Federal Commissioner of Taxation v. Gordon
43 CLR 456(Judgment by: Isaacs CJ)
Federal Commissioner of Taxation v. Gordon
Court:
Judges:
Isaacs CJRich J
Starke J
Subject References:
Taxation and revenue
Income tax
Deduction
Expenditure for production of assessable income
Legislative References:
Income Tax Assessment Act 1922 (Cth) No 37 - ss 23(1)(a); ss 25(e)
Judgment date: 20 November 1929
SYDNEY
Judgment by:
Isaacs CJ
The following written judgments were delivered:
ISAACS C.J. This is an appeal to this Court in its appellate jurisdiction, under sub-s. 10 of s. 51A of the Income Tax Assessment Act 1922-1928, from the decision of my brother Dixon, who held that the sum of PD15 17s. 8d. paid by the respondent to the Graziers Association of New South Wales for the year ending 31st December 1926 was an allowable deduction from the respondent's assessable income for the relevant year. Apart from the prohibitory words in s. 25 (e), no doubt could exist that it is a proper deduction. By that paragraph, with the introductory words of the section, it is provided:"A deduction shall not, in any case, be made in respect of any of the following matters: ... (e) money not wholly ... laid out or expended for the production of assessable income." In my opinion the only purpose or intention legally imputable to the respondent in connection with outlay or expenditure of the sum mentioned is to pay it to the Association for utilization in accordance with its professed objects. Once paid to the Association it merges in its funds and ceases to be traceable or separate from the like subscription of other members.
The only test of whether it comes within the description contained in s. 25 (e) is that of the Association's objects. Those objects are set out in clause 4 in these terms: The objects of the Association are (a) to prevent strikes, (b) to maintain freedom of contract, (c) to effect the amicable settlement of disputes between members and their employees, (d) to secure to the members all the advantages of unity of action to protect them in all matters affecting their interests, (e) to undertake the engagement of labour required by members, (f) to act in conjunction with other unions or associations of a similar nature in any part of Australia, (g) to enable the Association to amalgamate or affiliate with and to appoint representatives to any employers' union or association in Australia, (h) to enter into any agreement with the employees of the Association which may seem to be for the mutual benefit of both the Association and such employees.
Apart from object (d), there could hardly arise any question that the Association was for the purpose of arranging and securing for its members' benefit the continued and uninterrupted progress of industrial relations on the most advantageous terms. That is conspicuously for the purpose of producing assessable income, for strikes and lock-outs stop everything. But (d) raises some difficulty. Its terms literally read are wide. They do not go beyond trade operations, but the question here is: Do they go beyond that class of trade operations which are confined to the "production of assessable income"? With some hesitation I have arrived at the conclusion that they do not. I think on the whole, that, on reading clause 4 in a business light, par. (d) is directed to unity of action with respect to all matters affecting members' interests in relation to their employees. The position of the paragraph aids that construction. It is true that clause 57 provides for the furtherance of political objects, but only by means of a "separate fund," and the "political object" provision, as I read and interpret it, is a separable adjunct to the ordinary objects of the Association, and, as its funds are to be additional and separate and as contribution to that fund is not a condition of membership of the Association, I disregard it. But within the "political objects" department can be placed at least many of the subjects dealt with at the conference of April 1926, and for the rest I do not think they should affect the strict legal effect of clause 4 as I have interpreted it. Broadly speaking certainly, and strictly speaking also, as I think, on the whole the subscription escapes the prohibition in s. 25 (e), and, as it undoubtedly falls within s. 23 (1) (a) and is indivisible, the respondent is entitled to the deduction and the judgment should be affirmed.