Perron (as Trustee for Brennan Trust) v Commissioner of Taxation (Cth) [1972] HCA 47

High Court of Australia Stephen J. Perron (as Trustee for Brennan Trust) v Commissioner of Taxation (Cth) [1972] HCA 47

ORDER Order accordingly.

Cur. adv. vult.

Stephen J delivered the following written judgment:—

Oct. 11 Stephen J

In this appeal the taxpayer, as trustee of a trust estate, appeals against an assessment raised by the Commissioner pursuant to s. 99 of the Income Tax Assessment Act and contends that the relevant income of the trust estate should instead have been assessed to tax pursuant to s. 99A.

That is the only matter which is in question on this appeal. The facts are not in issue; indeed, before me a statement of agreed facts was tendered. It disclosed that during the year of income out of a net income of over $326,000 a distribution of $4,000 was made to a beneficiary of the trust, the balance of the net income of the trust estate, amounting to over $322,000, being accumulated. It was income to which no beneficiary was presently entitled and thus fell for assessment under one or other of ss. 99 or 99A.

Which of these two sections was to apply is made to depend upon the formation of an opinion by the Commissioner. Section 99 is expressed to apply "only if the next succeeding section does not apply" and s. 99A (2) provides that s. 99A does not apply "if the Commissioner is of the opinion that it would be unreasonable that this section should apply".

The significance to the trust estate of a selection as between these two sections arises from the fact that the rate of tax under the one may readily differ from the rate of tax under the other. The rate of tax where the assessment is made under s. 99A is such a rate as may be "declared by the Parliament for the purposes of this section"—s. 99A (4). In fact, at all material times a rate of fifty cents in the dollar has applied to the income of a trust estate assessed pursuant to s. 99A. Where an assessment is made under s. 99 the applicable rate is that which would apply if the income were that of an individual and were not subject to any deduction.