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TMI Blog1932 (6) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... yments; there is no reference to deductions; there are, simpliciter, the words "pay my wife during her life the annual sum of £5,000 free of income-tax." Eve, J., has held that that freedom so prescribed included' freedom from sur-tax as well as income-tax. Counsel for the appellants, who have presented to us, both of: them very useful and helpful arguments, contend that those words -ought to be confined to income-tax alone, and cannot be made to cover the sur-tax. I am not unmindful that a distinction between what is known as sur-tax, or super-tax, and income-tax can be drawn. I will use in future the words "super-tax," because sur-tax was introduced by the Finance Act of 1927, s. 38, sub-s. 1 (b) , but although the name is different I agree with Bennett, J., who said in the case Hulton, In re ; Hulton v. Midland Bank Executor and Trustee, Ltd., after going very carefully through the provisions relative to the matter; " In every essential feature, super-tax and sur-tax are, in my judgment, the same tax." Now what is super-tax? It was originally imposed by the Finance (1909-10) Act, 1910, s. 66. By that section it is declared that; "In a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst those assessments, and to the collection and recovery of income-tax,……. shall, so far as they are applicable, apply to the charge, assessment, collection, and recovery of super-tax……" Therefore it can be said that here is something which is an additional income-tax. It is called a super-tax, but the mode of its incidence, the mode of its initiation, and the mode of its collection, are different. I pointed that out in the Michelham Case, where I said (14 L. T. at p. 168 ; 15 Tax Cas. at p. 750): " The fact that it is paid or may be paid a little differently from the income-tax, that deduction does not apply, does not alter its character." The consideration, therefore, of the nature of super-tax seems to disclose that, in spite of the criticism that might be offered on which differentiation between it and income-tax can be founded, the difference is not effective to destroy the fact that it remains an additional duty of income-tax within the statutes to which I have referred, and for the purposes of the payment; With those observations I feel myself unable to carry into effect any differentiation between the, income-tax and super-tax wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes v. Bates. In that case there was a gift to the, wife of " such a sum in every year as, after the deduction of income-tax for the time being payable in respect thereof, will leave a clear sum of £ 2,000." Russell, J., held that that was free of income-tax only, and that the wife was not entitled to payment of any sum in respect of super-tax. He founded his judgment upon the reference to "deduction," and pointed out (94 L. J. Ch., at p. 191 ; [1925] Ch., at p. 159) : "Super-tax was not a charge in respect of any particular annuity or sum, but was a charge in respect of the recipient's whole income and was not a matter with which the trustees would be charged or concerned at all." He is dealing there with the judgment of Peterson, J., but as he puts it : "The question is : Did the testator mean that only income-tax 'in respect thereof' was to be deducted, and that super-tax was not to be deducted ?" He then holds that : "The testator did not intend that in addition to income-tax being deducted a proportion of the super-tax payable by his wife in respect of her total income should also be deducted." In the use of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x, and he referred in his judgment both to Crosse, In re; Oldham v. Grosse, and Doxat, In re; Doxat v. Doxat, and distinguished those cases on the ground that there the gift was ' of an annuity free from income-tax. He then proceeded to consider the words with which he had to deal, and came to the conclusion that, on the construction of the particular bequest, the freedom from income-tax did not include freedom from super-tax, relying (inter alia) upon the words "in respect thereof' occurring in the bequest, and pointing out that super-tax was not strictly speaking a tax payable in respect of the annuity. Counsel, however, has contended that a gift of an annuity free from income tax must necessarily mean a gift of an annuity free from income tax payable "in respect thereof," and that, therefore, the reasoning of Russell, J., in Bates, In re; Selmes v. Bates, ought to be applied to the present case; but it is to be observed that the learned Judge in that case relied upon the express use of the wards "in respect thereof" as distinguishing the case from the case of a gift such as we have here. 6. I have said that the question was settled, so far as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay something in respect of super-tax on the annuity, by which I mean a sum calculated in the way indicated in the statute, the person whose duty it is to carry into effect the gift of the annuity will have to pay, not only the sum that is mentioned in the gift, but also the amount paid by the annuitant, or payable by the annuitant that year, in respect of super-tax. If that be so, I cannot conceive why it should make any difference that the gift of the annuity is only to be found in a direction to a trustee to pay. The trustee, in that case, has to perform the same duty as the executor or trustee, or other person would have had to perform in the first case that I have mentioned, namely, where there is a gift simpliciter of an annuity free of income tax. There are, of course, cases-the Master of the Rolls has referred to some of them-where the testator, by the use of the words ''pay without deduction" has shown that he is not dealing with the position as between the annuitant and the Crown, but is dealing with the position that will exist as between the annuitant and the trustee who has to pay, and words that give a direction "to pay without any deduction" ind ..... X X X X Extracts X X X X X X X X Extracts X X X X
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