TAXING MIXED INCOMES.

Te Aroha News, Volume XLI, Issue 66286, 5 October 1925, Page 2

TAXING MIXED INCOMES.

o A QUESTION OF METHOD DISCUSSION IN AUSTRALIA Some discussion has arisen in Melbourne on a subject of the taxation of mixed incomes as computed by the Federal Taxation Department. The view in some quarters is that in the case of a mixed income, for instance, an income of £750, of which £SOO is derived from personal exertion and £250 from property, the £SOO should be taxed at the £SOO rate for personal exertion, and the £250 ishould be taxed at the £250 rate for property income. The argument altogether overlooks the fact that the Federal taxation of income is progressive, says the Sydney Morning Herald, and that if the method were as stated above a fixed income of £750 would pay less tax than an income of £750 derived wholly from personal exertion. In the case cited a taxable income from personal exertion of £750 would pay £25 1/4, and if the tax were imposed on a mixed income of £750 on the basis suggested the tax levied would be £2O 6/3, that is £SOO personal exertion at the rate approximate to £SOO, £l4 0/4, and £250 income from property at the rate approximate to £250, £6 5/11. Such a levy would be clearly against the ii tention of Parliament, which is that income from property should pay a higher rate than income from personal exertion. Mr Robert Ewing, the Federal Commissioner of Taxation, has been at pains to make plain that the method adopted by Parliament in such a case is to tax the £SOO from personal exertion at the appropriate poundage rate for £750 from personal exertion, and to tax the £250 from property at the appropriate poundage rate for £750 from property. The proper tax on £750 so constituted is thus £2B 7/1, namely, tax on £SOO personal exertion at the appropriate poundage rate for £750 from personal exertion £l6 14/3, and £250 at the appropriate poundage rate for £750 from property, £ll 12/10.