SUPREME COURT.

Dominion, Volume 4, Issue 995, 9 December 1910, Page 3

SUPREME COURT.

ABSENTEE LAND TAX. IMPORTANT DECISION. An important point affecting the liability of absentees to pay graduated land tax was decided in a judgment' delivered at tho Supreme Court yesterday by Mr. Justice Cooper. Tho 'plaintiffs in the case were Sir George M'Lean and other trustees of the estate of' tho late William Hart Levin, and tho defendant was tho Commissioner of Taxes. The case was argued by Mr. W. H. D. Bell for plaintiffs, and' Mr. H. H. Ostler for, defendant. "This," said his Honour in his judgment yesterday, "is an originating summons in which the Court is asked to interpret Sections 54 and 59 of The Land and Income 'Assessment Act, 1908, in reference to an assessment jnado under that Act of an 'absentee tax' relating to a portion of the estate of tho deceased known as 'Sowlands,' in which estate Mrs. Elsa Vogel and Miss Mona Beatrice Levin, who aro> both absent from the Dominion, haro each a fourth interest. Mrs. Vogel and Miss Levin are 'absentees' within the meaning of Section 5J of the Act. The .unimproved value-of 'Bowlands' is .£95,943. /Neither Mrs. Vogel nor Miss Levin owns any land in New Zealand other than ' their respective interests in 'Bowlands.' For the year ending March 31, 1910, the plaintiffs were assessed for graduated land tax as follows:—Graduated land tax on 435,!M;>, at 19s. per cent., ',£9ll 9s. 2d.; graduated tax,. 25 ner cent, on ,£95,953, at 10s. per cent., ,£227 17s. 4d.; absentee tax, being 50 per cent, of graduated tax on the share of Miss Levin, .£2B 2s. 2d.; absentee tax, being 50 ner cent, of graduated tax on the share of Mrs. Vogel, ,£22 2s. 2d.; total, £1195 10s. lOd. Payment Under Protest. "The plaintiffs have paid this sum so assessod under protest, on the ground that the last two items, namely, tho sum of £26 2s. 2d., should not have been included therein. Tlie defendant has declined to order a refund of these sums under Section 116 of the Act, and claims that these sums are properly charged. Honour next observed that ' the material provisions of the Act upon which tho question in dispute.had to be determined wore Sub-Sections 1 and 3 of Section SJ, and Sub-Sections 1, 2, 3, 4, and 5 of Section 59. Sub-Sections 1 and 3 of Section 54 were as follow:— "Sub-Section 1. Notwithstanding anything hereinbefore contained, every taxpayer- who.. on the 31st day of •March in every year is an absentee within the meaning of this section shall bo assessed and liable for graduated land tax at a rate greater by fifty per cent, than the rato at which ho would have been assessed independently of this section." "Sub-Section 3. If an absentee taxpayer is liable to bo assessed for graduated land tax' jointly with any other taxpayer who is not an absentee, they shall bo assessed and liable jointly, as it neither was r.n absentee, and tho absentee taxpayer. shall also be separately assessed and liable in accordance with the provisions of Section 54 hereof foi the ; additional tax imposed by this section." Tho legal estate in "Bowlands" was vested in tho plaintiffs in trust for the four children of tho lato Mr. Levin, each having an equal interest, and the twoladies were two of these .children. The term "owner" in respect of land included tho beneficial owjiers as well as the trustees (Section 2). The interests of the beneficiaries in'"Bowlands" were undivided, and they were therefore joint "owners" within the meaning of the Act. But for the provisions of Section 59 of the Act, the four beneficiaries would have been "a single taxpayer." Section 59 was as follows:—: "(1) Whenever two or more persons (hereinafter called joint owners) ~ own land jointly •or in common, whether as partners or otherwise, they shall be assessed and liable for graduated land tax in accordance with the provisions of this section. ' (2) The joint owners shall be jointly assessed and liable in respect of the laud so owned by them jointly or in common' (hereinafter called the joint estate), as if it was owned by a single person, without regard to their respective interests, in the case, and without taking into account any land . owned by any one- of them in severalty, or jointly, or in common with any other person. (3) Each joint owner shall in addition bo assessed and liable in respect of his individual interest in the joint estate, together with anv other land, owned by him in severalty and. with' his individual' interests in any other land. .(4) In the case of each joint " owner there shall be deducted from tho tax so payable by him under the ■ provisions. of the .last preceding subsection (so far as such tax : exceeds tho graduated land tax that would bo payable by him if he owned no interest in any joint estate) his share of the tax so' payable in respect, of the joint estate.. (5) The share of a joint owner.in the tax so payable in respect of the- joint estate shall bear the. same proportion to the amount of that tax as his interest in tho joint estate bears to the whole value .of that estate."

