INCOME TAX CASE

Southland Times, Issue 24868, 7 October 1942, Page 4

INCOME TAX CASE

Disputed Assessment Payments made to a member of the armed forces by his previous employers to bring his military pay up to the level of civilian salary were the subject of a case heard by the Court of Appeal at Wellington. The appellant, the Commissioner of Taxes, contended that such payments were assessable for income tax, while respondent, Neil Melville Louisson, company director, submitted that they were mere presents, bearing no relation to any contract for services, and that such presents were not assessable as income whether they were paid periodically or otherwise. Mr Broad appeared for the Commissioner of Taxes and Mr H. P. Richmond for the respondent ' The respondent, formerly a director and salaried officer of Fairbairn, Wright, Limited, of Auckland, went overseas in January 1940 with the 2nd New Zealand Expeditionary Force and has not yet returned. The company decided in October 1939 that it would make up the difference between employees’ pay and their military pay, and during the income year in pursuance of the resolution paid respondent £6ll/16/6 as salary and £5O director’s fee. The appellant allowed a deduction of £2OB from the assessable income of the company and the company paid income tax on £453 16/6. But in assessing the respondent’s income tax, the appellant determined he was liable to pay upon the whole of the £661/16/6. The respondent contended that this sum did not accrue by virtue of his employment or by virtue of his holding any office in the company, but that the sum of £453/16/6 consisted of a mere gift in the nature of a personal tribute and was not made in respect of or in relation to the employment of the services of respondent and that such sum was not assessable income. The question for the determination of the Court was whether the £453/16/6 was the assessable income of the respondent in the year mentioned. Previously the respondent appealed to the Supreme Court against the assessment and the appeal was upheld by Mr Justice Fair. It is against this decision that the Commissioner of Taxes has appealed. j .. j The Appeal Court reserved its decision.