TAXATION LAWS

New Zealand Herald, Volume 79, Issue 24268, 8 May 1942, Page 6

TAXATION LAWS

EXCESS PROFITS LEVY MAXIMUM ON DEBENTURES COLLECTING FROM DEFAULTERS (S.R.) WELLINGTON. Thursday A rise from 60 per cent to 75 per cent in the excess profits tax, an increase of 6d in the pound in national security tax, and other taxation changes announced in the Financial Statement presented last week are contained in a Finance Bill introduced and read a first time in the House of Representatives to-day. A fresh provision enables the Commissioner of Taxes to require employers to deduct from their employees' wages in instalments income tax default. No mention was made by the Minister in charge, the Hon. A. H. Nordmeyer, of the rise in excess profits tax. The increase is effected by a short clause amending the Excess Profits Tax Act, 1940. Several adjustments in the basic rates of income tax are made consequent upon the increase in the supertax from 15 to 33 1-3 per cent. The maximum rate of tax on debentures is reduced from 8s 9d to 8s Bd. The old rate was 2s fid in the £1 plus 1-100 th of a penny on every £1 rise to £6600, and then l-150th of a penny to £7950, at which point a maximum, rate of 8s 9d was reached. The l-100th of a pennv now drops to l-150th of a penny at £6300, with the result that the. maximum rate at £7950 is 8s Bd. Method of Computation For individual taxpayers who have a mixed income—earned, unearned or non-assessable —-the method of computation is to be as follows: Non-assess-able, earned and unearned income are all added together. To obtain the tax on the earned income in these circumstances, the total tax on the non-assessable and earned income is computed at the efFective rate for the total of these two joint incomes. From this is subtracted the tax on the nonassessable income at the rate it would have borne if it had been the sole income. The balance is the tax payable on earned income and the 33 1-3 per cent surtax must be added to this. The tax on the unearned income is computed in) a similar manner. . There are machinery clauses in the bill to enable effect to be given to these principles. Staff Superannuation Funds The Commissioner of Taxes is given authority to fix tho amount of contributions by employers to staff superannuation funds. The Minister explained that at present some employeis were paying very large sums into sucn funds and the commissioner believed this was a means of avoiding taxation. The most equitable method would be for the commissioner to determine the amount and fix the limit. Asked by an Opposition member it there was any right of appeal from the commissioner s decision in such cases, Mr. Nordmeyer said his decisions were subject to the approval of the Minister of Finance. , , Provision is made in the bill for the deduction of income tax from payments due to defaulters. The commissioner mav require any person owing money to a defaulting taxpayer to deduct the amount of income tax unpaid and transfer it to the taxation authorities. This provision, which is also to bind the Crown, is to be retrospective ra its application. 20 Per Cent of Wages Anv such deductions from wages or salaries will bes computed so as not to exceed a deduction at the rate of onetwentieth each week of the income tax due or at the rate of 20 per cent of the wages or salary, whichever rate is the less. The taxpayer is entitled to receive from the debtor a statement in writing of the fact of the deduction and its purpose. Penalties up to £IOO are provided for offences against the new provisions. ... The bill provides legislative power tor the increase in national security tax to apply to all salaries and wages derived in respect of any period after May iU and to all instalments of combined national and social security charge that became due on or after May 1, 194-. Authority is also included m the bill to enable companies to adjust dividends in respect of the increased national security tax. . . , The final clause makes provision lor the commissioner to deduct at its source an amount which he claims should be the tax in the case of those drawing varying incomes from different sources, such as insurance and commission agents and certain others. STANDARD GOODS ESSENTIAL COMMODITIES (S.R.) WELLINGTON. Thursday The progress made with the standardisation of household and other commodi ties whs roviowod by tho Minister of Supply, the Hon. D. G. Sullivan, in replying to an urgent question aslted by Mr A. S. Richards (Government— Roskill) in the House to-day. He said the development of standards lor ~u _ol tho 38 groups of essential commodities within tne Government's cost of living stabilisation programme was in progress. action in connection with the other 18 having been deferred. Fifteen specifications covering all essentia) types of men's, women's and children's footwear had been completed with the co-operation of manufacturers and retailers, said the Minister alio formulation of standards for bread and for meat sold on the retail market had been will advanced, in consultation with trade representatives. A considerable amount of investigation had been done on textiles, including essential garments. This was urgent work, and would be completed.