TO BE EXEMPTED

Gisborne Herald, Volume LXVI, Issue 19980, 4 July 1939, Page 14

TO BE EXEMPTED

WIVES’ MAINTENANCE SOCIAL SECURITY CHARGE AM ENDM ENT PENDING MR. SAVAGE’S ASSURANCE (Pev Press Association.) WELLINGTON, this day. The liability of wives who are separated from their husbands to pay the social security charge and income tax .upon maintenance moneys was the subject of a statement by the Prime Minister, the. Et. Hon. M. J. Savage, yesterday.

‘•lt has been brought to my notice, saicT Mr. Savage, “that under the existing law maintenance payments made in terms of a deed of separation or a court order to a wife, who is living apart from her husband, are liable in the hands of the wife for the social security charge, and also in those cases where the amounts exceed personal exemptions allowable for income tax. In many cases the maintenance moneys so paid have already borne tax in the hands of the husband. As usually these payments are met by the husband out of his income, the Government proposes' to remedy this position at the earliest opportunity by legislation providing that a wife shall not be liable to pay social security charge or income tax cn moneys paid to her by her husband under a deed of separation or under an order of the court. The legislation will not ail'ect the liability of the husband to pay income tax and the social security charge upon these sums where the payment is made out of incom'e, but the husband will, of course, continue to be entitled for income lax purposes to the statutory exemption in respect of his dependant wife. Where lire maintenance moneys are paid out of a trust fund created by a settlement so that the income has not already borne tax, the wife will remain liable for the social security charge and for income tax on the sums received by her.

To ease the position of wives now in receipt of maintenance payments, I have arranged with the Commissioner of Taxes that, pending the passing of tire necessary legislation, the social security charge will not be collected upon maintenance moneys, except in those cases where these moneys represent income received by trustees under a settlement of .property made by the husband and paid by those trustees to the wife. This means that, in cases where the maintenance is paid out of the income of the husband, whether under a court order or under the terms of a separation agreement, the wife need not include tire maintenance payments in her declaration of income. In addition, where the wife’s income is sufficient to make her liable for income tax, she will not be required to pay that tax upon the maintenance receipts. This concession does not extend to alimony paid by a man to his former wife after divorce. Where the parties have been divorced, they no longer stand in the relationship of husband and wife.