Page 35 - Taxation P6 - Lecture day 2 Notes - Trust
P. 35
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 Luzen to
repay that sum, there was a continuing donation by him to Luzen of
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 Luzen to the taxpayer in respect of the balance owing to
him and that probably Luzen would 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
Luzen dividends.
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