FARMERS' INCOME TAX

Lake Wakatip Mail, Issue 4486, 24 September 1940, Page 3

FARMERS' INCOME TAX

ADJUSTMENT OF STOCK VALUES

The Hon. Adam Hamilton). .Leader of the Opposition., writes, stating .that he is being continually asked to explain in simple form the various; effects of recent amendments to the Income Tax Law, as they effect farmers in particular with special 'reference to the values of live stock. He sets out the position as follows: I am continually being asked if I could explain in simple form the vari J ous effects of recent changes in Income Tax Law as it effects Farmers, with special reference to the value of live stock. And also bow these changes affect the payments of Farmers’ Social Security and National Security charges. Although questions were asked and answered in the House, the position never seems to have been made clear. Tire following statement sets out the. position as I understand it: (1) Section 7. ‘Land and Income Tax Amendment Act. 1940’: This section deals with standard values for farmers’ live stock and suggests —sheep 19s. cattle £5. This section applies only—fa) TO THOSE FARMERS WHO SELL OUT. thereby bringing the market value of their stock into their income tax returns for that vear. OR <b> THE FARMER. WHO DIES, and whose stock is valued on a market value basis.

This section affords a goodly measure of relief to either of these classes of farmers, who have adopted in the past low stock values, in that the Commissioner can allow them to adjust their values to the above standard at the beginning of that income tax year. This would have the effect of materially reducing the income tax for the year in question). (2) The above Section 7 affects onlv FARMERS WHO HAVE BEEN PAYING INCOME TAX FOR A NUMBER OF YEARS: that is, farmers whose unimproved value of land is OVER £3OOO. This _ class of farmer is not, however, obliged to alter his present stock values unless he wishes to do so. If he raises hi? stock values at the present time, he may be doing nimself an inriuistice by having to pay income tax and social security and national security taxts on a higher level than at normal times. He may, therefore, bo better advised during there abnormal times, : to adhere to his present values.

(S') FARMERS WHOSE PROPERTY I« OF AN UNIMPROVED VALUE UNDER £3000: these farmers are liable for income tax this year for the first time. The Commission er is sisting that thev adopt MARKET VALUES for their stock in their first returns. The values may be. even, higher than are quoted above in section 7 of the 1910 Amendment Act. This adoption of the market value at the beginning is not unreasonable and may ultimately be as much in the farmer’s interests as against his anto(4> tS 'wiTH |the PARMER WHO WAS NOT PREVIOUSLY SUBJECT TO INCOME TAX (referred to m (3) above)—a difficulty arises in connection with, the returns that he had previously been making for social se-i curity tax. In his social security tax returns, he adopted his own stock values, some of which may have been considerably lower than market value. The difficulty now arises when he is compelled to raise the values in his social securitv retunrs to the same as the values in his new income tax returns . This materially increase®. n,n an artificial way, the amount he will have to pay for both social security and national security tax on this year’s income. This in no doubt a sore point. He is now doubly affected. because toe national security tax has been imposed since he first established his values', which must now be increased at the command of the Commissioner of Taxes. It would seem only meagre justice, seeing that these value® are ordered to be brought into Line, that the taxpayer concerned should be allowed the alternative of adjusting his values at the date when he first established them, and paying any increase of social security tax involved _ at the rate of tax in existence during that year. This is apart from the fact that he is paying tax on income earned prior to the national security tax being imposed.