PRIVY COUNCIL CASE

Wanganui Chronicle, Volume 75, Issue 177, 29 July 1932, Page 7

PRIVY COUNCIL CASE

ASPRO APPEAL PAILS LONDON, July 27. The Privy Council dismissed, with costs, the appeal of Aspro v. The Commissioner of Taxes of New Zealand. The Privy Council reserved judgment in this case on June 23. The question at issue was whether the Commissioner of Taxes had the right to interfere with the allocation of directors’ fees in a private company. The case was heard by the New Zealand Court of Appeal in July, 1930, wheu it was stated that when the company was established a profit was shown on the first year’s workings, and the directors’ fees were fixed at £l5OO each. The profits had increased in each succeeding year, and the direc tors’ remuneration was now fixed at £5OOO each. The Crown argued that as the company became established the directors’ duties would become lighter In this ease the fees had grown higher instead of lower. It was contended for the Crown that this was a distribution of profits as fees in order to lower the rate of income tax. By a majoritv the Court of Appeal he’d that the distribution was not justified “The outlay was so unreasonable and extravagant, that it at once raises the presumption that it was illicit.” said Mr. Justice Herdman.