A SAFEGUARD
DEBENTURE TAX
LEVY ON UNEARNED INCOME
POSITION EXPLAINED
Some uncertainty has been expressed j about the 8s 2d tax that is provided in the annual taxing Bill for tax-bear-ing local body and company debenture income, but it is explained that this is merely a safeguard, and that this amount, except. in odd circumstances, does not apply in practice. Those local bodies and companies that do not contract to issue tax-free debentures are bound to supply the Income Tax Department with a return of income of all individual debenture holders, and this income, so far as the individual taxpayer is concerned, is regarded as ordinary income and added to the taxpayer's other assessable income. It is* taxable in coniunction w i*'i that income at the ordinary rate applicable thereto, and is, of course, s^o-. ject to the 33 1-3 increment for unearned income. If a local body or company fails to furnish the required return- to the Department, the Department assesses the debenture income payable at the rate of 8s 2d in the £1; and if the local body or company passes that charge on to the debenture holder, the latter can claim a refund of the difference between that and the amount for which he is ordinarily liable. In some cases, where taxpayer's income approaches the taxable, maximum, it might pay him to have his debenture income assessed and taxed separately at the rate for debenture I interest provided in the Act. The following is an example of how the taxation proposals operate when there are two sources of income:— £ £ ». (1. Salary 500 Debenturo interest SOO SOO o^o Exemptions: Ordinary. er- v emption ; .... 2J 0 Wife r.O . . . 280 0 0 Taxable balince ..... ' 540 9 0 Tax on £540 at 25.4 d \.. 573 C Increment of 33 l-3rd for ' unearned income .;.. 10 13 4 | Total til. 67 J8 i I In order to clarify the position in regard to the 33 1-3 per cent, increment in income tax in respect of unearned income, it is pointed out that this impost' applies, to income derived by the taxpayer from local body debentures, which are subject to a tax of 8s 2d in the £~and also to those company debentures that are likewise subject to the 8s 2d tax. This excludes company debenture-income issued, free of income tax (that is, under terms providing for payment of income tax by the company), but covers all other classes of unearned income.
Permanent link to this item
https://paperspast.natlib.govt.nz/newspapers/EP19360915.2.108
Bibliographic details
Evening Post, Issue 66, 15 September 1936, Page 10
Word Count
408A SAFEGUARD Evening Post, Issue 66, 15 September 1936, Page 10
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