Thomson v Federal Commissioner of Taxation

This case concerned an appeal by the executors of the estate of Alexander William Thomson, deceased, against an assessment of Federal estate duty. The Commissioner of Taxation had included two sums, £10,000 and £6,000, in the deceased's dutiable estate, which the executors contended were not part of the estate. These sums had been placed on fixed deposit with a bank in the joint names of the deceased and his son and daughter, respectively.

The primary legal issue before the court was whether these sums, deposited under specific arrangements, were deemed to be part of the deceased's estate for the purposes of the Estate Duty Assessment Act 1914-1942. Specifically, the court had to determine if the deposits constituted a "settlement" within the meaning of the Act, and if so, whether they fell within the provisions of section 8(4)(c) or 8(4)(e) of the Act, which deem certain property passing under settlements or retaining a life interest to be part of the deceased's estate.

The court reasoned that from the time of the initial deposits, a trust was created in respect of each sum. Despite the trust property comprising a series of successive choses in action through renewals and transfers to a matured deposit account, the court found there was not a succession of trusts, and the same trusts persisted. The deceased retained complete control over the funds during his lifetime, with the beneficial interest passing to his son and daughter only upon his death. This outcome brought the sums within section 8(4)(e) of the Act. Alternatively, the court held that if the son and daughter possessed a beneficial interest during the deceased's life subject to his power of revocation, the control retained by the deceased constituted an interest for life, thus bringing the sums within section 8(4)(c) of the Act. The court also affirmed that trusts and dispositions within a settlement did not require to be in writing to be captured by the Act.

The appeal was dismissed, and the assessment of estate duty was confirmed. The appellants were ordered to pay the respondent commissioner's costs of the appeal.