“NOMINAL” FINES FOR FALSE INCOME RETURNS

Press, Volume CII, Issue 30126, 9 May 1963, Page 23

“NOMINAL” FINES FOR FALSE INCOME RETURNS

An elderly Chinese market gardener, illiterate in English and in his own Language, relied on his nephew to make out his tax returns. When the Inland Revenue Department began tn investigate the returns the man refused to have anything more to do with his nephew, and accepted the assessments made by the department without question. This was said in the Magistrate's Court yesterday, when Kee Sum Wong, aged 70, faced 10 charges of negligently making false returns of income.

The defendant was fined a total of £lOO and ordered to pay costs amounting to £2O. He pleaded not guilty to all charges, and was represented by Mr P. T. Mahon. Mr N. M. Izard, S.M., was on the bench. Kee Sum Wong faced seven charges relating to the years 1052 to 1968 inclusive and three joint charges with his son, Gee Kow Wong, also known as Jack Wong, aged 25, a market gardener, who was in partnership with him, relating to the years 1959, 1960, and 1961. The charges against the son were dismissed.

Mr I. C. J. Polson, who prosecuted, gave a statement to the Magistrate in which it was said that the total income returned by Kee Sum Wong for the years 1952 to 1958 inclusive was £7642. The deficient income was £94.18, giving a total income of £17,127. The deficient tax was £3041. For the three years involved in the charges the partnership returned £6175, whereas the actual income was £8853, giving a deficiency in income of £2680 and in tax of £829. “Different From Usual’’ The case was different from the usual, in that it was alleged that the wrong returns were a result of negligence and not wilfulness, Mr Polson said. Kee Sum Wong was unfamiliar with English, and was illiterate in his own language. He had been in New Zealand since 1920, but had made visits to China. Records kept by him were insufficient to enable a cor-

red return to be filed. The only records kept were in notebooks, in wbich some receipts and expenses were recorded, and figures on scraps of paper. The defendant was alleged to be negligent in that he failed to obtain professional or qualified advice on his upturns at the appropriate time. Towards the end of the period he employed an accountant to put in some of his returns. Mr Poison said.

It would be shown in evidence that a nepivew of Kee Sum Wong, Percy Chew Lee. acted as an interpreter for him and made up the returns on information supplied by Kee Sum Wong verbally. Extremely large amounts were involved, and it was alleged that there was an average deficiency of £lOOO a year in the case of Kee Sum Wong and a similar amount for the partnership. “Bt is virtually impossible for the defendant not to have been aware at some stage that the tax he paid was not in accordance with his liabilities and duties,” said Mr Polson.

Thomas Gilbert Campbell Mackay, an inspector of the Inland Revenue Department, gave evidence along the lines indicated by Mr Polson. Case For Defence Mr Mahon, opening the case for the defence, said that Kee Sum Wong could neither read nor write in Chinese or English. He drew bis name rather than signed it His son had very limited schooling.

“I invited the Court to take the view that the responsibility, if any, for the false returns is that of the father right throughout. The son was only taken into partnership after he left school,” Mr Mahon said.

Negligence in this case did not merely mean a lack of due care as in a civil case, as this was a criminal prosecution. The defendant did not challenge the figures given by the department, and accepted the liability to pay the tax as assessed by the department. It was impossible for a completely illiterate man to keep records or to know wihat

his returns contained when he signed them, said Mr Mahon. Kee Sum Wong did not know he was entitled to the ctsUri benefit or universal superannuation. The inepeetor tried to get the back superannuatton for him for the period he was entitled to receive it.

Kee Sum Wong had employed Lee to compile his returns since before the war. He relied on him implicitly in all his business dealing until the returns were questioned by the department. When he was told the returns were not correct he accepted the figures without question. Graham Miller Walker, a solicitor, said that Lee was always present when any business matters were conducted with Kee Sum Wong, and he accepted his nephew's guidance in such matters. About 1969 the Crown took part of Kee Sum Wong's land for reserve purposes. Kee Stun Wong said he would accept the figure decided on by Lee for compensation. After the tex investigation began Kee Sum Wong would have nothing more to do with Lee, as he felt “let down.” To the Magistrate the witness said that Kee Sum Wong had not consulted him about tax returns until the department began inquiries. Kee Sum Wong gave evid* ence through an interpreter.

“It is inconceivable that a man who was so successful in business did not appreciate that he should give all sales slips to Mr Lee. and this failure involved negligence,” said the Magistrate, “The returns were substantially less than the earnings '’ The Magistrate said he would impose only a nominal penalty, as it seemed to him a technical offence of negligence.