Manawatu Evening Standard. THURSDAY, APRIL 23, 1925. INCOME TAX ASSESSMENTS.

Manawatu Standard, Volume XLV, Issue 120, 23 April 1925, Page 4

Manawatu Evening Standard. THURSDAY, APRIL 23, 1925. INCOME TAX ASSESSMENTS.

There appears to be some misunderstanding concerning the returns of incorao asked for by the Taxation Office this year, the form which taxpayers have to fill up being varied somewhat from that formerly used and now including income derived from dividends. In certain quarters it appears to have been assumed from this that it is intended to include such income in the taxpayer’s taxable income, and that thus the interest ho may hold in company concerns will be subject to double taxation. It was, however, stated some time ago when the now schedules were in course of preparation that it was intended that such a return of income from dividends should bo made so that a reliable estimate could bo formed of the probable effect of transferring taxation on company income, as at present levied, from the companies to the individual shareholders. Under the existing system of company taxation the shareholder is entitled to exemption from tax in respect of dividends which he may receive from the company or companies in which lie is interested, taxation having already been paid on tlie assessed income of such company or companies, consequently ho does not include such amounts in his return. It will be remembered that the Taxation Commission which took evidence on the subject last year recommended that returns of individual incomes should include moneys paid in respect of dividends and that, if it were found that the revenue would not be unduly affected, the tax should im transferred from the companies to their shareholders, and that company taxation should be confined to a flat rate on the profits of the company. That would presumably meet the wishes of the companies that have been complaining of the allegedly excessive taxation they are called upon to pay. Jt probably would not, however, meet with the requirements of the Treasury, which has heavy commitments to meet that can only be paid out of taxation, if the profits made by massed capital, which are necessarily greater than those of the small trader, are to escape taxation by being dissipated amongst a large number of .shareholders who by reason of their small incomos (dividends included) pay little or no income tax, there will be no alternative to increased taxation of those in a smaller way of business. There are many cooperative concerns in the -country in which the capital Las been subscribed by men of small means, on which there is a big trade turnover and a correspondingly big income. On a capital of £IOO,OOO it should not be a difficult matter to obtain trading profits equivalent to 10 per cent. The £IO,OOO so earned would contribute a fairly substantial sum in the shape of income tax to the Treasury. Disbursed amongst the shareholders of the concern it might not produce a tenth part of the tax that is paid by the company. The Taxation Commissioner and the department are “trying out” the position, and when the returns of income for the past twelve months are received and analysed, it will be possible for them to estimate'

the loss that the transfer of taxation from the companies to their individual shareholders would entail. That such a transfer would entail a loss, and a heavy one at that, is certain. In one estimate given of its probable effect the Commissioner of Taxes was quoted by Mr Massey, as reported in Hansard, to have stated that it would be necessary to make a minimum rate of 2s Gd in tho £1 on all incomes in order to make good the loss such a change would bring about. People paying tax on the smaller incomes find the present charge of Is in the £1 heavy enough. To increase it by another Is 6d in the £l, simply to relieve company trading concerns, banking and financial companies, etc., from payment of a legitimate tax would amount to a tyrannous exercise of power on the part of the authorities which would be strongly resented and justly reprobated.