FARMERS' INCOME TAX

Bay of Plenty Beacon, Volume 3, Issue 216, 23 September 1940, Page 5

FARMERS' INCOME TAX

ADJUSTMENT TO STOCK VALUES STATEMENT BY HON. A. HAMILTON "1 am continually being asked if I could explain in simple form the various effects of recent changes in Income Tax LaAv as it affects farmers, with special reference to the values of live stock and also how these changes affect the payments of Farmers' Social Security and National Security charges." writes the Leader of the Opposition, the Hon. Adam Hamilton, in a press statement. "Although questions were asked and answered in the House, the position never seems to have been made clear. "The following statement sets out the position as I understand it:— (1) Section 7, 'Land and Income Tax Amendment Act, 1940': This section deals with standard values for farmers' live stock, and suggests—sheep, 19s, cattle,'£s. This section applies only — (a) To those farmers who sell out. thereby bringing the market value of their stock into their income tax returns for that year, or (b) The farmer who dies, and whose stock is valued on a market value basis. This section affords a goodly measure of relief to either of these classes of farmers, who have adopted in the past low stock values, in that the Commissioner can al'low them to adjust their values to the above standard at the beginning ol' that income tax year. This would have the effect of materially reducing the income tax for the year in question. Stock Values Unchanged. (2) The above section 7 affects only farmers who have been paying •income tax for a number of years: that is, farmers whose unimproved value of land held is over £3,000. This class of farmer is not, however, obliged to alter his present stock vataes unless he wishes to do so. If he raises his stock values at the present time, he may be doing himself, an injustice by having to pay income tax and social security and national security taxes on a higher level than at normal times. He may, therefore, be better advised during these abnormal times, to adhere to his present values. (3) Farmers whose property is of an unimproved value under £3,000: these farmers are liable for income tax this year for the first time. The Commissioner is insisting that they adopt market values for their stock in their first returns. The values may be even higher than are quoted above in section 7 of the 1910 Amendment Act.. This adoption of the market value at the beginning is not unreasonable and may ultimately be as much in the farmer's interests as against his interests. A Difficulty Arises. (4) With the farmer who was not previously subject to income tax (referred to in (3) above)—a difficulty arises in connection Avith the returns that he had previously been making for social security tax. In his social security tax returns, he adopted his own stock values, some of which may have been considerably lower than market value. The difficulty now arises when ho is compelled to raise the values in his social security returns to tho same as the values in his new income tax returns. This materially increases, in an artificial way,, the amount he will have to pay for both social security and national security tax on this year's income. This is no doubt a sore point. He is now doubly affected, because the national security tax has beeia imposed since he first established his values, which must now be increased at the command of the Commissioner of Taxes. It -would seem only meagre j,ustice, seeing that these values are ordered to be brought into line, thai the taxpayer concerned should be allowed the alternative of adjusting his values at the date when he first established them, and paying any increase of social security tax involved at the rate of tax in existence during that year. This is apari from the fact that he is paying tas on income earned prior to the national security tax being imposed.'