WAR DONATIONS

Gisborne Herald, Volume LXVII, Issue 20254, 23 May 1940, Page 7

WAR DONATIONS

NO TAX DEDUCTIONS INTEREST-FREE LOANS RUMOURS DISPELLED MR. NASH’S EXPLANATION (Per Press Association.) WELLINGTON, this day. Questions in relation to taxation, which have been raised in connection with donations and interest-free loans to the Crown, were dealt with bv the Minister of Finance, the Hon. W. Nash, in a statement to-day. “Under the existing law, said Mr. Nash, no deduction is permissible for income tax or social security purposes in respect of any donation regardless of the purpose for which the money is to be expended. If a taxpayer desires to give money out of his income for any purpose whatever, he obviously must determine precisely how much he can afford to give out of the income which he has available for that purpose. Effect of Concession “If exemption for taxation purposes were allowed in respect of donations, the result would be that the revenue, in effect, provided part of the gift attributed to the donor. For example, if a person whose income tax rate is 5s in the £ gave £IOO to the war funds and was allowed a corresponding deduction in his taxable balance, clearly the revenue as o whole would gain £75 only. “Apart from this point the grant of an allowance of this nature for taxation purposes might result in serious interference with the collection of revenue for ordinary purposes. Having regard to all circumstances, it does not seem that exemption is respect of donations can be justified. “I find that rumours have been current," said Mr. Nash, “to the effect that persons who lend interest-free money to the Government will be assessed for income tax upon the income which they might have obtained upon the amount of the loan had the money been invested in some other way. These rumours are wholly without foundation. Persons are liable for income tax only upon the income received and w'here a person has lent money to the Government free of interest he receives no income from that loan at all. He accordingly is not charged taxation. Donations of Interest “With regard to taxpayers who possessed Government securities or deposits in the Post Office Savings Bank, who do not wish to realise on their securities, they may if they so desire donate to the Government the interest to arise upon their securities or deposits during the continuance of hostilities or such other period as they specify. The appropriate method of doing this will be explained on individual application to the Treasury or the Post Office. Future interest; given in this manner will not be assessable for taxation.” The total of interest-free loans to date is £1,851,781. which includes donations from Messrs. Pitt and Moore, Nelson, for the duration of the war and six months after £2000; Mr. L. B. Lambert, Auckland, £IOOO, and Leyland Motors, Wellington, £IOOO.