TAXATION OF COMPANIES

Dominion, Volume 13, Issue 302, 15 September 1920, Page 8

TAXATION OF COMPANIES

QUESTION OF MAXIMUM RATE.

Criticism of the method of taxing companies under tho Land and Income Tax Bill was made by Mr. M. A. Carr in the course of his address to tho Council of the Wellington Chamber of Commerce on Monday. Quoting an actual case of injustice, lie said:—"The capital of a ccrtain company is ,£BO,OOO. The classification of tho shareholders is: 25 shares and under. 35" shareholders; he-tv.-pen 26 and 100 shares, 109; between 101 and 300 shares, 105; between 301 and 1000 shares, 20; and over 1000 shares, 4." Mr. Carr stated that the profit as shown in tho balance-sheet was .£6350. .Adding the previous year's income tax, ■£■11)00, and depreciation written oft', but not allowable by the Tax Commissioner, J;900. the 'assessable income bccame .£ll,OlO. Tho incomo tax payable under the scale provided in tho Bill would b* at 8 9.Gd. in tho £, leaving JESIOS Bs.; and if the 'company declared C per ceut., iIdSOO, would be absorbed.

"There is nothing exceptional in an illustration such as this, regarding either the distribution of shares or tho rate of profit earned," added Air. Carr. "It may safely bo assumed that the greater proportion of the shareholders liavo moderate incomes. Should they in respc* of that portion of their interest in the profits of tho company bo taxed through the company at tho maximum rate of 8 fl.Gd. in the .£?"