I have been asked to advise as to whether British income tax is payable on so much of the profits of the Commonwealth Government Line of Steamers as are earned in the United Kingdom.

The Commonwealth Government Line of Steamers is, I understand, an undertaking of the Commonwealth Government the receipts from which go into, and the expenditure of which is defrayed from, the Consolidated Revenue Fund. Therefore any profits earned by the Line are the property of the Commonwealth.

It is not clear from the file under which Imperial Income Tax Act the matter has arisen, and I propose, therefore, to advise upon the position as arising under the latest Imperial Income Tax Act-that of 1918.

That Act imposes income and super tax in accordance with the Schedules. The only Schedule which calls for attention in relation to the question of the profits of the Line is Schedule D, which, inter alia, imposes tax in respect of the annual 'profits or gains arising or accruing-

1. to any person residing in the United Kingdom from any kind of property whatever, whether situate in the United Kingdom or elsewhere; and
2. to any person residing in the United Kingdom from any trade, profession, employment, or vocation, whether the same be respectively carried on in the United Kingdom or elsewhere; and
3. to any person, whether a British subject or not, although not resident in the United Kingdom, from any property whatever in the United Kingdom, or from any trade, profession, employment, or vocation exercised within the United Kingdom.

It will be observed that in each case the tax is charged in respect of the profits of a person. 'Person' is not defined in the Income Tax Act, but is defined in the Imperial Interpretation Act 1889, section 2, as including a body corporate unless the contrary intention appears.

As a general rule of construction, statutes do not bind the Crown unless the Crown is named therein. And this rule appears to apply particularly to statutes imposing duties and taxes (see Craies, Statute Law, 4th edn, p. 355). The Crown is not named in the particular Act referred to. I am, therefore, of opinion that the Crown is not liable to pay income tax under that statute. And this non-liability is, in my opinion, applicable to the Crown as representing the Commonwealth as well as to the Crown as representing the Imperial Government.

The decision of the High Court in R. v. Sutton 5 C.L.R. 789 (when it was held that in the construction of Commonwealth statutes the above rule did not apply to the Sovereign as head of a State of the Commonwealth) was based on the distribution of power between Commonwealth and States under the Constitution of the Commonwealth, and has no application to this case.

I am, therefore, of opinion that the Commonwealth is not liable to pay income tax on the profits in question.

I suggest, however, that if the Government desires to contest the liability of the Commonwealth to pay the taxes in question, it would be preferable, in the first place, to make representations to the Secretary of State for the Colonies, reference being, if thought fit, made in those representations to the fact that the Commonwealth Law Officers have advised that the Commonwealth is not liable to pay those taxes.

[Vol. 16, p. 488]