WAR LOAN

Otago Daily Times, Issue 24413, 26 September 1940, Page 6

WAR LOAN

COMPULSORY MEASURE ANNOUNCEMENT OF TERMS EQUIVALENT OF INCOME TAX PROSPECTUS THIS WEEK (Per United Press Association) WELLINGTON, Sept. 25. The Minister of Finance, Mr Nash, announced to-night that arrangements had been completed for the issue of a war loan locally and prospectuses would be available throughout the Dominion by the end of this week. “As has been previously indicated, war expenditure during the present financial year is estimated at about £38,000,000, of which approximately half will be in New Zealand and the other half overseas,” Mr Nash said. “Of the amount required to be raised in New Zealand, special taxation is estimated to provide £ 14,000,000, leaving approximately £5,000,000 to be raised by loan. In addition to this £5,000,000 will be needed for local requirements. As was pointed out in the Budget, we must endeavour to raise within New Zealand some portion of the amount required to meet the expenditure abroad, thus relieving as far as possible the drain upon the resources of the British Government. “ The present loan issue,” the Minister said, “ is estimated to provide a minimum of £8,000,000, but, as set out in the prospectus, persons who have already contributed free-of-interest loans will have the option of converting them into this issue. Persons who have made gifts to the War Expenses Account may reduce their contributions to the loan accordingly.” Terms of Prospectus The prospectus provides for the issue of Government stock which will be non-interest-bearing to October 1, 1943, and will, thereafter, until October 1, 1953, when the principal is repayable, bear interest at per cent, per annum. The first interest payment of £ 1 5s per cent, will be made on April 1, 1944, and thereafter payments will be made halfyearly. Any stock issued to an applicant in terms of the prospectus will be accepted at par at any time before maturity in payment of death duties in respect of the applicant’s estate. The price of issue is £ 100 per cent, and is payable as follows: On application, £3O per cent.; on December 16, 1940, £4O per cent.; on March 25, 1941, £3O per cent. The loan is being raised in accordance with the provisions of the New Zealand Loans Act. 1932, whereby interest and principal are a direct charge on the nublic revenues of the Dominion. Applications for an issue of the stock will be received by the Reserve Bank of New Zealand up to October 18, when the loan will be closed.

The Minister of Finance has indicated that, for the purposes of the Finance Emergency Regulations, 1940 (No. 2), he will not regard any person as having subscribed in due proportion to his means unless such person has subscribed to this loan an amount at least equal to the income tax payable by him in respect of income derived during the year ended March 31, 1939, being the tax normally payable in February, 1940, decreased, in case of individuals, by £SO and, in the case of companies by £7O. Tax-free Income Excluded For the purposes of computing this minimum subscription, which must be calculated fo the nearest multiple of £ 10, any income that was free of income tax in the hands of the recipient, shall be deemed to have been subject to such taxation. Tax-free income, which would be taken into account in this way, includes dividends other than those from companies incorporated in New Zealand, interest from tax-free Government Stock and from tax-free company debentures, tax-free income derived from abroad and also farming income where the land used had an unimproved value of less than £3OOO. The Trustees Act, 1908, authorises trustees to invest in Government securities, and special provisions affecting trustees are contained in Regulation 20 of the Finance Emergency Regulations, 1940 (No. 2), the effect of which is that no obligation or limitation imposed on any trustee by virtue of any trust instrument or otherwise shall prevent or excuse him from compliance with any direction, notice, or requirement under those regulations. Copies of the prospectus and forms of cash application will be available within a day or two at the Reserve Bank, Wellington, the district Treasury offices at Auckland, Christchurch and Dunedin, and at any postal money-order offices or from 1 members of any Stock Exchange in the Dominion but neither banks nor stockbrokers will receive any commission for their services in connection with this loan. A General Invitation Commenting on the issue, Mr Nash stated that, while all were expected to contribute the minimum in accordance with their means, the prospectus was a general invitation to everyone to assist war efforts by subscribing as much as possible. “I hope,” he said, “ there will be a generous response to the invitations to subscribe to the loan, the proceeds of which will be used solely for equipping and maintaining our armed forces in the Dominion or overseas, and other war purposes.”