Mount Morgan Gold Mining Company Limited v Commissioner of Income Tax (Qld)

The appeal concerned the Mount Morgan Gold Mining Company Limited (the appellant) and the Commissioner of Income Tax (Qld) (the respondent). The dispute centred on whether a sum of £142,111 19s. 1d., representing the appellant's share of profits distributed by the Gold Producers' Association, was subject to income tax in Queensland. The matter was heard by the High Court of Australia on appeal from the Supreme Court of Queensland.

The legal issues before the High Court were whether the sum in question constituted "income arising or accruing from a business carried on in Queensland" or "earnings derived from Queensland" under the Income Tax Acts 1902-1920 (Qld). Specifically, the court had to determine if the profits generated from the sale of gold, which was mined in Queensland but then refined in New South Wales and subsequently sold through an association operating largely outside Queensland, were taxable in Queensland. This involved considering whether the transactions of the Gold Producers' Association should be attributed to the appellant's Queensland business operations or if the profits were derived from business conducted elsewhere.

A majority of the High Court, comprising Higgins, Rich, and Starke JJ., held that the sum of £142,111 19s. 1d. was, at least in part, taxable income arising or accruing from a business carried on in Queensland. They reasoned that if the entire sum was not taxable, it should be apportioned between Queensland and other jurisdictions to determine the portion attributable to the appellant's Queensland operations. Conversely, Knox C.J. and Gavan Duffy J. dissented, finding that no part of the sum was liable to income tax, as they concluded the profits were made wholly outside Queensland and therefore not subject to tax under section 7(8) of the Acts, which limited the tax on Queensland companies carrying on business outside the state to profits made within Queensland. The decision of the Supreme Court of Queensland was reversed.