Opinion Number. 721

Subject

COMMONWEALTH SECURITIES COMMONWEALTH INSCRIBED STOCK: TREASURY BONDS: LOCATION OF STOCK FOR PURPOSE OF DETERMINING WHERE STOCK IS DUTIABLE: LOCATION OF INSCRIBED STOCK REGISTRY. WHETHER COMMONWEALTH SECURITIES ARE SUBJECT TO COMMONWEALTH ESTATE DUTY AND TO STATE PROBATE DUTIES: STATE TAXING POWERS

Key Legislation

CONSTITUTION, s. 114

Date
Client
The Secretary to the Treasury

The Secretary to the Treasury has forwarded the following memorandum asking for advice:

I am directed to ask that this office be furnished with an opinion, at the earliest possible date, as to whether-

  1. in view of the fact that Commonwealth Inscribed Stock is inscribed in Melbourne (the seat of Government of the Commonwealth), it would be necessary for the will of a deceased holder resident at the time of his death in Sydney to be proved in Victoria;
  2. Victorian State probate duty or New South Wales probate duty, as well as Commonwealth probate duty, would be payable upon such stock in the case cited;
  3. Commonwealth Treasury Bonds are subject to State as well as Commonwealth probate duty.

As regards the first question there would, in my opinion, be no necessity for the will of a deceased holder, resident at the time of his death in Sydney, to be proved in Victoria, unless the deceased left property in Victoria. Commonwealth securities held by the deceased would not, I think, be regarded as being in Victoria, unless in the case of securities transferable by delivery, they were actually situated in Victoria at the time of his death, or, in the case of other securities, the deceased was domiciled in Victoria. The mere fact that the Inscribed Stock register is located in Melbourne would not, in my opinion, affect the matter.(1)

As regards question (b)-the State probate duty which would be payable would be the probate duty (if any) of the State in which the instruments were found, or the deceased was domiciled, as the case may be.

With regard to question (c)-I am of opinion that Commonwealth Treasury Bonds are subject to State as well as Commonwealth estate duty.

The question has been raised in the United States whether succession to property including United States bonds was subject to the inheritance laws of the States. In a long line of cases reviewed and affirmed in the case of Plummer v. Coler 178 U.S. 115 it has been held that the right to take property by will or descent is derived from and regulated by State law; and in assessing a tax on such right or privilege the State may lawfully measure or fix the amount of the tax by referring to the value of the property passing; and also that the incidental fact that the property is composed in whole or in part of Federal securities does not invalidate the State tax or the law under which it is imposed.

The principle of these cases, in my opinion, applies to the construction of the Commonwealth Constitution and the taxing powers of the States.

I am, therefore, of opinion that Commonwealth securities are liable to the appropriate State probate duty as well as to Commonwealth estate duty.

[Vol. 14, p. 375]

(1) On 8 October 1920 [V0l. 17, p. 101] Sir Robert Garran, as Solicitor-General, in answer to a question from the Secretary to the Treasury whether the establishment of Inscribed Stock Registries in all States of the Commonwealth affected this opinion, replied:

'I see no reason to vary the opinion expressed by me on 4 July 1916. The fact that Registries of Inscribed Stock have been established n each State does not, in my opinion, affect the question'.