Sands v Federal Commissioner of Taxation

High Court of Australia Webb J. Sands v Federal Commissioner of Taxation

ORDER Appeal dismissed with costs. March 28. Webb J.

stated the facts as above set out and continued:

Now it was the long-standing policy of the Minister, from which there was no departure, not to give his consent under s 11 during the ten years specified in s 8A except on the condition that the purchase price should not exceed the value of the improvements, but at the end of the ten years to consent to a transfer at the full value of the holding. No question was raised before me as to the propriety of this attitude of the Minister. In fact the appellant relies upon it as fixing the value of the holding for estate duty purposes at the value of the improvements effected by the holder.

Evidence was called by the appellant as to the existence of this policy of the Minister. But she called no evidence of value apart from the value of improvements effected by the deceased as to which there was no question. On the other hand the respondent commissioner, although he did not other-wise call evidence as to the full value of the holding, adduced evidence as to that value based on a freehold value of £20,850, which the parties agreed was in fact the freehold value as at 8th November, 1959. This sum the commissioner's witness discounted because the holding was a perpetual lease and also because of the existence of the Minister's policy and of the contingencies that might occur while that policy was in operation during the ten years from the commencement of the lease of the holding. The veracity of the witnesses was not challenged, and as there were no manifest errors in the calculations, allowances or estimates of the commissioner's witness I accept his evidence as giving a reliable indication of the full value of the holding as at the date of the testator's death on 6th February, 1953. Then the question is, which of the two values I should accept, the improvements value or the full value? I have decided to reject the value limited to the amount spent by the testator on improvements and to accept as the value the amount which the holding was worth to the testator at the date of his death, having regard on the one hand to the fact that he had the right to retain the property until the expiration of the ten years specified in s 8A and on the other hand to the limitation imposed on its transfer and to the events that might happen to prevent the full value being eventually realized. To do otherwise would be to disregard the incontestable right of the deceased to retain the property throughout the ten years.