Adelaide Stevedoring Co Ltd v Commissioner of Taxation (Cth) [1961] HCA 68

High Court of Australia Taylor J. Adelaide Stevedoring Co Ltd v Commissioner of Taxation (Cth) [1961] HCA 68

ORDER Appeal dismissed with costs.

Cur. adv. vult.

Taylor J. delivered the following written judgment:—

Nov. 14 Taylor J

The question which arises on the statement of agreed facts in this case is whether the appellant company (hereinafter referred to as the taxpayer) was on 31st July 1958 a "subsidiary of a public company" within the meaning of s. 105 (4) (b) of the Income Tax and Social Services Contribution Assessment Act 1936-1957 Cth. The taxpayer maintains that it was not and that its assessment to income tax based upon income derived during the year which ended on that date was excessive inasmuch as it was based upon the rate of tax prescribed for public companies.

On the relevant date the paid-up capital of the taxpayer consisted of 65,000 shares of £1 each and there were nine shareholders in all. But some of these shareholders held their shares in trust for each of two companies which also were shareholders, namely John Darling & Son Proprietary Limited and Elder Smith & Company Limited, and also for other persons who were not shareholders. In the ultimate analysis the beneficial ownership of the shares was as appears in par. (8) of the statement of admitted facts. From this paragraph it will be seen that John Darling and Son Proprietary Limited and Elder Smith & Company Limited together had, by reason of the aggregate of their beneficial ownership of shares (43,334), the capacity to control the taxpayer. But, as was pointed out by its counsel, it is apparent that there were a number of combinations of persons, omitting either one or other of the named companies, of whom, by reason of their aggregate holdings, the same thing might be said. It should be added that neither of the companies specified was, on the relevant date, a private company.