Intention of the Legislature. In the course'of an examination of the above-quoted clauses, his Honour said: "The Legislature has in the clearest possible language imposed upon an 'absentee' generally a liability to pay 50 per cent more of graduated land tax than the 'absentee' would have had to pay if resident in New Zealand. -That is the manifest intention of Sub-section I-of Section 54. Then, apparently considering that it would be a hardship if that 50 per cent was to be calculated on the full value of the whole property in the case of an absentee who had. an undivided interest m a property liable to graduated tax jointly owned by the 'absenteo' and person resident in the Dominion, it has provided that he shall be apparently assessed and liable in accordance with the provisions of Section 59 for the additional tax imposed .by Section 54. The 'additional tax' imposed by Section 51 is not tho gross assessment 'referred to in Subsection I, but tho 50 per cent increase in the rate of assessment. . That 50, per cent is treated in tho latter branch of Subsection 3 of Section 51 as itself a concrete additional tax. Heading the latter branch of Sub-section 3 with this meaning, and the words can, in my opinion, have no other reasonable meaning, • the method of ascertaining tho amount of this ■ additional tax is to bo found in the provisions of Section 59. And that method is set out in Sub-section 3 of that section. 'Each joint owner shall, in addition, be assessed and liable in respect of his individual interest in the joint estate together, with any other land owned by him in severalty and with his individual interests in. any other land.' This sub-section gives a ■ hypothetical means for determining the value of his joint interest for the purposes of a separate assessment. Tho hypothesis is that ho separately owns his joint interest. Now, it is obvious that if he owns no other land, the basis—for there must bo a basis—for determining the 50 per cent liability of an 'absentee' in reference to his joint interest in the joint property must 1)6 either by taxing the amount for which ho is jointly liable, and assessing the additional tax at 50 per cent of that amount, and that basis would bo in the present case for each lady one-half of tho sum of £227 17s. id.; or, by taking the hypothetical basis provided in Subsection 3 of Section 59, and assessing the additional tax at 50. per cent of that hypothetical amount. This is what the Legislature has done. The Tax Rightly Assessed. "The basis, therefore, for tho assessment of the absentee tax payable by tho two ladies is that amount for which they would have each been liablo if they had been resident in New Zealand, and had separately and severally owned the shares which they now own jointly with tho other beneficiaries. The hypothetical amount is in each case. .£56 4s. dd., being 7-lGths of a' penny upon tho sum of .£23,988 55., tho value of a fourth interest in the land, the subject of tho joint assessment. Tho 'additional tax' is one-half of that amount of J!SG 4s. 4d. "Tho answer upon tho originating summons is' that the sum of .£2B 2s. 2d., is payable as an .'absentee', tax in respect of Mrs. Vogel's interest ia 'Bowloms,'

and a similar sum is payable as an 'absentee' tax in respect of Miss Levin's interest, and that the method by which Uiese sums have, been ascertained by the Commissioner is the correct one." No order was made as to costs..: DIVORCE IN CAMERA. DECEEE NISI GIUNTED. The divorce suit of Evans v. Evans and Lliotr, the hearing of which, in camera, by Mr. Justice Cooper and a jury of twelve, has lasted lour days, was concluded last evening. The jury retired at 5 p.m., and, after four hours, the foreman announced ir. court that they saw no prospect of arriving at a unanimous verdict. They had found a three-fourths majority verdict on the issues submitted to them. They were, of opinion that both the respondent and the co-respondent had misconducted themselves, and they assessed the damages against the co-respondent at one farthing. His Honour remarked that the jury, having found, as they had on the issues of fact, ho agreed with them as to the damages. He granted a decree nisi, to he mado absolute after three months, and made an order granting the petitioner custody of the children until the further order of tho court. The question of costs was reserved. Mr. Wilford appeared for the petitioner, Mr. M. Myers for tho respondent, and Mr. A. L, Herdman for the corespondent