Income Tax

Press, Volume CVII, Issue 31500, 14 October 1967, Page 12

Income Tax

Sir, —Professor F. M. Henderson, in his presidential address to the Engineering Society of the University of Canterbury, is reported as complaining of the heavy personal income tax from which professional people in New Zealand suffer. No-one would quarrel with him in this complaint But he goes on to remark that, hy contrast dividends from company shares (“unearned income by anyone’s definition”) are taxed “at a flat 35 per cent” Surely Professor Henderson is aware that dividends in New Zealand are subject to double taxation. First the companies are taxed, and thfin the dividends are again taxable in the hands of the shareholder —not at a flat rate, hut as part of the shareholder's income. If tiie shareholder earns $7200 per annum, he will be taxed not at 35 per cent but at 60 per cent on bis dividends. People who have saved money to invest in company shares for themselves or their children might further question Professor Henderson’s assumption that all income from dividend* is unearned.—Youni etc, H.L.G. October 13, 1967.