The Acting Commissioner of Taxation has forwarded the following memorandum for advice:

I am in receipt of your advice in the above matter⁽¹⁾, but would point out that the corollary to the opinion seems to be that if a person owing a debt to another (which debt is not deductible in the debtor's income tax assessment) gives an order to the creditor on any source of income to the debtor to collect that income in satisfaction of the debt, the debtor cannot be taxed for income tax because he did not receive the money.

I should be glad if you would give further consideration to the above point and furnish me as soon as possible with your opinion thereon.

I have reconsidered the previous opinion referred to by the Acting Commissioner, but I do not think that the position stated in the memorandum is a necessary corollary to that opinion.

A person can, I think, be said to have received income for taxation purposes where he has the control of that income and in exercise of that control causes it to be paid direct to his creditor instead of to himself first and then to the creditor. In the case dealt with in the previous opinion the bankrupt had no control at all over his income, as by virtue of the assignment of his estate, compulsorily or voluntarily, he had parted with all control over the estate or its income, until the debt was extinguished.

I therefore, see no reason for altering my previous opinion, but I am of opinion that a person who requests that income due or accruing due to him shall be paid to his creditor in satisfaction of a debt due by him is in receipt of that income within the meaning of the Income Tax Assessment Act 1915-1916.

[Vol. 15, p. 181]

(1) Not published [V0]. 15, p. 15]. The question under consideration was whether the income from a life interest paid to a mortgagee in possession by the owner of the life interest, who had assigned his estate for the bene?t of his creditors, was income derived by the owner of the life interest. On 24 January I917 Mr Garran (as he then was) stated:

'For the purposes of the Income Tax Assessment Acts 1915 I think that the income must be actually received by him before it can be said to be derived by him within the meaning of section 10 (1) of the Income Tax Assessment Acts 1915.

In my opinion, the bankrupt is not taxable on the income from the life interest'.