AMENDMENTS PROPOSED BY GOVERNMENT.

Press, Volume LVI, Issue 16958, 6 October 1920, Page 6

AMENDMENTS PROPOSED BY GOVERNMENT.

(SPECIAL TO "THE TRESS.") WELLINGTON. October 5. A number of amendments are proposed by the Government in the Land and Income Tax Amendment Bill. In clause 12, regarding increased exemptions from income-tax in respect of insurance premiums, the deductions by way of special exemption shall not exceed in the aggregate 15 per cent, of the earned income of trio taxpayer. In the Bill as originally drafted it was 29 per cent. It is now proposed to omit clause 23 and substitute tho following: (1) Every local or public authority which has, whether beforo or after the commencement of this Act, issued debentures to persons resident in New Zealand, shall, for tho purposes of the principal Act, be tho agent of all debenture-holders, whether absentees or not, in respect of all income derived by them from those debentures, and shall make returns and bo assessable and liable for income-tax on that income accordingly. (2) No deduction by way of special exemption or otherwise shall be allowed to any local or public authority as such agent, or to any debenture-holders in respect of the income so derived from debentures. (3) Income eo derived by the holders of debentures issued by a' local or public authority shall be assessable and chargeable with income-tax separately from income derived by the debenture-holders from other sources, and unless otherwise expressly provided in the Annual Taxing Act for any year, shall be assessed at the rate specified in that behalf in part 11. of the schedule hereto. Now claiuses provide that for the purposG of computing the taxable income of any taxpayer, all deductions from the assessable income by way of special exemption (other than exemptions under section 87 of tlie principal Act) shall, to the extent of tho earned income of the taxpayer, be made from that income, and the balance (if any) shall be deducted from the unearned income. Whero any taxpayer in New Zealand enters into a contract of insurance or guarantee against loss, damage, or risk of any kind whatever (not being a contract of life insurance) with any foreign company not carrying on business in New Zealand, that company shall be liable to income-tax under the principal Act on tho profits derived by it from such contract of insurance or guarantee. For the purposes of this section, the profits derived from every such contract shall be deemed to be an amount equal to ten per centum of th 3 amount payable by the taxpayer as premiums in respect of such contract. For the purpose of the principal Act, every person who enters into a contract of insuranco or guarantee as aforesaid, shall be deemed to be the agent of the foreign company, and shall make returns and' be assessable and liable for income-tax accordingly. It is proposed to repeal sub-section 2 of section 37 of tho Finance Act, 1917, and substitute the following: If the Commissioner is satisfied with respect to the holder of any debenture or debentures issued by any local or public authority, or by any company, that the aggregate amount of income-tax paid or payable by or on behalf of the .deben-ture-holder (including the tax p'aid in respect of interest on debentures) exceeds tho amount of tax that would have been payable by him if tho interest received by him on those debentures had formed part of his taxable income, the Commissioner shall, on application by the taxpayer, pay to him the amount of the excess.

One of tho new clauses makes special provisions as to the floating rate of interest on debentures. The interest to be paid on the debenture shall be computed as part of the assessable income of the company, and not of the debenture-holder. Section 112 of the Act of 1916 shall not apply with respect to any such debenture or to the interest j>aid or payable thereunder. It is proposed to insert after clause 1 of part 11. (income-tax) the following new clause:_ On income assessable under sub-section (3) of section 23a of this Act, the rate of income-tax shall be 2s 6d for every £1 thereof. It is proposed to add to clause 4 of part 11. tho following proviso: Provided that if the earned income of a taxpayer for any year exceeds £2000, the reduction provided for by this clause shall be mado onlv in respect of the sum of £2000.