LIQUOR POLL SEQUEL.

New Zealand Herald, Volume LVIII, Issue 17828, 8 July 1921, Page 8

LIQUOR POLL SEQUEL.

EXPENDITURE BY TRADE. INCOME TAX DISPUTED. PROBLEM FOB, APPEAL COURT The licensing poll of 1919 found a distant echo in the Court of Appeal in TV ellington this "week., when a firm of Christchurch brewers, Messrs. Ward and Co., appea'ed against the assessment of the Commissioner of Taxes, of the profits of the firm, in which he held that a sum of £2123, expended in connection with the licensing poll, was not entitled to be deducted from the amounts of expenditure returned by the' firm for the purposes of income-tax. Mr. A. W. Blair, with him Mr. P. B. Cooke, appeared for the appellants, and Mr. W. C- MacGregor, K.C., Soli-citor-General, appeaxed for the respondent., the Commissioner of Taxes. The appellants contended that the expenditure was allowable in the production of assessable income on the following grounds :— (a) That it was a legitimate and necessary expense, for, had the money not been expended, the company's manufacturing business would not now have been in existence. (b) That it was necessary to enable the . company to continue in business, and to enable its brewery and publicans' licenses to be retained. (c) That the expense of fighting the poll was forced upon the company by the Government, which itself did nothing to assist the poll, and, further, that, as the poll wis taken at a time other than " general election," there was not the usual interest on the part of voters and inducement to to attend the poll. <d) That the expenditure was imperative, because of the apathy of the general public, which had no direct financial stake in the venture; and, moreover, the Christchurch polling day was wet, and the expense of getting voters to the poll was heavy. (e) That the first concern of a business should be a guarantee of its continuance. s (f) That the Commissioner had established a pre- ] [ cedent in respect of insurance premiums being regarded as just deductions. (g) That the expenditure was exclusively incurred in .the production of income. (h) That the money was not paid into a licensed victuallers' association, and, therefore, could -not be looked upon as a subscription. Effect of the Taxation.

Mr. Blair, in opening the case before the Court, said that, in 1913, there were two elections, one early in the year, and the other in December. In the first poll, had the vote succeeded, the licenses would have been wiped gut during a period of 13 months; the December poll, had it succeeded, would not have been so severe, as the licenses would have had life until the next election, three years afters In the circumstances, the expenditure was more heavy than would lhave been incurred at another time. The amount involved in taxation in the present case was £1000 The appeal related on'.y to the first poll. It could not be disputed that the expenditure was necessary, for the purpose of ensuring that the point of view of the Liquor Party should be put before the public. The poll was a very close one, and the result was not known till the soldiers' vote came t-o hand. The justification of the expenditure could not be assailed, as it was for the purpose of educating the public generally. If the expends were casually looked into, this could better be established. There were expenses for casual employees engaged in seeing that the right class of people were on the roll. The permanent staff was for the duty of carrying on a campaign of advertising, to me£t the effect of the amounts-similarly appropriated by the New Zealand Alliance. The item, taxi hire, was necessary, owing to the poll being taken on a wet day. Mr. Justice Hosking : They did not like too much water. (Laughter.) | " Not Profit-earning Expense " The Soiicitoi'-Geheial supported the view of the Commifsioner. The money in . question, he said, was expended rather as I incidental to influencing the electorate, i than in production. It was not soificient i for the purposes of the deduction that | the moneys were necessary 'for the com- | to carry on its business; the expenditure must be wholly and exclusively incurred in earning the income for the ; year on which the assessment was based. That was the interpretation which the Commissioner must have put on the matter. The expenditure was incurred for the purpose of obtaining protection against a change in the law, which in future years might dimmish or destroy the company's business. It was no part of the ! business of -brewing beer. j Mr. Justice Hosking said the argument i of the Commissioner, Eliat the expenditure ; was made during the was the Court's ! difficulty. It would probably examine the case in connection with the expenditure on the second poll. It there was no authority for the Commissioner to apportion the expenditure, the whole of it. must do, dealt with for the year in which it was made. The So'icitor-General: That is so. After further argument the Court reserved judgment.