Development Underwriting Ltd v Commissioner of Taxation (Cth)

High Court of Australia Menzies, J. Development Underwriting Ltd v Commissioner of Taxation (Cth)

ORDER Order Appeal allowed with costs. Usual order as to exhibits.

Cur. adv. vult.

Menzies, J

By its appeal the appellant taxpayer set out to convince the Court that the sum of $100,000, received by it from the National Mutual Life Association of Australasia Ltd during the year ended 30 June 1967, was not part of its assessable income of that year.

The Commissioner included the receipt as part of the assessable income of the taxpayer on the footing that it was the proceeds of a policy of insurance effected upon an employee—one Ignaz Abeles—so that, upon his death on 2 October 1966, the company should receive the money to take the place of the benefits it would otherwise have derived from the continuance of his services as the managing director of Metro Shirts (Industries) Pty Ltd and its subsidiaries: Inland Revenue Commissioners v Williams' Executors (1944), 26 TC 23, and Carapark Holdings Ltd v Federal Commissioner of Taxation (1966), 115 CLR 653; 10 AITR 378. The taxpayer contests this and contends that the Court should find that the policy in question was taken out by the taxpayer so that it would be in a position, in the event of the death of Mr Abeles, to pay to his estate large sums deposited with the taxpayer upon terms that they would be repaid upon three months' notice in writing.

The policy for £50,000 was issued on 12 April 1965, to commence on 8 October 1964—Mr Abeles' birthday—upon a proposal made by the taxpayer on 3 November 1964. The annual premiums of £1152, 10s. were paid by the taxpayer. The assurance was arranged for the taxpayer by one George Gombos.

On 27 November 1964 Mr Gombos received from the assurance company a memorandum as follows:—