I move:
That for the purposes of any assessment to income tax for any year which is made on or after, or has not become final and conclusive before, the thirteenth day of June, nineteen hundred and twenty-four, or of any deduction on account of income tax for any year, any increase of or addition to any salary, remuneration, pension, annuity, or stipend by way of war bonus, and any other like temporary increase or addition granted in order to meet the rise in the cost of living, shall be, and shall be deemed always to have been, chargeable to tax as salary, remuneration, pension, annuity, or stipend, as the case may be, and not as perquisites.
And it is declared that it is expedient in the public interest that this resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.
This resolution is necessary to legalise a practice which has been, or may be, upset by a legal decision given in England in a case called "McDonald v. Shan." In that case the decision of the British court would presumably be valid in the courts here, and if this resolution were not adopted and carried into law it would mean that there would be a repayment of Income Tax due to the extent of about £50,000, practically all to Civil Servants. It would be worse for us to have to repay that £50,000 in view of the fact that it actually was received by the British, but under the clean-cut arrangement we would have to make the repayment. It was the practice to regard the cost of living bonus as salary or remuneration, and prior to 1922 to charge it on the amount actually received in the individual year in which it was charged. Perquisites, however, were charged on the three years' average. The Act of 1922 changed the law, and made perquisites chargeable to tax on the actual year, so that so far as any tax due since 1922 is concerned there is no trouble. The law is as this resolution prescribes, that it shall be for the years prior to 1922. Practically no classes except Civil Servants are affected, for this reason, that the full formalities in regard to assessment for Income Tax have not been carried out in the case of Civil Servants. What actually happens is that the salary is known and Income Tax is deducted. If any Civil Servant wishes to question it he will be given information, but actually notice of assessment is not served, so that, consequently, it might be held that the assessments on Civil Servants had not become final and conclusive; and that they could now be reopened in view of the possibilities of this decision in the British Courts. Already one thousand claims for repayment have come in. Now there is actually no equity in these claims.
It means that if this Resolution is passed that all along Civil Servants will have been charged year by year on their bonus in the same way as on their salaries. If, on the other hand, we do not pass this Resolution, and the Courts follow the British decision, and extended it in the way we fear, the effect would be that up to 1922, when the bonus was rising, income tax would be chargeable on the three years' average. The result would be that, of course, a great deal less Income Tax would be found to have been payable than actually was paid. Then the Act of 1922 would come in, and for the years that the bonus was falling we would be obliged to charge actually on the amount of bonus for the year, so that the Civil Servants would have paid less when the bonus was rising, and they would get the benefit of the fall. As things stand, and if the Resolution is passed, the actual amount of Income Tax due on the salary and bonus will have been paid by the Civil Servants, but no more than was actually due. The proposal is quite an equitable one. As a matter of fact, it follows precisely on the lines of a clause which the British Government have in their Finance Act for this year. There is no hardship at all; the hardship would actually be on the State, that the particular class affected would escape payment of a certain amount of tax due in equity on the amount of bonus, or they might do so if the Resolution were not passed.