§ Mr. PETOasked the Chancellor of the Exchequer whether, in the cases where employers voluntarily make up the income of employés who enlist or who receive commissions in the Army to an amount which, together with their Army pay, will amount to the salary they were in receipt of before joining the Army or some other agreed amount, such allowance made by the employer is not reckoned as income for the purpose of taxation; and, if not, whether he will issue Regulations making it clear that such voluntary allowances are treated as gifts and exempted from taxation?
§ Mr. McKENNAThe question of the liability to Income Tax of the payments referred to depends upon the facts of the particular case. My hon. Friend would appear to assume that all such payments are in law voluntary, but the Commissioners of Inland Revenue are advised that where an employed person is given leave to serve and no notice to terminate his employment has been given—his place being kept open for him until he returns—the contractual relation between employer and employed still exists, and the wages paid during absence are not a free gift.