MONEY ON DEPOSIT

Otago Daily Times, Issue 18468, 1 February 1922, Page 5

MONEY ON DEPOSIT

CONVERSION BY COMPANIES..- ‘ CHANGE TO PREFERENCE SHARM V (Fhom Ope Own Cobkesp ondbnt.) Jl WETXINGfTON, January 3L • ; ■* The purpose of the Companies Temporary Empowering Bill, introduced in the early hours this morning, is to enable companies holding money on deposit to convert their obligations, with the consent of the lenders; into preference shares. There is one factor ’■ in this to be overcome. A company is at , present entitled to deduct the interest',it j pays to depositors from its assessable in-,' come for the purpose of income tax, _ and I without some special provision its position ‘ would bo charged in that respect by the *, proposed conversion. Instead of the deduo ’j tion the company would bo required to pay income tax upon the amount of the dividend paid to depositors. It is, therefore, proposed by the Bill to enable companies holding existing deposits to create a specific class ’ of “deposit preference shares,” which the 1 company can specifically exchange with de- 1 positors for existing deposits. It is providdd that for the period of five years, from . the commencement of the Act. the company • 4 shall bo entitled to deduct from its assess- J able income the dividend payable to deposit preference shareholders in the same manner, . as it now does the interest paid to dopoai- , 1 tors. The holders of deposit shares will pay income tax on their dividends. \ (l '