Bell v Commissioner of Taxation (Cth) [1953] HCA 99

High Court of Australia McTiernan J. Dixon C.J. Williams, Webb, Fullagar and Kitto JJ. Bell v Commissioner of Taxation (Cth)

ORDER Appeal dismissed with costs.

Cur. adv. vult.

The following written judgment was delivered by:—

July 18, 1952 McTiernan J.

This is an appeal from an assessment of Federal income tax which was levied for the financial year, 1st July 1947 to 30th June 1948.

The taxpayer complains of the inclusion of the sum of £11,000, which is assessed as income from property, in the taxable income. This sum is described in the adjustment sheet, which the Commissioner of Taxation sent with the notice of the assessment, in these words: "Amount received in respect of your share in Simmonds, Harper and Larkin Ltd."

This company was on 15th January 1947 incorporated at Port Moresby. The taxpayer at all material times was a resident of Australia.

The issued capital of the company was only seven £1 shares. On 24th March 1947 the taxpayer was registered as the holder of one of these shares, and on 3rd February 1948, according to the books of the company, he ceased to be a member. Its books represent that on 4th February 1948 it paid a dividend of £11,000 on each of its seven shares.

The sum of £11,000, which the taxpayer contends was wrongly included in the taxable income, represents the dividend which the company professed to pay.

If the dividend was paid as represented by the company's books, it would satisfy the definition which is given, by s. 6 (1) of the Income Tax Assessment Act 1936-1947, to the term "dividend"; and such payment would also satisfy all the conditions necessary, under s. 44 of the Act, to make a dividend paid to a shareholder, who is a resident of Australia, part of his assessable income.

The description, which appears in the adjustment sheet, of the sum of £11,000 is wider than the term "dividend", although it includes such a payment. The sum of £11,000 would come within the description if it was a receipt of the nature of income and the share itself was the source from which the taxpayer directly or indirectly derived the moneys. In the latter case, by reason of s. 25 of the Act, the sum would have been part of the taxpayer's assessable income; and by reason of the definitions of "income from personal exertion" and "income from property" it would have been income of the latter class.