Amalgamated Zinc (De Bavay's) Ltd v Federal Commissioner of Taxation
(1935) 54 CLR 295(1935) 9 ALJR 342
(1936) ALR 67
(1935) 3 ATD 288
(Judgment by: RICH AND EVATT JJ)
AMALGAMATED ZINC (DE BAVAY'S) LTD v COMMISSIONER
Court:
Judges:
Latham CJ
Rich J
Starke J
Dixon J
Evatt J
McTiernan J
Subject References:
Taxation and revenue
Income tax
Deductions
Compulsory contributions to fund
Continuing obligation to contribute
Outgoings
Loss made
Legislative References:
Income Tax Assessment Act 1922 (Cth) No 37 - ss 23(1)(a); ss 26
Judgment date: 19 December 1935
MELBOURNE
Judgment by:
RICH AND EVATT JJ
RICH AND EVATT JJ. The appellant company was incorporated in 1909 and thereafter, until it discontinued its business, carried on the business of treating tailings and ore and producing zinc concentrates and other metalliferous substances at Broken Hill. New South Wales. On and from 31st December 1920 the appellant as a mine-owner became and is still liable under the Workmen's Compensation (Broken Hill) Act 1920 to make annual contributions in respect of compensation payable to such employees of mine-owners at Broken Hill as have contracted pneumoconiosis or tuberculosis or to the dependants of deceased employees. The fund established by the Act is maintained as to one-half by contributions from the mine owners and as to the remaining half by contributions from the Government (Schedule, Part III.. clauses 12-18). During the two relevant years the appellant, pursuant to the Workmen's Compensation (Broken Hill) Act 1920, paid as its contribution to the fund the respective sums of PD1,207 0s. 2d. and PD1,175 11s. 6d. and now claims to deduct each of these sums from its assessable income for the years ending 30th June 1932 and 30th June 1933 respectively as being a loss made in each such year by the appellant in carrying on the business of a producer and seller of zinc concentrates in Australia. In 1924 the appellant discontinued the production of zinc concentrates and by the year 1929 had disposed of its plant and machinery. Between the year 1924 and the year 1929 the appellant sold the whole of its stock on hand closed its office at Broken Hill. During the relevant years ending 30th June 1932 and 30th June 1933 the whole of the appellant's assessable income was derived from certain investments in shares. Government bonds and money on deposit or at call. In addition the appellant received during these years two trifling sums in respect of its interest in a hall established by the Broken Hill mine-owners. The question for determination is whether, upon the facts stated in the case, the appellant company is entitled to deduct either and which of the sums mentioned from its assessable income in ascertaining its taxable income for the relevant year.
In our opinion the contribution or levy paid under the Workmen's Compensation (Broken Hill) Act 1920 cannot on any reasonable construction be said to be a loss or outgoing "incurred in gaining or producing the assessable income" when in fact the mine-owner at the periods in question was not carrying on a business founded on the ownership of the mine. We also think that s. 26 of the Income Tax Assessment Act, which was called in aid, has no bearing on this case. The question submitted should be answered in the negative.