§ MR. M'CRAE (Edinburgh, E.)I beg to ask Mr. Chancellor of the Exchequer whether he will consider the advisability of introducing into the Finance Bill a clause repealing the proviso to Rule Fifth of No. 2, Schedule A., s. 60, 5 and 6 Vic, c. 35, by which, contrary to the principles dealing with all other kinds of income, fines received in consideration of any demise of land or tenements are, if applied to productive capital, exempted from income tax, and whether he can state the amount so exempted for the year 1900–1901.
§ SIR M. HICKS BEACHThe proviso does not appear to be "contrary to 556 the principles dealing with all other kinds of income." It provides that fines (which may arise in many different ways and circumstances) should be chargeable as income when, as a matter of fact, they are treated by the recipient as income, but should be exempted when treated as capital. In the case of Settled Estates, for instance, fines must by law be treated as capital, and the life tenant is not entitled to anything more than the interest arising from their investment. It would be manifestly unjust to require that in such circumstances the amount of the fine should be subject to income tax. Moreover, it must not be overlooked that the property from which fines issue is taxed on its full annual value, irrespective of actual rent, so that in a sense there is a double assessment where fines are charged with income tax. It is not possible to give the amounts exempted under the proviso.
§ MR. M'CRAESeeing that the exemption of building lease fines is totally different to the state of affairs contemplated when the Act was passed, cannot the right hon. Gentleman reconsider the matter?
§ SIR M. HICKS BEACHI can add nothing to the answer I have given. It explains the reason for the exemption.