Parker v Federal Commissioner of Taxation

90 CLR 489
1953 - 1201A - HCA

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(Judgment by: Dixon CJ)

Between: Parker
And: Federal Commissioner of Taxation

Court:

Judges:
Dixon CJWebb J
Taylor J

Subject References:
Taxation and revenue
Income tax
Exemption
Mining

Legislative References:
Income Tax Assessment Act 1936 - s 23

Hearing date: PERTH 21 October 1953; 22 October 1953
Judgment date: 1 December 1953

SYDNEY

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Judgment by:
Dixon CJ

This appeal depends on the scope of the exemption from income tax conferred by s. 23 (o) of the Income Tax Assessment Act 1936-1943. The provision has been amended since the year of assessment. The income for which the taxpayer, who is the appellant, claims the benefit of the exemption was derived during the year ended 30th June 1943 and was included in his assessment for the financial year ended 30th June 1944. The notice of objection claimed that the assessable income should be reduced by PD1,285 as income derived by the appellant from the working of a mining property in Australia principally for the purpose of obtaining gold. The objection pursues the language of the exemption given by s. 23 (o) the terms of which were at that time as follows:"(o) the income derived by a person from the working of a mining property in Australia or in the Territory of New Guinea principally for the purpose of obtaining gold, or gold and copper, provided that in this case the value of the output of gold is not less than forty per cent of the total value of the output of the mine".

The sum of PD1,285 is not correctly described as assessable income, for in arriving at the figure deductions have been allowed. But for the purposes of the appeal it is enough to say that the assessable income in dispute was for the most part derived from the recovery of gold from tailings by cyanide treatment and for the rest consisted of the reward earned by crushing ore from other mines. Dwyer C.J., from whose decision this appeal comes, held that this income was not derived from the working of a mining property. Certain income considered to be included or reflected in the amount of PD1,285 from the crushing of ore he ordered to be deleted. Otherwise his Honour's order dismissed the appellant's appeal from the commissioner's assessment.

It appears that the appellant was the holder of a gold-mining lease and, for the surface of the same block or area, a machinery area lease. There was a crushing plant upon the area. It was probably established primarily for the crushing of ore won from the mine comprised in the area. But at the time in question the quantity so won was small and the plant crushed ore from other mines including two in which the appellant had a share or interest. After the extraction of gold the residues were run off in the form of slimes or tailings. Under the terms or conditions upon which the appellant crushed the ore and extracted the gold he obtained the tailings. That is he purchased them. The dumps of tailings upon the surface of the machinery area were therefore his property. It is from the treatment by cyanide of these dumps that the appellant derived the income for which he claims, and the commissioner denies, exemption.

The question is whether winning gold from dumps of tailings, situated in the manner stated, by treating them by a cyanide process, falls within the description "working a mining property principally for the purpose of obtaining gold". Dwyer C.J. held that it did not because the phrase referred to the obtaining of gold-bearing material from a mine, by excavation or something of that nature. For that reason income earned, whether in the form of an allowance of gold or a monetary charge, as a reward for crushing ore brought from other mines and income derived from the treatment of the dumps of tailings could not be described as derived from the working of mining property.

The appellant contends that a wider application should be given to the language of s. 23 (o). The words "mining property" are not restricted, he says, to mines in a primary or limited sense and no particular significance should be attached to the word working. He urged that the dumps were upon the surface of the mining lease and within the boundaries of the machinery area. So was the crushing plant. To treat the dumps or to crush ore was to work the mining property. The treatment of tailings, so the appellant said, was properly described as "mining operations", as had been held in Federal Commissioner of Taxation v Henderson. ^[F1] There was no distinction intended by the Act in its use of this phrase and in the use of the expression "the working of a mining property". Further, in State legislation the word "mine" was employed with the most extended meaning under various statutory definitions. It included any land used for mining purposes or where a mining operation was carried on.

No doubt these accumulated considerations mount up and give the appellant's argument a persuasive force. But the words of the exemption do not seem to me to be really capable of bearing the strain it places upon them.

The word "working" has, I think, a definite meaning in its application to "mining property". It describes the working of the thing itself-not the revolution of the machinery upon it nor the chemical treatment of residues brought upon it. We are not dealing with a case where from the raising of the ore to the extraction by every available means of the maximum gold content a series of processes is pursued in the working of the mining property in order to win the gold from the soil. Here the tailings are accumulated as a residual by-product substantially from the ore from other mines going through the crushing plant. They are acquired in effect by purchase, except as to the small part representing ore from the mine beneath. They are foreign to the "mining property" though resting upon it. The machinery area as such is not the "mining property" that is "worked". No doubt some of the reasoning in Henderson's Case ^[F2] may be appropriated to the use of the appellant to assist his argument. But it cannot be done without distortion of the reasoning. For the expression "mining operations" is not the same as "the working of a mining property". The former is plainly wider and the latter is directed to a different point. Mining operations means operations pertaining to mining and operations is a very large expression. The phrase "the working of a mining property" looks to the exploitation of a mining lease or other form of interest in the soil. The argument from the definitions employed in State statutes overlooks the consideration that without a statutory definition the words would not bear the extended meaning and that draftsmen frame definitions for their own convenience without regard either to the natural or the possible meanings of the words defined.

The various provisions of the Income Tax Assessment Act 1936-1943 relating to mining were introduced on different occasions and do not pursue a policy worked out with precision. They must be construed as they are expressed. The appellant must take the exemption made by s. 23 (o) as he finds it and it is insufficient for his purpose. The appeal should be dismissed.