COMPANIES AND INCOME TAX

Dominion, Volume 13, Issue 301, 14 September 1920, Page 5

COMPANIES AND INCOME TAX

POSITION OF SUBSIDIARY CONCERNS. In the course of his address before the Wellington Chamber of Commerce yesterday, dealing with the Land and Income Tax Bill, Mr. M. A. Carr said with reference to subsidiary companies:— 'JTn.der section 88, clause 1, of tho Act of 1916, the income of a person or company resident in New Zealand engaged in the business of shipping was exempt from New Z&iland taxation in respect of income derived out of New Zealand oy that business. T]iis exemption lias "een withdrawn (section 17 of Bill). Presumably this section has been included in the Bill to ensure that should the shareholders of a company register a subsidiary company, or register a branch office as an independent company, for the purposes of taxation the two companies would be considered one. But there must be many cases in which individuals aro interested in entirely different companies not connected with each other in business in any way other than that the shareholders in both of them to the extent of half tho capital in each are the same. Tho sectjon states that these companies _ shall be deemed for tho purposes of income tax to bo a single company. Should not the section be made wide enough to give the opportunity of satisfying the Commissioner ibat companies eo constituted are not one and the same, and aro not linked up in any way except for the coincidence that half of the capital in each is held by the same investors?" "As against the Act of 191G," concluded Mt. Carr, "section 21 does not confine the residence of a principal to beyond New Zealand, but now includes a principal resident in New Zealand or elsowliere."