FINANCE BILL.

Colonist, Volume LVII, Issue 14129, 4 July 1916, Page 3

FINANCE BILL.

\ SUMMARY OF'PROVISIONS. \

■EXCESS PROFITS DUTY

The Minister of Finance ("Sir Joseph Ward) has telegraphod an explanation of tho Finance Pall, which was introduced by Governor's message in the House of Representatives yesterday evening.

The first part of tho Bill deals with the ordinary income-tax levied in every year, laud is, in fact, the annual taxing Bill, with the addition that provision is made for a 5 per cent, tax in respect of all assessable income over £300.

Tart 11. deals with the assessment of excess profits duty, and is as follows :—

Subject to the provisions of ihis part of this Act there shall be levied aud piaid for the iise of His Majesty for the year of assessment commencing on April Ist, 1916, a .duty by way of in-come-tax (hereinafter in this part of this Act reefen'od to as an excess profits duty) of an lamount equal to 45 per cent, of the excess profits (as hereinafter defined), which arc included in the assessable income derived by the taxpayer during the income year ended on March 31st. 1916.

For the purposes of this part of this Act the term ''excess profits", of a taxpayer means the amount by which tha assessable income of the taxpayer for the income year ending on March 31st, I 91 6? exceeded his standard income as hereinafter denned.

10. For the purposes of this plart- of tho Act. the term "standard income' 3 of a taxpayer mean's'-in tho discretion of the taxpayer (a) his average salary o" assessable income for the three years ended March 31st, 1914, or (b)"" his Da erage yearly assessable income for any two or the said three years, or (c) his assessable income for .any one of tho said three years, or (d) a sum equal to 6 per cent, of the. auiount of the capital employed by >the taxpayer in the production of his income as at April Ist. 1915, together with such adcV.tional sum (not exceeding £500 in ji'-y case) as the Commissioner 'deems jv.st and reasonable as remuneration o'i. the personal oxertion of the taxl>ayer during the income year in the production of his income, provided that in all cases where in the opinion of tho Commissioner the standard ..income cannot ha ascertained in the manner referred to in paragraph (a) or in paragraph (b) or in paragraph (c) of this section it shall bo ascertained in tlv? manner referred to in paragraph (d) hereof.

11. If the taxpayer fails witnin two months after the passing of this Act or within two months after tho date of the completion of his balance for the ftP come year ended on March 3lst, 19LS, to make a return shoving his standard income as hereinbefore denned the Commissioner shall determine, the standard income in accordance with such one of the paragraphs of the last preceding -section'as he.think* lit. and the standard income so determined uy the Commissioner shall for all purposes be deemed to be tho standard income within the meaning of this part of this Act. 12 (-1) For the purposes of piarrioraph (d) of section 10 hereof the capital employed by a taxpayer in the production of his income as at April Ist, 1915 shall be deemed to be the difference' between the value of his. f-.ssets employed in the production of bis income and the amount of his liaibihti.es incurred for the purpose of producmg his income as on that date. ' (2) Fcr the purposes of this section the (assets of a taxpayer may in the discretion of tho Commissioner be deemed to include any land used by the taxpayer for the production of "liis income and for which he pays rent, and in such case the rent so paid by the taxpayer during too year of assessment shall be added fco and deemed .to form part of the assessable income of tho taxpayer for that year. 13. For the purpose of ascertaining the value of the assets and the amount of the liabilities of .any taxpayer as. on the. said April Ist, .1915, the Commissioner may if he thinks fit accept the value of the assets and the amount of the liabilities as appearing in any 'bal-ance-sheet furnished to him by the taxpayer, or he may require the taxpayer to furnish a statement as to tho said value and amount and may also requirefrom the taxpayer such other information a.i he deems .necessary. 14. Notwithstanding anything m tho last preceding section for the purpose of determining the value of the assets of a taxpayer as on April Ist, 19J5, in any case where the balance-sheet of the taxpayer is "uot accepted for that purpose by the Coir.Hiksioiurr, the following provisions shall apply :—(a) ' 1 hevalue of any land included m such as-sets-shall l)'e deemed to be the capital value of that land as appearing on the district valuation roll in force under the Valuation of land .Act. IW3B, on tne said April Ist, 3915, provided that if the capital value of the said land docs not separately appear on the valuation roll, but the' said capital Value forms part o? the capital value of-an' area- ot 1&ml which includes ihe land of the taxpayer and other land, the capital value as"so appearing may bo apportioned in the manner prescribed by .section 44. ol the Land and Income Tux Act, 19 Lo. and the provisions of that section shah | with the necessary modifications apply; accordingly, (b) The value of any live-! stock or stock-in-trade of the taxpayer! shall be the value shown-as on the said j April Ist, 1915, in the return of in-: com© (if any) made by the taxpayer under the Land and Income Assessment Act 1908, and in any case the value of tho live stock or stock-in-trade on tho said April Ist, 1915 (c) The value 1o? all other assets shall be their- value as on the said April Ist, 1915, as determined by the Commissioner, but- not exceeding in any case the cost of such assets to-.the taxpayer ■ . ■ Provision is thus made lor the met-r.oct of-ascertaining" the excess profits. This is by comparison with what is known as the' standard income, which is either the average income of the three year-, up to March. 31st, 1914, or the avoraga of any two of them or the income ol any one of them. .■ ■ ■. ; failing any of these three methods the excess, profits .are to be lascertaiued by "taking the excess of the taxpayer's income for 'the year .■ended March 31st, 1916, over G per cent, on the capital invested in the- business, with a fair remuneration for .his personal exertion ixoi exceeding:'-£500: . ' Provision-is made for the method or ascertaining capital and for adjustment's te meet fluctuations in the capital of the business: Special provision is made for cases where taxpayers are occupying land for which, they pay xent in the production of their income, nnd where there tare ■ anomalies arising out of the valuation of the leasehold interest, or the amount of rent paid Special provision is made for consideration of losses dining the" three years prior to the year in Vhich the income assessed is-earned. . Provision is also made restricting the writing down of stock-in-trade beyond the ar.'erape writing dowii of the ydars prior to March"Slst, 1914, A special method of assessing the income of banks is provided. Any in-crease in the rate of interest or any" increase in re-nt over and above such amount as would secure the taxpayer a return of 6 per cent, on

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lany additional capital expended on his property would be treated as excess, profits. Provision is made that where tho payment of the excess profits duty in oiip feum would cause serious hardship au extension of the time for paynvv.- - r , ■ \ bo given, but the Commissi' is to! make a report to Parliament his ac-! tion in any aaso in which he extends the time for payment, with his reasons! for doing so without disclosing, thei na?ne of the taxpayer. . . * Salaries and wages are excluded fro us the assessment of excess profits dub»\ The Bill also gives tlw- Minister of Finance authority for raising v £12,----000,000 loan, to bo placer! v, iiio credit of the War Expenses :.-..< m Power is given to rviv 'ie rates of interest on fixed dei>..- ,nd mortgages. _ _ Authority is given i •• w banks to issue 10* notes. Po\ve.r is given to is. .1,000,000 for puJ)lic works. There arc dan ,uing with the Public Trust OW. Where tho net profits of tho Pit1 lS ,b Office in any jcar exceed t!i. f £20,000, the Governor in ;(> ... , , aY direct that such profits <>•■ ..; part of them be •credited pro > i .t bonus to each estate or /n'--■■'•. = ' ■>• the office.