VALUATION PLAN.

Auckland Star, Volume LXXI, Issue 97, 24 April 1940, Page 10

VALUATION PLAN.

TRADING STOCKS. FOR TAXATION PURPOSES. EXPLANATION MADE. (By Telegraph.—Press Association.) WELLINGTON, Tuesday. In response to a request by the Associated Chambers of Commerce for an explanation with regard to the whole position concerning the valuation of trading stocks under recent legislation, the Commissioner of Taxes has advised the association as Follows: — "Under section 16 of the Land and Income Tax Amendment Act, 1939, stocks must be valued on one of the bases detailed therein, and the result of such valuation is that any reserve which existed previously legally becomes assessable income derived during the year ended March 31, 1940. If, however, any taxpayer who has created stock reserves in past years considers this procedure is inequitable, I will, on receipt of written application, be prepared to consider the spreading of existing stock reserves, either forward or backward, as desired by the taxpayer. "Such application should be made as soon as |>ossible, but must reach me not later than the date of the tiling of the return of income derived during the year ended March 31, 1940. Each application must state the amount of the reserve, when the reserve was originally created, and full details of any fluctuations since it was created. Right to Amend Reserved. "When an application to spread reserves existing at April 1, 1939, over past years is made, I reserve the right to amend back assessments in such manner as I consider just and equitable in the circumstances. If the application is to spread the reserve forward, no extension beyond March 31, 1944, will be permitted. "Where in any case a taxpayer's application for the spreading back of a reserve has been granted and it is Inter discovered that the 1940 valuation would, in fact, not have operated to bring tlic whole of the disclosed reserves into the assessable income for the income year ended March 31, 1940, and it appears that the spreading of the alleged reserve has resulted in the spreading of part of that taxpayer's 1940 assessable income, such assessments will be reviewed and that part of the reserve assessed in the year ending March 31. 1940, in accordance with the amended legislation. "All taxpayers who lodge applications should be prepared to produce evidence that a stock reserve existed prior to the 1940 valuation, aud those who are not aware of the actual reserve which existed are advised to value 1940 stocks on the basis previously adopted in order to compare that figure with' the result ob- I tained from the valuation in accordance i \* ith section lli ot the Laud and Income Tax Amendment Act, 1939.'*