New HCA Judgments: Aid/Watch and Henschke

Two new judgments handed down in the High Court.

Aid/Watch Incorporated v Commissioner of Taxation [2010] HCA 42

The High Court has allowed this appeal against a decision of the Full Court of the Federal Court of Australia.

For detail, see Alex's post on the case here. This was a test case concerning whether certain benevolent societies who are involved in political action for law reform can have tax exemptions as 'charitable institutions'. The Court found that involvement in the political process to foster legislative change is not necessarily inconsistent with an institution coming within the common law definition of charity.

Commissioner of State Taxation v Cyril Henschke Pty Ltd [2010] HCA 43

The High Court has allowed this appeal against a decision of the Full Court of the Supreme Court of South Australia.

Doris Henschke was a partner of Henschke Wines. when she decided to retire, she signed a retirement deed with the partners and the value of Doris' share in the business was paid out to her. The Commissioner of Taxation imposed stamp duty on the deed, arguing that it reflected a "conveyance on sale" within the meaning of s 60 of the Stamp Duties Act (SA). The Full Court said that the retirement payment did not effect any 'transfer' of Doris' interest, rather that interest simply ceased by virtue of the 'satisfaction' of her chose in action against the partnership.The High Court disagreed. Their Honours concluded that because the retirement of a partner necessarily causes a dissolution of the partnership and a creation of a new partnership, without the retiring partner, there is accordingly a transfer of assets to the new partnership. Consequently there was a 'conveyance' and stamp duty was payable.