FINES TOTAL £600.

Taranaki Daily News, 20 June 1925, Page 12

FINES TOTAL £600.

FIRM EVADES TAXATION. Bia PROFITS FROM HOTELS., DEPARTMENT LOSES THOUSANDS. AUCKLAND FIRM FINED. Bjr Tslegrapfc.—Praaa Assaciatfua. Auckland, Last Night. Fines amounting to £BOO were imposed by Mr. Poynton, S.M., in the Police Court to-day on Messrs Campbell, Ehrenfried ana Co., Ltd., the company’s accountant, Sidney Horace Abell, ar.d* the secretary, Ernest Bollard, for having made false returns relating to the income of the company. A plea of guilty wai entered to the six charges by Mr. G. P. Finlay, who represented defendants. Mr. Meredith (Crown Prosecutor) conducted the prosecution. Mr. Meredith said the prosecutions were laid under section 141 of the Land and Income Tax Act, 1916. The company owned 14 hotels, in which there were managers, and the profit® from these houses should have been shown in its income tax returns as profits of the company. However, the returns were submitted in the names of the individual managers and were not Indicated in the company’s return of profits. Thus the profits" from these various hotels were each taxed on a lower amount as if they were individual incomes instead of paying the higher graduated amount which was paid on the whole of the company’s profits. The loss in revenue in 1929 by reason of this amount escaping tire higher graduated tax was estimated by the department to be about £BOOO. This enabled £28,823 in income to be removed from the company’s profits, which would have paid 7s 6d in the £1 against that of the individuals paying varying amounts up to 3s in the £l. By the inclusion of many items which would not have been there in expenses liable to deductions for the purposes of income tax the system of tax evasion was pursued in another direction. In 1921 the estimated loss in tax in this direction' amounted to £4OOO.

Counsel was given leave to withdraw the prosecutions in regard to 1922 and 1923, as 111 these years the discrepancies were comparatively small and capable of explanation as bona fide errors, Mr. Finlay stated he was faced with the seriousness of the allegations and realised that while he had pleaded guilty on behalf of hie clients he had been prompted by the fact that the Act was all embracing and was hard to resist. Even if the offences were due to negligence the defendants were prepared for and expected to pay the full penalty. People conducting a licensed trade, said Mr. Finlay, were hedged and harassed by legislation and conditions not experienced by other branches ot business, and in 1920 and 1921 the conditions were altogether abnormal. The company had regarded each hotel as an entity, but there had been no fraudulent intent. The company’s officer-, followed out a commercial system which evidently did not conform to the Land and Income Tax Act as construed by the department. These officers knew the hotel business and had tried to make things look good in the eyes of their chiefs, the managing directors, who were out of New Zealand at the time and ignorant of the position. “We have been victims of the misapprehension of our own employees,” said Mr. Finlay, “and they have been victims of their own misapprehension.” While there was no answer to the charges it would be idle to infer that such a huge concern as the defendant company was setting out to deprive the department of any money. The magistrate imposed fines of £lOO and costs on each of the six charges.