LORDS DISMISS.
NEW ZEALAND APPEAL CASE. TVOOME TAX PROBLEM. (Prom Our Special Correspondent.) LONDON. November IT. Ift22. The appeal against the decieion of the New Zealand Courts in respect of a deduction from income claimed by appellants—Ward and Company—was dismissed yesterday. The Lord Chancellor, delivering judgimcnt. said that "the question was whether, under the Land and Income Tax Act of New Zealand, I!MG, £2.123 expended by the appellants on a special licensing poll was a permissible deduction in computing their assessable income as brewers and maltsters. The poll was taken under the Licensing Amendment Act, 1 f>l H. which provided for the taking of a special poll of the Parliamentary electors of New Zealand on the question whether the sale nf intoxicating liquors should be prohibited throughout New Zealand. The Act also provided that, should a poll result in the defeat of the proposal for prohibition, further polls might be taken once in every three years. The poll in this case was fixei for A] ril 30, l!)l!l, and, with a view of defeating the proposal for prohibition, the appellants, in th- tax year 1018-llt, incurred an expenditure amounting to £2,123 in canvassing, advertising, printing, r.nd other matters. The poll resulted in a narrow majority against prohibition. Kor the purpose of assessing the appellants for the year 1919-20. the Commissioner of Taxes required them to make a return of their income for the year ended on March 31, I!MH. and the appellants claimed to deduct the sum of £2,133. The commissioner disallowed the deduction, and the Court of Appeal aflinned his decision. Hence the present appeal. Tho question of law was whether the expenditure was "exclusively incurred in the production of the assessable income" derived in the tax year jftlS-111. In considering the question, their Lordships j put aside the circumstance that the expenditure was not of such a nature as to I produce income in the actual tax year in which it was incurred. In every trade, much o<f the expenditure in each yearsuch as expenditure in the purchase of raw material, in the repair of plant, or . the advertisement of goods for sale— wns designed to produce results wholly or partly in subsequent years: but. nevertheless, such expenditure was eon- , stantly allowed as a deduction for the year in which it was incurred. The real question was whether the expenditure wns. within the true meaning of Section Bfl (I) of the Act of Iflhi. exclusively \ incurred in the production of assessable income; and after fully considering the i arguments adduced, their Lordships were of opinion that that was not made. out. The expenditure was not necessary for the production of profit, nor was it in • fact incurred for tliat purpose. It was a voluntary expense incurred with a view to influencing public opinion against tak- ; ing a step which would have depreciated and partly destroyed tho profit-bearing thing. The expense might have been wisely undertaken, and might properly find a place, either in the balance-sheet or in the profit and loss account of .the ; appellants: but that was not enough to take it out of the prohibition in Section i ;8« (1) (a) of the Act. For that pur- | j pose it. must have been incurred for tin , • , direct purpose of producing profits." j
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Auckland Star, Volume LIII, Issue 309, 30 December 1922, Page 4
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546LORDS DISMISS. Auckland Star, Volume LIII, Issue 309, 30 December 1922, Page 4
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