A CURIOUS INCOME TAX APPEAL.

New Zealand Times, Volume XXVII, Issue 5733, 31 October 1905, Page 7

A CURIOUS INCOME TAX APPEAL.

AN ABSENTEE’S POSSIBLE LIABILITIES. THE APPELLANT SUCCESSFUL. The judgment given by Dr McArthur, S.M., on Thursday last in the matter of tho Commissioner of Taxes v. E. G. Jellicoo is of importance, bocause -tho circumstances of tho case are distinctly peculiar. Dr Mo Arthur, in his statement of the case, said the objector to Hie assessment of income was Mr E. G. Jellicoo, a barrister and solicitor, practising in Wellington. That gentleman left for England on A.pril SOthj 1904, and was absent from the colony until tho end of September. 1905. During his absence bo retained one room of his offices and. also a clerk, and lie derived no income from his practice here. The expenditure, according to tho balancesheet made out by his clerk, exceeded the receipts during Mr Jollicoe’s absence. In tho early part of this year tho Land and Income Tax Department made a demand upon Mr JeJlicoe that ' ho should make the usual return for the purpose'of enabling an assessment to bo made ot the amount liable to taxation for tho fiscal year commencing April Ist, 1904, and ending March 31st, 1905. On May 19th. 1904. Mr Jellicoe’s clerk wrote to the Commissioner stating that no income was being derived from Mr Jellicoo’s practice whilst ho was absent from tho colony, and on May 22nd a reply was received stating that tho ndvico contained in tho letter of May 19th was sufficient. “ This,” the Magistrate sail, ‘'explained why no return was made.” Tho objector (Mr Jellicoe) returned to Wellington on September 23rd. 1205, aid on tho 25th of that month ho received a letter informing him that the sum of £63 5s income tax and 10 per cent, for 1904-5 was outstanding, and requesting that tho amount snould bo paid forthwith. Tho objector had paid the income tax for tho fiscal year commencing April Ist, 1903, and ending March 31st, 1004, and ho produced the receipt. .The assessment for tho year mentioned in tho receipt was estimated on a return of income derived during the preceding year, , which ended on March- 31st, 1903. The return was dated June, 1903. The objector wrote to the Commissioner notifying his intended absence' before ho left for England. Tho objector, when leaving the colony, had niado no- definite arrangements._ Ho retained his house and a room in his former office, and also a clerk, who did business under arrangement with other solicitors. Mr Jcllioob’s name was up. and his clerk had power to collect debts. Mr Jellicoe’s practising certificate was taken out during the year. He carried on business during the month of April, 1904, and would havo made a return for that month had the Commissioner required him to do so. The amount of profit would havo been well within the exemption. His Worship, having cited at some length authorities affecting Taxing Enactments, said it appeared to him that tho question at issue in this case was; “Is the incomo liable to taxation tliat of the fiscal year, or is it in reality that of, tho preceding year which is liable to taxation?” In his Worship’s opinion, the income liable to taxation was that of the fiscal year, but for reasons of convenience the net provided a ready method of computing that income by taking as a basis tho rclnrn of incomo received in tho preceding year. Consequently, his Worship thought that if there was no income for the fiscal year, the mode of computation was immaterial and inapplicable.

His Worship was of opinion that the Commissioner was not entitled to recover on his assessment, and that the ■ objector ought to hare liberty to make a return of his actual profits during the period commencing .April Ist, 1904, and ending March 31st, 1903, but, fol-

lowing the English practice, he should not he entitled to avail himself of such return in computing the assessment for the next succeeding year, commencing April Ist, 1905, and ending March 31st, 1906.