| 21/11/2008 |
Bil-Malti
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| Board of Special Commissioners - Cases |
| Case No. 33/65 |
Decided: 12 March, 1966 |
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Income "received in Malta" by non-residents; alimony paid out of income earned in Malta, the couple both residing and domiciled overseas; fiscal law does not exist in a vacuum but is correlated to general law
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Appellant was separated from her husband from whom she received alimony in terms of a notarial contract. Both spouses resided and were domiciled overseas and payment was effected by the husband's representative out of monies emanating from a Malta Government pension.
The Board identified the crux of the problem as to whether the monies received by the wife constituted "income arising in Malta" and chargeable to tax as decided by the Commissioner.
It noted that it was a general principal that fiscal law was correlated to the general law of the country: "Taxation law does not exist in vacuo. It has regard to situations and transactions, the exact force and effect of which are determined and regulated by the general law" (Simon). Though it was a fact that the payment of the pension constituted "income arising in Malta", once the husband receives it, it becomes part of his patrimony and the relationship between the two parties ceased. The relationship between wife and husband was independent of that which existed between the husband and the Government.
The Board took the view that this was essentially a question of debtor and creditor in respect of a debt that was regulated, but not created, by the contract of separation. On the basis of U.K. case law the Board held that the locality of debts was the country where the debtor resided. In this case this was the U.K. and, since the creditor (i.e. the wife) resided in Australia, no income fell within the tax net spread by the Maltese Income Tax Act.
An appeal was entered before the Court from this decision (see case no. 64).
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