EXTRAORDINARY CASE

New Zealand Times, Volume L, Issue 11648, 12 October 1923, Page 3

EXTRAORDINARY CASE

INCOME-TAX CLAIM LARGE INCREASE ON WANGANUI ESTATE. FROM £629 TO £3055. What was characterised by counsel as an “extraordinary case’’ came before the Full Court yesterday, in connection with an appeal from an assessment by the Commissioner of Taxes for income tax on an estate in the Wanganui district. The Chief Justice (Sir Robert Stout) presided, and associated with him were Mr Justice Hosking, Mr Justice Herdman, Mr Justice Salmond, and Mr Justice Reed. The appellants were Kenneth Waring Dalrymple, sheepfarmer, of Parewanui, and George Pearce, merchant, of Wellington, who were trustees of the estate of the late John Taylor Dalrymple. The respondent was the Commissioner of Taxes, for whom Mr A. Fair, of the Crown Law Office, appeared. Mr C. P‘. Skerrett, K.C., with whom appeared Mr C. G. White, represented the appellants. The testator died in May, 1904, and the trustees administered his estate pursuant to trusts created by the will, until November, 1913, when the Supreme Court made an order approving of a certain deed of arrangement. The youngest child of the testator attained the age of 21 in 1912. In accordance with the terms of the will, an annuity of £SOO was paid to the widow; the latter died in January, 1920. _ Since her death the trustees continued to manage the estate for the benefit of the children of the deceased, and after payment of expenses of management, had in each year, by direction of the beneficiaries, distributed the residue of the estate’s income among the children. BIG INCREASES. For the years ending May 31st, 1919, March 31st, 1920, and March 31st, 1921, the appellants made returns of income, and were assessed for income tax for £629 8s 7d, £254 7s sd, and £2ll 8s 6d respectively. Such tax as so assessed was duly paid. On May 13th, 1923, the respondent having gone into the facte of the case and the legal position of the beneficiaries, decided that the income was assessable Under section 99 (h) of the Land and Income Tax Act, 1916, and not under section 99 (a). Amended assessments were accordingly issued, the amount' of tax payable being increased to £3055 Is, £1631 15s 8d and £1455 respectively. The appellants objected to this amendment, ana required the Commissioner of Taxes to state a case, contending that the income should be assessed under tlie provisions of section 99 (a), The respondent submitted that the provisions of this section did not apply, inasmuch as the .beneficiaries to whom the income was paid were not entitled in possession to the receipt thereof during the same year under the trust, and must he assessed under the pro'fisians of section 99 (b). The question for the court to determine was whether the assessments made, or any of them, should be confirmed or cancelled; or whether the amount should be increased or reduced; or what was the correct method or aa sessment. A BELATED CLAIM.

Mr Skerrett alluded to the case as an “extraordinary one.” He commented on the fact' that the Oommissianer did not make his fresh assSosment until nearly four years had passed, and the sum upon ■which he decided was no less than an advance of £SOOO. The paradox, he submitted, waa that though the beneficiaries under the trust had received the income from the estate it was held by the Commissioner, and that they must not receive it individually, bait that income tax must lie paid on the income as a whole. '' This had very considerably raised the scale, which bad increased from £1094 to over £6OOO.

Mr Faair replied at length, quoting authorities in support of the Crown’s case, after whioh the court intimated that further argument would be heard this morning at 10.30 o’clock.