NOT EXEMPT.

Auckland Star, Volume LXX, Issue 266, 10 November 1939, Page 6

NOT EXEMPT.

PATRIOTIC FUNDS.

DONORS MUST PAY TAXES.

T TST.AT. EXPERT'S CRITICISM.

| "If a person makes a gift for patriotic purposes no deduction is allowable in arriving at his income tax assessment. It is treated just the same way as any other donation." This was pointed out to-day by Dr. H. A. Cunningham, prominent legal authority and author of "Land and Income Tax and Practice," when commenting on a message received from Wellington yesterday stating that there was no legal power to make income tax concessions on patriotic gifts and that such provision wan regarded as unlikely. The message stated further that it was unlikely that funds for use overseas would i>e exempted from gift duty. "The only deductions allowable in assessing income are expenses incurred in earning jt, and the gifts mentioned do not come under this head."' said Dr. Cunningham, "lit Australia the income tax payer receives more liberal treatment, for he is allowed to deduct from his assessable income gifts made for a number of specified public purposes. Overseas Not Exempt. "With regard to gift duties the officials referred to in the telegram apparently agree that gifts to patriotic funds expended in Xew Zealand are exempt from duty," he continued. "It is considered, however, that if they are used oversea exemption is unlikely. This appears to be in accordance with the strict legal position, as various cases have decided that gifts for charitable and such like purposes are exempt only if thy persons who are. the objects of su;'i gifts are within Xew Zealand." In ordinary cases this rule was quite sound, iie said, as there appeared to be no particular reason why the Legislature should confer an exemption from taxation in respect of gifts made for the benefit of persons who were not in Xew Zealand at all. The presumption was that Parliament, when legislating for the l>euefit of any persons, intended to confine that benefit to persons within its jurisdiction \v ho were obedient to its laws, and whose interests it was under a co-relative obligation to protect. "But in the case of the patriotic funds the distinction appears to be unfortunate," Dr. Cunningham went on, "and it appears rather unreasonable. It seems that it will have the effect that any person who desires to make a substantial donation to patriotic funds will have to make it subject to the condition that it should be used only for the purposes of the troops while they are in New Zealand. Should Amend Act. '"If the Department does not intend to turn a blind eye to the exjienditure beyond New Zaaland, then it seems that there is a very good case for introducing an amendment to the Act. It is hardlylikely to induce subscriptions if persons who are prepared to give substantial donations know that by doing so they may not only have to pay gift duty, but also to have it added to any other gifts made during a period of 12 months for the purpose of arriving at the rate of gift duty on those other gifts." Dr. Cunningham concluded by giving an example. A person who made a gift of £000 to members of his family would pay £27 gift duty. If, however, he made a further gift "of £500 to be expended for patriotic purposes overseas, he would pay ti per cent on the full £1400 —a total of £S4.