Federal Commissioner of Taxation v W Angliss and Company Pty Ltd

The Federal Commissioner of Taxation appealed to the High Court of Australia against a decision of the Supreme Court of Victoria concerning the assessment of war-time profits tax for the years ending 30 June 1918 and 1919 for W. Angliss and Company Pty Ltd. The dispute centred on whether profits derived from the sale of goods exported from Australia to England were taxable in Australia. The Supreme Court had ruled that only profits from the sale of tallow manufactured by the company in Australia were taxable, excluding profits from other exported goods.

The legal issues before the High Court were whether profits made from the sale of preserved meats and tallow, which were produced or purchased in Australia but sold in England under contracts made and performed there, constituted profits arising from sources within Australia for the purposes of the War-time Profits Tax Assessment Act 1917-1918. Specifically, the court had to determine how to ascertain the actual profits arising from sources within Australia when a business involved operations both within and outside the country, particularly when goods had no saleable value in Australia but were profitable upon resale abroad.

A majority of the High Court, comprising Rich, Dixon, and McTiernan JJ., held that, in assessing war-time profits tax, no part of the moneys obtained from the sale outside Australia of preserved meats or tallow produced by the company, which exceeded their value in Australia before exportation, should be taken into account. Furthermore, profits from the resale outside Australia of tallow bought in Australia and not produced by the company were also to be excluded. The majority reasoned that the profits from preserved meats and offal arose from sources outside Australia because these goods had no saleable value in Australia beyond their cost of production, and their profitability was entirely dependent on the overseas market and sales operations. For tallow bought in Australia, the profit was considered to arise from the purchase and resale operations conducted abroad.

The appeals were allowed in part, and the case was remitted to the Supreme Court of Victoria for rehearing. The High Court varied the orders of the Supreme Court, directing that the Commissioner should reassess the company's tax liability in accordance with the principles that profits from the sale of preserved meats and offal arose from sources outside Australia, and that profits from tallow bought in Australia and resold abroad were also to be excluded from Australian taxation.