Parke Davis & Co v Commissioner of Taxation (Cth) [1959] HCA 15

High Court of Australia Dixon C.J. Fullagar, Kitto, Menzies and Windeyer JJ. Parke Davis & Co v Commissioner of Taxation (Cth) [1959] HCA 15

ORDER Order accordingly.

The judgment of the Court was delivered by Dixon C.J.:—

Dixon C.J., Fullagar, Kitto, Menzies and Windeyer JJ.

This is a case stated under s. 198 of the Income Tax Assessment Act 1936-1947. The appeal in respect of which the case has been stated is an appeal against an amended assessment. The amended assessment was based on an accounting period of twelve months ended 31st October 1946; that accounting period formed the year of income.

The appellant, Parke Davis & Co., is a company incorporated under the laws of Michigan, and has its headquarters at Detroit. For a considerable period that company carried on business as a manufacturing chemist in the United States of America, and it also carried on business, by means of branches, in other parts of the world, including Australia.

However, in 1945 a decision was made to incorporate another company which would carry on the business of Parke Davis & Co. in places outside the United States of America. A company was then incorporated under the laws of Colorado and called Parke Davis & Company Limited and in accordance with the purposes for which it was so incorporated it took over, among other businesses, the business carried on by the parent company in Australia. It was incorporated on 1st July 1945, and its issued capital comprised 1,000 shares at one dollar each. Of these shares, 995 were issued to the parent company; the five remaining shares were issued to five persons who were nominees of Parke Davis & Co.; they were in fact the directors of Parke Davis & Co. Ltd., that is to say, the company incorporated under the laws of Colorado. Accordingly neither company came within the definition of a "resident" as applied to a company contained in sub-s. (1) of s. 6 of the Income Tax Assessment Act; both were companies resident outside Australia.