POINTS OF INTEREST

Timaru Herald, Volume CXLV, Issue 21280, 25 February 1939, Page 5

POINTS OF INTEREST

Minister Explains Regulations

Position Clarified

By ieiegrapn Press Association WELLINGTON, February 24. In a statement to-day, the Minister of Social Security (Hon. W. Nash) indicated points of interest and Importance arising out of the Social Security Regulations which were gazetted on Thursday. "The regulations now being gazetted.” said Mr Nash, “relate solely to contribution to the Social Security Fund and represent the first step in the task of assuring to 1,600,000 people in this country that certainty of maintenance in reasonable comfort which proper administration of resources of this country renders possible. The Government has at no time under-estimated the magnitude of this task, and it has steadily, day by day, since the passing of the Act. built up the necessary organisation, with the result that there will be no difficulty in putting the Act into effect on April 1 next. Of course, the varying circumstances of those requiring assistance have demanded much attention to detail, but it should be possible shortly to issue such further regulations a. are necessary in connection with medical, hospital, unemployment, age and other benefits under the Act.” “The new regulations,” continued Mr Nash, “are framed so as to take advantage within the limits possible of the administrative machinery previously established in terms of the Employment Promotion Act. thus continuing the method of collection with which contributors are now familiar. With the change in the nature of the benefits provided, and consequently in the personnel of these liable to contribute. the new regulations are necessarily more comprehensive in scope than were those previously in force. They include not only provisions defining the rights of exemptions and obligations of contributors to the fund but also provisions ensuring more simple and effective administration than has hitherto been possible. The social security contribution payable under the Social Security Act. 1938. consists of a registration fee and charge upon salaries, wages and other income. Payments of contribution are very similar in form to the registration levy and charge upon income imposed by the Employment Promotion Act, 1936. which will cease to eperate as from the end of March. However, the contribution is a new charge, and will be utilised for purposes quite different from those to which the Employment Promotion Fund was put. This latter fund was used principally for the purpose of promoting employment, and consequently it was necessary to exempt from liability to contribute those persons of limited means who could not expect to obtain any direct benefit from the application of the fund. The Social Security Fund, on the other hand, will be expended in a manner which renders available to every person In this country assistance of some kind or other. This being the position, there are a large number of cases which circumstances previously justifying exemption from liability to contribute no longer exist. To meet any exceptional cases where payment of the charge may create hardship, the Act empowers the Commissioner of Taxes. In appropriate cases, to grant relief either by affording extended rime for payment or ”y allowing partial or total exemption from any pa.ticular instalment or Instalments as these fall due ”

Universal rei efits “In view of the universal nature of the benefits provided, the regulations have been sc framed that in general all persons over the age of 16 years are liable to pay the annual or quarterly registration fee, and also contribute to the Social Security Fund in respect, of income received by them,” said Mr Nash. “There are. or course, certain exemptions. The regulations make it clear that apart from total disability war pensioners, everybody who works er receives Income must pay. The position in respect to the registration fee may be summarised briefly thus: “Persons receiving income from any source are liable to pay the fee. and this applies whether or not they are also in receipt of benefits from the Social Security Fund. <88) persons who receive no Income but who receive benefits from the Social Security Fund an exempt from liability: thl. exemption ceases if and when they receive income.

<111) Person# not in receipt of monetary benefits urder the Social Security Act. but who are tempo-’.rily exempt from the fee because they are not in receipt of Income For example, persons in public hospitals and the like are required to pay the current instalment of the registration fee so soon as they recommence /oik. "An interesting and important innovation in respect of the registration fee appears as a provision enabling control by employes of payments of the fee by their employees as previously.” said Mr lash. “Employers are requirec to ensure that their employees pay quarterly or yearly instalments regularly In the past considerable number of employers have found that much time Is saved and much Inconvenience avoided if coupon books are held by the employer, instalments being met as they fall due by deductions from wages payable. Group payment of this nature it now possible in all cases, as employers are specially empowered to require employees to deposit coupon books during continuance of employment. While the coupon book is held bv the employer he is Jointly liable with the employee for each instalment as it becomes due, and may deduct this from wages p..yab!e. However, care has been t iken to protect employees from the negligence oi the employer tn that while the employer is liable to pay any penalty incurred because of late payment while the coupon book is held Ly him. he is able to recover from the employee only the Instalment and not the penalty.”

