Provisional Tax Altered

Press, Volume CIII, Issue 30477, 26 June 1964, Page 1

Provisional Tax Altered

(Parliamentary Reporter) WELLINGTON, June 25. Mr Lake announced in the Budget that the Government would immediately implement all of the Ross Committee’s recommendations for solving the problems of the provisional tax system for the selfemployed.

Legislation would be introduced to provide for the payment of provisional tax in two instalments, one-third due on August 7 and the remaining two-thirds on February 7, instead of in equal instalments as at present Taxpayers who had a balance date later that March 31,

who derived their assessable income from primary production, and who received more than half their cash income after February 7, would, however, be permitted to pay provisional tax in three equal instalments, due generally on August 7, February 7, and May 7. This change would not affect tax liability, but only the timing of the payment This year, when the change was to be introduced, revenue of about £2m would be lost Subsequent revenue would not be affected.

Mr Lake said that the right of taxpayers to re-estimate income would be broadened along the lines recommended by the committee, and its proposals for under-estimation would also be adopted. All those changes would apply for the current income year. The basic purpose was

to encourage the provisional taxpayer to make the best estimate he could of his income.

“If this is done,” said Mr Lake, “many of the problems associated with the P.A.Y.E. tax system will disappear.”. He said the committee’s proposals about P.A.Y.E. comp nies were still under consideration.

Tax exemption for lifeinsurance premiums and superannuation contributions for the self-employed taxpayer has been increased by £75 to a maximum of £325 The exemption will apply to contributions made duriqg the current income year. Mr Lake said the selfemployed taxpayer had to provide for his retirement completely out of his own income; and the Government considered that the present maximum exemption was inadequate.