DEFERRED MAINTENANCE EXPENDITURE

Northern Advocate, 29 April 1944, Page 3

DEFERRED MAINTENANCE EXPENDITURE

rpHE Government has had under consideration for some time past the '"question of permitting for taxation purposes a deduction in respect of deferred maintenance. As a result of war conditions and the consequent shortage of both labour and materials, maintenance which would normally be undertaken, of necessity, has had to be postponed. Maintenance in the case of farmers includes repairs to farm buildings and machinery, repairs to fences, scrub-cutting, drain clearing, renewal of pastures, topdressing and other normal farm maintenance. In the case of other businesses, it includes normal repairs to buildings, plant and machinery, motor vehicles and other business assets.

A decision has now been reached whereby such deferred maintenance may be claimed as a deduction for both income tax and social security charge and national security tax purposes. The scheme first operates for the income year ended March 31. 1944. and applies to all taxpayers (individuals and companies) in respect of all assets used in production of assessaole income. Briefly, the scheme is;

1. If a taxpayer considers that deferred maintenance in his case would amount to not less than £ ICO, he may lodge with the Government, as a noninterest bearing deposit, a sum equivalent to the amount of his estimated deferred maintenance. The Commissioner of Taxes on being satisfied that the amount is reasonable will then allow the deduction for both income tax and social security charge and national security tax purposes. For administrative reasons it has been decided that the allowance will apply only to those cases where the estimated deferred maintenance is not less than £IOO. 2. The Secretary to the Treasury will, on receipt of application from a taxpayer, refund any amount deposited in respect of deferred maintenance, provided that any deposit will not be refunded before the expiry of twelve months from the date such amount was deposited with the Government. Any amount refunded will be assessed to the taxpayer as income of the year in which repayment is made. The question as to the date when final repayment of deposits will be made will be considered by the Government when facilities become available to overtake the present arrears .of maintenance. As already stated, the scheme applies firstly for the income year ended March 31, 1944. The procedure to be followed in respect of claims to be made for that year and for subsequent years may be summarised as follows:

1. Any amount deposited in respect of estimated deferred maintenance for the income year ended March 31. 1944, must be paid not later than June 1, 1944, or if a taxpayer furnishes a return of income for the year ended on a date later than March 31. 1944, then within one month from such later date. Any amounts so deposited in respect of the next income year must be paid not later than the end of that income year, i.e., March 31, 1945, or equivalent balance date. Applications in respect of subsequent years will be on a similar basis.

The application form to accompany the deposit may be obtained on applying to the Commissioner of Taxes, P.O. Box 1703, Wellington, C.l. (it is imperative that the Post Office box number be included in the address.) When applying for the form, a taxpayer MUST STATE THE AMOUNT Ob DEFERRED MAINTENANCE WHICH HE INTENDS TO DEPOSIT AND TO CLAIM AS TO A DEDUCTION. An application form and an account for the amount of the deposit will then be forwarded to the taxpayer. On completion of the form it should be presented, together with the account and a cheque for tire amount of the deposit, at a money order post office, when the receiving officer will issue a receipt in the usual manner. A space is provided m the application form for details of the deferred maintenance, and if the Commissioner considers the claim is reasonable, an appropriate deduction tor income tax and social security charge and national security tax purposes will be allowed. If it is considered that a claim is not justified or is excessive, a refund of the amount deposited or a portion thereof will be made forthwith. 3. Any taxpayer desiring to take advantage of this concession for the income year ended March 31, 1944, should make prompt application in order that the" deduction may be claimed when furnishing the social security declaration and income tax return which are required to be made during the month of May, 1944.

4. Taxpayers or their agents are advised that income tax returns and social security declarations to be rendered next month should include a deduction for any amounts deposited in accordance with this announcement. If any reduction of the deposit is found to be necessary, the adjustment for taxation purposes will be made by the Commissioner. The necessary legislative authority for the allowance of deferred maintenance will be provided later.

The amount refunded consequent on an application made by a taxpayer or at the termination of the scheme will be assessed as income of the year in which the refund is made, irrespective of whether or not the amount refunded is in fact used for the purpose of effecting repairs or maintenance. DEDUCTION FOR COST OF KEEP OF FARM EMPLOYEES.—The amount which may be claimed as a deduction by the employer for incometax, social security charge and national security tax purposes in respect of the cost of food and lodging provided for each farm employee, where tire actual cost cannot be determined, has been increased from 15/- to £1 per week. The increased deduction applies to the year ended March 31, 1944, and subsequent years and any farmer whose return has already been furnished on the basis of the old allowance of 15/- should communicate with this office,— F. G. OEORN. Commissioner of Taxes, Wellington. 980