TAXATION OF COMPANIES.

Otago Daily Times, Issue 9300, 16 December 1891, Page 2

TAXATION OF COMPANIES.

The following is the correspondence which appeared in the Christchurch Press and is referred to in our leading columns: — (TO THE EDITOR OP THE I'RESS.) Sin,—ln reference to your leader of the 9th instant I should be glad if you will publish at foot hereof the enclosed copy of a letter from the Commissioner of Taxes to the Northern Investment Company of New Zealand (Limited), which I have just received from the manager of the company with permission to publish. This more than bears out my view of the amount of taxation to be paid by the non-privileged companies. Yonr readers will see that the commissioner claims :— Ist. One penny in the £ on the registered mortgages on land, i.e., one penny per £ on £470,921. Snd. Income tax at ls in the pound on the interest at L 5 per cent, on the debentures issued in England, viz., L381,t>42, being a part of the previous sum on which the mortgage tax is claimed. But to my astonishment the commissioner is not satisfied with this. Like Oliver Twist, he asks for more. The act, as interpreted by the commissioner, is more severe on these companies than I had supposed. 3rd. The commissioner, you will observe, also claims ls in the pound income tax on L11.2J15, being the net profits made by the company. My examination of their balance sheet shows me that the whole of their net profits, or all but a very trifling sum, are made out of the mortgages already taxed twice, as shown above. I thought the etfect of the act as interpreted by me was quite bad enough. How much worse it is if the commissioner's view is correct! However, I tliink it will be found that the commissioner is wrong as to this last demand. Tlie only doubt I have on the subject is as to which of them—the commissioner or Mr Ballance—is the more ignorant as to the operation and effect of the act. —Yours, &c, Arthur E. G. Rhodes.

Property Tax Department, AA'cllingtou, •2nd December 1891. The Public Officer, Northern Investment Company of New Zealand, Ltd., Napier. Sir,—l have the honour to acknowledge the receipt of yours of the 19th ultimo, and to apologise for the delay that has unavoidably arisen in replying to it. Forms were posted to the company's alldress on the 20th ultimo, and have doubtless been received in due course. Under the Land and Income Tax Act of IS9I the company will be taxable on its funds invested in land or in mortgages of real property, and returns must be sent giving a detailed statement of each. AA'ool liens will not be treated as mortgages. It will, therefore, not be necessary to return them, nor will it be necessary to return interest accrued, money deposited with a bank, or otlice furniture. I send you a statement, as requested, compiled from tbe balance sheet sent by you and from the balance sheet of JiOth June ISiW. The debenture interest has been calculated at 5 per cent. A'oui's obediently. John -AFGowan, I'i-o Commissioner. Northern Investment Company of New Zealand (Limited). land tax. _ . . . _ . _ On real property j j Nil On mortgage* ..:■ ! 47(>,92V i I i at ld IISS7 3 5 Graduated tax ..J i j 1 Nil income tax. i£ii i £ £ Funds invested ... |182,979 Less capital ...dOn.OOO; j Rank 1,..J!7i ! ;]m,:«7: :;si,c,4_: at 5 ■„"; 19,082 I at ls 954 2 0 Net profits ... , 11,235 j at ls 5.1 15 0 ' ; JioOJl 0 5 Except for graduated land tax the rates are to be annually fixed.

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