Federal Commissioner of Taxation v Dixon
86 CLR 540(1952) 10 ATD 82
[1953] ALR 17
[1952] HCA 65
(Judgment by: Webb J)
Federal Commissioner of Taxation
v Dixon
Judges:
Dixon CJ and Williams J
McTiernan J
Webb JFullagar J
Subject References:
Taxation and revenue
Income tax
Assessable income
Enlistment of employee in defence forces
Remuneration
Difference between war service pay and civil remuneration paid by employer
Liability to tax
Legislative References:
Income Tax Assessment Act 1936 No 27 - ss 6; 23(5); 23B; 25; 26(d); 26(e)
Defence Act 1903 No 108 - s 118A(3)
Judgment date: 11 December 1952
SYDNEY
Judgment by:
Webb J
WEBB J. As I view the evidence the moneys sought to be taxed were paid to the taxpayer because of, and as a reward for, his enlistment and for no other purpose. This fact remains, although the taxpayer when he enlisted was in the employ of the company that paid him the reward, and he qualified for the reward because he was its employee; and although the reward was conditional upon the military pay of the employee being less than his pay as the company's employee, and was limited to the amount of the difference. The commissioner in claiming that the reward is taxable overlooks the essential nature of the reward as one solely for enlistment and concentrates on the limitation of the reward to particular recipients, being employees of the company, and its quantification with regard to the difference in their military and civil pay. But the essential nature of the reward as one solely for enlistment remains, notwithstanding this limitation and quantification. It is true that the quantification made the reward the equivalent of the loss of pay as a result of enlistment; but on the other hand the amount of the reward bore no relation to length of service with the company: a soldier who had long been employed by the company but with short military service might receive a mere fraction of the reward paid to a soldier employed by the company for a brief period but with long military service.
The quality of the reward is not determined by the yardstick used to quantify it.
The purpose of the payment by the company, as I see it, was to encourage enlistments among its employees, but its motive may have been to induce them to return to their employment with the company after discharge from the forces; many would, no doubt, have enlisted in any event. However, the purpose of, and not the motive for, the payment is the test of its nature.
In my opinion the reward was not given or received "in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by" the taxpayer, and so does not come within s. 26 (e) of the Income Tax Assessment Act 1936-1943.
I would answer the question in the negative.