The Auditor-General has forwarded for advice the following memorandum:

It has come under notice that State stamp duty is being paid to the Queensland Insurance Company on all insurances taken out by the New Guinea Agency on goods etc. consigned to the Mandated Territories Expropriation Board, Administrator, New Guinea etc. and the question has been raised as to whether such duty can be legally claimed by the State for the Commonwealth.

(2) Upon inquiry as to whether stamp duty is being paid upon consignments to Papua through its Trade Agent, the local auditor, Sydney, advised as follows, under date 27 April 1922:

... for the past twelve months, the Papuan Government Trade Agency has had its own Insurance Fund.

1. Prior to that, stamp duty was being paid to the insurance companies which accepted their business.
2. In order to minimise expenses in stamp duty, the Agency previously adopted the expediency of taking an 'open policy' for all goods shipped by the same vessel, irrespective of the port of destination. Considerable savings were thus effected.
3. The insurance companies with which the Papuan Government Agency dealt always admitted the illegality of charging stamp duty, but otherwise refused to accept the risk owing to a reluctance towards anything in the shape of litigation with the State Stamp Duty Department.
4. It is understood, however, that the companies will issue policies without payment of stamp duty, on the condition that the Commonwealth Government accept responsibility and undertake to defray any legal expenses etc. that may result therefrom; or provided an exemption is obtained from the State Department.

(3) Will you kindly favour me with your opinion upon the question raised.

I presume that the insurances are effected in New South Wales and that the liability of the Commonwealth under the law of that State is in question.

Section 88 of the Stamp Duties Act 1920 of New South Wales, No. 47, 1920, provides as follows:

Any person who-

1. receives or takes credit for any premium or consideration for any insurance, and does not, within one month after receiving or taking credit for the premium or consideration, make out and execute a duly stamped policy of such insurance;
2. makes, executes, or delivers out or pays, or allows in account, or agrees to pay or allow in account any money upon or in respect of any policy which is not duly stamped,

shall be liable to a fine not exceeding twenty pounds. The obligation to pay the stamp duty is, therefore, imposed upon the person or company issuing the policy.

By the Second Schedule to the Act, however, exemption from stamp duty is granted in respect of every instrument whereby any contract is made with His Majesty or any other person or authority on his behalf.

In my opinion, therefore, policies of insurance taken out by the New Guinea Agency are not liable to stamp duty under the New South Wales Act.

[Vol. 18, p. 410]