Tax anomaly seen

Press, Volume CXIV, Issue 33452, 6 February 1974, Page 15

Tax anomaly seen

I The change by some companies to P.A.Y.E. taxation presented special problems for subsisting companies with September and October balance dates, said the director of the Canterbury Manufacturers’ 'Association (Mr 1. D. Howell). j In a report to the! ; monthly meeting of the) ! association’s council, Mr) ; Howell said the Governiment should consider allow-

! ing such companies to spread payment of the extra ' six months taxation over ' seven years, as it already ■ allowed for all companies for i the 1973 tax year, . “For these companies the , tax paid can be particularly ' high over a short period of this year, and can seriously affect the future of some such companies. ! “It is fully recognised that (companies with SeptemberI October balance dates must icome into line with all ;i P.A.Y.E. companies, but it does not seem reasonable that they should be so heavily penalised in relation . to other companies,” said Mr Howell. The problem was further aggravated by the recent big drop in liquidity. I Mr Howell said that a company with a March balance date and liable for $lOO,OOO tax for the year ended March 31, 1973, would • pay $154,761 during the 11 : months from November, I 1973, to September, 1974. i “However, a company

i with an October balance and i the same tax would have to , ■ pay $221,427—in effect, ) compressing over two years’ • tax payments into one year.” Both these examples, Mr 1 Howell said, allowed for ' 1973 deferred tax payments. “The tax legislation effect ' on subsisting companies with September-October balances i must create very severe liquidity problems, and will affect their costs and also j their development and ex- ] pansion for many years,” he j said. | This had come while New , Zealand companies were ) i going through a very difficult ( period. There was heavy pressure on companies to make big investments in new) plant and equipment to in-1' crease productivity in an . effort to hold costs and ( . prices. The council voted that ; • the matter be referred to the I federation’s taxation committee, and that it also be , raised with the Associate Minister of Finance (Mr ’ Connelly).