| 17/5/2012 |
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| Board of Special Commissioners - Cases |
| Case No. 5/59 |
Decided: 28 April, 1959 |
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Personal deductions not allowable to a non-resident on income arising in Malta through the industry of his wife who is resident in Malta; a tax return accepted by Revenue may not be cancelled or retracted and an assessment may only be quashed by the Board on appeal - article 2; article 20 now 49; article 22 now 53; article 23 now 54, Income Tax Act
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Appellant had emigrated to Australia in 1952 where, some time later, he settled with his wife and children. In the meantime his wife and elder daughter continued to run three betting agencies, two of which were registered in their names. Appellant argued that the income brought to charge to tax arose exclusively from the commercial activity of his wife and consequently belonged to her. In view of the fact that the wife was resident in Malta appellant maintained that Revenue ought to have made allowance for personal deductions in assessing the chargeable income.
In line with the general legal concept, article 20 of the Income Tax Act expressly provides that income earned by a married woman formed part of the community of acquests and, therefore, belonged to the husband. It has to be accounted for in his name and not in that of his wife, even if the couple were living apart or if one of them was residing abroad. On the other hand sub-article 22(1) of the Act provided for certain deductions to be made from the income of persons resident in Malta. It is evident that the operative word is "resident" and the Department would have been in breach of the Act had personal deductions been allowed from the income of appellant who was evidently a non-resident in terms of law.
The Board agreed that persons who are not resident in Malta might suffer hardship in such cases. Indeed article 23 of the Act authorised the Governor in Council to determine what personal deductions may be allowed from the income of non-residents. Such regulations had not as yet been issued, reinforcing Revenue's view that no personal deductions could be allowed so long as the rules envisaged by the Act had not been set.
The Board finally agreed with Revenue's contention that a return may not be cancelled or retracted and an assessment may be quashed solely by the Board on appeal. Once the Board had confirmed Revenue's assessment the return could not be annulled or withdrawn.
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