asked the Chancellor of the exchequer whether he is aware that when interest is allowed by the Crown on deferred payments of compensation under the provisions of Section 10 of the Compensation (Defence) Act, 1939, the practice is to deduct Income Tax at the standard rate in force at the date of payment, irrespective of the period of several fiscal years during which the interest may have accrued; that by delay in settling amount and payment of compensation the taxpayer is placed at a disadvantage with a rising Income Tax; and whether he proposes to take steps to correct this injustice?

The relative provisions of the Income Tax law require that Income Tax shall be deducted from the interest in question at the rate of tax in force at the time of payment without regard to the period over which the interest may have accrued. This requirement is the same whether the rate at the time of payment is higher or lower than the rate or rates obtaining during the period of accrual, and I could not see my way to propose any alteration of the present law. The Departments are, however, doing their best to effect speedy settlements of claims, and payments on account are made in cases where the settlement is delayed.