§ 55. Lieut.-Colonel Sir MERVYN MANNINGHAM-BULLER
asked the Financial Secretary to the Treasury whether he is aware that instructions have been issued from the Inland Revenue Department at Somerset House to assess dividends received from ordinary shares in the latter part of 1931 for the purpose of Surtax at the rate of £51 13s. 4d. for 1721 every £50 of dividend paid; and whether he will state the reason for such action?
§ Major ELLIOT
My hon. and gallant Friend is presumably referring to cases in which ordinary dividends were paid in the year 1931–32 under deduction of tax at the original standard rate of 4s. (id. in the pound instead of at the increased standard rate of 5s. in the pound imposed by the Finance (No. 2) Act, 1931. In relation to such, cases the effect of Subsection (3) of Section 12 of the Finance Act, 1930, is that the net amount received is, for all tax purposes (including Surtax), to be deemed to represent income of such an amount as would, after deduction of tax by reference to the increased standard rate, be equal to the net amount received. Consequently, on the basis of the standard rate of 5s. in the pound, a sum equivalent to the net amount received plus one-third of that amount would represent the statutory income returnable, and in the instance given by my hon. and gallant Friend this will amount to £51 13s. 4d.
§ Sir M. MANNINGHAM-BULLER
Does not that result in the levying of Surtax at a higher rate than that authorised by Parliament?
§ Major ELLIOT
I think not. I think it is strictly in accordance with the Finance Act, but as it is an intricate queston, I should be glad to discuss it with my hon. and gallant Friend.