| 22/8/2008 |
Bil-Malti
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| Board of Special Commissioners - Cases |
| Case No. 15/52 |
Decided: 30 June, 1953 |
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Taxability of annuities - article 5(1)(e), now article 4(1)(d), Income Tax Act
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Appellant had ceded his share in a partnership to his brothers in consideration of Lm300 and a weekly annuity of Lm4 for the rest of his life. He claimed that the annuity, being the price for the cession of a right, was of a capital nature and, therefore, not taxable.
The Commissioner maintained that all annuities, of whatever nature, were taxable as all fell under article 5(1)(e).
The Board repeated the same arguments which it had brought forward in case no. 13/52, noting that our law taxed annuities both when constituted by onerous title as well as when constituted gratuitously. In Malta annuities are a much older concept than the Income Tax Act itself, therefore if the Act really wanted to distinguish between an annuity which was of a capital nature and another one which was of an income nature, it could have done so.
According to British legislation, annuities were always taxable unless these consisted of payments by installment of an ascertained capital sum. The Board quoted from several authoritative texts and tax cases and noted that the Maltese Act did not distinguish between the two types of annuity.
It was held that appellant had actually bought an annuity that assured him of an amount of income until his death. The appeal was rejected.
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