LAND AND INCOME TAX

Evening Star, Issue 22452, 24 September 1936, Page 6

LAND AND INCOME TAX

CONCESSIONS AND AMENDMENTS SUPERANNUATION INVESTMENTS EXEMPT [From Out: Parliamentary Reporter.] WELLINGTON, September 23. A principal feature of amendments to the Land and income Tax Act which were introduced in the House by Governor’s Message is a concession in respect to graduated land tax where the lands are held by superannuation funds. These lands are to be exempt from the was’explained by Mr Nash (Minister of Finance) that where income from land was used exclusively for superannuation purposes no tax would be payable. Superannuation funds were invested in Jands, and a good deal placed in buildings of which the sites were liable to land tax, but for the amendment. To levy land tax on this class' of land would destroy the principle of extension of pension payments, for the Government would be giving .extra payments in one direction and taking them away from another section of the community. Another concession in the Bill relates to religious bodies, who will be charged land tax at one-quarter of the normal rate, but not less than a halfpenny in the £. This, said the Minister, would relieve churches and others who would have been hard hit but for this reduction of the present charge of one-half the ordinary rate to one-quarter. The Bill also provides that the definition of “ native ” under the Land and Income Tax Act is to include a halfcaste, which is in line with the definition in the Native Land Act. A former section of the principal Act designed to prevent evasion of the tax by transferring a portion of the land to a relative and then leasing it back at a nominal rental, was repealed when the Graduated Land Tax was abolished in 1931, but the amending Bill reinstates this provision. The clauses relating to income tax provide, as announced in the Budget, for a flat rate exemption of £2lO to all taxpayers other than companies or absentees, and prohibit any deduction from assessable income of sums paid in unemployment tax. Section 8 of the Bill enables an allowance to be made in respect to assessable income for any premium paid by the lessee or hirer of anv form of machinery held on lease. This, stated the Minister, particularly applies to machinery leased for boot manufacturing, and is a revival of a provision of law which formerly applied to leased talkie apparatus. Losses of companies are dealt with in Section 9, which permits the carrying forward of a loss for three years, and covers cases where a company which has made losses, instead of .going entirely into liquidation and winding* up, has had its shares purchased by entirely new shareholders, who proceeded to write off the losses incurred by the old company. The clause will enable the new shareholders to obtain the benefit of the carry forward of these losses. The accident insurance business is subject to a higher rate of income tax than the income from life insurance, the latter paying at nine-twentieths of the usual rate, but it was explained by the Minister that most life insurance companies also carry on accident insurance in competition with other insurance companies, and section 10 would provide that the accident business should bo separated from the life business so that the income from accident business should be paid at the normal Section 11 deals with debentures issued by a company without a fixed rate of interest, and provides that the interest shall bo deemed to be nonassessable income. For the purpose of determining the rate of tax to be applied to assessable income, such interest will now be used for the same purpose as interest from free-of-tax stock dividends, and free-of-tax debenture interest. A £SO flat rate of exemption is to be given all taxpayers in respect of a wife, husband, or housekeeper. “ In the past this exemption gradually disappeared,” stated the Minister, “ but it will now be maintained.” There is also a clause permitting the department to collect income tax by instalments in advance. Recovery of income tax on monies payable for alimony or maintenance is dealt with in section 15, which directs that the tax shall be paid by the person required by the court order to pay alimony or maintenance. “ I hear no reference to a hardship clause,” commented Mr Coates, referring to the graduated land tax. “ There is the existing hardship clause,” replied the Minister. “ But that is not a hardship clause at all,” said Mr Coates. “ You told us it was when you introduced it,” said the Minister. Mr Coates replied that he had not introduced the clause, but he was sure that there would be serious hardship, especially where land was mortgaged. Mr Nash stated that he would be glad to look into the matter before the Bill was rend a second time. There was no hardship clause in the Bill at present. The Bill was read a first time.