COMPANY'S GIFTS

Auckland Star, Volume LXXIII, Issue 233, 2 October 1942, Page 4

COMPANY'S GIFTS

INCOME-TAX APPEAL ASSESSMENT DISPUTED (0.C.) WELLINGTON, this day. In a case neard by the Court of Appeal the Commissioner of Taxes as appellant, contended that payments made to a member of the armed forces by his previous employers to make his military pay equal to his civilian salary were assessable for income tax, while respondent, Neil Melville Louisson company director, submitted that they were mere presents, bearing no relation to any contract for services and that such presents were not assessable as income whether they were paid periodically or otherwise Mr. Broad appeared for the Commissioner of Taxes, and Mr. H. P. Richmond for the respondent The respondent, formerly a director and salaried officer of Fairbairn Wright, Limited, of Auckland went overseas in January, 1940, with the Second New Zealand Expeditionary l orce and has not yet returned. The company decided in October 1939 it would make up the difference between employees' pay and their military pay, and during the income year in pursuance of the resolution paid respondent £Gll 16/6 as salary and £n0 director's fee. Appellant allowed a deduction of £208 from the assessable income of the company, and the company paid income tax on £4.j3 16/6. But in assessing respondent's income tax. the appellant determined he was liable to nav upon the whole of the £661 16/6 Respondent contended this sum did not accrue by virtue of his employment or by virtue of his holding any office in the company, but that the sum of £453 16/6 consisted of a mere gift in the nature of a personal tribute and was not made in respect of or in relation to the employment of the services of respondent, and that such sum was not assessable income. The question for the deterfjhe Court was whether the £403 16/6 was the assessable mcome of the respondent in the year mentioned. Previously the respondent appealed to the Supreme Court against the assessment, and the appeal was upheld by Mr. Justice Fair. It is against this decision that the Commissioner of Taxes has appealed decisfon a Court reserved its