Thurn v Federal Commissioner of Taxation
(1965) 112 CLR 43239 ALJR 100
(Decision by: Menzies J.)
THURN
v FEDERAL COMMISSIONER OF TAXATION
Judges:
Kitto
Taylor
Menzies JJ.
Judgment date: 30 June 1965
Decision by:
Menzies J.
The Estate Duty Assessment Act requires that so much of moneys payable under a policy of assurance upon the life of a deceased person as bears to the whole of the policy moneys the same proportion as so much of the premiums paid by the deceased bears to the total premiums paid, shall, if such moneys are payable to any of a specified group including his widow, be deemed to be part of his estate for the purposes of the Act (s. 8 (4) (f)), notwithstanding that the policy moneys are not payable to the deceased's personal representatives so as to constitute part of his actual estate.
The Commissioner claims that by virtue of the foregoing provision a sum of 6,816 pounds, part of 11,928 pounds payable by the Australian Mutual Provident Society to the widow of F. M. Thurn deceased upon his death, is to be deemed part of the estate of the deceased.
In December 1954 F. M. Thurn took out with the Society a policy upon his own life for 10,000 pounds. He paid four annual premiums of 615 pounds- in all, 2,460 pounds. In February 1959 he assigned the policy to his wife in consideration of the payment of 2,460 pounds. The assignment was completed in accordance with the provisions of the Commonwealth Life Insurance Act. Thereafter the wife paid three premiums totalling 1,845 pounds. On 10th July 1961 F. M. Thurn died, and the sum then payable under the policy (viz. 11,928 pounds) was paid by the Society to his widow. The 6,816 pounds which the Commissioner claims was correctly included in the estate of the deceased for the purposes of the assessment of estate duty, is four-sevenths of 11,928 pounds.
The assessment was correct if, in the circumstances stated, the policy moneys in question were payable to the widow under a policy of assurance on the life of the deceased.
When the policy in question was taken out, the policy moneys were payable to the deceased's executors, administrators or assigns. Nothing was payable under the policy to his widow. So long as this continued to be so, the deceased himself paid the premiums. When the policy was assigned to the wife in accordance with the provisions of the Commonwealth Life Insurance Act, the transferee obtained all the powers and became subject to all the liabilities of the transferor under the policy and became entitled to sue in her own name on the policy (s. 87). Thereafter the wife herself paid all the premiums. Once, however, there was a duly registered assignment, it seems to me there was a policy that would, upon the death of the assured, fall within the terms of the section - that is, one on the life of F. M. Thurn under which money was payable to his widow upon his death. The policy could, however, before the death of the assured, cease to be such a policy - for example, if the wife, during the life of the assured, were to have assigned it to a person not falling within the class enumerated in s. 8 (4) (f) of the Estate Duty Assessment Act. When the deceased died, however - and this seems to me to be the material date - the terms of s. 8 (4) (f) were literally fulfilled, for money was payable to his widow under a policy of assurance upon his life where four of the seven premiums had been paid by him. It does not seem to me to matter that the policy moneys became payable to the widow under the policy by reason of the operation of the Life Insurance Act which gave her, inter alia, the right to sue in her own name on the policy. It matters not, for the purposes of s. 8 (4) (f), how the policy moneys became payable to the widow under the policy. It is sufficient that they had become beneficially payable to her under the policy.
Furthermore, I do not think that the operation of the paragraph is restricted to cases where the policy moneys become payable to a person because he or she falls within a particular description to be found in the policy; moneys payable to persons named who are, for instance, children are within the ambit of the provision notwithstanding the beneficiaries are not described as children in the policy. In my judgment, par. (f) applies whenever it happens in fact that the moneys are payable under the policy to, or in trust for, any person who, at the date of death of the policy holder, falls within the description to be found in the paragraph - not within a description to be found in the policy.
I would therefore answer the question in the case stated as follows: Yes - 6,816 pounds.