EVADING INCOME TAX

Waikato Times, Volume 94, Issue 14764, 1 October 1921, Page 5

EVADING INCOME TAX

MAKING FALSE RETURNS. CHARGES AGAINST WAIKATO FIRMS MAXIMUM PENALTIES IMPOSED. Three Waikato lirms were fined the maximum penalty of £IOO at Auckland yesterday for having wilfully made false returns of income tax. Mr ,). W. Poynton, S.M., was on the Bench. The Crown prosecutor, Mr V. R. Meredith, prosecuted on behalf of the Commissioner of Taxes. House and [taking, Ltd. (MrMacDiarmid), of Hamilton, drapers, pleaded guilty to four charges, covering the years' 1917. 1918. 1919, and 1920. Mr Meredith said Hie penalties under the Income Tax Act were heavy, because not only was a person liable to a fine not exceeding £IOO for every offence, but he was also liable lo be charged as a further penalty with treble the amount of the deficient Lax. In tiiis case there there were several serious phases. Large sums which would have been shown to the credit of Ihc business as sales made were suppressed, and reintroduced into Ihe business through private banking accounts .of the main shareholders as loans.. The suppression of sales and bogus purchases amounted to a large sum,' and the amount of income lax over four years which was not paid approximated £9OOO. Evasion of Responsibility Denied. Counsel for the defence said "no was sorry Mr Meredith had said the firm was unwilling to accept its share of responsibility for taxation. He could not dispute the figures given, but during Ihc four years the firm had actually paid £'tooo in income lax. The company had been badly advised professionally. It had done illegally what it could have clone legitimately. In preparing the balance sheet stock had been placed at a high figure—the cost of replacement—which would have shown a profit which did not cxisl. Toweduec the figure to a fair and proper amount llcititious purchases had been entered. He had come forward to admit the offences, but did not wish it to go forth that the linn had evaded it's responsibilities. The Magistrate: This is h deliberate fraud on the department, and I do not see any reason why He: full penally should not be imposed. Defendants j are lined £IOO on each charge with costs. Cambridge Draper's Admissions. Tiie next case was lhal of o'. R. C. Calvert (Mr West), draper, id' Cambridge, who admitted three charges of making false returns. Mr Meredith said that defendant inHaled his purchase of goods by entering in this head purchase of land and a motor-car. A deposit on his house was charged to his salary account. Discounts allowed lo him by merchants I were not shown in income lax returns. The net result in the three years was that his unpaid income tax approximated £27-57. Mr West said the defendant had no desire to shirk any responsibility. In regard to the purchases the money had actually been spent, but should not have been debited as purchase of goods- It was a case of a small trader suddenly confronted with abnormal business and increased turnover. There were many legitimate ways of reducing assessable income, by which defendant could have reduced the income tax. When confronted by the inspector he had frankyq admitted the facts. The magistrate said the Slate had been defrauded of over £2OOO. The penalty would be the same as in the last case. Defendant was lined £IOO on each of the three charges, with costs. Plea of Not Guilty Entered. ' A idea of not guilty was entered by Barton and Ross, Limited (Mr MacDiarmid), furnishers, of Hamilton, to three similar charges. Mr Meredith said the firm's books had been inspected by an experienced inspector, who found Ihem well kept. The firm's profits were wrongly arrived at and were hopelessly wrong- In three years Hie profits were extensively reduced, the amount being over £7OOO. When the inspector wrote regarding certain items he received a reply lhal thi 1 firm had written up stock for fire insurance purposes. The Commissioner of Taxes had lost about £2BOO in the three years, owing to the irregularities. Counsel for the defence submitted that the return made each year had not been a wilfully false one, and if this was not a wilful return the prosecution must fail. This was a one-man company. Boss was the principal shareholder, " He had built the business up, and had attempted to do all Ihe work. He kept, the hooks and made out the returns, but was not an accountant, and did not understand the effect of certain methods lie iiad adopted, lie thought they were legitimate. He bad valued his slock at present prices for fire insurance purposes, and not at original cost. Thai was fair and legal. However, this would have shown a wr.ong profit, and,so he bad made fictitious ,-n----i tries of purchases of slock. The return made each year v .is correct with i the books, but the mistakes were made lin the book-keeping. Counsel subiniti ted lhal this was done in error, and ' not for tile purpose of evasion of income lax. Hoss believed the books were correct. il. C. Boss gayc evidence as to his method of book-keeping. In cross-exa-mination he staled that, at, no time was his stock valued at more than market value, but, was above the cost (trice. V. 11. Sanson, public accountant, who had examined defendant's bunks after the inspector's visit, said Mr Ross did in,!, understand the effect of the entries i lie liuil made. The magistrate said he must cone.' to i the conclusion that what had been done had been done with the intention of evading income-tax. A line of £IOO was imposed on each charge.