SALES TAX LAW

Dominion, Volume 27, Issue 73, 19 December 1933, Page 10

SALES TAX LAW

Aid in Administration SIMPLER PROCEDURE Collector’s Power io Sue With the object of simplifying the administration of the Sales Tax Act passed last session, an amending Bill was introduced and read a first time in the House of Representatives last evening. No major alterations are made in the system of collecting sales tax. The existing law is so amended as to remove any possible misconception as to when the tax becomes payable, and it is also proposed to empower the collector to sue for tax which has become due. The Minister of Customs, Rt. Hon. J. G. Coates, stated that it had been pointed out by the Controller and Audi-tor-General that the original Act did not bind the Crown, and that, therefore, sales tax could not be recovered by wholesalers who sold taxable goods to the Crown. It was recognised that, as the Crown had imposed on purchasers from wholesalers the liability to recoup such wholesalers for the tax paid by them, it was obviously only fair that the Government should adopt the same principle in cases where they purchas ed goods from wholesalers in New Zealand. An undertaking had accordingly been given by the Government that, if claims by wholesalers which included sales tax were passed by the Audit Office, legislation would be introduced during this session to validate the matter. This was dealt with in the Bill. “Manufacture” Defined. It had been found that in some industries it was the practice for a merchant owning material to forward such material to another merchant to be made up into manufactured articles, the material remaining the property of the first-mentioned merchant, and a charge being made by the latter merchant merely for the cost of manufacture. Doubts had arisen as to whether such transactions were covered by the definition of “manufacture,” and opportunity had been taken to remove any possible doubt as to what had been considered to be the strictly legal position. Provision was proposed to make quite clear that sales tax was payable by a person who manufactured goods for the erection or construction of buildings, in cases where such goods were of a like class or kind to those sold by other manufacturers in the ordinary course of business. It was also proposed that, when taxable goods were sold by a retailer to a wholesaler for resale by such wholesaler or for use by him as materials in the manufacture of goods for sale, the wholesaler might deduct from the sale value of goods sold by him. in any one month the tax inclusive price paid or to be paid by him during that month for taxable goods purchased from retailers. The wholesaler would pay tax on the price at which he sold the goods. Similar .provision was also being made in cases where a manufacturing retgiler purchased taxable materials from another retailer. Position of Receivers. Difficulties had arisen with respect to the position of receivers under the Act; A liquidator who entered into possession of the assets of a company was required by Section 27 of the Sales Tax Act to set aside such sum out of the assets as appeared necessary to provide for any sales tax that was or might become pavable by the company. It was now proposed to require similar action on the part of a receiver who entered into possession of the assets of a company on behalf of debentureholders. - It had been found desirable for the convenience of traders to make definite statutory provision for the collector to accept returns in respect of the ordinary monthly accounting periods of merchants in'lieu of the calendar months. This was effected in the Bill.