W Thomas and Company Limited v Commissioner of Taxation (WA) [1931] HCA 11

W Thomas and Company Limited v Commissioner of Taxation (WA) [1931] HCA 11

When the Dividend Duties Act 1902-1924 (W.A.) uses the words 'all profits made by a company carrying on business,' it is referring to profits arising from the trading or business operations of the company, not to realized accretions or enhancements in value of capital or fixed assets; thus, profits arising on a realization of part of the company's assets are not liable to taxation under the Act.

Parties
Appellant; Plaintiff: W. Thomas and Company Limited; Defendant; Respondent: The Commissioner of Taxation (Western Australia)
Jurisdiction
Australia
Procedural Posture
Appeal / On Appeal From the Supreme Court of Western Australia (full Court) to the High Court of Australia
Outcome
Appeal allowed; judgment of the Full Court set aside.
Legal Topics
Dividend Duties, Realization of Assets, Capital Profits, Corporate Profits, Tax Assessments
Taxation Law Company Law Dividend Duties Realization of Assets Capital Profits Corporate Profits Tax Assessments

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Parties

W. Thomas and Company Limited

Appellant; Plaintiff

The Commissioner of Taxation (Western Australia)

Defendant; Respondent

Procedural Posture

Appeal / On Appeal From the Supreme Court of Western Australia (full Court) to the High Court of Australia

Legal Issues

  1. 1 Whether profits arising on realization of part of the company's assets are liable to taxation under the Dividend Duties Act 1902-1924 (W.A.)
  2. 2 Interpretation of 'all profits made by a company' in the context of the Dividend Duties Act 1902-1924 (W.A.)

Ratio Decidendi

When the Dividend Duties Act 1902-1924 (W.A.) uses the words 'all profits made by a company carrying on business,' it is referring to profits arising from the trading or business operations of the company, not to realized accretions or enhancements in value of capital or fixed assets; thus, profits arising on a realization of part of the company's assets are not liable to taxation under the Act.

Court Disposition

Appeal allowed; judgment of the Full Court set aside.

Orders

  • Declare that the amount upon which the duty of £4,552 19s. 11d. has been assessed is not profit within the meaning of the Dividend Duties Act 1902-1924, and is not chargeable with duty under the said Act.
  • Order that the respondent Commissioner of Taxation pay the costs of the appeal to the Full Court and of this appeal.