EARNED OR UNEARNED?

Manawatu Standard, Volume XLV, Issue 128, 4 May 1925, Page 4

EARNED OR UNEARNED?

A superannuation allowance is not, according to a Supreme Court ruling, “earned income.” In giving judgment to that effect on Tuesday, the Full Court was dealing with a case in which the appellant’ was a retired judge of tho Supremo Court and therefore cue of tlioir own order, That tact fflW soften the blow to other superannuated servants of the Star,© whose incomes aro likely to to affected ty tho ruling, but it will in no way alter their opinion that the superannuation allowance, which probably constitutes the major portion of their income, hag not been “earned” in the truest sense of the term. Within the last few months quite a number of publio servants, who have served 40 years or more in various capacities as members of tho Civil Service, have been retired. As part of the superannuation allowances they now receive they contributed, during the years of their active service, a ceiv tain fixed proportion of their salaries. It is to be presumed they are entitled to claim that proportion at least as “earned” income because it actually formed part of their earnings. Then, again, the Government, in recognition of and in further payment or reward for their services, subsidised the superannuation fund out of which their allowances are now paid. Can it be reason ably argued that such subsidies, paid on such grounds, are other than “earned” income? We cannot say whether His Majesty’s judges of the Supremo Court are contributors to the Civil Service Superannuation Fund, or whether their superannuation allowances are paid out of that fund. We rather f. cy they are not. If that is the cu:-', .heir Honours’ ruling on the matter >. superannuation allowances may be ' jgavded as .applicable only to themsiil es and their learned ex-col-leag'- who is spending the evening of his days in retirement. In that case, again, the ruling of the Full Court will not cause that “flutter in the dovecotes” of the Civil Service that might otherwise be expected of it. Yet, even a retired judge may think, and claim, that his superannuation allowance, forming part and parcel of the emoluments of office, is as much “earned income,” and therefore entitled to be treated as such by the Commissioner of Taxes, as the salary he received while on active service as a member of the judioiary. The point is however, an important one to all annuitants, and a clearer declaration of the Court seems desirable, “earned” iiroome, as it is termed, being assessed for taxation on a lower scalp than what is termed “unearned” income. Under the latter beading are included all receipts from dividends in investments, etc., including rants. There may not bo a great many annuitants affected by the Supreme Court judgment; but, whether few or many, the principle involved is the same, and, as an injustice is seemingly involved in the oase of those who have contributed over a long period of years to the pensions they are receiving, the law should bo amended so as to bring the pensions, or annuities so received within the limit of “earned” income. It is, however a moot point whether pensions, other than those awarded for war service under the War Pensions Act, should be exempt from the tax on “unearned” income in cases where the annuitant has not been a contributor to the superannuation fluids of the service to which he or sho belongs. Income tax is only payable upon,,Jncomes in excess of £3OO, and there are pertain exemptions above that amount which may possibly apply to some of the annuitants. In respect of such income as' they receive over and . above that limit it certainly does, not scein just that pensions or annuities received apcl paid in respect of contributions from their past earnings should be assessed as “unearned income.”