LAND AND INCOME TAX

Manawatu Standard, Volume XLVI, Issue 175, 25 June 1926, Page 3

LAND AND INCOME TAX

LECTURE TO ACCOUNTANT STUDENTS. Land and income tax was a subject dealt with by Mr P. Cutforth, of the Taxation Department, 'Wellington, at a meeting of the Palmerston North Accountant Students’ Society last evening, whereat Mr R. H. Crozier presided. At the outset, Mr Cutforth stated that, as the primary object of the address was, in somo measure, to aid students of accountancy, he would confine himself as much as possible to the points of the subject on which examination questions were likely to occur. Land tax, he said, was assessed on the unimproved value of the land, while income tax was assessed on the income earned for the year preceding that in which the tax was payable. The income was assessed on forms which were circulated by the department, and failure to fill these in was a breach of the law,' anyone neglecting so' to do being liable to a fine of anything between £2 and £IOO. Any objections made by the taxpayer could be heard privately before a magistrate, but it was pointed out that, if the taxpayer refused to pay on assessment, the magistrate "had no option but to decide in favour of the department. Land tax, said Mr Cutforth, often caused great misunderstanding as to who was an “owner” of land. The owner, the lessee, the trustee, were all deemed owners. It was, however, no advantage to tax a lessee unless lie owned more land than the owner from whom he was leasing. If the unimproved value did not exceed £ISOO, exemption of £SOO was allowed. After £ISOO the reduction lessened £1 for every £2 of assessment —this was only on unencumbered land. On mortgaged land a mortgage reduction was allowed up to £IO,OOO. After £IO,OOO the reduction lessened £2 for every £1 in excess, until, at £15,000, no reduction was allowed. Income tax was assessed on the annual earned income; unearned income was subject to different regulations. Earned income was defined as that due to the personal exertions of the taxpayer, while unearned income consisted of rent, interest, etc. There was a reduction of 10 per cent, on all earned income up to £2ooo—a £3O exemption always being allowed for every person whose incomo did not exceed £6OO. After this it was reduced £1 for every £IOO, until at £9OO no reduction was allowed. There was. oi course, the reduction of £SO per child dependent upon the taxpayer—the word child including step-child and grand-child. Then there was the question of the absentee if his home was not in New Zealand, and he himself was absent for more than two years. For such a taxpayer the tax increased 50 per cent., and was assessed on whatever interests the taxpayer held in New Zealand. A reduction of £SO was allowed a taxpayer who supported his widowed mother. Also, reductions were allowed on life insurance, superannuation and the National Provident Fund. Legacies, totalisator receipts and life insurances matured were not touched by the department. In concluding, Mr Cutforth dealt at length with the various penalties imposed by the department for breaches of the Act, and especially for wilful mis-statements. The speaker was accorded a hearty vote of thanks, the chairman expressing regret that Mr Cutforth was leaving Palmerston North so soon, as lie wts sure that the students would like to hear the address again. I '