THE NEW TAX

Evening Post, Volume CXXX, Issue 30, 3 August 1940, Page 10

THE NEW TAX

NATIONAL SECURITY

WHAT IT IS AND WHO PAYS IT

Couched in necessarily official and unambiguous terms, a notification has ■been given by the Commissioner of Taxes of the liability of persons and •companies for payment of the new National Security Tax of Is in the £. This is in addition to the Is in the £ tax for Social Security; the combined taxes are thus 2s in. the £ or 10 per cent. Clear as tha language used in the notification is, it may still be difficult for some people, especially those with limited means and business experience, to understand. With a view to presenting the principal points in the notification in terms plainer than those used, inquiries have been made in the proper quarter as to what this-new tax is and who has to pay it. Ferhaps it would have been better to call it a "war tax" or "defence tax"' rather than a National Security Tax, confusing it with. "Social" Security. However, the docking of 2s, instead of ls'in every £ received by wage and salary earners last week, was clearly if painfully understood. There appears to be no need to go into that, except to explain that the combined charge of 2s in the £ applied to amounts earned after. July 21, 1940.

Business-and professional men have now seized the points in the notification and are discussing it, not withou* expressing some surprise at its retrospective character—as they see it, and as applied to them. What may not be so clear to everyone liable for this new tax is that it has to be. paid—as the Social Security tax has to be paid—on all income other than wages or salaries, and paid at the sanie' time. Such income may be derived from various sources and some of them are here mentioned:—

Dividends received from companies which themselves do not pay the social security tax; although those companies which do pay, it usually say so on their dividend warrants. Interest received on Post Office and other savings bank deposits and on other deposits. . Income received from letting dwellings or subletting rooms, also from boarders and lodgers. Income received from any business or manufacturing concern. Income from farming, market gardening, fruit growing, beekeeping, poultry raising, and any income from all sources of this kind. . • Dividends or profits from building societies must pay the tax. In short, income from any source, excepting wages and salaries which are taxed before they go into the pay envelope or are shown in the cheque, as the case may be, or other payments smilarly taxed at their source. This deduction of 2s in the £ taken off wages and salaries began on July 21; but the 2s in the £ in respect of other income commences "in respect of such income derived during the year ended March 31, 1940," and on that income the new or national security tax does not apply to the May • instalment; but it will apply to the other three instalments, which will be double what they otherwise would be. Put in another way: income (not wages or salaries") for the year ended March 31 last amounted to, say, £80. For social security tax for the full year the sum of £4 would have to be paid in four quarterly instalments of £1 each; but now that national security tax has to be paid on August 1 the instalment will be £2, and the same amount for the instalments due in November and February next. Those liable to pay the combined social and national security taxes of 2s in the £ are companies, trustees, and all persons (male and female) who have reached 16 years of cge; but persons who are in receipt of war pensions in respect to total disablement are exempted, except in cases where they have earned wages or salaries, for on that income they pay the taxes. If the amounts are not paid within one month of the due date then a penalty of 10 per cent, is incurred. Payments may, however, be made in advance. The social security registration fee instalment of 5s payable by all males of 20 years and over who reside in New Zealand— excepting those who are exempt—is also due on August 1. All such persons, no matter who or what they are, must be registered under the Social Security Act. Any person who is in doubt on any point as to his or her liabilities for social security and/or national security, tax can obtain information from any money-order office. But everyone is advised to make inquiries as early as possible during this month of August so as to avoid penalties for late payments of amounts they, may be liable to pay during this month:.