Ronpibon Tin NL v Commissioner of Taxation (Cth) [1949] HCA 15

High Court of Australia Latham C.J. Rich, Dixon, McTiernan and Webb JJ. Ronpibon Tin NL v Commissioner of Taxation (Cth) [1949] HCA 15

ORDER Ronpibon Tin No Liability v. The Commissioner of Taxation of the Commonwealth of Australia.—Question answered as follows:—As a matter of law no part of the expenditure upon allotments to dependants of the Eastern staff of the company or upon cables is allowable as a deduction and the commissioner rightly disallowed that part of the expenditure as a deduction; subject to the foregoing declaration the learned judge should decide as a matter of fact what part or proportion of the remaining expenses was fairly and properly attributable to gaining the assessable income. Costs of case to be costs in the appeal. Tongkah Compound No Liability v. The Commissioner of Taxation of the Commonwealth of Australia.—Question answered as follows:—The learned judge should decide what part or proportion of the expenditure in respect of which the deduction is claimed was fairly and properly attributable to gaining the assessable income. Costs of case to be costs in the appeal.

Cur. adv. vult.

The Court delivered the following written judgment:—

June 6 Latham C.J.,Rich, Dixon, McTiernan and Webb JJ.

These are two appeals from assessments to income tax which were brought on to be heard before the Chief Justice as associated matters.

His Honour at the joint request of the parties took steps to have the question which the appeals raise submitted for the decision of the Full Court. The matters are now before us as upon cases stated under s. 198 of the Income Tax Assessment Act 1936-1944.

In each case the appellant is a no-liability mining company registered in Victoria. Up to the outbreak of war with Japan the chief business of the companies was tin mining. Ronpibon Tin No Liability owned and worked a tin mine in Siam under leases from the Siamese Government. Tongkah Compound No Liability owned and worked a tin mine at Seremban in Malaya and it held shares in other companies which owned and worked tin mines at the same place. Each of the appellant companies had derived substantial revenues from the tin mining so carried on. But these revenues formed no part of the assessable income of the companies. It was admitted by the parties in each case that the income from tin mining had been exempt from income tax under the provisions of s. 23 (q) of the Income Tax Assessment Act. It does not appear why this was so in the case of Malaya, that is to say whether the income from tin mining was not exempt from income tax in that country or the tin won was subject to a royalty or an export duty. But it is to be gathered from the material before the Court that in Siam an income tax was imposed and, further, that the company was required to pay a royalty in respect of the tin. After the Japanese obtained control of Siam and of Malaya the companies were of course cut off from all access to their workings, which fell into enemy hands. The mining manager and the assistant mining manager of Ronpibon Tin No Liability were interned, but the wife of one and the wife and children of the other had been sent to Australia. There the company continued to pay them an allotment or allowance for their support. The last accounting period in which either company received income from tin mining carried on during the period was the accounting period which included the last months of the calendar year 1941. That accounting period for Ronpibon Tin No Liability was the year ending 30th June 1942 and for Tongkah Compound No Liability the year ending 30th September 1942. In assessing the respective companies to income tax upon the income derived during the successive accounting periods up to that time, the commissioner had necessarily to deal with the question to what extent the outgoings incurred by the companies in Australia were referable to the mining operations in Malaya or Siam and to what extent they were referable to the derivation of income from other sources. The other sources of income consisted only in interest upon money invested either in Treasury Bonds or upon fixed deposit.