assured named in the first column of the said Schedule, The City Mutual Life urance Society Limited will (subject to the Conditions onthe back of which shall be held to form part of the Policy) on the death the said Assured pay the sum specified in the fourth column of said Schedule together with vested bonuses to the said Member s/her Executors, Administrators or Assigns on the Policy being ivered up to the Society." As the member named in the first mn the names of the four partners were set out followed by words and brackets: "(Tenants in Common)" and the tax- er was named as the assured in the same column. The premium in the second column was £8 0s. 5d. monthly " under Order ". e premiums on all the policies were paid to the insurance ny by the partnership's bank in pursuance of the order oned and were debited by the bank to the partnership account. ich of the partners was debited each year in the books of the tnership with the amount of the premium paid on the policy life and in the annual partnership balance sheets the amounts he premiums paid appeared as deductions from the respective ners' capital accounts. For the year in question the taxpayer d £96 which was debited to her account in the books of the ny as a deduction from her income under s. 82H (1) (a) (i) of 1954 but it was disallowed by the commissioner to the extent and on review a board of review confirmed the commissioner's sment. e taxpayer appealed from the decision of the board to the Court. Cur. adv. vult. Acar J. delivered the following written judgment :— is an appeal by a taxpayer from a decision of an income tax rd of review. The argument before me was as admirable for ty as for its brevity. the benefit of all the partners as tenants in common. The H. ©. or A. 1958. Ww CroweCommirs- SIONER OF TAXarion. Aug. 1. O84 H.C. oF A. 1958. we Crowe . Comaus- SIONER OF Taxarion. Fullagar J. HIGH COURT In her return of income derived in the year ended 30th Jun the taxpayer, Mrs. Gladys Veronica Crowe, claimed as a dedi from her assessable income a sum of £96 Os. Od. under s. 82x (1) of the Income Tax and Social Services Contribution Assessment 1936-1954. This provides (so far as material) that " Amounts. by the taxpayer as premiums or sums for insurance on the life taxpayer shall be allowable deductions." The commissio allowed the deduction to the extent of £72 Os. Od., and the b of review confirmed his assessment. The taxpayer is a member of a partnership, the firm nar which is " Twenty-nine Murray Street". The firm carries equally Fi the profits of the wait On 14th Deveriieath the partners effected four policies of life assurance with the Mutual Life Assurance Society Ltd. Each assurance is; on th - surviving partners. the premiums payable differ because of the different ages partners. The premiums are payable monthly. On the of the life of the taxpayer, Mrs. Crowe, the total annual sum is £96, on that of the life of Mrs. McLean £103, on that of Mr. Sullivan £86, and on that of Mr. D. M. Sullivan £63. The p are paid to the society by the firm's bank in pursuance of a" order "', and are debited to the account of the partnership. In the years ended 30th June 1950 and 30th June premiums on these life policies were simply debited to the and loss account of the partnership. This meant, of course, th as between the partners, the total amount of the premiums on the four policies was borne by them equally. In every sub year, however, each of the partners has been debited in the | 0 of the partnership with the amount of the premium paid policy on his or her life, and in the partnership balance amount has appeared as a deduction from each partner's account. It was stated by Mr. Campbell, and not dispute Mr. Andrews, that, although the sum of £96, which is now in was paid in monthly instalments by the bank to the socie OF AUSTRALIA. debited to the taxpayer in the books of the partnership the end of that year of income. I mention this fact (if it be a but my opinion on the case would be the same if the relevant book entries had been made in the year of income. On the facts above stated I am of opinion that the board of review as right in confirming the disallowance by the commissioner of the eduction claimed by the taxpayer. The apparent difficulty of the case arises, I think, from two factors. first is that a partnership has, in English law, no legal personality istinct from those of the individual partners. This, however, does n that there is not a very real difference between a right or igation of a partnership (or partners as such) and a right or tion of an individual member of a partnership. It will not, erefore, be wrong or misleading if we speak of the partnership 3a party to the contract evidenced by the policy. The second urce of difficulty lies in the fact that there is, under the policy, ) obligation resting upon anybody to pay premiums. The due ent of premiums is merely a condition of the liability of the ety to pay on maturity the sum assured. There must, however, -a definite person or definite persons who are party or parties to ie contract of assurance, and by whom that condition is contem- as being performed. It will not, therefore, be wrong or ding if we speak of the premiums as being, as between the y and the partnership, payable by the partnership. [am inclined to think that a taxpayer is not entitled to a deduction 8. 82H (1) (a) (i) unless the premium is not only paid by him payable by him by virtue of a contract of insurance between him ninsurer. Otherwise it might well be said that the premium been paid by him " for insurance " within the fair meaning words in s. 82H (1) (a) (i). On this view, if A, a creditor, an insurance on the life of B, his debtor, and B voluntarily that premium from his assessable income. A could not e he has not paid it, and B could not because he has not paid ance—he has paid it for no consideration whatever. It is ry, however, to express a concluded opinion on this point. case supposed B could at least say that he had paid the ium tothe insurer. In the present case it cannot, in my opinion, | that the taxpayer has paid the premium. The premium was y payable by the partnership : it was paid by the partnership month of the year of income when the bank acted on the income with which we are now concerned, the total sum of H: C. or A. 1958. Ww Crowe v. Commas- SIONER OF TAXATION. Fullagar J. HH. C. or A. 1958. ce CRowE vw Commis- SIONER OF TaxaTION. Fullagar J. HIGH COURT bank order and debited the amount of the payment to the par ship's current account. The fact that the payment was mad the partnership to the society cannot, as it seems to me, be altere or affected in any way by any antecedent or subsequent agz among the partners as to the manner in which, as between t selves, the burden of the outgoing shall be borne. Tt is true, as Mr. Andrews said, that both common law and equit have always taken a liberal and commonsense view of what ¢ stitutes payment. In order to establish payment, it is not ne to prove an actual handing over of cash or a cheque by debt creditor. So, if the taxpayer had effected an insurance on her oy life, and the partnership had paid a premium on the policy at request and debited the amount to an advance account in its book I should have said that she ought to be held to have " paid" i premium, although no money or money's worth passed from h hand to the hand of the insurer. But such a case is remote this. Here there was clearly a payment, but the amount paid ' not payable by the taxpayer, and was not paid by her. It is true also, of course, that the taxpayer was herself a n of the partnership, and therefore one of the persons who made the payment. But to be a party to a payment in that not the same thing as making that payment: cf. Wi Simpson (1). The decision of Rowlatt J. in that case was ba two grounds. The first ground depended on an expression ¥ does not occur in s. 82H (1) (a) (i), but, so far as it rests on the seco ground, the case seems to me to be apposite here. As between th partnership (the payor) and the society (the payee) neither whole nor any ascertainable part of the amount paid can be a buted to the taxpayer. The appeal should, in my opinion, be dismissed. Appeal dismissed with costs. Solicitors for the appellant, O'Shea, Corser & Wadley. Solicitor for the respondent, H. E. Renfree, Crown the Commonwealth. (1) (1926) 2 K.B. 500.