TAXATION PROPOSALS

Dominion, Volume 10, Issue 3160, 11 August 1917, Page 8

TAXATION PROPOSALS

SUGGESTIONS BY CHAMBER OF COAIMERUE.

A deputation from the \\ elliugtou Chamber of Commerce waited upon the Minister of Finance yesterday afternoon, when a memorandum regarding taxaaon proposals was laid before him and discussed with him. The memorandum urged tint a more generous allowance should ]jo made lor depreciation of plant in the assessment of income, and that concessions should be made to companies workin" "'wasting assets," such as gold mines, where tko annual dividend really included a return of capital. The memorandum referred also to the taxation of companies. "There is one other aspect of tho taxation proposals, and that is in regard to the taxation of limited liability companies," it stated. "In New Zealand tho system is directly to tax tho company, dividends on investments not being included in the assessable- 1 incomo of individual shareholders. In the case of large companies the eflect of this is that all shareholders, whether they have small or large holdings, will probably bo subject, so far as the return on' their investments is concerned, to the highest rate of income tax, viz., <s. 6d. in the pound. Tho matter is dealt with under tho Imperial Acts by collecting tax from tho company, tho. latter deductiiis the incomo tax when tho dividend is pawl and it is left to the individual shareholder to apply to tho revenue authorities for a refund of the difference between tho rato payablo on his income and what tho company .has paid. It is admitted that this system is somewhat cumbersome. ~,,., ~ • "It is understood that the practice in tho Commonwealth in assessing the Federal income tax is first to deduct tho dividend paid, a company paying tax on the undistributed profits only, and shareholders are required to include in their incomo returns dividends received. Ilie latter method is certainly moro equitable than our present system. My council desires to co'nvev the suggestion that so far as the special war tax is concerned it should not bB imposed until a..fan' return on capital is first allowed to the company, the surplus profits only be'ing subject to tho war tax, w;liilo the whole of tho profits will bo subject to tho ordinary income tax. It is realised that this does not wholly meet the case, but it is believed that if the suggestion is adopted, it will tend to relieve y-hat is an anomaly in our taxing system."