TAX S YSTEM REVIEW

Press, Volume CVI, Issue 31088, 17 June 1966, Page 1

TAX S YSTEM REVIEW

(From Our Parliamentary Reporter) WELLINGTON, June 16. Announcing that there would be a comprehensive review of the whole field of central Government taxation by a committee of independent experts, the Minister of Finance (Mr Lake) said in the Budget that the taxation system should be designed to place the least practicable restraint upon incentive and efficiency, while maintaining equity among all groups of taxpayers and the community generally.

Dealing with taxation incentives, the Minister said the following provisions would be continued until March 31,1968:

The special and initial depreciation allowances of 20 per cent. The deduction of certain farm development expenditure beyond the normal limit of £4OO. The deduction for tax purposes at. the rate of 150 per cent of the cost of export market and tourist promotion expendi- ■ ture. The 10 per cent rebate for ordinary income tax, with a limit of £lOO, would be continued for a year, the Minister said. This applied only to individuals.

On life insurance and superannuation exemption, the Minister said the present 20 per cent limit would be abolished. This would mean that the special exemption would be the lesser of the

amount paid or either £250 or £325, Whichever limit was applicable. Within those limits it was also proposed to extend the range of life insurance policies qualifying for the exemption. The extension would include eligible policies on the lives of a taxpayer’s wife and children. The changes would apply from April 1, this year. On the special exemption of £7B for separated and divorced persons with dependent children, Mr Lake said this was in addition to • the child exemption. It was an extension of the allowance at present available to a widow or widower. Research institutions approved by the National Research Advisory Council would be included among those to which companies could make donations which

I would be deductible for taxa-' ; tion On trading stock, the ; Minister said that at present > it could be valued at the tax- ! payer’s option at either cost, ! market value or replacement i cost. A further basis which ■ had been recognised in prac- ■ tice would now be written . into the law. As a result, a ' lower value could be allowed where special factors such as i obsolescence had reduced I the value of stock. ■ Excess retention tax was I under consideration