TAXATION APPEAL CASE

Taranaki Daily News, 7 October 1929, Page 13

TAXATION APPEAL CASE

INCOME FROM DEBENTURES SHOULD GENERAL TAX RATE APPL FULL COURT RESERVES DECISION. By Telegraph—Press Association. Wellington, Oct. 4. A Full Appeal Court, consisting of the Chief Justice, the Hon. Al. Afyers, and Judges Herdman, Adams, AfacGregor and Ostler, is engaged to-day hearing an originating summons issued by the Government Life Insurance Commissioner (plaintiff) against the Attorney-Gen-eral (respondent) for an interpretation of the Land and Income Tax Act (1923). Questions submitted for the opinion of the Court are (1) whether the aggregate amount of income-tax paid by plaintiff for the years ending December 31, 1925, 1920 and 1927, exceeded the amount that would have been payable by him on debentures issued by local authorities forming part of the taxable income of the Government Life Insurance Department; (2) at what rate plaintiff is liable to pay income-tax on income arising from such debentures, having regard to the provisions of the above Act and other relevant statutory provisions. Plaintiff alleges that, for the years ending December 1925, 1920 and 1927, he has paid a sum of £17,017 3s 8d in income-tax in excess of what he was liable to pay by law. On the answers of the court to the above question rest his right for a refund of this amount. For plaintiff Alessrs. C. A. L. Treadwell and H. J. James appeared, and fjsr respondent Air. A. Fair, K.C. Air. Treadwell said the Income Tax .department had claimed tax at the full rate on interest from debenture securities held by the Insurance Commissioner. Plaintiff claimed he was entitled to a rdfund on the tax paid in pursuance of such a claim by virtue of the provisions of section 99 (2) of the Land and Income Tax Act 1923. The rate of debenture tax should not exceed the general* rate. By section 93 of the said Act the rate of tax in respect of life insurance companies was halved except in respect of income derived from debentures, but section 96 provided that plaintiff had not to pay on debenture tax a rate higher than half the rate of the general tax. Plaintiff accordingly sought a refund of the difference between the general rate paid by him and the debenture rate, and the onus was on the defence to show that the plaintiff was not entitled to this benefit. Air. Fair, K.C., for the defendant, said that it was only by consent that the proceedings before the court were taken' in the form that they were. The Commissioner of Taxes had consented to the proceedings in order to have the question decided. If the debenture tax had formed part of the taxable income of a taxpayer, or had not been separately assessed at a different rate, it would have fallen within section 96 of the 1923 Act. This exempting section did not extend the exemption to income from debentures. If there had been separate assessments of debenture interest it would have been charged at the full rate. Income derived from debentures was expressly exempted from the provisions of section 96. Judgment was reserved.