Lewis v Commissioner of Income Tax


Revenue Court

Marsh, J.

No. 6 of 1988

Commissioner of Income Tax

Mrs. A. C. Hudson-Phillips, Q. C. for appellant.

Mr. A. Hamilton and Mr. W. Alder for respondent.

Revenue law - Income Tax Act — Construction of ss. 12(z) and 12(ab) — Whether sections are mutually exclusive — Approach to construing a Taxing Act — If the words of Tax Act are clear the court is obliged to apply them — Words of statute best declare the intention of Legislature — Words of statute clear and unambiguous — Sections 12(z) and 12(ab) stand on their own and are not mutually exclusive — Appellant exempted from tax — Appeal allowed.

Marsh, J.

This Appeal raises an interesting point, but since the law is settled and the matter is fresh in my mind, I do not propose to take time.


The appellant is a 78 year old non-resident, who is in receipt of a pension from the Jamaican Government in respect of former services in Jamaica as a Judge of the Court of Appeal. He is also in receipt of income from dividends and interest derived from Jamaican sources.


His total income from these three sources during the year of assessment in question was $24,075. He has claimed exemption from tax on that income under two separate provisions of section 12 of the Income Tax Act, namely, section 12 (z) and section 12 (ab). The actual wording of the section is as follows:

“12. There shall be exempt from tax…

  • (z) As regards the year 1986 and any subsequent year of assessment –

    • (i) $15,000 of the income of any individual derived from a superannuation allowance or pension under either a statutory pension scheme or a scheme for payment from a superannuation fund approved by the Commissioner pursuant to subsection (2) of section 44 or an approved retirement scheme approved by the Commissioner pursuant to section 44a; or

    • (ii) if the individual referred to in sub-paragraph (i) of this paragraph has attained the age of 55 years or is found to be permanently incapacitated as described in paragraph (y) of this section, $15,000 of his income derived from any of the sources referred to in sub-paragraph (i) aforesaid and from any other source;

  • (ab) as regards the years 1986 and any subsequent year of assessment –

    $15,000 of the income of an individual who has attained the age of 65 years or attains that age at any time during the hear of assessment

Provided that nothing in this section shall be construed to exempt, in the hand of the recipients, any payments other than those referred to above made wholly or partly out of the income so exempted.”


The taxpayer's claim has been rejected by the Revenue on the basis that these two sub-paragraphs are mutually exclusive and so he is entitled to claim under one or the other, but not both. The taxpayer has appealed that decision on the ground that the Respondent Commissioner of Income Tax is wrong in her construction of the section. He contends that the sub-paragraphs are not mutually exclusive and he is, therefore, entitled to the exemption under both.


Clearly then, the case turns on a straight question of law, namely, what is the proper construction of the relevant provisions of the Act?


Before examining the wording of the section, I think it might be useful at the outset to state my understanding of the approach to be taken by a Court in construing a taxing Act.


The leading case on the point is to be found in the judgment of the late Rowlatt, J., in the case of Cape Brandy Syndicate v. C.LR. 12 T.C. 366; which was cited with approval in the I House of Lords by Lord Simonds, in Canadian Eagle Oil Co. Ltd. v. The King 27 T.C. 205. In the i case Rowlatt, J., said:

“Now, of course, it is said and urged by Sir William Finlay that in a taxing act, clear words are necessary to tax the subject. But it is often endeavoured to give that maxim a wide and fanciful construction. It does not mean that words are to be unduly restricted against the Crown or that there is any discrimination against the crown in such Acts. It means this, I think; it means that in taxation you have to look simply at what is clearly said. There is no equity about a tax: there is no presumption as to a tax; you read nothing in; you imply nothing, but you lookfairly at what is said and at what is said clearly and that is the tax.”


Even though the appellant is claiming an exemption and the onus is therefore on him to prove that he qualifies, I cite that short and well-known passage because it very succinctly embodies the approach which I think should guide me in the instant case; namely, that if the words of the Act are clear in their meaning, then I am obliged to apply them. It is settled law that in all such circumstances, the words of the Statute themselves best declare the intention of the Legislature. Where, of course, there is ambiguity in the statutory language, different considerations might apply and the court may go beyond the actual wording in an effort to clear up any such situation.


I turn therefore to a consideration of the relevant provisions. Section 12 is an omnibus section beginning with the words — There shall be exempt from tax.” Thereafter follows a series of sub-paragraphs in which are delineated the types of sources of income to be exempted. In the instant case, we are involved with the last two paragraphs of the section; namely, paragraphs (z) and (ab).


Looking firstly at paragraph (z) and omitting any reference therein to “incapacitated persons” I understand the following to be the position:

As regards the year 1986 and any subsequent year of assessment -

  • 1. A taxpayer who is under the age of 55 and who is in receipt of a pension referred to in the paragraph will be entitled to set off against that pension the sum of $15,000 in each...

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