Brambles Holdings Limited v. Federal Commissioner of Taxation.

Judges:
Barwick CJ
Gibbs J
Mason J
Jacobs J
Murphy J

Court:
Full High Court

Judgment date: Judgment handed down 2 November 1977.

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Barwick C.J.: My brother Jacobs, in the reasons for judgment which he has prepared in this appeal and which he has afforded me the opportunity to read and consider, has set out the relevant facts and circumstances and the statutory provisions with which the Court is presently concerned. I agree with my brother's conclusion that the appeal be allowed: and generally with the reasons he gives for arriving at it. For myself, I would wish only to add a brief observation.

In the administration of taxation laws it is, in my opinion, fundamental that the citizen is entitled to take advantage of the provisions of the statute, even if the result is not something contemplated by the draftsman. If that result is not acceptable to the Parliament, no doubt Parliament will amend the statute, an exercise which occurs with frequency and seemingly without difficulty. Provisions such as sec. 16T of the Pay-roll Tax Assessment Act, 1941 as amended (Cth) and sec. 260 of the Income Tax Assessment Act, 1936 as amended (Cth) ought not to be construed as denying such a right to the citizen, even where he deliberately chooses the form of a transaction into which he contemplates entering so as to attract the benefit of the statute, the transaction of course not being a sham or pretence. Whilst these two

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ATC 4483

sections may not be in identical terms or operate in an identical fashion, they should be treated alike in this respect.

Bearing in mind this fundamental principle, illustrated as it is in cases such as
I.R. Commrs. v. Duke of Westminster (1936) A.C. 1 ;
W.P. Keighery Pty. Ltd. v. F.C. of T. 100 C.L.R. 66 ;
F.C. of T. v. Casuarina Pty. Limited 71 ATC 4068 , 127 C.L.R. 62 ;
Cecil Bros Pty. Ltd. v. F.C. of T. 111 C.L.R. 430 ; and
Mullens & Ors. v. F.C. of T. 76 ATC 4288 , sec. 16T upon its proper construction, in my opinion, refers to what I might call substitute arrangements, that is to say, arrangements which alter or supplant some existing arrangement upon which the taxing statute can or already has operated. It is not correct, in my opinion, to construe the section as applying to what I might call an initial transaction. The use of the expression ``would otherwise have been the case'' in sec. 16T can only be satisfied, in my opinion, by some transaction of the parties on which the relevant Division of the Act operates. It cannot be satisfied by reference to some supposed transaction into which the parties have not entered which, had they done so, would have produced an economic result akin, if not identical, to the result of the transaction into which they did in fact enter.

Applying this construction to the instant circumstances it is, in my opinion, clear that there is no arrangement between the parties on which sec. 16T could operate. All that can properly be said is that, with a motive to obtain a financial advantage through the operation of the Act, the appellant entered into a genuine, as distinct from a sham, transaction which, by its terms and structure, attracted that financial advantage.

I agree that the appeal be allowed.