The Secretary, Prime Minister’s Department, has forwarded me for advice a communication received by him from the Premier of South Australia requesting that the Commonwealth will reimburse the Eastern Extension Australasia and China Telegraph Co. Ltd. the amount of Federal Land Tax paid by that Company.

The request is based upon the Agreement of 29th August, 1871, between the Company and the Government of South Australia, and the later agreement of 14th April, 1900, between the Company and the Governments of South Australia, Western Australia and Tasmania. In the former agreement, it was stipulated that the undertaking property and profits of the Company should be exempt from all provincial, local and other taxes, rates, charges and assessments within the Province of South Australia, whether then existing or chargeable, or thereafter to be charged, imposed or created. The later agreement provided, in clause 19, that the governments of the respective contracting colonies should repay to the Company such sums as are sufficient to recoup the Company any income tax and any rates or taxes, Parliamentary or otherwise, which the Company shall be required to pay in such respective contracting colonies (except rates and taxes on premises occupied as local offices for the purpose referred to in clause 16 of the Agreement). The later agreement also expressly saves the privileges, exemptions and rights of the Company under the Agreement of 1871.

The rates and taxes referred to in the agreements are rates and taxes imposed by the respective Colonial Governments, and the obligation of recouping the Company would only rest on the Commonwealth to the extent to which those rates and taxes related to matters which had come under the control of the Commonwealth.

I may add that in the recent case between the Company and the Commonwealth in relation to the payment of land tax by the Company, it was held by the High Court that the agreements did not exempt the Company from payment of land tax imposed by the Commonwealth.⁽¹⁾

I see no reason why the Commonwealth should entertain the question of reimbursing either the State or the Company the amount of any Commonwealth land or income tax which the Company is required by law to pay.

[Vol. 20, p. 479]

(1) Eastern Extension, Australasia and China Telegraph Co Ltd v Federal Commissioner of Taxation (1923) 33 Ch 426.