| 21/11/2008 |
Bil-Malti
HOME
SERVICES
HELP
SEARCH
|
| Board of Special Commissioners - Cases |
| Case No. 6/69 |
Decided: 29 October, 1969 |
   |
|
Premiums on maturity of Bonds are income receivable by the owner and not by the usufructuary - article 5 now 4, Income Tax Act
|
Appellant did not include in her tax return a premium on maturity of Defence Bonds inserting a note to the effect that "Premium received by (my son) as the said Bonds are in his name subject to usufruct to taxpayer". Revenue considered such income as having risen from "rents, royalties, premiums and any other profits arising from property" and was, therefore, chargeable to the usufructuary in terms of article 5 of the Income Tax Act.
The Board noted that in terms of the Civil Code the usufructuary was entitled to any type of fruit being natural, industrial or civil. The words "civil fruits" might be construed to mean a sum of money received at regular intervals. This is not the case since, as held by the Court of Appeal "Cutajar vs Blackman" 11 January 1954, civil fruits included monies received occasionally such as laudemium or premiums payable on a contract of lease.
In regard to the premium in question it had been stated in the prospectus "Upon application by the holder the Bonds will be repayable at the rate of 102 pounds for each 100 pounds of Bonds on the maturity date ... " and defined the premium as "a deferred payment of interest payable at date of maturity under prescribed conditions. Indeed the Director of Savings in the U.K. declared that "premium payable on maturity is an accretion of capital."
The Board held that once the premium constituted an accretion of capital it did not pertain to the usufructuary but to the owner. The appeal was, therefore, upheld. The Board did not review the question as to whether income of a capital nature was chargeable to tax or not because the chargeability of the income as such had not been contested.
An appeal was entered before the Court from this decision (see case no. 80).
|
|
|
|
|