The Controller of the Clearing Office has submitted to me the following minute for advice:

Forwarded herewith is file relative to the indebtedness of Noyes Bros (Sydney) Ltd to the Mannesmannrohren Werke, Berlin.

2. In accordance with the provisions of the Trading with the Enemy Act 1914-1916 Noyes Bros report an indebtedness of £12,594.17.9 to the Mannesmannrohren Werke and on receipt of claim (marked 'A' herewith) from the German Clearing Office in accordance with the provisions of Article 296 of the Treaty of Versailles, the Official Secretary in Great Britain was advised to credit the German Clearing Office with that amount, plus interest, vide this Office memorandum No. 5112 of 23 February 1921.
3. At the same time Noyes Bros were granted an extension of time to meet this indebtedness in accordance with regulation 25 of the Treaty of Peace Regulations.
4. As will be seen from Messrs H.B. Allard, Way and Hardie's letter of 12 September 1921, Noyes Bros (Sydney) Ltd have now been assessed for income tax by the New South Wales authorities for the years 1915 to 1920 in respect of interest due upon such debt.
5. In view of paragraph 22 of the Annex to Article 296 of the Treaty of Versailles, which creates a charge for interest, advice is desired as to:

1. The nature of the reply to be forwarded to Messrs Allard, Way and Hardie on behalf of Noyes Bros (Sydney) Ltd;
2. Whether German creditors are only entitled to receive the 5% simple interest alluded to in paragraph 22 of the Annex less income tax both State and Federal.

Interest at the rate of 5% has been guaranteed by the Commonwealth on debts due by its nationals to German nationals. It is suggested that Messrs Allard, Way and Hardie be informed that the debt and interest due to the Company cannot be abated by any payments it may make by way of income tax to the State of New South Wales and that the debt and interest in full must be paid to the Controller.

With regard to question (b), I am of opinion that deductions for either Commonwealth or State income tax cannot be made from the 5% interest referred to in the Annex to Article 296.

[Vol. 18, p. 61]