FARMERS' INCOMES

Dominion, Volume 9, Issue 2630, 27 November 1915, Page 3

FARMERS' INCOMES

AND THE NEW TAXATION

A COMPLEX RETURN

Soma farmers have been perplexed as to bow to fill in tho now form on which they are required to make returns of their income for taxation purposes. Tho task of devising a scheme by which a fanners income could bo fairly calculated has proved a difficult one, and the form supplied to farmers by tho Land and Inoome lax Department is a fairly imposing one. The following Departmental statement in explanation of t-ne return and how to prepare if was supplied by the Prime Minister yester-

Formerly income' derived from land was exempt, but in order that an equitable contribution may be obtained from all persons who havo made extra profits by reason of tho high prices consequent of the war, an amendment to the Tfvio a Iflcomo Assessment Act 1908, was brought in by the Finance Act of last session, making all income trom land liable to taxation and placing all-persons in'receipt of income on the same footing. In this Act profits derived.from the use of land by the owner or any .other persons from grain, sheep, cattle, live stock, from the extraction, removal, sale or treatment of minerals, ( flax, or timber, rents, royalties, fines, premiums, or any other revenues including goodwill of any business, are now assessable. Profits made by dealing in live stock, etc., must also bo returned as income. Forms on which to make returns have recently been issued by the Land and Income lax Department. "The fiist page of the form contains the notice to make the return, with spaces for the name and address of tl'e person making the return, and for the totals of the schedules -in the other parts oi the form. At the head of the second page there is a space for the names and addresses and shares of, partners. The total of the figures included under this schedule should agree with the total income returned. Theinformation'asked for is required to enable the correct exemption to be allowed, and the correct rates of tax to bo assessed, The next schedule provides tor the receipts and expenditure in connection with properties let, and calls tor no special comment.. i "The next schedule '' (B), tho. statement of live stock and . produce on I nana, would probably occasion a good deal of trouble to farmers. 'It may be explained that if the fanner closes his accounts and takes stock at any other period of the year , than March 31, say Juno 30, or September' 30, he is not required to put in this schedule the value of his stock at March,, but should in this case enter tho stock at June 30 or September 30 in each year. In regard to tho values to be entered, it is not advisable to enter the actual selhng. value at the timo at which .the stock is taken. The usual process is to hare a standard value for oaoh class of stock, and to kpsp to that valuo when entering up the stock figures. u p ?, or loss wi| l then be shown when the stock is sold. '"Th? third page of the form, schedule (O;, the statement of receipts and expenditure' in respect of farming operations, provides for receipts being shown on the left-hand sido'and tho expenses .and outgoings on the'right-hand eide. j . , rs '' ltom °f' receipts are the sales ot live stock, produce, etc. If the farmor making the return is not able to state this in detail, he may bring the whole of these itoms together and enter the _total ainount' of his. 'rcoeipts trom the fanii for the year. V '?l le "i ext ' tem 011 this side is the estimated value of the farm produce that is used for the taxpayer's own family. He' should include in this only what is used tor the family ( not for servants or labourers. This item is put in here in order to balance the expenditure which appears on the other side, which is not strictly expenditure incurred iir the production of -the income. The next'" items are the-values of stock, which are to be entered from the totals shown in statement (B) on page 2. "Tho first item of expense is the amount paid for live stock during tho year. Tlie jiext item is,the rent. The next two items, ■ mortgage interest and other interest,, will include tho total interest paid by the farmer on tho moneys borrowed by Jnm for the working of his tarm. Ihe mortgage interest, although it is to-be stated here, will not. under the provisions of the Act, bo allowed as a deduction in the assessment of' income. The item is entered here so that fuli' information will, be given in reference to the_ interest paid, and correspondence which would be necessary to obtain this information will be avoided. . next, item, 'Seed bought,' will include,, of course, all the seed for annual cropping, grass seed for renewing should not'include crass seed bought for grassing new country. Food , stuff bought for stock requires no comment.

" Wages paid for labour will include all I P a id for tlie ordinary r'unniurr I -of the farm, and should not include wages paid for bushfolling, breaking in , new. country, erecting new buildings, tences, and other permanent improvements, as .these a,re capital expenses and not working expenses., The. next, item is the amount paid for rations bought for employees. The same remarks as have been made concerning the wages apply to this item. The next item will include all working expenses that havo am! 6011 eiru merated above. "Then follow the entries for stock copied from the total of schedule (B).on page 2, then the rates and the fir© insurance, which will include the fire insurance paid on produce stored, stacks, ricks, etc. On the fourth page there is provided a schedule in which to'enter the. land used for the purpose of producing the taxpayer's income and on ii ? c< ' uct ' on of 5 per .cent, will be . allowed when making the. assessment, it the taxpayer has any doubt about the values he may omit them and' merely give the description of the property and its area, and the Department will then be able to ascertain the valu© appearing m the District Valuation Roll, which' is the value on which the allowance is to be made. The next schedule on this pago provides for particulars of the life insurance premiums paid by the taxpayer on his own life, and for particulars or the names and ages of his children in respect of which exemption, as set out in the note on tbo form, will bo allowed. . "If any taxpayer finds himself in any difficulty in regard to the completion of the return,' he can obtain whatever information lie requires by writing, to the Commissioner of Taxes in Wellington, or applying to the officer in charge of the Valuation Office in 'Auckland, Cliristchurch, Dunedin, 'and Invercargill."