Commissioner of Taxation (Cth) v Australian National Hotels Ltd

High Court of Australia MASON CJ, DEANE and TOOHEY JJ Commissioner of Taxation (Cth) v Australian National Hotels Ltd

Mason CJ

Yes, Mr Handley.

Mr Handley: The applicant does not seek to proceed with the grounds of appeal which raise issues of fact or s 260. The proposed grounds of appeal are at pp 97 and 98 of the application book and the only grounds sought to be pursued are grounds 3 and 4.

If the court pleases, we would present two alternative but related submissions in support of the grant of special leave and in support of any resulting appeal. Firstly, and more fundamentally, we would submit that premiums paid for insurance against capital losses of any kind are outgoings of a capital or of a capital nature and are not allowable under s 51. And we would therefore submit that the assumption made by the majority in the Federal Court that premiums such as fire insurance premiums on capital assets are deductible is not a correct view of the Australian law.

Mason CJ: Was that point put in the Full Court of Appeal?

Mr Handley: It was not put. The submissions put for the Commissioner in the Full Federal Court accepted that fire insurance premiums were deductible but argued against the principle being extended.

The second submission is that if insurance premiums such as fire insurance premiums on capital assets are allowable under Australian law, this is anomalous and contrary to principle and there should be no extension of this anomaly by analogy or otherwise. On either view, we submit the present application does raise important questions in relation to s 51 which extend beyond the field of insurance against exchange losses and outside the field of insurance generally and we would instance payments to insure against future long service leave obligations as one possible extension of the Full Federal Court decision in this case.