Income tax rebate time

Press, Volume CXII, Issue 32880, 1 April 1972, Page 12

Income tax rebate time

(<By

TERRY McGOVERNE)

It’s that time of the year again—when the mainstay of the country, the taxpayer, can ask the Government for his money back, or at least some of it.

Few taxpayers have to be told that from April 1 they can go to the Inland Revenue Department with the ink still wet on their tax returns and triumphantly ask for a rebate.

Most taxpayers in the salary and wages bracket are entitled to some of their money back and if they get off the mark quickly they won’t have to wait long for the Reserve Bank to "tear one off” the computerised cheque book for them. In Christchurch the Inland Revenue Department will get about 90,000 returns from salary and wage-earners and authorise payment of refunds to about 90 per cent of them. The department is scrupulously diligent about pushing the refunds through as quickly as possible knowing that the Government has during the year taken more money than it is entitled to from most taxpayers. But every year so many returns are so badly completed that the taxpayers responsible have to wait longer than necessary for their money. Invariably there are hundreds who are seemingly in such a rush to fill in their returns to get their rebate that they don’t bother to provide all the details required. Many do not bother to sign their returns and that alone means that they drop to the bottom of the waiting list for a refund. Others leave out other important details — address, occupation, income, tax deductions, the wife’s name or the children’s. These gaps in the return only frustrate the Inland Revenue Department staff who have to send them back to the taxpayer for completion. Hundreds of other taxpayers deny themselves rightful refunds because they do not know, or cannot be bothered to give, details of their personal exemptions. For example, there are hundreds who never bother to claim for their life insurance premiums.

Such exemptions are, apart from having 10 children, the only big source of tax saving. For the man who subscribes to a subsidised superannuation fund, the total exemption is $7OO. The man who does not belong to a superannuation fund out has to plan for his own retirement can claim up to £950 a yean In both cases a man may claim for the insurance he pays for his wife and children.

In terms of saving money which would otherwise be a gift to the Government, the man who is not insured "to the hilt” is foolish, to say the least.

Another exemption often ignored is that for school fees, donations to approved organisations and for the advancement of education.

The department will exempt fees paid to a registered private school or special school for handi-

capped children, for the tuition of any child, step child or foster child of the taxpayer who was under 18 years on April 1, 1971. Cash donations /to such schools also qualify for an exemption provided the school is not run for private profit Cash donations to State schools, school committees, parent teacher associations are also eligible provided they are for the benefit of all the pupils. Voluntary cash donations to free kindergartens and play centres, schools of medical research, universities, arts miisiC and other cultural organisations also qualify. Maximum claim The maximum amount of money one is entitled to claim under this heading is $lOO. In many cases $lOO is only a fraction of the amount of money the taxpayer is required to spend on education during the year. To be eligible for such exemptions one must provide receipts. Claims must refer to sums of not less than $2. The little paper badges street collectors hand out on Fridays do not qualify. Charitable donations to qualify for

exemption must be in cash, not goods or services. Generally the donations must be to charitable or welfare organisations working in New Zealand only but there are 11 major exceptions — C.0.R.5.0., Milk for- Millions, Freedom from Hunger, Save the Children Fund, Red Cross, Food Bank of New Zealand, Lepers Trust Board, Mission to Lepers, Volunteer Service Abroad, Commoiiwealth Foundation, Sir Walter Nash Vietnam Appeal.

Needy relatives Many people supply support to relatives other than their wives and children during the year. They are entitled to exemptions if they support a separated wife, divorced wife, foster child, children over 18 years, parents or grandparents. One is entitled to claim $135 for each person so supported or the amount paid to each, whichever is the smaller. Most people have the exemptions for their wives and children deducted from their tax on a weekly or fortnightly basis. However, they must fill in the exemptions on their returns otherwise they will find they owe the

department some money. Taxpayers, who have children over 18 should remember they are entitled to full exemption if the children are still dependent: for example university students or infirm children. Generally the child’s income should not exceed $lO4O.

One may also claim exemptions for the help or support given to relatives living abroad. The support may be in the form of cash or clothing. One may be required to supply evidence of that support. There are further lengthy provisions for exemptions relating to wives and children and details of these are readily available at any tax office. Similarly there are provisions for exemptions relating to housekeepers who may be required where widowers look after their own children or where wives are ill or incapacitated. All taxpayers should be careful about validity of their claims for exemptions, especially life insurance premiums, Make sure you actually pay them before you claim them. You could be embarrassed this year because the department intends to check.