TAX PROCEDURE

New Zealand Herald, Volume LXXV, Issue 22985, 12 March 1938, Page 15

TAX PROCEDURE

STOPPING EVASION DATES OF FINANCIAL YEARS STATEMENT BY MR. NASH REVENUE LOST IN PAST [BY TELEGRArH —SPECIAL REPORTER] WELLINGTON, Friday "This new procedure will bring into being a formula which will stop quite a lot of tax evasion," said the Minister of Finance, the Hon. W. Nash, in the House of Representatives to-night, referring to a clause in the Finance Bill dealing with alterations in the dates on which financial years may close in future. Under the bill any taxpayer, with the consent of the commissioner, may furnish a return for the year ending on the date of the annual balance of his accounts. The income for that year will be deemed to have been earned during the year ending March 31 nearest that date. In this connection September 30 of any year will be regarded as being nearer to the preceding March 31. If a taxpayer adopts this practice he will not be able to depart from it without the prior consent of the commissioner. Effect of Changed Dates "There has been a procedure under which companies have changed the date of their financial year," said Mr. Nash. "Presuming they balanced on March 31, they then changed to June 30. For some unexplainable reason commissioners in the past have taken the income derived during the year ended. June 30 only, and the companies have got away with the tax for the three months during which the change was made. Profits made between March 31 and June 30 were not assessed for income tax." Mr. Nash said that in one instance £14,000 did Hot come into the assessment, and the company beat the Government for £5517. Questions About Practice The Rt. Hon. G. W. Forbes (Opposition —Hurunui): What were the commissioners doing? Mr. Nash: I don't know. We were not in charge then. If we can recover the money we will. The Leader of the Opposition, the Hon. A. Hamilton: What does the law say? Does it say the practice is all right ? "Apparently • the commissioners thought so," said Mr. Nash. "In another case the revenue lost amounted to £3733. One company got away with the tax for a whole year. The proposed alteration may occasion some companies having to pay two taxes in one year. However, they will still have earned the income on which they pay the tax."