INCOME TAX.
r A PROBLEM IN ASSESSMENTS. J IMPORTANT MAGISTERIAL JUDGMENT." "For "a long time past the Income-tax Departmert has contended that- incometax >paid in one year is not for the -year immediately preceding it, but for 'the period anterior Lhereto. Many claims iinade on this basis have been paid without legal protest. A case contested .ber Sort Dr. M'Arthur, S.M., has just established that the contention of the Department was ill-founded, and as the case is .one of interest to all who are sufficiently ; fortunate to be liable to pay income■tax,' and especially to those who may .'temporarily cease to do business in the .colony, and who go abroad for some time, we publish a comprehensive sumiiriary," of the judgment giyen by Dr. l-M*ATthur. The Magistrate sat as the .tribunal to which appeals against deci.'sfons pf the Commissisoner of Taxes must and the objector was Mr, E. G. Jellicoe, solicitor, by whose permission the judgment is now published for information of tho public. It sets out that the objector, a barrister anl solicitor practising in Wellington, left for England on the 30th April, 1904, and was absent from the colony until the end of September, 1905. ""During bis iibsence he retained one room of his offices and . a clerk, r^nd- derived no income from his practise as a •barrister and solicitor during his^ absence. In the early . part of the year the Department"- made a. demand that ho should make the usual njturn for the purpose of enabling an assessment to be made of the amount liable to taxation for the fiscal yesr commencing the Ist day of April, 1904, and ending -this 31st March, }9Q5 A reply given 'by his clerk that "objector had derived no income from his practice during absence from the colony was accepted as sufficfent answer by' the Department. On the 23rd Septemher, 1905, objector returned to Wellington, and on the 26th of' that month" he received a letter informing him that *be sum of £63 ss~ income-tax and 10 per cent, for 1904-5 was outstanding, and requesting that the sum be paid forthwith. The demand was as follows : " Income-tax for the year commencing on the first day of April, 1904, will be due and payable at this office, Government Buildings, Wellington^ etc." - Objector had paid the income-tax for the fiscal year commencing the Ist April, 1903, and ending the 31st .March, 1904, and he produced the receipt. The assessment for the year mentioned in the receipt was estimated [ &h*SL~ return of the income derived during the preceding year. Objector, on leaving the colony, made no definite arrangements. He retained his house, and a room in his formei office ; also a clerk who did business under arrangements with other solicitors. His name was up, and his clerk had power to collect debts. His practising certificate was taken out during the year. From the Ist April, 1903, to the 31st March, 1&04, he was in practice and earning an income. A question was put to him by the Commissioner : " Do you know that it is in respect of income in that period you are now as> sessed." The objector replied: "I know it is quite the contrary. I produce the Department's letter of the 3rd October, 1905, in which they sjiy, ' You are liable fox-the,. amount claimed for the year ending -fthe-^lst- March- charged on income clerived during year ending the 31st iMarch, 1904." On the 29th September, 1905, objector received a letter inform-" ing him • that the amount due was assessed under section 21 of the Assessment Act on income derived during the ■year ending the 31st March, 1904, in 'which year the objector was in practice.' officer in charge o.f the Income-tax Department stated that the objector's nameT>ad_been on the income assessment Trolf.^ince: thfe 'Act; of* 1900 'ncame into' force to the present time; that the present assessment objected to "was made" . junder'tho provisions of section 21 of the }Act of 1900, and that the assessment '■was made commencing the Ist April, J1904, and ending the 31st 'March, 1905, ,npon income derived during the previous 'year ending the 31st -Majch, 1904; also, "that the assessment was made on the sth 1905, and was averaged on the j objector's return for the year before ithat, and that the objector's name was in the first, igcome assessment, J 1892-3, which was the first year of the « income-tax, when the income was aver1. aged on a return of income derived dur- ; ing the preceding year. His, Worship held it was the duty of the Court to . find out" what was the meaning of the . Legislature, and to attach a rational and - beneficial meaning to the Statute, though an equitable construction was not admissible in,a taxing, statute, where one must pimply adhere ~to tthe words of the sta- j tute. As Lord Blackburn had said: I " The object of a taxing statute was to \ grant a revenue, at all events, and I think the only safe rule is to look at the words of the enactments and see what is -the- intention expressed by these ... -words." To hjs .Worship the question at V issue in this case was clearly defined, - and might be stated thus : "Is the income liable to .taxation that of the fiscal year, or jsit in reality the income of the succeeding year that is liable to taxa- . tion?" His Worship's judgment was thajt; the, income "liable to .taxation was that of tho fiscal year, though for reasons of convenience the Act provided a ready method ot computing that income ' — viz., 'by taking as a basis the return of income received in the preceding year. Hence his Worship thought that if there was no income for the fiscal year the - Siode of computation was immaterial and * inapplicable. .Section 14 of the Act of 1900 provided that inoome-tax " shall be charged " on all income derived or received during the year immediately preceding • the • " year 'in and for which such tax is as- - sessed and levied as aforesaid." To his ■Worship's mind this undoubtedly meant that the tax was to be assessed and levied for the fiscal year, but was to be charged or based on income clerived during the preceding year. Subsections 5, 6, and Bof section 18 of the Act seemed to support this view. Section 2 of the Act (b) specified : " For every pound sterling of the income chargeable by Jaw derived or received from business or employment for the year ending- on the 31st March, , 1904: Purely; # if words meant anything, this meant that the tax was to be paid" for - "thcf annual period or fiscal year from" the Ist April, 1904, to the 31st Alarch, 1905,- and 1 was* 'chargeable on the basis of inconie' < cleriFed In the preceding year._ For treasons given, his Worship •wtui "of 'ojinioD]'that the Commissioner waa'not enlitled"£o recover on flip assess.jrienE- made* under the^pro^isions of sectipn'2l; ant} ,tha£ tho' 'objector ought to have liberty to make a return of his actual' profits" during. the annual period commencing on Ist April, 1904, and ending the. 31st. March, 1905; but, following the. English practice, ha should not., be entitled to avail himself of such return in computing the assessment for tlicnext succeeding year commencing the Ist April,. 1905, and ending the 31sfc 'March, 1906. The Department is., appealing against the decision.
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Bibliographic details
Evening Post, Volume LXX, Issue 107, 2 November 1905, Page 4
Word Count
1,223INCOME TAX. Evening Post, Volume LXX, Issue 107, 2 November 1905, Page 4
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