Classes of Exemptions “The Social Security Act makes all persons ordinarily resident i' New Zealand liable to pay a charge at the rate of 1/- in the pound upon all income received by them from whatever source, but provides for a grant by regulation of exemption in certain cases,” continued Mr Nash. Exemptions now provided fall into two classes, total exemption to certain classes of persons and exemption from liability in respect of certain types of income. Persons wholly exempt are persons in receipt of total disability war pensions and persons occupied as official representatives of othe, countries. Incomes which are exempted from liability to bear the charge include monetary and other benefits received under the Social Security Act or under any Act repealed by it, and also sick pay from friendly societies. In addition, dividends declared after April 1, 1939, by companies, which are liable to pay a charge upon their profits are exempted by the Act itself, as also are war pension and workers’ compensation payments. It must be understood. however, that persons who receive exempt income are liable to pay the charge upon other income received by them and this charge will be payable in the same way as is the present employment charge.”

Position of Companies The Minister continued: “The provisions affecting companies and defining the obligations of liquidators, and also the obligations of trustees of deceased estates, and settlements of particular Interest to shareholders is the regulation requiring companies which are liable for the charge to print uppn dividend certificates the words 'the company is liable for social security charge upon this dividend’ and no social security charge on this amount is payable by a shareholder. This endorsement will enable shareholders at a glance to see what dividend should be included in their annual declarations of income and what should be excluded, thus avoiding confusion which might otherwise arise. Companies are liable to pay the social security charge in quarterly instalments in the same manner as are individuals. Persons leaving New Zealand on or after April 1 next are required either to pay or arrange for the payment of all social security charge for which they may be liable before authority to travel by ship or by air may be issued to hem. Any ship-owner or other person who issues such authority without having presented to him a certificate from the Commissioner of Taxes as to the payment of the charge is himself liable for the amount involved.

Summary of Classes “For the purpose of enabling a ready comparison of the general exemr'ions which existed under the Employment Promotion Act and the general exemptions now provided for under the Social Security Regulations,” said Mr Nash. “I have caused to be prepared the following summary showing the position of the various classes of persons. Examination will show at a glance whether the general obligation of each individual to contribute has in any way been varied. It must, of course, be remembered that this is a summary of the position as it affects classes of persons, and that Individuals within those classes may, because of circumstances personal to themselves, be entitled to exemptions not granted to the class as a whole. (1) Persons over 16 and under 20 years of age—Registration fee previously exempt, and charge on income previously exempt. These exemptions have now been discontinued.

i (2) Women—Registration fe- previously exempt; charge on Income previously wholly exempt from the charge upon wages from private domestic service, and wholly exempt in respect of the first £5O of income other than wages. These exemptions have been discontinued.

(3) Natives—Registration' fee previously exempt unless request made to become contributor; charge on income previously liable. Natives are now placed upon the same basis as European residents. <4> Chatham Islanders—Registration fee previously exempt, charge on income previously exempt. Chatham Islanders have now been granted benefits provided by the Social Security Act and are liable upon the same basis as residents on the mainland. (5) Pensioners—Under the Pensions Act, 1926 (old age. widows, miners, etc.). Registration fee previously exempt, charge on income previously exempt from the charge on income other than wages. These persons are now exempt from liability to pay registration fee only, if the benefits received by them under the Social Security Act or under Pensions Act. now repealed, constitute the sole source of income. In view of greatly increased monetary benefits now payable to them, they are liable to pay the charge upon all other income. <6> Aged persons, males 65, females 60. and persons more or less permanently disabled—Registration fee and charge on Income; these persons were previously exempt both from registration fee and from charge on income other than wages if the total Income received was not more than £lO4 per annum, but they were liable to pay wages tax on wages from employment. In view of the fact that these will now receive greatly Increased benefits under the Social Security Act, exemptions have been discontinued. This means that those who are entitled to benefits under the Social Security Act will be exempt from the charge upon the value of those benefits. They will also be exempt from liability to pay the registration fee if they have no income except the benefit under the Act. Those who have income from other sources will be liable for the charge upon that income and for the registration fee. War Pensioners (7) War Pensioners’ Registration Fee —Previously total disability war pensioners were exempt, but other war pensioners were liable to the charge on income. Previously total disability war pensioners were exempt from the charge but not from wages tax. Cther pensioners were exempt only in respect of pension received. In the case of al! war pensioners the existing position has been continued. (8) Persons in schools and other institutions. The new regulations provide for

exemption of the following persons from liability to pay the registration fee during such period as they are not in receipt of any income:—(l) Inmates of institutions for relief of aged, needy and infirm persons; (ID Mental hospital patients and patients in public hospitals; (III) Inmates of prisons, etc.; (IV) Students attending educational institutions. These are not regarded as receiving income merely because they may receive benefits under scholarships or bursaries; (V) Members of religious orders whose rules forbid possession of property; (VI) Persons who are registered as unemployed.