SOCIAL SECURITY TAX

Wairarapa Times-Age, 4 July 1939, Page 5

SOCIAL SECURITY TAX

MAINTENANCE PAYMENTS TO BE EXEMPTED

ON GROUND OF DOUBLE . TAXATION. PRIME MINISTER PROMISES LEGISLATION. (By Telegraph—Press Association.) WELLINGTON, This Day. The intention of the Government to introduce legislation exempting a wife separated from her husband from payment of the social security charge or income tax on maintenance moneys paid to her under a deed of separation or Court order was announced last evening by the Prime Minister, Mr Savage. He said that pending this legislation arrangements had been made with the taxation authorities to refrain from collecting the social security charge on these payments. The exemption did not apply to maintenance moneys paid from a trust fund created by a settlement. Mr Savage said that under the existing law maintenance payments madein terms of a deed of separation or Court order to a wife living apart from her husband were liable in the hands of the wife for the social security charge, and for income tax also in cases where the amount exceeded the personal exemptions allowable. In many instances maintenance moneys so paid had already borne tax in the hands of the husband, for such payments were usually 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 on moneys paid to her by her husband: under a deed of separation or under an order of the Court,” said Mr Savage. “The legislation will not affect the liability of the husband to pay income tax and social security charge on these sums where payment is made out of income, but the husband will, of course, continue to be entitled for income tax purposes to the statutory exemption in respect of his dependent wife.

“Where the 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 social security charge and for income tax on the sums received by her.” AN IMMEDIATE CONCESSION. Mr Savage said that to ease the position of wives now in receipt of maintenance payments he had arranged with the Commissioner of Taxes that, pending the passing of the necessary legislation, the social security charge would not be collected on maintenance moneys, except in those cases where these moneys represented income received by trustees under a settlement of property made by the husband and paid by those trustees to the wife. This meant that in cases where the maintenance was 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 the maintenance payments in her declaration of income. In addition, where the wife's income was sufficient to make her liable for income tax, she would not be required to pay that tax on the maintenance receipts. “This concession does not extend to alimony paid by a man to his former wife after divorce,” said Mr Savage. “Where parties have been divorced they no longer stand in the relationship of husband and wife, and the considerations which justify the exemption of moneys received by the wife under separate agreements or orders have no application." RUMOUR DENIED NO PROPOSAL TO INCREASE SECURITY TAX. (By Telegraph—Press Association.) WELLINGTON, This Day. “No such suggestion has ever been made to me," said the Prime Minister. Mr Savage, yesterday when there was referred to him a rumour that the Government was contemplating raising the social security levy on salary and wages from Is in the pound to 2s. "1 have not heard of it," Mr Savage add ed. "and I think that if it were so I might reasonably be expected to have done so.”