INCOME TAX

Evening Star, Issue 18729, 3 September 1924, Page 5

INCOME TAX

MR W. W. KING'S ADDRESS. At the Y.M.C.A. last night, under the auspices of the Ex-Students’ Association of the Otago University Commerce Faculty, Air W. W. King delivered lK an address on ‘ Income Tax.’ The chair was occupied by the president of the association, Air C. T. Lee. Air King’s remarks referred principally to the income tax form, and ho explained in detail its different clauses. Returns, he said, were required from all persons and companies. In connection with tho former, only those whose incomes exceed £250 were'required to furnish returns. This did not apply to companies. Returns must be made on an earnings basis, not on a cash basis. Air King quoted instances of taxpayers having suffered through failure to make their returns on an earnings basis. Under the heading of claims for special exemptions, if a person earned £9OO by way of income he ceased to be _ entitled to the recognised £3OO exemption; a man who earned £BOO would be allowed £IOO exemption; a man who earned £7OO would be entitled to £2OO exemption; and a man who earned £6OO would be entitled to the full exemption of £3OO. With regard to exemption for children, supposing a child were born on March 30, the taxpayer would be entitled to the full exemption of £SO for the child for that year, but he was entitled to no allowance in tho year in which that child attained the] ago of children. Under the heading of rents received, a landlord was entitled to 5 per cent, exemption, and on this account very little tax was derived by the department from this source. Interest on an Australian tax-free war loan was not tax free in New Zealand, for example; nor was a New Zealand tax-free loan free of tax in Australia. Briefly put, Government tax-free bonds were only free of tax in the country_ of origin. Income from mining which did not include dividends on shares in registered mining companies was assessable to the extent of one-half in the case of gold and scheelito, but income from coal mining was assessed in tho same way as income derived from an ordinary business. The word business, as far as income tax returns were concerned, had a very wide meaning. Air King then dealt at length with deductions, which, he explained, were distinct from exemptions. He said tho general scheme of tho Income Tax Act was to prevent deductions. In the matter of salaries and wages, a husband could not claim a deduction with respect to money alleged to be earned by His wife._ Chit dren were also prohibited under this heading unless cash were actually paid. Many farmers who made returns were_ prone to claim deductions under this heading. As far as accident insurance was concerned, deductions were only allowed in the case of employees. With respect to travelling expenses, a business man could not claim a deduction on money cx. pended in travelling between his home and his business. Advertising was sometimes a difficult problem, hut in general practice money expended on advertising was allowed, it being recognised that it was a means of increasing business. Deductions were allowed on subscriptions by a member of the Accountants’ Society, for example, on his annual subscription. As far as bad debts were concerned, it had been claimed that money invested in Exhibition Company shares could be deducted under that heading, hut the department would not admit such an allow ance, it being claimed that this was an investment of capital. Under tho heading of income derived from the business of dealing in live stock, etc., a farmer who bought sheep and fattened them was exempted from taxation with respect of income derived from this source, whereas a dealer who turned the stock over at a profit in a few weeks after purchase was not so favored. After Air King had answered a number of questions he was accorded a hearty vote of thanks.