WAR TIME PROFITS

Dominion, Volume 10, Issue 3156, 7 August 1917, Page 6

WAR TIME PROFITS

NEW TAXATION BILL IN AUSTRALIA

POINTS OP THE MEASURE

Tho War-Time Profits Tax Assessment Bill, which had been introduced in tho iedoral House of Representatives, differs considerably from the measure. The incidence of the proposed taxation is not stated, and this will form tho subject of a separate measure, which is not yet available. An important addition to the definition clause relates to wasting assets, which include mines (other than coal mines), quarries, timber right, and any similar asset which, through gradual removal of the substance of the asset, becomes exhausted. Tho provision in tho old Bill relating to an exemption where the excess profits did not exceed .£2OO has been somewhat altered. Tho new clause reads as follows:—

Where the profits arising from any business in the accounting period (a) Do not exceed the pre-war standard of profits by more than «£2OO the amount of the excess shall be deducted.

(W Exceed the pre-war standard of profits by more than il!00 there shall be deducted from that excess the sum of .£2OO less o£2 for every by which the excess exceeds ,£2OO.

The meaning of the now provision is that, whilst in tho old Bill nothing was paid on nn excess profit of J2OO, an excess profit of .£2Ol was fully taxed. A sliding scale has now been introduced. On an excess war income of .£202 tho taxable amount will be £\. The exemption consequently disappears when tho excess income reaches ,£6OO.

Several now exemptions have been introduced. These are: "Fruitgrowing, the maintenance of daily herds for the supply of dairy products, and (where conducted \>n land first used for pastoral purposes since the beginning of the present war) pastoral pursuits, and also businesses where the principal business consists of mining for gold, and businesses commenced since August "l» 1914, which, in the opinion, of the Commissioner, derive tho whole of their profits from the recovery from waste manufactured products of any materials which are used for the production of munitions of war." Determining the Profits. The clauses relating to the determination of profits are amended to provide that:— "Where a person carries on more businesses than one and this Act applies to some or all of such businesses, he may deduct from the sum of the profits on which, apart from this proviso, war-time profits tax would be payable by him. "(a) The loss (it* any) on any of such businesses to which this Act applies, and "(b) The cxcess (if any) of the losses over tho profits of all of such businesses (if any) to whicli this Act does not apply/' An objection, raised to tTie original proposal was 'that proper provision had not been made to relievo from harsh taxation businsses established since the war, tr , that had become remunerative since the war. Power is given under the now 311*1 to tho Commissioner "(1) To allow as deductions such sums (which apart from tins section would not j bo deductible) as he thinks necessary, m , order to meet the particular case. "(2) To vary the -pre-war standard of profits to such an extent as he thinks necessary in order to meet the particular case, and . , -. v • • (3) To calculate the amount of the capital emploved in the business in such manner as he thinks necessary in order to meet the particular case/' A further new proviso is that the modification made by the Commissioner in such cases as above mentioned is not to be greater in extent than is sufficient to ensure the stability of the business. _ Appeal from the Commissioners decision may be made to a board of referees. Variations in Capital. The Bill contains new provisions relating to capital having increased during the accounting period, and to capital havinir decreased. Theso are as follow: (1) Where capital has been increased during the accounting period a deduction shall be made from the profits of the accounting period of tho greater of the following sums:— (a) The statutory percentage per annum on the amount by which tho capital has been increased; or (b) The percentage per annum (on the amount by which the capital has been increased) of the profits standard on the average capital of the pre-war trade years by reference to_ which the piofits standard has been arrived at. (2) Tho deduction specified m the last preceding sub-section shall be proportionate to the part of the accounting period'; during which the additional capital l.as been employed. , (3) Where capital has been decreased bv withdrawal during the accounting period an addition shall be made to the profits of the accounting period ot the create!' of the following sums. "(a) Tho statutory percentage per annum on the amount by which the capital has been decreased; or "(b) Tho percentage per annum (on the amount by which the capital has been decreased) of the profits standard on the average capital of the P™"V? r years by reference to # which the pionts standard has been arrived at. "Provided that where it is shown to flie satisfaction of the Commissioner tlir,the capital has been decreased during t he accounting period through co ®P"]j° l , y dispossession the profits ot he accounting period shall not be increased as provided by this section." . A very important new provision allows for the reduction of all rates and taxes, including Commonwealth and Stato land and income taxes. Provision is also made for deductions for the use of wasting assets, the methods being clearly set out. Interest Irom -Commonwealth war securities is not to form part of war-time A very important change is that, instead of the statutory percentage being, as originally proposed, G per rent, the of a business carried on by a company, and 7 per cgnt. in the. case of any other business, the statutory percentage is to be fixed at 10 per cent. Persons in receipt or control of money for persons resident outside Australia, but who carry on business in Australia, are when required by the Commissionei, to pay the war-times profits tax due, and can retain the money paid out of the mimey received by them. The original Bill provided that the Act would cease to have effect on p. date to be fixed bv proclamation. It is now proposed that it shall extend to the end of the accounting period after the end of June next following the declaration 01 peace. •