SALES TAX AMENDMENTS

Taranaki Daily News, 19 December 1933, Page 7

SALES TAX AMENDMENTS

AVOIDANCE OF CONFUSION

CONVENIENCE OF TRADERS.

EXPLANATION OF THE MEASURE.

By Telegraph—Press Association.

Wellington, Last Night.

It has been found that in some industries it is the practice for merchants owning material to forward such material to another merchant to be made up into manufactured articles, the material remaining the property of the first-men-tioned merchant and a charge being made by the latter merchant merely for the cost of manufacture. Doubts have arisen whether such transactions are covered by the definition of “manufacture” in the Sales Tax Act, and opportunity has been taken in the amendment Bill introduced in the House to-night to remove such doubts. This provision is retrospective. Considerable difficulty has been experienced by both merchants and the department in cases where taxable goods are sold by retailers to wholesalers for resale by the latter. Under the existing law when a retailer sells goods to a wholesaler he is entitled to a refund of tax from the department, provided he sells the goods imported by him at a price exclusive of the sales tax and that he can satisfy the department as to the actual amount of tax paid on the goods. No such provision, however, exists in cases where goods sold by a retailer are New Zealand-made goods or imported goods which had been imported by persons other than the seller. In such cases it is necessary for the retailer to sell to the wholesaler at a price inclusive of sales tax and to advise the latter as to the amount of sales tax included in the price. The wholesaler then deducts the amount of such sales tax from the amount. payable by him when the goods are eventually resold. METHODS OF ADJUSTMENT. These methods of adjusting tax paid by retailers have caused serious inconvenience to both retailers and wholesalers owing to the large amount of detail work required. In some instances it involves disclosing the buying prices to competitors, and in some cases it is impossible owing,' inter alia, to the number of hands through which the goods have passed for the retailer to advise the wholesaler as to the amount of tax. It now proposed that when taxable goods are sold by a retailer to a wholesaler for resale or for use as materials in the manufacture of goods for sale that the wholesaler may deduct from the sale value of the goods sold by him in any one month the tax-inclusive price paid to the retailers. The wholesaler will, of course, pay the tax on the price at which he sells the goods. Similar provision is also being made in cases where a manufacturing retailer purchases taxable materials from another retailer. Difficulties have arisen in respect to the position of receivers under the Act. A liquidator who enters into possession of the assets of a company is required by the Act to set aside such a sum out of the assets as appears necessary to provide for any sales tax that is or may become payable by the company. It is now proposed to require similar action on the part of a receiver who enters into possession of the assets of a company on behalf of debenture holders.

It has been found desirable for the convenience of traders to make definite statutory provision for the collector to accept returns in respect of ordinary monthly accounting periods of merchants in lieu of calendar months, and this is effected in the Bill. It is -also proposed in another clause to amend the law to remove any possible misconception as to when the tax becomes payable, and finally, in order to simplify the procedure it is proposed to make provision for the collector to sue for tax which has become payable.