Legal Research
Cases
Cain v Whyte

Cain v Whyte

Case [1932] HCA 6 15 April 1932

Appeal

Estoppel

Statutory Construction

Statutory Interpretation

No judgment structure available for this case.

Type to search within this case.

47 CLR 354

ANDERSON'S INDUSTRIES LIMITED

THE FEDERAL COMMISSIONER OF TAXATION RESPONDENT. War-time Profits Tax-Assessment-Company-Voluntary liquidation--Business

transferred to new company-Dissolution of old company-Tax on profits made prior to transfer-Assessment of "liquidator" after dissolution-New company also assessed-Both assessments subsequently withdrewn-Fresh assessment upon April 13-15.

new company-Effect of prior assessments -Election Person for the time being owning or carrying on the business "-War-time Profits Tax Assessment Act 1917-1918 (No. 33 of 1917-No. 40 of 1918), secs. 14*, 24, 25, 47.

A company transferred its business and was wound up. After the company had been dissolved the Commissioner purported to make an assessment upon the liquidator for war-time profits tax in respect of profits arising before the change of ownership.

Held, that the assessment was ineffectual, and the Commissioner was not precluded from assessing the transferee of the business to tax in respect of the same profits under sec. 14 of the War-time Profits Tax Assessment Act 1917-1918 as the person for the time being owning or carrying on the business." * The War-time Profits Tax Assessment

a company is being wound up after the Act 1917-1918, by sec. 14, provides as

commencement of this Act, the liquida- follows " (1) The war-time profits

tor of the company shall give notice to tax shall be assessed by the Commis-

the Commissioner within fourteen days sioner. (2) The tax may be assessed

after the approval of the shareholders on any person for the time being owning

to the winding up has been obtained or carrying on the business or acting as

or the order for the winding up has been agent for another person in carrying on

made, and shall set aside such sum out the business, or, where a business has

of the assets of the company as appears ceased, on the person who owned or

provide for any such war-time profits agent in carrying on the business

tax as may become chargeable immediately before it ceased, and where

(5) In any case in which a business is there has been a change of ownership

transferred to another person after the of the business, the Commissioner may,

commencement of this Act, the person if he thinks fit, take the accounting

to whom the business is transferred period as the period ending on the date

shall be personally liable to pay any on which the ownership has so changed

war-time profits tax which may sub- and assess the tax on the person who

sequently be assessed as payable by the owned or carried on the business or

former owner if he fails to secure the acted as agent for the person carrying

payment of that tax to the Commis- on the business at that date. (3) Where

47 CLR 355

On the hearing of an appeal to the High Court by Anderson's Industries Ltd. from an assessment of it to war-time profits tax ANDERSON'S for the financial year 1918-1919 Evatt J. stated, for the opinion of the Full Court, a case which was…

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 Cain v Whyte

Details

AGLC: Cain v Whyte [1932] HCA 6
Case: [1932] HCA 6
Decision Date: 15 April 1932

CaseChat Overview and Summary

This case concerned an appeal by Anderson's Industries Ltd. (the new company) to the High Court of Australia regarding an assessment for war-time profits tax. The dispute arose after Charles Anderson & Co. Ltd. (the old company), which had carried on a hat manufacturing business, transferred its business and subsequently went into voluntary liquidation and was dissolved. The Commissioner of Taxation had initially issued an assessment for war-time profits tax in respect of profits made prior to the business transfer to the liquidator of the old company, after the old company had been dissolved. This assessment was later withdrawn, and a fresh assessment was issued against the new company.

The central legal issues before the court were whether the Commissioner was precluded from assessing the new company for war-time profits tax due to the prior, albeit ineffectual, assessment made upon the liquidator of the dissolved old company. Specifically, the court had to determine if the Commissioner's actions constituted an election that prevented him from pursuing the new company, and whether the new company was personally liable to pay the tax under section 14 of the War-time Profits Tax Assessment Act 1917-1918, despite the prior assessment and subsequent dissolution of the original business owner.

The court reasoned that the initial assessment upon the liquidator of the dissolved old company was ineffectual. Section 14 of the War-time Profits Tax Assessment Act 1917-1918 provided the Commissioner with the power to assess the tax on the person for the time being owning or carrying on the business, or where a business had ceased, on the person who owned or carried on the business immediately before it ceased. Crucially, subsection (5) of section 14 stipulated that where a business was transferred, the transferee would be personally liable for any tax subsequently assessed as payable by the former owner if the former owner failed to secure payment. The court held that the Commissioner was not precluded by his earlier actions from assessing the new company under this provision, as the initial assessment was a nullity and did not bind the Commissioner to a particular course of action or prevent him from pursuing the correct party under the Act.

The court found that the Commissioner was not estopped from assessing the new company. The initial assessment on the dissolved company's liquidator was invalid and therefore did not constitute a binding election. The court concluded that the Commissioner was entitled to assess the new company, as the transferee of the business, for the war-time profits tax payable by the former owner, particularly given the former owner's failure to secure payment of the tax. The appeal was dismissed.

Orders