EVADING INCOME TAX

Otago Witness, Issue 3595, 6 February 1923, Page 49

EVADING INCOME TAX

FINES OF £IOO. In the City Police Court on Friday morning Mr H. W. Bundle, S.M., heard three charges preferred against Annie Blaney of having failed to furnish the Commissioner of Taxes with a return in prescribed form of her assessable income for the year ending March 31, 1918, 1919, and 1920. Mr F. B. Adams prosecuted for the Commissioner of Taxes; and Mr J. B. Callan, representing the defendant, entered a plea of "Guilty.” Mr Adams said that the case from the point of view of the department was a pretty bad one, and it was his duty to ask the court to deal with it seriously. There was a fairly long history of neglect on the part of Mrs Blaney. As far back as 1914 there was delay and trouble about her returns. In the years 1915, 1916, when she had left the Caledonian Hotel and retired into private life, her returns were put in late but accepted. In 1917 there was no return, and a default assessment was made in January, 1918. Objection was lodged and a proper return was later put in by defendant, who asked that her neglect should he excused. He handed in a summary of figures for the year covered by the charges. In each of the last four years default assessments were made In the first three she paid the tax under the assessment, but in the fourth the income assessed exceeded the real income, and this led to an objection and the discovery of the real position. There was a very big discrepancy between the assessment and the real income, particularly in the year 1920-21. Mi Adams said the matter he wished to emphasise concerned] the year 1920-21, at which time, the default assessment had risen to £I6OO, the tax paid being £2OO, whereas the income in that year was really over £3OOO. That was a discrepancy which the lady could not possibly have failed to .observe. During that year three separate sums were withdrawn from her banking account and put on fixed deposit and yet at the end of the year the account was some hundreds of pounds better off. The tax that should have been paid was £592. The total shortage for the three years was £732. The automatic fine was £9O, barely enough to pay interest on the money withheld. He submitted that this was a case in which the taxpayer had been waiting year by year for default assessment, and paying according to this whenever it was profitable to her to do so. When the assessment was a little above the income there was a complaint. He was instructed to ask the court to deal with the case in such a way as to deter other people from adopting a like practice. Mr Callan said that when Mrs Blaney made no return in 1918, the department did not prosecute, but made a default assessment. Ii did the same the following two years, so that there had been an element of encouraging Mas Blaney to take the default assessment procedure. There seemed to be an intention to let things go and see how bad a position the taxpayer would put himself in before prosecuting. He could not say that the amount of £3OOO mentioned by Mr Adams was not assessable income, but it was far from being cash or actual income. It was not right that the impression should go out that she was making that out of the hotel business. Last year there was something like £450 unearned income. Of course, they all ought to understand the income tax, but many business people were quite unable to fathom how the figures were arrived at. Mrs Blaney was enoouraged by the department to leave it to them and the department seemed very happy to make up the figures. Had she been conscious of anything wrong sin would not have provoked the inquiry that had brought about these proceedings. Mr Adams said he would like to put the matter more strongly than he had done at first. Mr Callan had- adopted the usual practice of blaming the, department. This was a ease in which the lady must have known what was happening, and he asked that his orship should deal with it as one in which default was knowingly made. In one year the income assessed was not one-fifth of the real income. In the next year it was just about one half, and she must have known that the State was being defrauded. She had been corresponding with the department through an accountant for. some years. She was one of the class of persons Who should receive very little., consideration in such a case as this. Mr Bundle, in giving, his decision, said that some of the figures were rather arresting. In the first year default assessment was only one-fifth of . the real income. It was not necessary to attach any criminal intent to defendant, but it was cerfitinlv extreme carelessness. -On the first charge defendant would be fined £SO, and £25 on each of the other two, with solicitor's fee (£2 2s) in each case.