§ Mr. REESasked the Chancellor of the Exchequer whether interest paid on money borrowed from a bank against Stock Exchange securities is allowed as a deduction in calculating income for Super-tax; and, if not, will he explain why such deduction is not allowed?
§ The FINANCIAL SECRETARY to the TREASURY (Mr. Hobhouse)For Super-tax purposes the income is to be estimated in the same manner as the total income is estimated for the purpose of exemption or abatement under the Income Tax Acts. Annual interest payable by the taxpayer would be deductible in estimating his income for Super-tax purposes, but not interest on short loans.
§ Mr. REESasked whether the deductions from gross profit allowed in assessing to Super-tax under the Finance Bill will be confined to such as are allowed in assessing to ordinary Income Tax; whether in any case any person will be called upon to pay Super-tax in respect of income not actually received and available for expenditure; whether it is proposed to levy Super-tax for 1909–10 on the average income of the preceding three years, seeing that since the repeal of Section 133 of the Act of 1842 assesses may often be called on in that case to pay upon a larger income than they received in 1909–10?
§ Mr. HOBHOUSEThe deductions to be allowed in calculating profits for the purpose of Super-tax are the same as those allowed for the purposes of the ordinary Income Tax, with the addition of the deductions specifically allowed by Clause 47 (2) of the Finance Bill. The question, therefore, whether the profits chargeable are available for expenditure will not arise. The Super-tax for 1909–10 will be chargeable on the total income for 1908–9, estimated in the same manner as the total income from all sources is estimated for the purposes of exemptions or abatements 1418 under the Income Tax Acts. With regard to trade or business profits, the basis of liability will accordingly in most cases be the average profits of the three years 1905–6, 1906–7, and 1907–8.