NATIONAL
FOR
SCHEME
DISABLED
MEN
Sir,
Any further communication
should be addressed to-
The Secretary of the Admiralty, Bath.
quoting
C.E.16684740
on the outside of the envelare as well as in the text.
13
L.P.-No. 8.
Admiralty, BATH.
64
SIVED
24th December
.1940
26 DEC 1940 0.0. REGL
Admy
I am commanded by My Lords Commissioners of the Admiralty to acquaint you for the information of the Secretary of State for the Colonies, that they have had under consideration the application of the Salaries Tax imposed by Hong Kong Ordinances Nos.13 and 29 of 1940 to unestablished employees appointed from the United Kingdom for service in H.M.Naval Establishments at Hong Kong.
[2.
Army
The salaries (or wages) and allowances of the staff in question are not subject to United Kingdom Income Tax and Lords appreciate that salaries or wages, (including overtime payments) are therefore taxable under Section 8 of Ordinance No.13/1940, but it is not clear whether the allowances, i.e., colonial allowance for non-industrial employees, and foreign service and house allowances for industrial employees, are deemed to be "income" in this connection.
These allowances are really of a compen- satory character and are identical with those of established employees except that the latter, being subject to United Kingdom Income Tax, are specially increased to allow for the extra taxation payable through their inclusion in the individual's taxable emoluments. Thus, if the allowances of the unestablished staff were subjected to Salaries Tax, their allowances would have to be increased at the expense of Imperial Funds to compensate for this liability. ( -My-Lords would therefore be glad if arrange- ments could be made to exempt these allowances either under the provisions of Section 7 of Ordinance No. 29/1940 or otherwise as may be deemed appropriate.
3.
The question also arises whether the Salaries Tax payable should be deducted at source by the Paying Officer as is the practice in force for collecting United Kingdom
The Under Secretary of State,
Colonial Office,
Downing Street,
LONDON, S.W.1.
Income Tax/
R-S