Double taxation relief prevails over inconsistent domestic deeming rules when statutory force gives the treaty-based method priority.

An international double taxation arrangement given statutory effect prevails over an inconsistent domestic charging rule: the Finance Act provision made the relief order binding to the extent of inconsistency, and the order's method of attributing profits to the foreign life insurance business displaced the domestic deeming rule for the years in question. The taxable profits therefore had to be determined under the double taxation relief arrangements rather than under the domestic formula, and the domestic assessments could not stand.

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Issues: Whether the Double Taxation Relief (Taxes on Income) (Australia) Order, 1947 applied to the company's United Kingdom life insurance business so as to supersede the assessments made under rule 3 of Case III of Schedule D.

Analysis: Section 51 of the Finance (No. 2) Act, 1945 gave statutory effect to the relevant international arrangements and provided that they would prevail notwithstanding anything in any enactment to the extent of inconsistency. The domestic charging mechanism under rule 3 of Case III of Schedule D treated a conventional or deemed figure as the taxable profit of the foreign life insurance business, whereas the relief order and its article III contained its own method of attributing profits to an Australian enterprise with a permanent establishment in the United Kingdom. The two methods pursued the same object but by different means, and the relief order therefore displaced the domestic rule for the years in question.

Conclusion: The relief order applied, the assessments under rule 3 could not stand, and the appeal failed.

Final Conclusion: The company was entitled to be assessed under the double taxation relief arrangements rather than under the domestic deeming rule, with the consequence that the Crown's appeal was dismissed.

Ratio Decidendi: Where an international double taxation arrangement is given statutory effect and is inconsistent with the domestic charging rule, the arrangement prevails and the taxable profits must be determined under the arrangement rather than under the domestic deeming provision.

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