Legal Research
Cases
Bohemians Club v Acting Federal Commissioner of Taxation

Bohemians Club v Acting Federal Commissioner of Taxation

Case [1918] HCA 16 21 March 1918

Statutory Construction

Jurisdiction

Appeal

Tax Law

Statutory Interpretation

No judgment structure available for this case.

Type to search within this case.

24 CLR 334

THE BOHEMIANS CLUB

THE ACTING FEDERAL COMMISSIONER

OF TAXATION Income Tax-Assessment-Income-Club-Subscriptions of members-Income Tax

Assessment Act 1915-1916 (No. 34 of 1915-No. 39 of 1916), secs. 3, 10.

The annual subscriptions of members of a social club are not taxable income MELBOURNE,

of the club within the meaning of the Income Tax Assessment Act 1915-1916, March 15, 21.

and are not to be taken into account in ascertaining its taxable income.

CASE STATED.

On an appeal by The Bohemians Club from an assessment of the Club by the Federal Commissioner of Taxation for income tax, Rich J. stated the following case for the opinion of the Full Court :-

1. "The Bohemians " is a social club in Melbourne. 2. Pursuant to sec. 28 (1) of the Income Tax Assessment Act 1915-1916 the said Club by its secretary duly furnished to the Commissioner of Taxation a return for the year ending 31st Decem- ber 1914, which return was accepted by the Commissioner pursuant to sec. 28 (1) of the Act in lieu of a return for the financial year. Annexed to such return was a copy of the Club's annual statement of receipts and expenditure.

3. The Commissioner assessed the Club for income tax on £96 5s. 6d. as being the taxable income of the Club shown by the said annual

24 CLR 335

statement. Included in the assessment were the annual subscriptions H. C. of members of the Club.

4. The said Club, being dissatisfied with such assessment, duly BOHEMIANS lodged an objection which was disallowed by the Commissioner.

5. The said Club appealed to the High Court pursuant to the provisions of sec. 37 (4) of the said Act.

6. The said appeal being now before me for hearing, I state this case for the opinion of the High Court upon the following question of law arising in the appeal (1) Are the annual subscriptions of members of The Bohemians Club mentioned in the said state- ment of receipts and expenditure income of the Club within the meaning of the said Act ?

At the hearing of the case stated the following question was added: (2) Are such subscriptions to be brought into account for the purpose of ascertaining the taxable income of the Club ?

Mitchell K.C. and Mann, for the appellant. Assuming that a social club is within the definition of a "company" in sec. 3 of the Income Tax Assessment Act 1915-1916, the annual subscriptions of members are not income of the club (New York Life Insurance Co. v. Styles (1) Carlisle and Silloth Golf Club v. Smith (2) i. What a body of men contribute out of their own pockets to themselves for purposes of their own is not income at all. If subscriptions should be taken into account in ascertaining the taxable income of the club SO also should a call made when it is found that the subscriptions in a particular year had not been sufficient to cover the expenses.…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Bohemians Club v Acting Federal Commissioner of Taxation

Details

AGLC: Bohemians Club v Acting Federal Commissioner of Taxation [1918] HCA 16
Case: [1918] HCA 16
Decision Date: 21 March 1918

CaseChat Overview and Summary

The Bohemians Club appealed to the High Court of Australia against an income tax assessment made by the Acting Federal Commissioner of Taxation. The Commissioner had included the annual subscriptions of the Club's members in the assessment of the Club's taxable income for the year ending 31 December 1914. The Club contended that these subscriptions were not taxable income.

The legal issues before the Full Court were whether the annual subscriptions of members constituted income of the Club within the meaning of the *Income Tax Assessment Act 1915-1916*, and consequently, whether such subscriptions were to be brought into account for the purpose of ascertaining the Club's taxable income.

The Court held that the annual subscriptions of members of a social club are not taxable income of the club. Griffith C.J. reasoned that a social club is a voluntary association of persons who contribute to a common fund for their mutual benefit, not for profit. These contributions are essentially advances of capital for a common purpose, expected to be exhausted within the year, and are not income of the collective body of members. The Court rejected the Commissioner's argument that the Club, as a separate legal entity under the Act, should be treated as distinct from its members, finding that this did not alter the fundamental nature of the subscriptions. Powers and Rich JJ. concurred, with Rich J. noting that the Act did not contain any language that could be construed as imposing a tax burden on such subscriptions, and that they were not income in the customary fiscal sense.

The Court answered both questions in the negative, finding that the annual subscriptions of members were not income of the Club and were not to be brought into account for the purpose of ascertaining its taxable income. The Club was awarded costs of the appeal.

Orders