Case: Cadbury-Fry-Pascall v Commissioner of Taxation [1944] HCA 31 ; (1944) 70 CLR 362
Outcome: discussed
In view of the respondent's submissions, it is necessary to consider the effect of s 4(1). By the operation of s 4(1), the Agreements Act incorporates the Assessment Act subject to s 4(2). However, each Act retains its own identity and the imposition of the relevant tax is still imposed by and at the rates declared by the Income Tax (Dividends, Interest and Royalties Withholding Tax) Act 1974 (Cth) and the Income Tax Rates Act 1986 (Cth) by reference to the Assessment Act. The incorporation has the consequence, as a matter of a drafting technique, of incorporating the text of the Assessment Act into the Agreements Act. As Lockhart J said in Amalgamated Television Services Pty Ltd v Australian Broadcasting Tribunal (1984) 1 FCR 409 at 413: It is not uncommon to find in an Act a provision that an earlier Act is incorporated and shall be read as one with the later Act. The effect of such a provision is to transpose the earlier into the later Act or to write every provision of the earlier Act into the later Act as if they had been actually printed into it. It is a rule of construction of statutes; but it cannot be used in effect to amend the provisions of the earlier Act which is to be read as one with the later Act. Sometimes an Act provides that it is incorporated and shall be read as one with an earlier Act. The effect is the same namely, to transpose the later into the earlier Act. See generally the Canada Southern Railway Co. v The International Bridge Co (1883) 8 AC 723 at 727, per Lord Selborne; Osborne v The Commonwealth [1911] HCA 19 ; (1911) 12 CLR 321 at 342-343, per Barton J Perpetual Trustee Co (Ltd) v Wittscheibe (1940) 40 SR (NSW) 501 at 510, per Jordan CJ; Cadbury-Fry-Pascall Pty Ltd v Federal Commissioner of Taxation [1944] HCA 31 ; (1944) 70 CLR 362 at 388, per Williams J, and the cases there cited; Tasman Timber Ltd v Minister for Industry and Commerce (1983) 46 ALR 149. 42 Undoubtedly, the drafting technique of incorporation by reference may require necessary adjustments or modifications to be made in the incorporated provisions. In Cadbury-Fry-Pascall Pty Ltd v Commissioner of Taxation [1944] HCA 31 ; (1944) 70 CLR 362 at 388 Williams J said: The tax is imposed by the Tax Act, which prescribes the rates of taxation. This Act incorporates the Assessment Act and provides that the two Acts are to be read together. My own view, to which I adhere, as to the effect of such a section, is stated in Perpetual Trustee Co (Ltd) v Wittscheibe as follows: "In re Woods' Estate; Ex parte Her Majesty's Commissioners of Works &amp; Buildings the Court of Appeal held that if a subsequent Act bring into itself by reference some of the clauses of a former Act, the legal effect of that is to write those sections into the new Act just as if they had been actually printed into it. It has also been held that where two Acts are to be read together the Court must construe every part of each of them as if it had been contained in one Act, unless there is some manifest discrepancy making it necessary to hold that the latter Act has to some extent modified something found in the earlier Act: see Hart v Hudson Bros Ltd ; Phillips v Parnaby , and Williams v Tooth &amp; Co Ltd ." (Footnotes omitted). See also McGillivray v Piper (2000) 182 ALR 282. 44 However, be that as it may, because s 4(1) is made expressly subject to subs (2), then the real issue in this case is not so much the application of the principles expressed by Williams J in Cadbury 70 CLR at 388, but whether s 4(2) brings about the result contended for by the respondent. This result does not hinge on the reading of the two Acts as one, but upon whether there is any relevant inconsistency between the Agreements Act, and relevantly here, the Assessment Act. It is to be noted that s 4(2) does not only deal with inconsistency in relation to the incorporated Act (namely the Assessment Act), but also with any Act imposing Australian tax. The obvious purpose of s 4(2) is to ensure that the Agreements Act is to prevail, but only in respect of its field of operation and according to its provisions. 45 Section 3(11) operates to determine whether the beneficiary's share of the income may be taxed in Australia in accordance with the business profits article. Such a provision has effect notwithstanding the operation of the withholding tax provisions and s 128(B)(3)(h)(ii) as contended for by the applicant. In my view, s 3(11) facilitates the operation of the business profits article which is only enabling and does not impose any tax itself. Section 3(11) is not in its terms, nor in the context in which it appears, concerned with the operation of s 128B of the Assessment Act and was not intended to so operate. Section 3(11) is not a definition provision which purports to replace the definition of "permanent establishment" for the purposes of the application of s 128B(3)(h)(ii). The work of s 3(11) is in connection with Art 7 and enables tax to be imposed in the circumstances set out in the extrinsic materials referred to by the respondent. As I had said, s 3(11) does not impose any tax in itself, or in conjunction with Art 7, assuming it applies. Section 3(11) is not directed to the operation of the withholding tax provisions and provisions that actually impose tax, and was introduced as an enabling provision only to assist in the taxing of distributions to a trust beneficiary which has a non-resident in the context of the business profits article where the concept of a permanent establishment is significant. Each of s 3(11) and s 128B can thus operate without affecting the operation of the other and without any inconsistency.