TAXPAYERS' OBLIGATIONS.

Press, Volume LVII, Issue 17126, 22 April 1921, Page 6

TAXPAYERS' OBLIGATIONS.

UNDER LATEST REGULATIONS. EXPLAINED BY COMMISSIdiiEE. Some valuable information on taxation under the Income Tax Amendment Act, 1920, was given by the Commissioner of Taxes", Mr D.' G. Clark, at Auckland on Monday evening, at a largely-attended meeting of business men and others interested, held in „the Chamber of Commerce under the auspices of the Auckland branch of the New' Zealand Society of Accountants. Mr S. G. Chambers presided. Mr Clark said there was now a provision that a person holding land unimproved for three years would havo to pay 50 per cent, more on his tax. That was intended to compel the use of land, rind did not come into force until 1923. A provision that interested most of the smaller income-tax payers was the increasing of the exemption for children from £25 for each child under 16 years to £SO for each child under 18. Of equal value to the same class was the altera., tion regarding the, exemption of £SO in respect of life iusuranco premiums paid and £IOO in respect of payments to superannuation funds. The two had now been combined, and a person could have an exemption of l 5 per cent, of his earned income for cither the ono or the other." The professional man' not having an opportunity to contribute to a superannuation fund could get exemption up to £30!) in respect of life insurance. ' In a sense it provided for wastage of a professional man's earning power. The Commisisoner referred to a recent readjustment of allowances for depreciation. Those oh brick, stone, concrete) rind wooden buildings had been reduced. Amongst new allowances was 5 per cent, for depreciation of furniture attd 6fflco appliances. That would apply to tho assessments of this year. There were two ways of getting an allowance for wear and tear, namely, by writing off tho .depreciation or by ihe annual expenditure oil ropaii'S and rehewnls. The taxpayer, to • obtain the depreciation allowance, must make- oiifc proper accounts showing that it had beeii properly written off and that the charge for wear and teat bad not been duplicated. There. had been a good many Cases where Doth had boon included. Some farmers had bad men working on the repair of sheds, etc.' ( the cost goirtg into the working expenses) So it was "thought better that a proper set of accounts should bo" kept; A new provision that would abolish ft great deal of hardship was ono whereby the exemptions granted to a family mail with, say, £3OO ft year, would continue to apply to liis estate after his death, the trustees being placed in thd position of the testatof. Evasion of tflconle Tafc

Mr Clark next referred to a new provision for assessing companies jointly in l'egard to income tax, as in the case" dt the land' tax. It 'was, he said,; designed to meet cases where the subdivision of companies was fdf the purpose of evasion of income tax. It would be d. matter of examination in each case" as'to whether or notthe subdivision of a company or the incorporation by qhe'eompany into other smaller companies had been carried out with that object or was really for the pfomdtidn of'business and in the best interests of the company. Each caSe" would bd deait with on its merits. Table of New Taxes. The old war tax had been abolished, continued the Commissioneri It had' been incorporated.as nearly as possible in the schedule of the 1920. Act, and the new rate had beeii kept as near as possible to the amount of the combined old rates; The rates Were now charged on taxable inedthej 6b whatever, apparent increase thefe was, it Wttß'ndt.so great as it Seemed. In the bid taX, 4s 6d of the 7s\fld wtts chSfged on assessable incoijie. ItS., Income befdre exeiriip tions had been deducted. The new rates were chafgeti Oh taxable income only, running up to 83 9d in the £ for ineomes uj» to £10)000* whereas tho maximum Wevidtlsly w m 7s (Id dp to £6OOO. Taking' the assessable incomeof £4OO, the Old rate waS is 3d, new rate la 2,4 d; ititiome of £IOOO, old rate Is 7d.85d, hew rate Is 9.6 d. The latter 1 was slighter higher, but the exemptions on the Income were gtefttef: 'ia /.thai the tax. when worked out, wouldjibtba so great under the new Act as 1 nTwttSi On an assessable income of £2OOO the old rate was 26 6.36 d, and tho new rata was 2s 9,6 d; on £SOOO. old rate 3S 0.87 d, tt6w rate 6S ■b.flds fiOtlOO, eld rate 6s ID.Sfd. new rate 6s fl:6ff. The two sets bf tftbiea cattle closely together there. Although tliefe Wefe Wme Ittfge incomes ltt New . Zealand, there wefS hot many large taxpayers.

, Some IntefeSting.f elutft . Mr Clark answered & number df interesting He sdid' that military pensions and ail ether p"ensiori§ were assessed wherever the income was assessed; It was incorrect to say that legislation this year had reduced the income-tax by 10 per cent., The Prime Minister had expressed the hope, that he would \je able to make such tl reduction. There was, of course, ndw an exemption of 10 per cent, unearned incomes tltt to £2OOO. De.alihg with the writing off Of fitodK, the" Commissioner said that wa£ & Matter left entirely to the discretion of the taxpayer. Personally, he would ndt question the jigure written off unless he had good reason to suspect that the taxpayer hjid merely written down to evade taxation. That, however, was riot at all likely juSt now. He knew there woUld be heavy writings down, and he would not question them. It was left to the taxpayer to do what he thought waS.faifi* A .prize front Tattersall's wafc not taxable income', was the answer given to one enquiry, Speculation in Land. •A goodmany- people' a*6. uflablo td distirigtiisn whether the profit from, the sale of land is income or not, said a member of the audience, and he added that there should be instructions given on the- form stating that unless a. person was dealing in land he -wh# n6t liable ftir taxation on profits made on a bona fide sale. Mr Clark replied that it was not easy to state the position more definitely, because there was mtire than the hlere dealing ih lartd invdlved. A man who bought, even one property on speculation was liable to pay tax. . The questioner: But dpi* ffoth speculation? Mr .Gldrk: I WOuld sooner hate the return and have it investigated. properly, (Laughter.-) The Commissioner instanced the Case of a farmer retiring and disposing of hi*.farm. j a he w'ould not be liable. A syndicate that cut up land Would have to make a return and show what profit there had beeh, and that profit would bo taxed: if no return of a deal was made the Department could go back as far as 1891.