National Trustees Executors and Agency Co of Australasia Ltd v Federal Commissioner of Taxation

The National Trustees Executors and Agency Company of Australasia Limited and Abigail Chisholm, as administrators of the estate of Colin Joseph Chisholm, deceased, appealed to the High Court of Australia against an assessment of estate duty by the Federal Commissioner of Taxation. The dispute concerned the calculation of deductions allowable under section 8(7) of the Estate Duty Assessment Act 1914-1950, which provides for a deduction from Australian estate duty of duty lawfully paid in a place outside Australia.

The primary legal issue before the Full Court was the proper construction and application of section 8(7) of the Estate Duty Assessment Act 1914-1950. Specifically, the Court was required to determine how the quantum of the deduction was to be ascertained when an estate had assets situated in multiple overseas jurisdictions, and when some of those assets attracted duty in more than one foreign country. A further issue concerned whether certain investments in England, which were exempt from duty under English law, constituted part of the estate upon which duty was lawfully paid in England for the purposes of the deduction.

Dixon C.J. and Taylor J. (with whom Webb J. concurred, and Kitto J. dissented on one point) held that the quantum of the deduction under section 8(7) is ascertained by comparing the aggregate of all duties lawfully paid in places outside Australia with the duty payable under the Act in respect of the relevant parts of the estate, and taking the lesser of these two sums. The Court reasoned that the wording of the section, particularly the phrase "any part of the estate situate outside Australia," contemplated an aggregation of all foreign duties paid. Regarding the English investments, the Court unanimously held that as these investments were exempt from duty under English law, they did not constitute part of the estate upon which duty was lawfully paid in England, and therefore no deduction was allowable in respect of them.

The Court ordered that the appeal be allowed in part. The assessment of estate duty was to be recalculated in accordance with the Court's interpretation of section 8(7), and specifically excluding any deduction for the English investments.