Jones and Steains v Federal Commissioner of Taxation (No 2)

This case concerned a dispute between Jones and Steains (the appellants) and the Federal Commissioner of Taxation (the respondent) regarding the assessment of war-time profits tax. The core of the disagreement revolved around the calculation of the "profits standard" to be applied as a deduction from the business's profits during the relevant accounting period.

The legal issues before the court were whether the phrase "pre-war standard of profits" was identical to the phrase "profits standard" as used in the *War-time Profits Tax Assessment Act 1917-1918*, and consequently, whether a minimum sum stipulated for the "pre-war standard of profits" under section 16(3) of the Act was applicable to the calculation of the "profits standard" under section 12(1)(b).

Isaacs J. held that the two phrases were not identical. He reasoned that the minimum sum provision in section 16(3) specifically referred to the "pre-war standard of profits," which served a different function than the "profits standard" used for deductions under section 12(1)(b). The "profits standard" in section 12(1)(b) was intended to address differences in profit-making capacity between pre-war and accounting periods, and its calculation was not subject to the minimum stipulated for the "pre-war standard of profits." Therefore, the actual profits standard of £372, proportionate to the pre-war period, was to be applied.