VITAL CHANGES

Gisborne Herald, Volume LXVI, Issue 20056, 30 September 1939, Page 14

VITAL CHANGES

INCOME TAX INCIDENCE REMOVAL OF ANOMALIES LAND TAX EXEMPTION INSURANCE DEDUCTIONS (Por Press Association.) WELLINGTON, this day. Important alterations to the present taxation law are embodied in the Land and Income Tax Amendment Bill, which was introduced by the Governor-General’s message in the House ol Representatives yesterday. The bill, which is also designed to correct a number ol anomalies in the incidence of taxation, will apply to income being derived during the current income year.

Two ol' the main provisions are those limiting the deduction from taxable income for insurance and superannuation purposes to £l5O and allowing land tax levied on land used in the production of assesable income to be claimed as a deduction for income tax purposes.

Exemption from the payment of income tax is given to members of the New Zealand forces outside New Zealand during the war, and a soldier's pay does not operate to increase the rate of tax on the balance of his income. An employer who pays a salary to an employee who is serving with the forces is entitled to claim a reduction from his assessable income in respect of the amount paid to the employee, with the limitation of £4 a week.

Exemption Removed The exerhption of £SO which has been granted in the past to a childless widower in respect of a housekeeper is removed, but the bill confers the right to exemption on a divorced person with dependent children. Where death removes a dependant, the taxpayer is granted full exemption for that year, instead of a portion only. One of the most important clauses of the bill is that limiting 'the sum which may be claimed as special exemption on account of life insurance premiums, superannuation and national provident fund contributions to £l5O a year, or 15 per cent of the assessable income, whichever is the lesser.

Authority is given lor the aggregation ol the incomes of husband and wife lor taxation purposes. A lengthy clause provides for the assessment of the incomes of husband and wife living together at the rate of the tax' prescribed for the combined figure, except where the income of one is less than £SO. Where separate assessments are made, the personal exemptions of £250 allowable to them both is divided between them in accordance with the respective amounts of their assessable income. Other personal exemptions, -such as those for dependent children, will be apportioned, as the Commisisoner of Taxes thinks fit. Income tax is to be levied on all income derived from the use or occupation of land, whether the unimproved value is less than £3OOO or not. An important clause provides that land tax levied on land used in the prcdueUon'of assessable income may be claimed as a deduction for taxation purposes. The present law prevents a taxpayer from deducting from his assessable income any income tax, land tax or employment charge paid by him. The deduction of income tax or social security charge is still precluded. ‘ \ The bill was read the first time.