FINANCE BILL

Dominion, Volume 9, Issue 2823, 14 July 1916, Page 6

FINANCE BILL

IMPORTANT AMENDMENTS

5 PER GENT. TAX GRADUATED £600 EXEMPTION FROM WAR TAX SEVEN & A-HALF PER CENT. ALLOWED ON CAPITAL PROVISION FOR DEPRECIATION Many important and^comprehensive amendments to the Finance Bill were introduced into the House of Representatives yesterday evening by Governor's Message. The alterations remodel the ,measure to a. considerable extent and meet many, if not all, of the criticisms to whioh the measure in special aspects has been subjected. . i , In Part I 'of tho measure dealing with the rates of land tax and income tax, a sew sub-clause is introduced to provide that "tho expression "income on which tax is payable" in the Land and Income Tax Act, 1916, shall mean the taxable ineome, less the amount (if any), payable by the taxpayer as excess profits duty under the present Bill. This will eliminate the double-banking of taxation. A Graduated Scale. ' The flat rate of five per cent, for the special tax on incomes, is abandoned, *pd a rough graduation adopted to provide that on taxable incomes up to 1900 a year the tax shall be 6d. in the £, and on other incomes Is.-in the £. Excess Profits Duty. In. Clause 10, defining T the standard of income upon whioh the excess profits duty is to "be imposed, the words "at tho discretion of the taxpayer" are altered to "at the election of the taxpayer," and . in Sub-section (d) the six jier cent, return Upon the capital invested is altered to TJ per cent.,- and the additional allowance of -£500 is increased to X6OO, thus making this method of computing the income more attractive. In the original Bill it was provided that the capital should be determined as at April 1, 1915, but it is now proposed to make the assessment on the capital employed in the "income year," and not merely on the amount concerned on April 1. Special "Hardships" Clause. The following new clause gives the Commissioner discretionary power in certain casos:—"ln any case where the Commissioner is satisfied that the computation of the standard income in the manner prescribed by section ten would entail 6erious hardship on any taxpayer by reason of the recent commencement of tho business of such taxpayer, or br reason of the Fart that the amount of capital actually employed by the taxpayer in ■ his business .Is, owing to the nature of that business, small compared with the capital necessarily at stake for that business, the Commissioner may compete the standard income in such manner as, having regard to all the circumstances of the case, ho deems just and reasonable."

Duplication of Taxes. Provision for negotiation with (JrGal Britain to avoid duplication in tlie im- ~ position of war profits is made in a new clause:— "In any case where excess profits are chargeable with'excess profits duty under this part of this Act, and are also chargeable in Great Britain with excess profits duty under any Act of the Imperial Parliament imposing an excess profits duty, the Minister of Finance may arrange with the Chancellor of the Imperial Exchequer, or other authorised ~r person, for the apportionment between .. the Imperial and the New Zealand Governments, ' towards the supplies necessary for the services, of His Majesty, of the excess profits duty derived pursuant .. either to this part of this Act or to such Imperial Act as aforesaid (whichever provides for the greater amount of such ' duty), and in any such caso the excess • profits duty charceablo pursuant to the other 'of such Acts shall not be ed."Valuation of Assets. ' In clause 14 giving special nrorisions for the valuation of assets, Paragraph , B, dealing with the return of live stock and stock-in-trade as assets, is . deleted. ; A new nroviso is added stipulating that where tJfo taxpayer has purchased land , returnable as assets since the last Gov- .- ■ eminent valuation its assessable value effall Rot be less than the price agreed •npSti in connection with that transaction. | Clause 20, making special provisions Vith respect to income derived from investments on mortgage or from rents, is abandoned. Allowancs for Depreciation, In conncction with wasting assets, the Commissioner of Taxes is given power ■ to allow a deduction for depreciation not exceeding per cent, of the value of the asset as at tho comnicncemcnt of the income year. A £60(1 Income Limit. Upon tho exemption of salaries and Wages from the excess profits duty a new subclause provides that where a salary is less than .£6OO a year, and where, an.additional commission or share ; of. profits is received which might otherwise be subject to the tax, the Commissioner may .regard as salary that portion of the additional payments which will increase th'o salary to <C6OO. It is also provided that where a taxpayer is a company the amount allowed for tho remuneration of directors shall not exceed the average annual amount allowed ■ for the last three years, and in any 5 other caso shall not exceed the sum o? .£ISOO. Discretionary Power. " In. connection with the determination of the amount of capital provision is made.that the Commissioner "may make ' such adjustment as he thinks just and equitable in any case where the amountof , the capital employed by a taxpayer in the production of his income has been substantially increased or decreased during the year." Board of Appeal. Appeals against assessment for excess profit* duty juay.be heard by a specially ' constituted Board of Appeal, to consist of three members, of whom tho president shall lie a Judge, of the Supreme Court'. -The others' shall be such persons. not members of the Government ■ service, as may De appointed. No olijeci t.ions shall be heard ici public, and the Board shall have all the power of a Commission, under tho Commissions of Inquiry Act, 1008. The decision of tho Board on any question of fact shall bo final and • conclusive, but questions of jaw shall. l>e subject to an appeal to the Court of Appeal. • Offences committed with respect to tho assessment of the excess profits duty render persons guilty thereof liable bo a fine of not more than .i"i 00 or less than JX. j Tho penal tax imposed in Sections 144- " 153 of the Land and Income Tax Act, 191 G. is not made applicable to the excess profits tax. Banking and Loans. In Clause 37, giving power to make regulations ill connection with banking, . the words, "as defined by the Banking . Act, 1B0S." are. inserted after tho word "charter," thus making it ■ clear that this clause docs not apply to commercial firms carrying on semi-lianking business. Regulation of Investment. Clause 38. giving power to mako regulations as to the investment of moneys and ratos of interest, is. deleted and replaced by the following new clause:— (1) The Governor in Council may from time to time by regulation— (a) Make such provision as ho thinks neccsary in the public interest for the regulation or restriction of tthe investment of moneys larond New Zealand; and fp) slako ouch provision as he ttifciks neccssary in the public interest regulating the rates of interest

■ that may be paid by any bank or other corporation or person on moneys invented in New Zealand by way of fixed deposit, or ou moneys invested in New /iealaud by way of mortgago of laud. (2) Regulations under Paragraph (») of this section may, if the Governor ill Council thinks fit, having regard to the special circumstances occasioned by the present war wtli Germany, prohibit the investment of moneys beyond New Zealand, except with the consent of the Minister of Finance.

(3) Regulations under Paragraph (b) of this section, in the case of fixed deposits, may fix different rates of interest, having regard to the length of the respective periods for which deposits may be made and, in the case of interest on mortgages, may fix different rates of interest with respect to different classes of security. Limitations Removed.

In Clause 89 the restriction upon any "society, firm, or person," from carrying on tho banking. business, except under Parliamentary authority, is removed and the restriction made applicable only to bank?. Sub-clause' 3 is altered to read "this section shall not apply to any bank which, on the passing of this Act, is carrying on the business of banking in New Zealand." The definitions oil "bank" and "banking" iii the Banking .Act, 1908, are adopted. All regulations made under this portion of the Bill must be submitted to Parliament in due course.

Minor Matters. Some new clausos are provided in Part VI dealing with stamp duty, etc. It is provided that duty shall bo payable on debentures secured by a trust deed. It is also provided that conveyances and transfers of property to the trustees of war funds shall be esempt from stamp duties. In the section relating to Post Offiw Savings Bank deposits a new clause provides that interest on fixed deposits shall be computed from the day the deposit is made.