Page 36 - P6 Slide Taxation - Lecture Day 2 - Trust

CIR V bEROLD

• When the taxpayer sold and transferred a large number of

valuable assets to Luzen, he did so on credit and without

charging interest on the purchase price. In effect he lent a

substantial sum of money to Luzen, and as long as he

refrained from compelling Luzento repay that sum, there

was a continuing donation by himto Luzenof the interest on

that loan. … One glance at the relevant balance sheets and

profit and loss accounts will show that no interest was paid

by Luzento the taxpayer in respect of the balance owing to

him and that probably Luzenwould otherwise not have

been able to declare any dividends. If the taxpayer had

charged interest, his income would have been increased

thereby. His object, however, was to give his children the

benefit of that interest in the guise of Luzendividends.

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