Taxation On Bonuses

Press, Volume CVI, Issue 31248, 21 December 1966, Page 3

Taxation On Bonuses

fN.Z. Press Association!

WELLINGTON, Dec. 20.

Recipients of Christmas bonuses could have to pay more tax at the end of the financial year. The Wellington District Commissioner of Taxes (Mr C. Rosen) said today that some employers taxed bonuses at the minimum taxation rate of 4s 3d in the £.

Mr Rosen said that where a person's total income for a year exceeded £l3OO. this minimum deduction eould result in a person owing the Inland Revenue Department more tax at the end of the financial year.

“No tax code exemptions are allowed against bonuses, and as a result the tax on the bonns is higher than the tax on the weekly wage,” he said. Some employers did not appreciate this, and merely taxing bonuses at the minimum rate of 4s 3d.

If a married man with two children earning £25 a week received a bonus of £5O. he would have to pay £lO 12s 6d tax to be liable for no further taxation, said Mr Rosen. If that same man was earning £4O a week, however, he would still probably Initially be taxed £lO 12s 6d, but at the

end of the financial year he would be liable for another £7 7s 9d. Mr Rosen said that this came about because the man receiving £4O a week earned more than £l3OO a year, and was therefore taxed at more than 4s 3d in the £ on his bonus. The higher a man’s wage was, the higher the rate of taxation on bonuses became.

He advised employers either to deduct an increased amount of tax if a man earned more than £l3OO a year, or warn their employees that they would probably have to pay more tax on their bonuses.