AN INCOME-TAX APPEAL

Dominion, Volume 13, Issue 1, 26 September 1919, Page 7

AN INCOME-TAX APPEAL

BON US SHARES HELD NOT TO BE ASSESSABLE. Mr. Justice Rowlatt, in an appeal by the British Inland Revenue Commissioners recently, held that bonus shares allotted to the shareholders of a company were not "income," and were therefore exempt from income tax. The Commissioners appealed from a decision of the Special Commissioners, who said that tho Surveyor of Taxes was not entitled, in assessing a Mr. John Blolt to super-tax, to consider as incorao bonus shares allotted to him as a shareholder in a company. The company, alter paying two years' dividends, allotted fully-paid preference shares to tho holders of ordinary shares by way of a further dividend, and resolved to capitalise a certain sum. Mr. Blott received 1250 shares in all. 'i'lie Commissioners submitted that theeo were not capital, but income. His Lordship held that there was no payment of dividend until a part of the profits had been liberated to tho shareholder, and he luvl taken it, and dismissed the appeal with costs. A second appeal on similar grounds was also dismissed.