(New Zealand) The insurance company was taxed on the interest it charged to policyholders on late payments of life insurance and investment premiums. The Act had now been superceded. The Commissioner now appealed a dismissal of the charge. The debt was calculated as the arrears plus compounded interest. The Commissioner argued that the arrangement was by way of a loan advanced to the policyholder to pay the premium upon which interest was charged. The legislation divided insurance company income into investment income which was taxable, and premium income which wasn’t.
Held: There was no proper reason for distinguishing interest on late premiums from the premiums themselves, and the interest was not taxable.
Lord Nicholls of Birkenhead Lord Browne-Wilkinson Lord Steyn Lord Hoffmann Sir Kenneth Keith
Appeal No 64 of 2000, [2001] UKPC 54, [2002] BTC 9, [2002] STC 13, [2001] STI 1770
PC, PC, Bailii
Income Tax Act 1976 204 (New Zealand)
England and Wales
Updated: 21 August 2021; Ref: scu.167069