Specific capital gains rate prevails for a body of individuals, while balance income is taxed at the maximum marginal rate.

Long-term capital gains included in the income of a body of individuals were taxable at the specific rate under section 112(1)(d), because that provision operates independently of the general rule in section 167B. Where members' shares are indeterminate, section 167B governs taxation of the balance income at the maximum marginal rate, but it does not displace the specific capital gains rate. Accordingly, the capital gains were assessed under section 112(1)(d) and only the remaining income attracted taxation under section 167B.

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Issues: Whether the long-term capital gains included in the income of a body of individuals were liable to be taxed at the specific rate under section 112(1)(d), while the remaining income was taxable at the maximum marginal rate under section 167B.

Analysis: Section 167B is a general charging provision applicable where the shares of members are indeterminate, whereas section 112(1)(d) prescribes a specific rate for taxation of long-term capital gains. The specific rate for capital gains was held to operate independently of the general rule for taxation of the balance income of the body of individuals.

Conclusion: The long-term capital gains were correctly assessed under section 112(1)(d), and only the balance income was liable to tax at the maximum marginal rate under section 167B.

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