SALE OF PROPERTIES.

Taranaki Daily News, 19 May 1921, Page 6

SALE OF PROPERTIES.

A QUESTION OF LAND-TAX.

SHOULD PURCHASER PAY?

Some interesting arguments were heard in the Supreme Court at New Plymouth yesterday, before Mr. Justice Reed, on the rule as to payment of land tax when a property change® ownership. The action was brought by Edward W. M. Lysons, of New Plymouth, A. B. Charters, Whangarei, and G. R. Kidson, Wellington, as trustees of the will of the late H B. Curtis, against Henry A. Charles, of Wanganui, to recover the sum of £lO6, being taxes which plaintiffs said had been paid on behalf of defendant. Mr. D. Hutehen appeared for plaintiffs, and defendant was represented by Mr. Patterson (Hawera ). The statement of plaintiff’s case was that the amount in dispute was paid by them in respect of certain lands afterwards sold to defendant. The parties entered into a contract on April 4, • 1920, for completion on July 1, 1920, and one clause of the agreement provided that on 4he latter date all rates, taxes, and other outgoings should be apportioned between the parties. Possession was duly taken pursuant to the agreement, but owing to defendant not being ready the up was not made on the day specified, and took place later, in August. What plaintiffs were claiming was the proportion of the land tax from July 1, 1920 (the day defendant took possession) till March 31, 1921. This defendant had refused to meet, though he was the beneficial owner. The question for consideration was whether the clause in the agreement providing for apportionment was contrary to section 162 ot the Land and Income Tax Act of 1916, which enacted that every contract, agreement, or arrangement was void, which had for its purpose, or purported to have, the effect of altering the incidence of taxation, or relieving any person of his liability to pay taxation. Counsel contended that an agreement for apportioning taxes in connection with the sale of the property did not clash with the section quoted, as it did not affect the incidence of taxation, and was merely an adjustment between the parties A number of authorities were | quoted in support of the foregoing ari guments. For defendant, Mr. Patterson said that it had hot been the practice, at least in Taranaki, to apportion land tax. His main contention was that, the tax which was assessed as at noon on March 31, was payable for the year preceding, and hot for the succeeding year. A person who entered into possession after March 31, therefore, would have nothing to do with the assessment made on March 31. His Honor: Do you mean to say that a man who enters into possession after the levy of the tax may escape payment altogether the first year? Mr. Patterson replied that in the event of a man coming into possession as mentioned there appeared to be no provision in the Act as to the payment of land tax. . Further, the tax was a graduated one, and. as such, counsel said it was impossible to apportion it-. Decision was reserved.