Commissioner of State Taxation v Cyril Henschke Pty Ltd & Ors

The Commissioner of State Taxation (the Commissioner) appealed to the High Court of Australia against a decision of the Supreme Court of South Australia concerning the assessment of stamp duty on a transfer of shares. The dispute involved Cyril Henschke Pty Ltd and other shareholders (the taxpayers) who had acquired shares in a company that owned land. The Commissioner had assessed stamp duty on the basis that the transaction constituted a dutiable transaction under the *Stamp Duties Act 1923* (SA) (the Act), specifically as a transfer of dutiable property. The taxpayers argued that the transaction was not dutiable, or alternatively, that the duty should be assessed on a lesser value.

The High Court was required to determine whether the transfer of shares in a company, where the primary asset of that company was land, constituted a dutiable transaction under the Act. Specifically, the Court had to consider whether the shares themselves were dutiable property, or if the transaction should be characterised as a transfer of the underlying land. A further issue was the proper valuation of the shares for stamp duty purposes if the transaction was found to be dutiable.

The Court reasoned that the Act defined dutiable property to include shares in a company. The transfer of shares, irrespective of the company's underlying assets, was therefore a dutiable transaction. The Court rejected the taxpayers' argument that the transaction should be viewed as a transfer of land, holding that a transfer of shares in a company that owns land is distinct from a transfer of the land itself. The legal principle applied was that the separate legal personality of a company means that its shareholders own shares, not the company's assets directly. The Court also addressed the valuation of the shares, confirming that the value of the shares for duty purposes should reflect their market value, which would indirectly take into account the value of the company's assets.

The High Court allowed the Commissioner's appeal, finding that the transfer of shares was a dutiable transaction and remitting the matter to the Supreme Court of South Australia for determination of the amount of duty payable.