COMPANIES HOLDING DEPOSITS.

Taranaki Daily News, 3 February 1922, Page 6

COMPANIES HOLDING DEPOSITS.

NEW LEGISLATION.

FOR CREATING SPECIAL SHARES.

(From Our Parliamentary Reporter.) Wellington, Jan. 31.

The purpose of the Companies Tem- | porary Empowering Bill, introduced in ; the early hours this morning, is to enable companies holding money on dei posit to convert their obligations, with j the consent of the leaders, into prei ference shares. There is one factor in i this to be overcome. A company is at j present entitled to deduct the interest i it pays to depositors from its assessable income for the purpose of income •; tax, and without some special provision, ■ its position would be changed in that I respect by the proposed conversion. Ini stead of the deduction the company would be required to pay income tax j upon the amount of the dividend paid I to depositors. j It is therefore proposed by the Bill to enable companies existing deposits to create a specific class of /‘‘deposit preference shares,” which the company can specifically exchange wit.h depositors for existing deposits. It is provided that for the period of five years from the commencement of the act, the company shall be entitled to deduct from its assessable income the dividend payable to deposit preference shareholders in the same manner as it now does the interest paid to depositors. The holders of deposit preference shares will pay income tax on their dividends.