Assignment

The question has been designed to test your ability to write logically and to engage in critical analysis in relation to the correct categorization of particular receipts of income and items of expenditure. The question that forms the basis of your written assignment is as follows:

Lord MacNaghten in London County Council v Attorney General [1901] AC 26 (HL) at 36 states that:

"Income tax if I may be pardoned for saying so, is a tax on income. It is not meant to be a tax on anything else. It is one tax not collection of taxes essentially distinct. There is no difference in kind between the duties of income tax assessed under ... any of the ... schedules of charge. One man has fixed property, another lives by his wits; each contributes to the tax if his income is above the prescribed limit. The standard of assessment varies according to the nature of the source from which taxable income is derived. That is all."

Likewise, In Tennant v Smith [18921 AC 150 (HL) at 164 he states that:

"It is a tax on income in the proper sense of the word. It is a tax on what 'comes in'-on actual receipts... No doubt if the appellant had to find lodgings for himself he might have to pay for them. His income goes further because he is relieved from that expense. But a person is chargeable for income tax ... not on what saves his pocket, but on what goes into his pocket. And the benefit which the appellant derives from having a rent-free house provided for him by the bank, brings in nothing which can be reckoned up as a receipt or properly described as income."

In relation to the New Zealand income tax base, to what extent do you agree or disagree with these statements? In your essay, be sure to refer to the Income tax Act 2007 and decided cases. References to relevant journal articles will, if accurate, attract extra marks.

Note: This essay is to write about commercial law in New Zealand