Tax exemption details

Press, Volume CXIV, Issue 33601, 1 August 1974, Page 10

Tax exemption details

(.V.Z. Press Asiioctation) | WELLINGTON, -j The new tax deductions for superannuation and life insurance will j I be phased-in by three annual increases of i I $lOO. beginning in April 1 ! next year. The Government an- ‘ nounced in the Budget that 1 the present superannuation and life insurance maximum ' deduction of $7OO would be:' increased to $lOOO. and 1 , today the Minister of Finance (Mr Rowling) announced the phasing-in arrangements. The present $7OO limit applies to workers whose ent-, ployer does not contribute' to their superannuation. The! present limit of $950 for! other workers would be raised to $lOOO next April, said Mr Rowling. He repeated the Budget statement that employees may deduct 4 per cent of their taxable remuneration

I where this represents super- !< annuation contributions!! greater than $lOOO. SELF-EMPLOYED I Details of deductions by < employers were also an- < nounced by Mr Rowling. The self-employed will be allowed to claim a deduction . of up to $lOOO for contribu- 1 tions to the New Zealand s superannuation scheme, or ’ an approved alternative ‘ scheme, phased in from ' April 1975 in five annual in- 1 stalments of $2OO but in no : case to exceed the income ; ;from self-employment in any ! year. ‘ As well the present spe- I cial exemption of $950 will ( be increased to $lOOO from April, 1975, to cover addi--I tional superannuation contritbutions and life insurance 1 (premiums. | Employees who are sub- 1 istantial shareholders (50 per 1 cent or more) of the em- ' ployer company will be re- i garded as self-employed, and over-all the company and ' the shareholder employee j will be allowed the same de- ’ duction and special ex- 1

emption as a self-employed person. Otherwise, a self-employed! person will have a similar definition as in the Accident Compensation Act. PENSION SCHEMES Employers will be allowed in calculating their assessable income a deduction of up to 10 per cent of the taxable remuneration of each employee for contributions t o approved pension schemes, including the New Zealand superannuation scheme. The Commissioner 1 of Inland Revenue will have power to allow a higher percentage in appropriate cases. If these approved contributions alone are less than $lOOO. supplementary lumpsum contributions up to an over-all limit of 10 per cent of each employee’s taxable or $lOOO, whichever is less, will be allowed. Where contributions are made to approved restricted lump-sum schemes, the maximum allowable deduction for those contributions will be 10 per cent of each employee’s taxable remuneration, or $7OO, whichever is less.