Important Decision under the Property Tax Act.

Poverty Bay Standard, Volume IX, Issue 954, 22 June 1881, Page 1 (Supplement)

Important Decision under the Property Tax Act.

Probably no magistrate on the New Zealand Bench could have given a more clearly intelligible judgment on an important and novel point of law than that given by Mr Shaw in the R.M. Court on Thursday last, in the case Crombie v. Greatrox. The case arose out of the operation of the new Property Tax Act, and there was no precedent to follow. The Act itself made no provision for the emergency which had arisen, and the issue of the case involved most important considerations. We published the judgment in full in Friday’s issue. Condensed in briefest words, the question involved was this : —Can a firm, doing business in England and New Zealand, claim exemption, for property tax purposes, for debts which, under the system of book-keeping adopted by the firm, are made to appear as owing by the Wellington branch to the Home branch, the so-called debts representing the value of goods received or goods in course of transit ? The Court was asked to decide whether the holder of property in New Zealand is entitled, for the purpose of making a return of property, to deduct debts payable outside the colony, and, secondly, whether the defendant in the case under adjudication could deduct a debt due by himself to the firm of which he is a partner. The Bench held that a person owning property in New Zealand may deduct debts and charges due, or to become due, to persons outside the colony, but that in the particular case of the defendant Greatrex he could not claim the exemption asked for. because unless a liability is a bona fide liability which a person could be sued upon it is not a liability within the contemplation of the statute. The soundness of this judgment seems beyond dispute. The position might be put thus: —A man may owe money, out the person he owes it to cannot, for certain reasons, sue for its recovery. This bars the debtor from claiming exemption in his property tax returns for such amount. He cannot claim exemption for what he cannot be compelled to pay. Again, a man may have money owing him but certain reasons prevent him from obtaining it, he cannot sue. Clearly in making his returns for property tax purposes he omits that amount from his assets, it is unrealizable, hence untaxable. The rule works both ways. The Act may possibly be amended during the present session to define the responsibility of firms, having branches within and without the colony, and the method to be adopted in making returns of assets and liabilities arising out of a duplex system of business.— N. Z. Times.