LAND TAX ASSESSMENT

Evening Post, Volume CXXVI, Issue 84, 6 October 1938, Page 11

LAND TAX ASSESSMENT

TEST CASE VERDICT

AMENDMENT ACT OF 1936

An action brought in the nature of a test case to determine the interpretation of the Amendment Act, 1936, which made land tax payable by lessees in respect of their leasehold properties as if they were freehold, was decided by a reserved judgment delivered in the Supreme Court today by Mr. Justice Reed. The case involved much property and a considerable amount of taxation. The parties were the De Luxe Theatre Co., Ltd., and the Commissioner of Taxes.

Mr. C. H. Weston, X.C, with him Mr. W. Olphert, appeared for the company (the appellant), and Mr. P. B. Broad for the Commissioner.

For the purpose of swelling the receipts from land tax, the Amendment Act of 1936 made land tax payable by lessees in respect of their leasehold properties as if they were freehold. The taxpayer is credited with the amount of tax payable by the owner of the freehold, who is obliged to pay tax in respect of the land; but the addition of leasehold to his freehold in many cases involves him in payment of graduated land tax, and also brings him within the maximum rate of 6d in the pound. The Amendment Act came into force on October 6, 1936, but was expressly made retrospective to April 1, 1936. As land tax is assessed and levied in respect of land owned by the taxpayer at noon on the preceding March 31, the question arose as to whether taxpayers holding land on March 31, 1936, were liable to tax for the year beginning on April 1, 1936.

The company argued that the amendment should have been made retrospective to March 31, 1936, in to bring it within the net, and the Commissioner contended that the intention of the Act was sufficiently clear by implication to include anyone owning leasehold land on March 31, 1936.

His Honour said the question resolved itself into whether the Legislature had sufficiently expressed its intention that ( the amendment should apply to the position as existing on March 31, 1936. He thought it had, first because the amendment was declaratory, and, second, because the general scope and purview of >he amendment was to make the amendment applicable to leasehold land held on March 31, 1936. Where "an Act was in its nature declaratory, the presumption against construing it retrospectively was inapplicable.

"If the annual taxing Act had been passed on October 5, 1936, in the form subsequently .adopted, the appellant would not have been liable for land tax," said his Honour. "On October 6 the amendment is passed by which persons owning leasehold property shall be deemed for the purposes of land tax to be owners of the fee simple, 'and shall be assessed and liable for land tax accordingly.' No authority for assessment for the current year had at that time been given by the Legislature. Having by the amendment extended the liability for land tax to leaseholders, the Legislature then proceeds to deal with the taxation to be levied for that year, and the annual taxing Act is passed imposing the assessment, levying, arid collection -of land tax on land 'on which land tax is payable.' To ascertain oh what land land tax isjpayable, the law at that time must be referred to, and clearly that means the law as provided in the principal Act, together with all amendments in force at that date."

The Commissioner's assessment was confirmed.