INCOME TAX DEFAULT

Evening Post, Volume CIX, Issue 143, 20 June 1925, Page 11

INCOME TAX DEFAULT

DEFENDANT COMPANY PLEADS GUILTY FINES TOTALLING £600 INFLICTED. (BI TELEGRM'3. —PRESS ASSOCIATION.) AUCKLAND, 19th June.

Fines amounting to £600 were imposed by Mr. Poynton, S.M., in the Magistrate's Court to-day ou Campbell, Ehrenfried, and Company, Limited, the company's accountant (Sidney Horace Abell), and- the secretary (Ernest Bollard) for having made false returns relating to the income of the company. A plea of guilty was entered to six charges by Mr. G. P. lrinla-y> who represented defendants. Mr. Meredith (Crown Prosecutor) conducted the prosecution.

Ml-. Meredith said thai (.lie prosecutions were laid under section 141 of the Lund and lucomc Tax Act. The company owned W hotels, in which there were •managers, and the profits from theso houses should liuvc been shown in its income tax returns as Iho proMs of the. company. . However, returns were submitted in the uaines of the individual managers and not indicated in the company's return of profits. Tims the profits from these various hotels wero each taxed on the lower amount, as if they were individual incomes, instead oi paying the higher graduated amount which was paid on the"whole of the company's profits. The loss oC revenue in 1920 by reason of this amount escaping the higher -graduated tax was estimated by the Department to be about £8000.- This enabled £28.823 income to be removed from tho company's profits, which-would have paid Vs 6d in the £, to that of individuals paying varying amounts up to 3s in the *•-. -By tho inclusion of mauy items which should not have been there in expenses liable to deductions for tho purposo of income-tax, the system of tax evasion was pursued in another direction . In 1921 the estimated loss in tax in-this direction amounted to £4000. Counsel was given leave to withdraw prosecutions in regard to 1022 and 1923 as m these years the discrepancies were comparatively small and capable of ex pianatiou as bona fide errors Mr. Fiulay stated that he was faced with the seriousness of the allegation* and realised that while he had pleaded guilty on bis clients 1 behalf he had been prompted by the fact that the let was all-embracing and -,vas hard to resist, even if the offences were due to ncli gence. Defendants wei'e prepared for and expected to pay the full penalty leople c-onductmg a licensed trade, said biw-Y' WCrO ,hcde ed a'ld ham«cd bj .legislation and conditions not cv ml rt '' aI?" orlndl- Tlic company Md regarded each hotel ns an cntil v a.UI^ hcL-- l -f^ -lyd^nollf-t'tSdS Income Tax MX us . construed g U^ iM'Hrtment. These officers knew the hotel business,, and had tried to make things look good in the eyes of their chiefs, the managing directors, who were out of New Zealand at tho time and were ignorant of the position. "Wo have been victims of tho misapprehen-sion--of our own employees," said M*r Innlay, "and they have been victims ot their own misapprehension." While there was ■ no. answer to Iho charges" it would be idle to infer that such ;i liucc concern.as' the defendant company was settmg out to deprive the DenaHnient of any Money. -1 The Magistrate imposed a fine of £100 and costs on each of the six charges.