Trust Co of Australia v Commissioner of Stamp Duties

The dispute in *Trust Co of Australia v Commissioner of Stamp Duties* concerned the assessment of stamp duty on a transfer of shares. The taxpayer, Trust Co of Australia, sought to have the assessment set aside, arguing that the Commissioner of Stamp Duties had incorrectly valued the shares for the purpose of calculating the duty payable. The matter came before Gaudron and Gummow JJ of the High Court of Australia.

The central legal issue before the High Court was whether the Commissioner had erred in its valuation of the shares. Specifically, the court had to determine the correct method for valuing the shares at the time of the transfer, considering the relevant provisions of the Stamp Duties Act 1920 (NSW). This involved an examination of how to account for factors that might affect the market value of the shares, such as the existence of a controlling interest and any associated premium.

The High Court considered the principles of valuation applicable to shares for stamp duty purposes. Their Honours noted that the valuation should reflect the price that a willing purchaser would pay to a willing seller in the open market. In this context, the court analysed whether the Commissioner had given sufficient weight to the fact that the transfer involved a substantial block of shares, which might command a different price than individual shares traded on the open market. The court ultimately found that the Commissioner's valuation method was flawed, as it did not adequately account for the control premium inherent in the transfer of a significant shareholding.

The High Court allowed the appeal, setting aside the Commissioner's assessment and remitting the matter to the Commissioner for reassessment in accordance with the principles articulated by the court.