PARLIAMENT Tax Bill’s Technicalities Engage House

Press, Volume XCVIII, Issue 29009, 25 September 1959, Page 12

PARLIAMENT Tax Bill’s Technicalities Engage House

(Aew Zeuiuua Press Association) WELLINGTON, September 24. Except for the time it took for formal business, the House of Representatives today spent most of its sitting in discussing the Land and Income Tax Amendment Bill in committee.

A good deal of this discussion was on technical points, and with the intention of removing abstruse technicalities and language from the clause which sets out the calculation of income tax on the basis of average weekly income Mr T. P. Shand (Opposition, Marlborough) moved two amendments.

Neither amendment was accepted by the Minister of Finance (Mr Nordmeyer), who said that at least 90 per cent, of pay-period taxpayers—those earning up to £lO4O a year—would be satisfied to remain as such without having to put in a tax return.

The clause which Mr Shand sought to amend, said Mr Nordmeyer, dealt with the method of assessment, which was more the concern of the Commissioner of Inland Revenue to interpret than the taxpayer. Concessions built into the tax tables were taken into account in the assessment of income by the averaging method.

The basis of the P.A.Y.E. system was the co-operation of the employer, said Mr J. T. Watts (Opposition, Fendalton) in a discussion of the clause requiring an employer to make tax deductions from an employee’s wages. “Penalty on Employer” Mr Watts said the present penalties went far enough, but those now proposed put too great a burden and penalty on the employer, and he doubted whether the employers’ organisations realised that. (The clause enables tax to be recovered by the Commissioner of Inland Revenue from the employer. Any employer who is required to make a payment to the commissioner will have a right of reimbursement from his employee.)

Mr Watts said that if an acountant or a clerk did not collect the tax, then the firm was liable. But that.was going too far. Mr Nordmeyer said it was important to remember that to a very great extent the clause was a substitute for the P.A.Y.E. system of collecting social security tax. There was an obligation on the employer to deduct that tax. The clause reverted to the system which obtained under the social security tax law when an employer, if he did not collect the tax, was required to pay it. Mr J. R. Marshall (Opposition, Karori) said it was not sound in

principle than an employer should be penalised in the way the clause envisaged. The penalty should be related to the circumstances of the case, and it should be left to the Court to fix the appropriate penalty.

Mr Nordmeyer: There is power for an employer to collect from an employee. Mr Marshall said that that was a transference of power from the Commissioner of Inland Revenue to the employer. Farmers and Shearers Mr W. H. Gillespie (Opposition, Hurunui) said it was a pretty complicated business for farmers to work out the tax they had to deduct from casual employees such a shearers, and they could easily make a mistake. Under the clause in the bill farmers were liable to pay the tax themselves if they had not deducted it from the employee. Mr Shand said the average farmer had to make about 14 calculations to work out the tax to deduct from shearers. He could easily make a mistake, and it was not easy to get in touch with the employee later and tell him a mistake had been made.

There were plenty of existing provisions to deal with cases where employers and employees deliberately collaborated to avoid paying full tax. Mr Nordmeyer said that where an honest mistake was made the commissioner would be most reluctant to exercise his power under the section. After a little further discussion the bill was committed.