INCOME TAX AND FARMERS

Press, Volume LXXVI, Issue 23130, 20 September 1940, Page 13

INCOME TAX AND FARMERS

Effect of Recent

Changes

STATEMENT BY LEADER

OF OPPOSITION

Recent changes in income tax legislation as it affects farmers, are explained by the Leader of the Opposition (the Hon. Adam Hamilton) in a statement just issued. “I am continually being asked if I could explain in simple form the various effects of recent changes in income tax law as it affects farmers, with special reference to the values of livestock,” states Mr Hamilton, “I am also asked how these changes affect the payments of farmers’ Social Security and National Security charges. Although questions were asked and answered in the House, the position never seems to have been made clear. “The following statement sets out the position as I understand it:

(1) Section 7, ‘Land and Income Tax Amendment Act, 1940’: This section deals with standard values for farmers’ livestock and suggests—sheep 19s, cattle £5.

“This section applies only—(a) To those farmers who sell out, thereby bringing the market value of their stock into their incoipe tax returns for that year, or (b) the farmer who dies, and whose stock is valued on a market value basis.

’’This section affords a goodly meas-. ure of relief to either of these classes of farmers, who have adopted in the past low stock values, in that the Commissioner can allow them to adjust their values to the above standard at the beginning of that income tax year. This would have the effect of materially reducing the income tax for the year in question. Raising Stock Values

"(2) The above section 7 affects only farmers who have been paying income tax for a number of years: that is, farmers whose unimproved value of land held is more than £3OOO. This class of farmer is not, however, obliged to alter his present stock values unless he wishes to do so. If he raises his stock values at the present time, he may be doing himself an injustice by having to pay income tax and social security and national security taxes on a higher level than at normal times. He may. therefore, be better advised during these abnorpnal times to adhere to his present values. “(3) Farmers whose property is of an unimproved value of less than £3000: These farmers are liable for income tax this year for the first time. The Commissioner is insisting that they adopt m'arket values for their stock in their first returns. The values may be even higher than are quoted above in Section 7 of the 1940 Amendment Act. This adoption of the market value at the beginning is not unreasonable and may ultimately be as much in the farmer’s interests as against his interests. Social Security Tax “(4) With the farmer who was not previously subject to income tax (referred to in (3) above): A difficulty arises in connexion with the returns that he had previously been making for social security tax.

“In his social security tax returns he adopted his own stock values, some of which may have been considerably lower than market value. The difficulty now arises when he is compelled to 'raise the values in his social security returns to the same as the values in his new income tax returns. This materially increases, in an artificial way, the amount he will have to pay for both social security and national security tax on this year’s income.

“This is no doubt a sore point. He is now doubly affected, because the national security tax has been imposed since he first established his values, which must now be increased af the command of the Commissioner of Taxes. It would seem only meagre justice, seeing that these values are ordered to be brought into line, that the taxpayer concerned should be allowed the alternative of adjusting his values at the date when he first established them, and paying any increase of social security tax involved at the rate of tax in existence during that year. This is ap; rt from the fact that he is paying tax on income earned before the national security tax was imposed.”