FALSE RETURNS.

Press, Volume LXI, Issue 18413, 20 June 1925, Page 14

FALSE RETURNS.

TAXATION EVADED. (fhsss association telegram.) AUCKLAND,. June 19. Fines amounting to £6OO wore imposed by Mr Poyntou, S.M. y in the Magistrate's Court to-day on the Campbell, Ehrenfried Company, Limited, the company's accountant, Sidney Horace Abell, ami secretary, Ernest Bollar, for having made false return 9 relating to the income of tho company.

A plea of guilty was entered to the six charges by Mr Finlay, who represented the defendants.

Mr Meredith, Crown Prosecutor, who conducted the prosecution, said tho prosecutions wero under section 141 of tho Land and Income Tax Act. The company owned 14 hotels, in which thero werp managers, and the profits from these houses should have been siiown in its income-tax returns as tlip profits of the company. However, the returns were submitted in tho names »f the individual managers and not indicated in the company's return ot profits, thus the profits from these various hotels we.ro each taxed on a lower amount as if they were individual incomes, instead of paying the higher g.aduatod amount, which was paid, en the whole of the company's profits. The loss in revenue in by reason ot this amount escaping the higher graduated tax was estimated by the ltepartment to bo about £BOOO. This enabled £28,823 of income to bo romoved from the company's profits, which would havo paid /a lid in the £., to that of individuals paying varying amounts up to 3s in tho £. By the inclusion of many items which should not havo been there in expenses liable to deductions for purposes of incometax, the system of tax evasion was pursued in another direction. Ini 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 in these years the discrepancies were comparatively small and capable of explanation as bona ildo errors.. Mr Finlay said ho was faced with the seriousness pf tho allegations and realised that while ho had pleaded guilt}-, on his clients' behalf, ho had been prompted by the fact that the Act was all embracing and was hard to resist, even if offences wero duo to ueglig'enne. Defendants wero 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 of business, and in 1920 and 1921 conditions wero altogether abnormal. The company had regarded each hotel as an entity, but there had. been no fraudulent intent. The company's officers followed out a commercial system which evidently did not conform to tho 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 st tho time, and were ignorant of the position. "We have been the victims of the misapprehension of our own employees," said Mr Finlay, "and they have been the victims of their own misapprehension." While thero was no answer to tho charges, it would be idle to infer that such a huge concern as tho defendant company was setting out to deprive the Department of any money. Tho Magistrate imposed a fine of £IOO and costs on each of the six charges.