TAX-FREE LOANS

New Zealand Herald, Volume LXXVI, Issue 23273, 16 February 1939, Page 9

TAX-FREE LOANS

EXPIRY OF CONDITION OVER £14,000,000 INVOLVED HIGHER INTEREST PAYMENTS The interest-frcc-of-ineome-tax condition of a further batch of Government securities converted under the New Zealand Debt Conversion Act, 1932-33. will expire during the next few months. Altogether securities aggregating over £14.000,000, held throughout the Dominion, will ho affected. On these loans the State will he obliged to find some £71,000 additional interest each year, but as an offset against this the total interest payments on the loans will bo taxable in tho hands of the investors.

The first operation under this provision of the Act "was completed in November last, when the 1938-52 3Jper cent tax-free loan automatically became a 4 per cent taxable loan, maturing on May 15, 1949-52. Securities totalling £9,410,825 were involved in this operation. In the approaching months tho tax-free period of the March and September, 1939-43, and the May, 1939-52, 3} per cent issues will expire. The next loan to become 4 per cent is the March 15, 1939-43 issue, totalling £7,916,205, followed by £2,300,050 on May 15 and £4,024,405 on September 15. After the dates on which the freedom of income tax expires these loans will ho quoted as 15/3/1940-43 4 per cent in the case of March and September issues and 15/5/1949-52 4 per cent in tho case of the May issue.

Last year there was evidence of the occurrence of some substantial readjustments in tlio holdings of these loans. The bulk of'the isues, which were originally War and Victory loan issues, are held by the large financial institutions of the Dominion. Where company income tax is on the highest scale, an investing company is faced with a substantial reduction of yield once the loan becomes taxable, in spite of the higher interest income, and if better buying has been offering a change-over has followed. In the market at present there is strong inquiry for these loans, but few supplies are offering. Accrued interest on the .March and September loans is about 29s ami that 011 the May issue 17s (id. This, of course, is included in the quotation price. Allowing for accrued interest, but not for brokerage, the yield on the 1939-43 loans on a -1 per cent basis including redemption at the most distant maturity date is around £4 8s per cent, and that on the May, 1939-52 issue around £4 2s per cent.

TRADE OF BRITAIN FIGURES FOR JANUARY ALL-ROUND DECREASES LONDON, Feb. M Tho Board of Trade returns for .January show that the value of imports to Britain was £75,570,000, compared with £84,95(5.340 in January, 1938, a decrease of £9,386.340. 'J'h.i value of exports was £39.479.000, compared with £4U83,132, a decrease of £1.704.132. and of re-exports £4,595,000. compared with £4,501,414, a decrease of £206,414. _ The principal decreases were:—lmports: Grain and flour, £2,225.000; tobacco, £666,000; iron ore, £1,469,000; wood and timber, £625,000; raw cotton, £1,251,000; seeds and 'nuts, £748,000; rubber, £736,000; iron and steel and manufactures thereof. £1.905,000; oils and fats, £604.000. Exports: Iron and steel and manufactures, £1.519,000; cotton yarns and manufactures, £781.000.

The chief increases were:—lmports Dairy produce/ £841,000; other food £696.000; raw wool, £900,000. Exports Vehicles, £1,308,000.

Following is a comparison of the returns for January for the past three years: — Imports Exports Re-exports £ £ £ 1037 .. 75.5N0,736 30,100,726 5,076,020 1038 .. 81.056,310 -11,183,132 <1,801,111 1030 . . 75,570,000 30,170,000 1,505,000

The apparent adverse balance in January, 1937, was £31,4.03,981. It increased ill January, 1938, to £38,971,79-1. Last month the excess of imports over exports, was £31,496,000.

RECORD EARNINGS WOOLWORTHS, LIMITED DIVIDEND OF 174 PER CENT (Received February 15, 11.45 p.m.) SYDNEY, Feb. 15 A preliminary statement shows that a record ne.t, profit of £271,693 was earned by Woolworths, Limited, in the year ended January 31, beine an increase of £53,976 over the previous highest figures. The final dividend is 11J per cent, making 175 for the year, compared with 15 per cent in the previous year. The net earnings compare with £217,717 in the previous year, when a bonus issue of one fully paid share of 5s for every five shares held was made. The paid capital of the company is £1,203,332, in which there are 3,713,328 ordinary shares of 5s each, in addition to £275,000 preference capital. BRITISH EXCHEQUER LATEST WEEKLY RETURNS British Wireless LONDON, Feb. 11 The latest weekly Exchequer returns show that the total ordinary revenue amounts to £731,648,977, compared with £704,270,145 ai the corresponding date last year. The total expenditure, less selfbalancing items, is £830,253,372. compared with £745,032,822 a year ago. CARLTON BREWERY NET PROFIT INCREASED (Received February 15, 0.10 p.m,) MELBOURNE, Feb. 15 Net profits of Carlton Brewery, Limited, for the year ended December IS] was £136,500, compared with £135,533 in 1937. The dividend is at the unchanged rate of 15 per cent, requiring £122,549.

The dividend was raised from 12 per rent to L r > per cent in 1937. Carlton Brewery and its subsidiary, the Victoria Brewery, together own a 32 per cent interest in Carlton and United Breweries. BRITISH WAR LOAN British Wireless LONDON, Feb. 14 War loan. 3 J per cent, is quoted at £O7 8s 9d, compared with £97 lis 3d yesterday. BUSINESS ON WALL STREET NEW YORK, Feb. 11 On the New York Stock Exchange to-da, - tko turnover' totalled 42U,000 shares.