Ruling Against Tax Commissioner

Press, Volume CIV, Issue 30724, 13 April 1965, Page 18

Ruling Against Tax Commissioner

(New Zealand Press Association) WELLINGTON. April 12. The Court of Appeal today ruled the Commissioner of Inland Revenue was not entitled to charge gift duty because a man fails to exercise his right to be paid an annual remuneration for his services as a trustee.

The Court dismissed an appeal by the Commissioner against a decision by Mr Justice Tompkins in the Supreme Court, Wellington, on March 2 last year. Respondent in the case was the public trustee, as execu tor in the will of John Hugh Marshall, a farmer, of Titahi Bay, Wellington, who died in November, 1955. In 1951 Marshall formed a trust with himself and another man as trustees. Contemporaneous with this deed was an equitable mortgage given by the trustees to Marshall. A provision of the deed was that Marshall could demand £650 remuneration each year. He took advantage of this

in 1955 but did not claim in 1952, 1953 or 1954. The Commissioner of In land Revenue claimed these refusals amounted to gifts under sections 38 and 39 of the Death Duties Act. 1921, and were liable to duty. There was also a provision in the mortgage allowing Marshall to claim interest each year amounting to £2638 Is 6d. but he claimed only in 1953. The commissioner argued that his refusals to claim in 1952. 1954 and 1955 amounted to separate gifts and assessed duty on them. Mr Justice Tompkins held there was no obligation to pay interest or remuneration unless Marshall demanded it. and no duty was payable if there was no demand. The Court of Appeal dismissed the Commissioner s ap peal against this ruling and allowed the Public Trustee £lO5 costs.