Deductibility of disputed tax-related payment required a supplementary statement of case before the reference could be answered.

A reference on whether an amount was deductible as business expenditure could not be decided on the existing statement of case because the decisive facts were missing. The court noted that the legal character of the amount depended on a material factual distinction: whether it was only the difference between tax payable at the full rate and the concessional rate, or an amount over and above that difference imposed for breach of law. As the reference had to be answered only on the facts stated, a supplementary statement of case was required before any proper determination could be made.

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Issues: Whether the reference could be answered on the basis of an incomplete statement of case, and whether a supplementary statement of case was required before deciding the allowability of the amount as business expenditure.

Analysis: The question referred turned on a material factual distinction: whether the amount described as penalty was only the difference between tax payable at the full rate and the concessional rate, or whether it represented an amount in excess of that difference imposed for infraction of law. The statement of case did not contain the facts necessary to apply that distinction. Since the reference had to be decided on the facts stated in the statement of case, the court could not answer the question on the existing material. A further statement of case was therefore necessary to enable a proper decision.

Conclusion: The reference could not be finally answered on the existing statement of case, and the Tribunal was directed to submit a supplementary statement of case.

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