A Commentary on Section 260 of the Income Tax and Social Services Contribution Assessment Act 1936—19651
| DOI | 10.1177/0067205X6500100204 |
| Author | P. K. Waight |
| Published date | 01 June 1965 |
| Date | 01 June 1965 |
| Subject Matter | Article |
A
COMMENTARY
ON
SECTION
260
OF
THE INCOME
TAX AND
SOCIAL
SERVICES
CONTRIBUTION
ASSESSMENT
ACT
1936-1965
Mr
Justice Holmes'
view
that
payment
of
taxes
should
not
be
begrudged
-as
they
are
the
price
of
civilisation-is
of
course
not
shared
by
the
vast
majority
of
tax-paying
citizens.
Judicial recognition
of
the
general
lack
of
this public-spirited
attitude,
and
the
reason
for
the
enactment
of
the
sweeping
provisions
of
section
260
to
counter
tax
avoidance,
is
found
in
the judgment
of
Menzies
J.
in
the
recent
case
of
Peate
v.
Commis-
sioner
of
Taxation-
It
is
perhaps
inevitable
in
an
acquisitive
society
that
taxation
is
regarded
as a
burden from
which
those
who
are subject
to
it
will
seek
to
escape
by
any lawful
means
that
may
be
found.
This
is
generally called
tax
avoidance
and
it
is
successful
if
by
reason
of
what
is
done
what
is
potentially taxable
is
put
outside
the
effective
operation
of
the
revenue
laws.
Furthermore,
in
the
absence
of
a
special
law
a
genuine
transaction
does
not
lose
its
legal
effect
because
it
was
carried
out
to
avoid,
limit
or
postpone
tax.
It
is
the
recogni-
tion
of
this
that
accounts
for
the legislature casting
its
net
wide
to
frustrate
the
attempts
of
those
confronted
with
tax
liabilities
to
get
round
the
law.
As
often
as
a
particular
loophole
is
closed
through
which
it
has
been
discovered
that
revenue
is
lost,
another
is
likely
to
be
found,
so
that
as
long
as
it
confines
itself
to
stopping
gaps
the
legislature
is
always
a step
behind
reluctant
taxpayers
and
their
ingenious
advisers.
It
is
not,
therefore,
surprising
that
Parliament
has
sometimes
sought
to
anticipate
tax
avoidance
by general
laws
rendering
ineffectual
against
the
Commissioner
arrangements
which
are
not
shams
but
are
entered
into
to
avoid
taxation
obligations
that
would
otherwise
in
due course
be
incurred.
Such
a
law
is
s.
260
of
the Income
Tax
Assessment
Act (Cth)
...2
A
first
reading
of
section
260
would
appear
to
suggest
that
it
covered
all
situations
whereby
the
tax
liability
of
any
person
was
reduced.
3
The
text
of
s.
260
is
as
follows-
Every
contract,
agreement,
or
arrangement made
or
entered
into,
orally
or
in
writing,
whether
before
or
after the commencement
of
this
Act,
shall so
far
as
it
has
or
purports
to
have
the purpose
or
effect
of
in
any
way,
directly
or
indirectly-
(a)
altering the
incidence
of
any
income
tax;
(b)
relieving
any
person
from
liability
to
pay any
income
tax
or make any
return;
(c)
defeating, evading,
or
avoiding any
duty
or
liability
imposed
on
any
person
by
this
Act;
or
(d)
preventing
the operation
of
this
Act
in
any
respect,
be
absolutely
void, as
against the
Commissioner,
or
in
regard
to
any proceeding
under
this
Act,
but
without
prejudice
to
such
validity
as
it may
have
in
any other
respect
or
for
any
other purpose.
2
(1962)
36
A.L.J.R.
258,
259.
1
See
per
Knox
C.J.
in
Deputy
Federal
Commissioner
of
Taxation
v.
Purcell
(1921)
29
C.LR.
464, 466.
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