CAPITAL OR INCOME?

Evening Post, Volume CII, Issue 35, 10 August 1921, Page 6

CAPITAL OR INCOME?

A TAXATION PROBLEM,

An interesting question relating to tho liability or otherwise of moneys obtained by the sale of a farm to assessment for income taxation was submitted to his Honour Mr. Justice Sim, ActingOhief Justice, to-day.

Dr. G. E. Anson, of Wellington, appealed against the assessment > by the Commissioner of Tax«s in connection with a sheep station near HunterviUe. Mr. P. B. Cooke appeared, with Mr. T. 0. A. Hislop, for tho appellant, and Mr. W. 0. MacGregor (Solicitor-General) for the (apnvmisiioner of Taxes.

The statement of the case showed that in making returns of income tho appellant* adopted a standard value for his tstock. In June, 1915, he sold the station, and in July, 1919, sold all the stock, for £9650. Tho appellant claimed that the difference between the amount ■realised for the sale (£9650) • ami the standard value declared (£3776), being £5874, was merely an increment oi capital, due to the improvement of the stock, and not assessable for the purpose of taxation of income. The Commissioner claimed that the-* amount of £5874 was (income derived from the business of the appellant as a station owner during the •year, and demanded tax on the amount. At the request of the appellant, the •Commissioner stated the case to the Court, for decision whether the amount was an accretion of capital or income assessable for income lax.

Mr. Cooke stated as the chief element in the case the fact that the appellant never dealt in sheep or cattle. His sole business was the production of wool and the sale of surplus stock, and never extended to the purchase and re-sale of stock. The moneys spent on stock was fixed capital; the stock appreciated in value,; the moneys received at the sale were capital; and in no case was capital taxable. If this contention was correct, the aniount of the standard value of the stock named in the income tax return was immaterial. '. '; , (Proceeding.)