Griffin Coal Mining Co Ltd v Commissioner of Taxation

High Court of Australia Mason CJ Deane and McHugh JJ Griffin Coal Mining Co Ltd v Commissioner of Taxation

Cur. adv. vult.

Mason CJ, Deane and McHugh JJ

Mr Conti: Your Honours, there is a matter of fundamental importance arising in relation to law of taxation in this case.

Mason CJ: What is it?

Mr Conti: It is not easy to encapsulate in one sentence, but can I get to it in this way. If I may be pardoned for saying that s 51(1) — the text of it is in the application book at p 64, if you want to have a look at it. Your Honours, we are conscious of the circumstance that in GP International Pipecoaters Pty Ltd , in a passage which is extracted at p 60 of the application book, this court encapsulated, if I may put it that way, the law generally as s 51(1), albeit that the immediate context of the case was concerned with receipts and not expenditure, and it put the concept of s 51(1) in terms of:

character of the advantage sought by the making of the expenditure —

That leaves for consideration in, of course, each individual case but particularly in this case, as an ideal example, what is the full scope of the expression "advantage" where there used. Must the advantage be something in the ordinary course of business or can there be circumstances where it is outside the ordinary course of business where one is addressing the so-called second limb — the business test limb — or where one is considering generally the disqualification provisions of s 51(1) relating to capital?

Now, here, what we are concerned with can be characterised as something extraordinary albeit something occurring in the course of the business life of the taxpayer and it is a once-off matter, although, of course, expenditure can often be once off. What we wish to submit to the court is this, that s 51(1) should be construed — and this is the ideal vehicle, with respect, for such a construction to be entertained — in effect, obversely to the approach the court took in Myer , and