TAX SURPRISE

Manawatu Standard, Volume LIII, Issue 16, 16 December 1932, Page 8

TAX SURPRISE

FRIENDLY SOCIETIES AND TRADE UNIONS. INCOME TAX DEMANDS. (Bv Telegraph.—Special to Standard.) ( 7 b WELLINGTON, Dec 16. There will shortly be a considerable) stir in trade union and friendly society circles over the enterprise of the Land and Income Tax Department in discovering what looks like a rich source of revenue for the State. The development came to the Standard s correspondent’s notice as the result of receipt, by one of the largest trade unions in the Dominion, of a substantial assessment for income tax, for the first time in its long history. This organisation, in common with manv other trade unions, has been fortunate enough to create reserve funds which have been invested in gilt-edged stocks and in property. It is uponi income derived from these sources that the department is dimming income tax and. it is understood that m some exceptional cases retrospective demands are being made over the last two years. A portion of the organisation’s investments constitute a definite reserve for a death benefit fund, and it is probable that the official claim for taxation will be strongly contested on that ground. The development covers an eien wider field, as the department bases its claim on an interpretation ot the Jaw which only exempts from taxation such income of a trade union 01 friendly society as is not derived from outside trading or, to quote the phrase in the Act “beyond the circle of its membership.” thus, while members contributions would be clearly exempt from tax assessment, that portion or the organisation’s income received irom investments, mortgages and property rentals is brought within the scope or the tax collector. It certainly opens up a rich field, for the accumulated funds of the friendly societies of the Dominion were returned this year at a total of £4,277,715. Of this sum. the amount placed on investment at interest is £3,664,776, and the net interest earned (subject to taxation according to the official reading of the law) is £178,900. . , Leading friendly societies which have large investment incomes include: Manchester Unity of Oddfellows, with an income from this source of £00,725; United Ancient Order of Druids, £44,644; Ancient Qrder of Foresters -Mo,353; and Independent Order of Oddfellows, £16,325. In addition there are the trade unions having invested funds, in respect to which detailed informal tion is not officiallv available.