TAX SURPRISE.

Star (Christchurch), Volume XLIV, Issue 638, 16 December 1932, Page 7

TAX SURPRISE.

FRIENDLY SOCIETIES AND TRADE UNIONS. Considerable Stir Likely. GOVERNMENT DISCOVERS NEW SOURCE OF REVENUE. (Special to the “ Star.”) WELLINGTON', December 16. There 4^'ill shortly be a considerable stir in trade union and friendly society circles over the enterprise of the Land and Income Tax Department in discovering whjLt looks like a rich source of revenue for the State. The development came to a “ Star ” representative’s notice as the result of receipt, by one of the largest trade unions in the Dominion, of a substantial assessment for income-tax, for the first time in its long history. This organisation, in common with many other trade unions, has been fortunate enough to create reserve funds that have been invested in gilt-edged stocks and in property. It is upon income derived from these sources that the department is claiming income-tax, and it is understood that in some exceptional cases retrospective demands are being made over the last two years. A portion of the organisation’s investments constitute a definite reserve for a death benefit fund, and it is probable that the official claim for taxation will be strongly contested on that ground. The development covers an ever wider field, as the department bases its claim on an interpretation of the law which only exempts from taxation such income of a trade union or friendly society as is not derived from outside trading or, to qjiote the phrase in the Act, “ beyond the circle of its membership.” Thus, while members’ contributions would be clearlv exempt from tax assessment that portion of the organisation's income received from investments, mortgages and property rentals is brought within the scope of the tax-collector. It certainly opens up a rich field, for the accumulated funds of the friendly societies of the Dominion were returned this year at a total of £4,277,715. Of this sum the amount placed on investment at interest is £3,664,776, and the net interest earned (subject to taxation according to the official reading of the law) is £178.900. Leading friendly societies which have large investment incomes include:— Manchester Unity of Oddfellows, with an income from this source of £60,725; United Ancient Order of Druids, £44.644; Ancient Order of Foresters, £35,353; and Independent Order of Oddfellows, £16,325. In addition, there are the trade unions having invested funds, in respect to which detailed information is not officially available.