ALLOWANCE PAID TO SOLDIER

Southland Times, Issue 24596, 19 November 1941, Page 6

ALLOWANCE PAID TO SOLDIER

Claim For Taxation

Fails

(P.A.) AUCKLAND, November 18. An assessment made by tire Commissioner of Taxes on the income of a soldier who has an allowance paid to him by his firm while he is on active service was challenged in an appeal heard by Mr Justice Fair. The appellant was Neil Melville Louisson (Mr M. Richmond), formerly a director and a salaried officer of Fairbairn, Wright and Company, Limited, and lieutenant abroad with the New Zealand Expeditionary Force. The Commissioner of Taxes was represented by Mr V. R. Meredith.

The question for the Court was whether the amount paid by the firm to the appellant was to be treated as part of his assessable income or to be regarded as a gift and therefore free of income tax.

“This is a matter already of importance,” said Mr Richmond, “and it will increase in importance as older and married men in lucrative positions are called. If the commissioner is right and employers assist men with large family commitments, double taxation of this kind may in fact reach over 20/in the pound.” Mr Richmond said the appellant was in receipt of a salary of more than £lOOO a year and in six months from the date of his enlistment on October’ 1, 1939, to the end of the taxation year the company paid him £453 to make up the difference between his previous salary and his military pay. SECOND TAX LEVIED The appellant furnished an income return of £lO2B, including in it the sum of £453. The Commissioner, having taxed the company on its allowance to the appellant, then again taxed him on the same amount. This payment was purely a gratuitous contribution made in practical acknowledgement that men were risking their lives on active service.

Mr Meredith submitted that if the | Legislature had. intended to exempt I such payments as those of the coml pany to the appellant it would have | expressly said so. He submitted that I payment was made in respect of his employment. i His Honour: It is not “in respect of i his employment” in the ordinary sense. |lt is in respect of his ceasing his employment. I His Honour said he thought the appelI lant must succeed. The Commission--1 er based his claim on the ground that | this payment was made to the appel- ! lant in respect of, or in relation to, his i employment or service. His Honour assumed that the appellant remained an employee of the company on account of a resolution it passed to make up the salary of employees on active service. It seemed that the payment was not made in respect of employment, but out of a sense of appreciation of the public spirit shown. That took it out of the category of income or salary and put it in that of personal testimonial. His Honour said there was nothing to satisfy him that the £453 was not paid as a single gift at the discretion of the company. His decision was not to be regarded as being of general application except in so far as it dealt with the payment of a lump sum.