PUBLIC SERVANTS OVERSEAS
Must Pay Income Tax
CONTRACTS WITH CROWN IN NEW ZEALAND
A decision supporting the contention that three New Zealand public servants working in the Cook Islands should pay income tax was given by Mr. Justice Reed in a judgment life delivered in the Supreme Court, Wellington, yesterday. His Honour upheld the view that the men concerned came within that pait of the law which states that people who derive income from contracts made in New Zealand must pay tax. A number of other public servants are affected by the decision.
The Cook Islands are part of New Zealand, but New Zealand laws do not apply there unless it is expressly provided, and the Lund and Income Tax Acts were not in force there. The three public servants have held their offices for many years and have never paid income tax, but the Commissioner of Taxes recently required them to make returns of income for the purpose of assessment.
The first ground on which the commissioner’s claim was based was that they reside in New Zealand, but his Honour held that two of them do not reside in New Zealand because their homes are not in New Zealand, while, in the case of the third, who has an official residence in the islands and a home for his wife and family in New Zealand, which he visits periodically, a decision was not necessary because of the effect of other parts of the judgment.
The next contention of the commissioner was that they were liable to pay because their incomes were derived from contracts made with the New Zealand Government or from contracts performed wholly or partly in New Zealand, which are sources of income included as taxable by the Act. After quoting authorities supporting the opinion that the holder of a public office may have a contract with the Crown and reviewing the terms of the officials’ appointments, his Honour stated that all three derived their incomes from contracts with the New Zealand Government, and that such contracts were made in New Zealand.
“The three appellants, although probably technically not so. are to. all intents and purposes New Zealand, civil servants,” his Honour concluded, “and there appears to be no reason why as a matter of fairness they should not pay income tax as civil servants are required to do. But for many years they have not been asked to do so, it having been assumed, apparently, that no such liability existed. In the circumstances, I suggest that there is an element of unfairness in claiming retrospectively. Where there has been a wilful evasion, it is fit and proper that the offender should be required to make good, but where, with full knowledge of all the facts, the department has Assumed that there is no liability to pay income tax and has, by inaction, conveyed that view to the appellants, these proceedings, in my opinion, should be treated as a test case applicable in its enforcement to the future. The enforcement of payment of three years’ arrears must bear hardly on persons of limited means.” »
At the hearing Messrs. P. Levin and S. P. Bunny appeared for the public servants who were parties to the case, and Mr. P. B. Broad, of the Crown Law Office, for the Commissioner of Taxes.
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https://paperspast.natlib.govt.nz/newspapers/DOM19380427.2.115
Bibliographic details
Dominion, Volume 31, Issue 179, 27 April 1938, Page 13
Word Count
553PUBLIC SERVANTS OVERSEAS Dominion, Volume 31, Issue 179, 27 April 1938, Page 13
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