LOCAL BODY INTEREST

New Zealand Herald, Volume LXX, Issue 21453, 29 March 1933, Page 10

LOCAL BODY INTEREST

REDUCTION FROM APRIL 1 METHOD TO BE ADOPTED SOME FINE CALCULATIONS After Friday, interest on local body securities will be subject to a reduction of 20 per cent, replacing the 10 per cent stamp duty now in operation. The procedure to be adopted by debentureholders in obtaining the half-yearly payments of interest will differ slightly from that now in forco. At present tho holder, on the due date of payment, may cash his coupon at his bank or the bank of which the local body concerned is a client. He either himself affixes stamps to the value of 10 per cent of the payment due, or fills in a form and the amount is deducted by the hank. In future a straight-out deduction of 20 cent will bo made. No stamps will be necessary, as the reduction is not in the nature of stamp duty. Thc # deduction is a comparatively j simple matter as far as the interest pay- j able to March 31 and the interest pay- j able to a period six months after March 31 or subsequent to that is concerned. In the first case tho 10 per cent stamp duty will be deducted as usual, and in the latter instances the full 20 per ! cent becomes payable. However, special calculations will ho needed in respect of interest payments between March 31 and October 1. The interest here concerned will cover a period partly before March 31 and partly after that date. For the period to March 31 the deduction will be on the lower basis and for the latter period on the higher. Thus, for a payment of, say, £3, on June 30, the first £1 10s will bo subject to 3s, or 10 per cent stamp duty, and the second £1 10s will be subject to a reduction of 6s, or 20 per cent. The total interest payment will be £2 lis. As interest payments are spread over varying periods, fine calculations will be necessary during the broken period from March 31 to October 1. The banks are looking to the local bodies to supply them with tables showing tho amount of payment on specified days. The local bodies are also expected to give notification. of such payments where the statutory limit of 4J per cent applies. POSITION AT MOUNT ALBERT OVERSEAS LOANS QUESTION The effect of the interest reduction legislation on the Mount Albert Borough Council's finances was outlined at a meeting of the council last evening by Mr. R. Fernor, chairman of the Finance and Legal Committee. Mr. Ferner said the total indebtedness of the borough was £856,714, of which £130,000 was domiciled abroad alid carried £5 13s 9d per cent interost. The total reduction in ini tcrcst rates on local loans would amount to £7742 a year. A proportion of this had already been saved this year by the operation of tho stamp duty. It was decided that steps should be taken to make application to holders of overseas debentures for a reduction in the interest rates, but the matter was , deferred for careful consideration by the Finance and Legal Committee before de- ' tails were submitted to the council. | TRANSPORT BOARD SAVING , ESTIMATE OF £B3IO A YEAR i It is expected that the legislation prol viding for a reduction in the interest on - local body loans domiciled in New Zealand r will save the Auculand Transport Board ) £H3IO a year, according to a statement i made yesterday by the chairman of the f board, Mr. J. A. C. Allum. The nds visabflify, he said, of arranging to cons vert some or all of tho boara's loans was i being investigated and a report would bo made later.