Brisbane Amateur Turf Club v Federal Commissioner of Taxation

[1968] HCA 31

HIGH COURT OF AUSTRALIA

Owen J.

BRISBANE AMATEUR TURF CLUB v. FEDERAL COMMISSIONER OF TAXATION

(1968) 118 CLR 300

3 June 1968

Income Tax (Cth)

Income Tax (Cth)—Assessable income—Annual distribution by Totalisator Administration Board made to galloping racing clubs—Income Tax and Social Services Contribution Assessment Act 1936-1968 (Cth), ss. 6, 25, 26 (g).

Decision

June 3.
The following written judgment was delivered:-
OWEN J. These are appeals by the Brisbane Amateur Turf Club ("the club") against two assessments of taxation, the one relating to the year ended 30th June 1965, the other to the year ended 30th June 1966, and in each case the same question arises. (at p302)

2. The Club is and was, at all material times, an unincorporated association of members, one of its objects being to encourage horse racing by the promotion and conduct of race meetings and the giving of prize stakes and rewards for horse races. The trustees of the Club are and were, at all relevant times, the owners of two racecourses in Queensland on which the Club regularly conducts race meetings. By s. 71A of The Racing and Betting Acts, 1954 to 1962 (Q.), a section which was enacted in 1961, the Governor in Council was authorized to make Orders in Council to provide for, regulate and control off-course betting on totalisators and for this purpose to establish an authority to conduct off-course betting on totalisators and to prescribe its powers, functions and duties. Pursuant to this provision a body corporate under the name of the Totalisator Administration Board of Queensland ("the Board") was constituted by Order in Council in February 1962 with power to provide for, regulate and control off-course betting on totalisators and at all material times thereafter the Board conducted off-course betting on totalisators. By cl. 8B of the Order in Council it was provided (inter alia) that the Board should, not later than 30th November in each year after the year 1964, set aside for the period of twelve months ended on the preceding 30th June to the credit of an account in its books to be called the "Galloping Racing Clubs Distribution Account" portion of its profits ascertained in accordance with a formula set out in the clause. Out of that account cl. 8B (e) (i) and (ii) directed the Board:

"Firstly, to pay to each of the galloping racing clubs that have conducted a race meeting or race meetings for the racing of galloping horses during the period of twelve months ended on 30th June last preceding 30th November in question, and is on such 30th June registered with a principal club as provided in sub-par. (g) of this par. 8B, the sum of Two hundred dollars but if the amount to the credit of the Galloping Racing Clubs Distribution Account is not sufficient to pay to each of those clubs the sum of two hundred dollars then the Board shall distribute equally amongst those racing clubs the amount standing to the credit of the Galloping Racing Clubs Distribution Account; Secondly, to distribute amongst the galloping racing clubs that have conducted a race meeting or race meetings for the racing of galloping horses during the period of twelve months ended on 30th June last preceding 30th November in question and is on such 30th June registered with a principal club as provided in sub-par. (g) of this par. 8B the balance (if any) of the amount standing to the credit of the Galloping Racing Clubs Distribution Account after making therefrom the payments specified in cl. (i) of this sub-par. (e) in the proportion in which the prize money given by each of those galloping racing clubs for the period of twelve months ended on the said 30th June bears to the aggregate of the prize money given by all of those galloping racing clubs for that period of twelve months."

Clause 12 of the Order in Council provided that the Board might, with the consent of the Minister, withhold such portion, as it deemed fit, of its profits otherwise available for distribution and apply the withheld profits for the purposes of the Board. (at p303)

3. The Club is and was at all material times a "galloping racing club" within the meaning of the Order in Council and, pursuant to cl.8A (e) (i) and (ii), the Board made distributions to it and to the other "galloping racing clubs" in the years ended 30th June 1964, 1965, 1966 and 1967, the amount received by the Club during the year ended 30th June 1965 being $151,736 and during the succeeding year $211,090. (at p303)

4. The sole question is whether the amounts so received by the Club were part of its assessable income. For the Club it was contended that the moneys received by it from the Board were donations or presents, not bearing the character of income receipts and not forming part of its assessable income but I am not prepared to accept that submission. It is true that the Board has power to withhold from distribution such portion of its profits as it thinks fit if the Minister consents to that being done. But if it does not do so, the periodical payments which the law requires it to make to the Clubs are, in my opinion, received by each of them in the course of carrying on its business of conducting race meetings and to assist it to do so. In my opinion the amounts in question on these appeals bore the character of income according to the ordinary concept of that word. (at p303)

5. There is yet a further reason for holding that the amounts are part of the Club's assessable income. Section 6 of the Act provides that "income from personal exertion" means, amongst other things, "any amount received as a . . . subsidy in carrying on a business" and, by s. 26 (g), the assessable income of a taxpayer includes "any . . . subsidy received in or in relation to the carrying on of a business . . . and such . . . subsidy shall be deemed to be part of the proceeds of that business". (at p303)

6. The express provision that subsidies received in the carrying on of a business shall be part of the recipient's assessable income is made, I would think, "simply for greater certainty", to use the words of Dixon C.J. and Williams J. in Federal Commissioner of Taxation v. Dixon (1952) 86 CLR 540, at p 555 . But even if this be not so, I think it is plain that moneys received by the Club from the Board pursuant to the Order in Council are subsidies received in or in relation to the carrying on by it of its business of conducting race meetings. They were payments made by a body set up by the Crown pursuant to a statute for the purpose of performing certain functions associated with horse racing and required by law to give financial aid out of its profits to racing clubs in order to assist them in carrying on their businesses. (at p304)

7. For these reasons the appeals should be dismissed. (at p304)

Orders

Appeals dismissed with costs.