National Trustees Executors and Agency Co of Australia Ltd v Federal Commissioner of Taxation (Chisholm's Case) (No 1)
(1953) 89 CLR 17727 ALJ 569
[1954] ALR 85
(Judgment by: Kitto J)
Between: National Trustees Executors and Agency Co of Australia Ltd
And: Federal Commissioner of Taxation
Judges:
Dixon CJ
Webb J
Kitto JTaylor J
Subject References:
Estate Duty (Cth)
Judgment date: 12 December 1953
Judgment by:
Kitto J
By virtue of sub-s. (3) of s. 8 of the Estate Duty Assessment Act 1914-1950 for the purposes of the Act the estate of a deceased person comprises his real and personal property in Australia, and, in addition, his personal property situate out of Australia if he was domiciled in Australia at the time of his death. Moreover, by virtue of sub-s. (4), property which was not his at his death is deemed, for the purposes of the Act, to be part of his estate if it falls within certain descriptions; and this applies to personal property within any of those descriptions which was situate out of Australia at the date of death, provided that the deceased was then domiciled in Australia: Trustees Executors & Agency Co. Ltd. v. Federal Commissioner of Taxation (1933) 49 CLR 220 . (at p193)
It is, clearly enough, by way of corollary to the inclusion of ex-Australian property to this extent in the dutiable estate, that sub-s. (7) of the same section is enacted. This provision allows a deduction from the total duty to which the estate is liable under the Act, that is to say from the duty which s. 8 (1) requires shall be levied and paid upon the value, as assessed under the Act, of the estate of the deceased person, when any duty is lawfully paid in any place outside Australia. The deduction is to be the lesser of two sums. One is the amount of duty paid in the place outside Australia in respect of any part of the estate situate outside Australia and the other is the duty which is payable under the Act in respect of that part of the estate. The two sums have one characteristic in common; the payment in each case must be "in respect of" a part of the estate situate outside Australia. (at p193)
It is in this that the key to the construction of the section appears to me to lie. The meaning of "in respect of" in this context has already been decided. It was considered by this Court in Perpetual Trustee Co. (Ltd.) v. Federal Commissioner of Taxation (1938) 59 CLR 611 , in relation to estate duty under the Act, and the decision was that the description of duty payable "in respect of" the ex-Australian assets applies to that proportion of the total duty to which the estate is liable which the value of the assets outside Australia, after the deduction of a ratable part of all the debts, bears to the net value of the whole estate. By an analogous apportionment one may ascertain what part of the duty paid in another country upon such property as is treated in that other country as the estate of the deceased person dutiable there, satisfies the description in sub-s. (7) of duty paid in that other country "in respect of" any of that property which is a part of the estate dutiable in Australia. (at p194)
Now, when sub-s. (7) speaks of "any part of the estate situate outside Australia", it cannot mean the whole of the personalty situate outside Australia which is included in the dutiable estate by sub-ss. (3) and (4), considered as one mass; for, if duty were paid in one foreign country upon some such personalty and in another foreign country upon other such personalty, it would simply be a misuse of language to describe the combined total of these foreign duties as duty paid "in respect of" all the foreign personalty. the truth would be that no duty would have been paid "in respect of" the foreign personalty as a whole, but each amount of foreign duty would be paid "in respect of" the particular lot of foreign personalty upon which it had been charged. (at p194)
Sub-section (7) thus appears to me, according to the natural meaning of its terms, to be intended to apply whenever "any part of the estate situate outside Australia" has attracted ex-Australian duty so that that duty may be said to have been paid in respect of that part. So understood, the sub-section operates to prevent the double taxation which sub-ss. (3) and (4) would otherwise produce in some cases; for as often as either of those sub-sections brings into the dutiable estate an asset situate abroad, and thereby causes Australian estate duty to become payable in respect of that asset, so often sub-s. (7) allows a deduction of that duty or of any foreign duty paid in respect of the same asset, whichever is the less. (at p194)
If this is the operation of the sub-section, there is no difficulty in applying s. 23 (b) of the Acts Interpretation Act 1901-1950 so as to read the words "where any duty is lawfully paid in any place outside Australia" as including the case where any duties are lawfully paid in any places outside Australia. If, for example, shares forming part of the estate under the Act are situate in Canada, and duty is charged in respect of them in Canada and again in the United States, the aggregate of these two duties is the amount of duty paid in places outside Australia in respect of those shares; and, as I understand the sub-section, either that amount or the duty payable under the Act in respect of the same shares, whichever is the lesser, is to be deducted from the total duty payable under the Act. Likewise if in an estate there are government bonds situate in England and brought to duty both in England and in New Zealand, sub-s. (7) gives a right to deduct the duty paid in the two places in respect of the bonds, or the duty payable here in respect of them, whichever is the less. I cannot see any justification for so construing the sub-section as to produce the curious result (as I would venture to regard it) that, if the shares in Canada and the government bonds in England happen to form parts of the same deceased person's estate, there are not these two rights of deduction, but, for no particular reason that I can perceive, one right of deduction, to be worked out by lumping the shares and the bonds together and treating the Canadian and the United States duties paid in respect of the shares, and the English and New Zealand duties paid in respect of the bonds, as if the combined total had been paid in respect of both the shares and the bonds. (at p195)
I would answer Question 1: (a) No, (b) Yes, (c) No. And I would answer Yes to Question 2 (a). (at p195)
I agree that Question 3 should be answered in the manner proposed in the judgment which my brethren have delivered. (at p195)