The Commissioner of Taxation has forwarded the following memorandum for advice:

I understand you are reconsidering the opinion given by you under date 29 December 1914⁽¹⁾, in regard to the liability to assessment, under section 39 of the Land Tax Assessment Act, of shareholders in the A.B. Co., in respect of the interests which they as shareholders in that Company hold in subsidiary companies carrying on business in the Commonwealth, in view of the opinion furnished by Mr Mitchell, K.C., to the Solicitors for the Company, which is adverse to the views expressed by you in that opinion.

I shall be glad to learn when your further advising in the matter may be expected. I have carefully considered my previous opinion in connection with this Company,

together with the opinion of Mr Mitchell, K.C., but I see no reason for altering the conclusion at which I previously arrived.

I agree with Mr Mitchell that sub-sections (3) and (4) of section 39 and section 40 do not apply to the case in question, but upon a consideration of sub-sections (1) and (2) of section 39 and the definitions of 'owner' and 'owned' in section 3, I think that the tax is clearly imposed upon the shareholders in the 'shareholder' company.

By section 3 'owned' has a meaning corresponding with that of 'owner', and 'owner' includes every person who is by the Act deemed to be an 'owner'.

By section 39 (1) the land of a company is deemed to be owned by the shareholders in proportion to their interests in the paid-up capital of the company. If one of the shareholders is a company, that 'shareholder' company is thus, under sections 3 and 39 (1), the owner of land within the meaning of the Act. As the 'shareholder' company is for the purposes of the Act the owner of land, then by section 39 (1) its shareholders in turn are deemed to be the owners of the land, which, for the purposes of the Act, is owned by the 'shareholder' company in proportion to their interests in the paid-up capital of the 'shareholder' company.

In my opinion, the Commissioner is entitled to treat the shareholders in the A.B. Company (Australia) Limited as the owners of the land held by the subsidiary companies in which the A.B. Company (Australia) Limited holds all the shares.

[Vol. 15, p. 218]

(1) Opinion No. 590.