THE TAXPAYER.

Taranaki Daily News, 27 April 1921, Page 5

THE TAXPAYER.

PRESENT LAW EXPLAINED. AMENDMENTS TO THE ACT. I ADDRESS BY COMMISSIONER. Recent amendments to the Land and’ Income Tax Act, and taxation matters generally, were dealt with by the Commissioner of Taxes (Mr. D. G. Clark) in addressing a meeting held in New Plymouth last night under the auspices of the Chamber of Commerce and the New Plymouth branch of the New Zealand Society of Accountants. There was an attendance of about eighty, Mr. Hugh Bajly presiding. In his opening remarks Mr. Clark said he could not touch on the political aspect of the question, or the general incidence of taxation. He proceeded to deal seratim with the provisions of the amending Act of 1920. Section 3, he said, was an extension of certain exemptions from land tax in respect of land subject to mortgage. Previously the exemption was £l5OO in cases where the unimproved value did not exceed £3OOO, diminishing so as to disappear at £6OOO, but now £4<OOC was allowed where the unimproved value did not exceed £6OOO, and over £6OOO the sum of £4OOO was allowed, diminishing at the rate of £2 for every £1 of that excess, so as to disappear at £BOOO. By the terms of section 4, relating to exemptions in cases of hardship, the amount which could be allowed by special exemption for such cases was increased from £2OOO to £2500. This applied where the income 1 of the owner from all sources did not exceed £3OO. The amount of exemption allowable to widows with dependent children was also increased from £3500 to £4OOO. UNIMPROVED LAND A new section (6) was designed to prevent the holding of land out of use, and unimproved. It would come into force on April J, 1923, and stipulated that any person who held land unimproved (within the meaning of the Aet), and of which he had been the owner for three years, would have to pay 50 per cent, additional tax. The amendments in 1920 provided for the joint assessment for the purposes of land tax of two or more companies which were held to consist of substantially the same shareholders; namely, if not less than half of the paid up capital in each of them was .held by or on behalf of the others. Previously the Act stipulated that threequarters of the paid up capital haa to be jointly owned. Exemptions granted in respect of dependent children had been increased from £25 for every child under 16 to £5O for every child under 18. This, said Mr. Clark, was a matter which particularly interested the salaried man. Increased allowances had also been mad,e in respect to life insurance premiums, and special exemntion up to £5O was given in respect of contributions paid to a widoyjed mclher. It was provided by section 16 that deductions allowed from income by way of special exemption should be made in the first place from the earned income. Special provision was made in regard to calculating the income of co-opera-tive dairy companies, the Act allowing the deduction of an amount equal to the sum paid to suppliers for milk during the income year. Any profits not paid out to suppliers would be taxed as profits of the company. THE LAND TAX. Mr. Clark proceeded to deal with the provisions as to payment of income tax on local body debentures and the methods of collecting these. He also pointed out that the provisions regarding overdue tax had been modified, the penalties being reduced to 5,7% and 10 per cent., according to the various classes, instead of 10, 12 and 15 per cent, as previously. The land tax was one penny in the £ on the unimproved value up to £lOOO. Where the value exceeded £lOOO, the rate ranged up to 7 17-20 pence in the £. In addition there was a tax of 33J per centy on the amount payable under the previous levies. As showing what amounts would be paid on various sum&, Mr. Clark quoted figures illustrating that the tax was £5 Ils Id on £lOOO (as against £6 ss, previously), and on £5OOO it was £3B 6s 8d (£35 3s Id), thus showing a slight decrease in the lower grades. On the higher amounts it increased, and on £15,000 the tax’ would be £l4l 13s od, compared with £134 15s 3d previously; on £20,000 it would be £216 13s 4d (£199 4s 4d); and on £138,000 it would be £6OlB 6s 8d (£4655 Is 6d). After quoting the different levies payable as regards'income, Mr. Clark gave figures showing that an income of £4OO would be taxed for £6, and this went up gradually, a levy of £4400 being made on an income of £lO,OOO, .£BBOO on £20,000, and £17,600 on £40,000. DEPRECIATION ALLOWANCE. Dealing with various other matters, Mr. Clark said the department was issuing a revised schedule of depreciation allowances. Hitherto they had allowed 5 per cent, on the plant and machinery that was power driven, but now proposed to make it 5 per cent, on the whole of the plant. On premises 2 per cent, would be allowed on a brick or stone building on the original value (instead of 3J previously), and on wood and iron 3 per cent, (instead of 4 per cent, formerly). This was taking the life of a brick or stone building at 50 years, and that of the other class at about 33 years. In connection with depreciation they did not intend to allow any that was not written off. In , such a case a taxpayer would have the alternative of getting an allowance as he incurred expenditure for replacements. A number of questions were asked at the conclusion of the address. In reply to one query Mr. Clark said reserve accounts of dairy companies would be treated as taxable income. In regard to depreciation they would be charged on Any excess of the allowance he had mentioned. On the motion of Mr. S. W. Shaw a hearty vote of thanks was accorded Clark. In reply, Mr, Clark said he always pleased to meet 1 it was the aim of the gain the confidence of that section public. He advised any difficulties to place his whole fore the department as it made work much easier. He assured that the officials were not iheic advantage of anv taxpayer or