BASIS EXPLAINED

Evening Post, Volume CXXX, Issue 84, 5 October 1940, Page 8

BASIS EXPLAINED

COMPUTED ON INCOME

EARNED AND UNEARNED

A further explanation of the basis of the minimum subscription requirements recently announced in connection with the War Loan has been* given by the Minister of Finance (the Hon. W. Nash).

"The minimum subscription for in- | dividuals is, in general, to be taken as the excess over £50 (calculated to i the nearest multiple of £10) of the income tax which was payable in February last in respect of income derived during the year ended March 31, 1939," Mr. Nash said. "In the case of companies the minimum subscription is the excess of the income tax (computed to the nearest multiple of £10) over £70. "Where persons are in receipt of exempt income (i.e., income not subjest to income tax) the income tax is to be computed as if that income were assessable income (i.e., income subject to tax), and not as being income which is either wholly excluded from assessment or which is merely taken into account for the purpose of increasing the rate of tax payable. The exempt income to be taken into account in this way will include dividends from overseas companies (but not local companies) and other exempt income from abroad, interest from tax-free Government Stock, and from tax-free company debentures, and also farming income where the land used had an unimproved value of less than £3000. In short, the exempt income includes all income that was subject to '' social security charge, but which was not assessable for income tax, and also all income derived from abroad and exempt from social security charge because it had already borne a similar charge overseas. It does not include dividends from New Zealand companies. COMPUTING SUBSCRIPTIONS "Wnere no income exempt from income tax was received, the minimum subscription can be readily ascertained by deducting £50 or £70 as the case may be from the amount of income tax actually payable, and converting the balance to the nearest multiple of £10. For example, if the income tax ordinarily due and payable in February last was £93 the minimum subscription would.be £40 in the case of an individual and £20 in the' Case of a company. If the tax was £96 the amounts would be £50 and £30 respectively. "In cases where- the income derived during the year ended March 31, 1939, consisted wholly or partly of exempt income (e.g., dividends and other exempt income from abroad, income from farming of land under £3000 unimproved value, or. tax-free interest), it will be necessary where the tax is likely to exceed £50. or £70, as the case may be, to compute the amount of tax which would have been payable on the basis outlined above. '.

"To assist persons who are not conversant with income-tax matters, more particularly farmers who were exempt from income tax in respect of 1939 farming income and other persons whose principal source Of income was exempt, the following table is set out as a general guide.in connection with the minimum subscription requirements. : ,

uj. nit; insurance "Small amounts in either case would not materially • affect the figures," the Minister added. ''Substantial amounts would reduce the -minimum subscription. Taxpayers whose cases are not covered by this table and who are not conversant with the basis of computation are advised to consult an accountant or other person versed in taxation matters for guidance, or may apply by letter to the Commissioner of Taxes.'*

Approx. amount of minimum subscription: Persons resident Total income in New Zealand, derived from , ■ ' « all sources Married ma n supporting wife, or children under during the the age of eighteen years, during the year ended year ended March 31, 1939. March 31, ■ ■ ''. 1939. (See Single Wife Wife and Wife and Wife and Wife-.and note below.) person. only. 1 child. 2 children. 3 children. 4 children. Income (if earned). £ £ £ £ £ £ 610 10 . — — . — — — 1 700 ...... 20 10 — — ■ — — 750 30 20 10 — — ■— 800 40 30 20 10 — — 900 ...... 50 40 40 30 20 10. 1000 70 60 50 40 40 30 . 1250 120 110 .100 90 80 • 70 1500 180 170 : 160 150 .' 130 120 i 2000 310 300 280 ' 270 260 240 Income ' (if unearned). . . 520 10 — . — — _ . — 600 20 10 — ' — — — 650 30 20 10 — — ' —' 700 40 30 20 10 — ... — : ' 750 50 40 30 20 ,10 — 800 70 50 40 30 20 10 900 ...... 90 80 70 50 40 30 1000 110 100 90 80 70 50 1250 180 170 150 140 130 110 1500 280 240 230 210 200 180 2000 430 410 400 380 360 340

Note: These approximate minimum subscription figures would apply except in the following cases:— (a)' Where the total income included a substantial amount of dividends from companies incorporated in New Zealand. (b) Where, in addition to allowances for wife and children as shown above, substantial amounts would be allowable for income tax purposes in respect of lifp insurancp nrpminms. t*tc