Cameron v Federal Commissioner of Taxation

The case of *Cameron v Federal Commissioner of Taxation* concerned Allan Cumming Cameron's appeal to the High Court of Australia against an income tax assessment. The dispute centred on whether payments made by Cameron for shares in Mount Morgan Ltd., a mining company, constituted "calls on shares" deductible under section 78 (1) (d) of the *Income Tax Assessment Act 1936-1937*. The Commissioner had disallowed the deduction, arguing the payments were instalments of purchase price rather than calls.

The legal issues before the Full Court were whether the sums paid by the appellant in respect of shares in Mount Morgan Ltd. were deductible under section 78 (1) (d) of the *Income Tax Assessment Act 1936-1937*. Specifically, the court had to determine if these payments, described in the company's prospectus and application forms as "calls," were indeed calls on shares in a mining company carrying on mining operations in Australia for gold, or if they were merely instalments of the purchase price of the shares.

The Court held that the payments were deductible as calls on shares. The reasoning emphasised that the prospectus and application form explicitly stated the balance of the share price was to be paid by "calls." While the prospectus outlined fixed dates and amounts for these payments, this did not alter their character as calls. The directors of Mount Morgan Ltd. subsequently passed resolutions making these calls, and the appellant received notices of these calls. The Court found that the liability to pay arose from the appellant's membership in the company, and the directors' actions in formally making the calls were consistent with the company's articles of association and the terms of the prospectus. Therefore, the payments were correctly characterised as calls, entitling the appellant to the deduction under the relevant tax legislation. The question submitted to the Court was answered in the affirmative.