McDonald v Deputy Federal Commissioner of Land Tax (NSW)

John William Fisher appealed to the High Court against an assessment for land tax in New South Wales for the years 1910 to 1913. The dispute concerned the unimproved value of his station property, "Merrimba," which comprised conditional purchases and conditional leases. Fisher returned the unimproved value at £1 per acre, while the Deputy Federal Commissioner of Land Tax assessed it at £1 3s. per acre. Fisher also contended that he was not liable for land tax in respect of his conditional leases.

The legal issues before the Court were twofold: first, whether a holder of a conditional lease granted before the commencement of the Land Tax Assessment Act 1910-1911 was liable for land tax under that Act; and second, whether the unimproved value of the pastoral property had been correctly assessed. The Court was also required to consider whether the primary judge had erred in ordering the appellant to pay the costs of the appeal.

The Court, by a majority (Isaacs and Gavan Duffy JJ., with Powers J. dissenting), held that a lessee under the laws of New South Wales of Crown land with a right of purchase, granted before the commencement of the Land Tax Assessment Act 1910-1911, was liable to taxation in respect of such land under section 28(2) of the Act. The majority distinguished the case of *Osborne v. The Commonwealth* and found that the wording of sections 27, 28, and 29 of the Act indicated that conditional leases with a right of purchase were not excluded from taxation. Regarding the valuation, the Court applied the principles from *Morrison v. Federal Commissioner of Land Tax*, stating that the practical method for ascertaining the unimproved value of an improved pastoral property was to determine its fair carrying capacity, considering existing improvements. The Court found that the evidence justified the primary judge's reduction of the assessment from £1 3s. to £1 2s. 6d. per acre.

The Court dismissed the appeal. It affirmed the primary judge's finding on the unimproved value of the land, concluding that the evidence supported the assessment. Furthermore, the Court held that the primary judge had the jurisdiction to order the appellant to pay the costs of the appeal, as the respondent had substantially succeeded in the proceedings.