INCOME TAX UNCHANGED

Press, Volume XCIX, Issue 29263, 22 July 1960, Page 13

INCOME TAX UNCHANGED

Steps To Stimulate Saving [From Our Parliamentary Reporter} WELLINGTON, July 21. Announcing that the Government did not intend to alter the rates of income tax this year, the Minister of Finance (Mr Nordmeyer) said in the Budget this evening that the rates were now lower—“in some cases substantially lower” than when the Government took office. Aggregation of incomes of married couples fbr taxation would be abolished except where one derived income from assets owned by the other or settled under a trust, the Minister said. The exemption for interest would be increased to £3O a year, and for life insurance and superannuation contributions, the exempted amount would be increased to £250 or 20 per cent, of assessable income, whichever was the lesser.

The value of reductions in income tax made in October and April was £4.6 million in 195960 and £17.8 million this year. Mr Nordmeyer said. However, the Government’s view was that as soon as circumstances justified personal exemptions should be increased above the present levels of £9 a week for single persons and £l2 a week for married. Last year, the Government had increased from £520 to £650 the amount a married woman could earn in a year before her income was added to that of her husband for the purpose of calculating his rate of tax. Representations had since been made that some women who might assist in certain important spheres, such as teaching, were reluctant to do so because of the aggregation provisions. It had been decided, therefore, that from the current financial year the aggregation of incomes of married persons would operate only where income was derived by one from assets the ownership of which was retained by the other, or which had been settled under a trust. In all other cases, tax would be payable by each according to his or her own income.

The increased exemption from tax on interest—£l2 naw and to be £3O in the future—would be limited to Interest derived from Post Office and trustee savings bank deposits, national savings and investment in Government stock, Mr Nordmeyer said. “The effect of this increased exemption will be to allow for up to £lOOO to be saved before income tax becomes payable on the interest earned,” he said. “The Government hopes that young people in particular will quickly appreciate the value of this concession.” As a further means of stimulating saving, Mr Nordmeyer said the present income tax exemption for life insurance and superannuation purposes would be increased from £175 a year to £250 or 20 per cent of assessable income, whichever was the lesser.