Estee Lauder Pty Ltd v. Commissioner of Taxation for the Commonwealth of Australia [1988] FCA 254

Estee Lauder Pty Ltd v. Commissioner of Taxation for the Commonwealth of Australia [1988] FCA 254

The sale value for sales tax purposes of goods treated as stock for retail sale is to be calculated based on a notional wholesale price from a hypothetical manufacturer under similar manufacturing conditions, including necessary royalties and technical service fees for industrial property, but excluding retail selling, advertising, and promotion expenses. Mr Burger's wholesale price calculations are generally appropriate but must be adjusted to include royalties and technical service fees proportionally; retail-related expenses are not to be included.

Parties
Applicant / Cross Respondent: Estee Lauder Pty Limited; Respondent / Cross Claimant: Commissioner of Taxation for the Commonwealth of Australia
Jurisdiction
Australia
Judgment Date
26 May 1988
Procedural Posture
Sales Tax Dispute / Post Remittal From High Court, Determination of Special Questions
Outcome
Special questions to be answered according to Mr Burger's calculations, adjusted to include royalties and technical service fees; parties to make further submissions/calculations as directed.
Legal Topics
Sales Tax Assessment, Valuation of Goods, Industrial Property Rights, Revenue Legislation Construction
Taxation Law Sales Tax Assessment Valuation of Goods Industrial Property Rights Revenue Legislation Construction

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Parties

Estee Lauder Pty Limited

Applicant / Cross Respondent

Commissioner of Taxation for the Commonwealth of Australia

Respondent / Cross Claimant

Procedural Posture

Sales Tax Dispute / Post Remittal From High Court, Determination of Special Questions

Legal Issues

  1. 1 Whether calculation of hypothetical wholesale price under s.18(2)(b) of Sales Tax Assessment Act (No.1) 1930 should include royalties and technical service fees for industrial property
  2. 2 Whether advertising, promotion, and selling expenses should be included in wholesale price calculation
  3. 3 Whether previous wholesale selling prices are an appropriate guide post-retail transition

Ratio Decidendi

The sale value for sales tax purposes of goods treated as stock for retail sale is to be calculated based on a notional wholesale price from a hypothetical manufacturer under similar manufacturing conditions, including necessary royalties and technical service fees for industrial property, but excluding retail selling, advertising, and promotion expenses. Mr Burger's wholesale price calculations are generally appropriate but must be adjusted to include royalties and technical service fees proportionally; retail-related expenses are not to be included.

Court Disposition

Special questions to be answered according to Mr Burger's calculations, adjusted to include royalties and technical service fees; parties to make further submissions/calculations as directed.

Orders

  • Applicant (Estee Lauder) to bring in short minutes to reflect reasons.
  • Further hearing on appropriate order as to costs.