Commissioner of Taxation (NSW) v Premier Automatic Ticket Issuers Limited

This case concerned an appeal by the Commissioner of Taxation (New South Wales) to the High Court of Australia against a decision of the Supreme Court of New South Wales. The dispute centred on whether a sum of £10,000 received by the taxpayer, Premier Automatic Ticket Issuers Limited, was income derived from a source within New South Wales for the purposes of the *Income Tax (Management) Act 1928* (NSW). The taxpayer, a New South Wales incorporated company with its sole place of business in Sydney, had acquired patent rights for a ticket-issuing machine.

The legal issue before the High Court was whether the £10,000, which represented ten per cent of the proceeds from the sale of British patent rights by Automatic Totalisators Ltd. to an English company, constituted income derived directly or indirectly from a source within New South Wales. The taxpayer admitted the sum was income but disputed its source, arguing it was not derived from New South Wales, or at best, only partly derived from a New South Wales source. The Supreme Court had answered this question in the negative, finding that the income was not derived from a New South Wales source.

The High Court, in allowing the appeal, reasoned that the taxpayer's income receipt of £10,000 was a result of its business activities conducted exclusively within New South Wales. These activities included the pursuit of its business of exploiting patents and entering into the crucial 1922 agreement in Sydney. While the ultimate sale of the British patent rights occurred in England, the Court found that the taxpayer's participation in the transactions that generated the income was confined to New South Wales. Therefore, the source of the income was the business conducted by the taxpayer within the State.

The High Court reversed the decision of the Supreme Court of New South Wales. It ordered that the sum of £10,000 was income derived directly and wholly from a source in New South Wales, and the Commissioner was awarded costs in both the High Court and the Supreme Court.