asked the Parliamentary Secretary to the Admiralty under what particular rule, applicable to Schedule E, Income Tax is charged on lodging allowance of naval officers; and whether such lodging allowance is merely intended to meet an expense incurred in earning a particular salary, and therefore free of tax, as in the case of necessary expenses incurred by Members of Parliament?
The lodging allowance of naval officers is an emolument of office within the terms of Rule 1 of Schedule E to the Income Tax Act, 1918. It is not a payment to meet an expense incurred in earning a particular salary. As my hon. and gallant Friend will realise, if naval officers in receipt of lodging allowance were assessed on their emoluments, exclusive of the cost of lodging, an obvious inequality would be created, since most people in similar employment have inclusive salaries out of which the cost of lodging has to be met, and those salaries are fully assessed.