Commissioner of Stamps (WA) v West Australian Trustee Executor and Agency Company Limited

The Commissioner of Stamps (WA) appealed to the High Court of Australia from a decision of the Supreme Court of Western Australia. The dispute concerned whether a sum of income tax, assessed against the estate of a deceased taxpayer, should be deducted as a "debt due by the deceased" for the purposes of calculating probate duty under the Administration Act 1903 (WA). The deceased, Michael Corbett, died on 14 November 1923, after the financial year for which the tax was assessed had commenced and after he had lodged an income tax return, but before the specific taxing Act imposing the liability for that financial year was passed.

The legal issues before the High Court were whether the income tax assessed against the executor of the deceased's estate constituted a "debt due by the deceased" within the meaning of section 88 of the Administration Act 1903 (WA), and consequently, whether it was a deductible debt for the calculation of probate duty. This involved determining when the liability for the income tax arose and whether it could be considered a pre-existing obligation of the deceased, despite the taxing Act being enacted after his death.

A majority of the High Court, comprising Knox C.J. and Starke J., held that the income tax was not a debt due by the deceased. Their reasoning was that the Land Tax and Income Tax Act 1923 (WA), which imposed the tax for the financial year 1923-1924, was assented to after the testator's death. While the Land and Income Tax Assessment Act 1907 (WA) provided machinery for assessment and recovery, and section 62b allowed for the Commissioner to pursue the executor, the obligation to pay the tax itself did not arise until the taxing Act was passed. Therefore, at the time of the testator's death, there was no debt due by him in respect of that tax. Higgins J. dissented, finding that the testator was a "taxpayer" by virtue of having lodged a return, and that the subsequent taxing Act imposed a debt on him which was deductible.

The High Court allowed the appeal, reversing the decision of the Supreme Court of Western Australia. The summons was dismissed, and the Commissioner of Stamps was awarded costs of the appeal to the High Court.