SALES TAX ACT

Wanganui Chronicle, Volume 76, Issue 299, 19 December 1933, Page 8

SALES TAX ACT

amendments prepared administration matters. ■ clarifying difficulties. [ Fer Press Association. J WELLINGTON, Dec. 18. Explaining the Sales Tax Amendment Bill the Rt. Hon. J. G. Coates, Minister of Finance, in the House tonight said that it was introduced for the purpose of simplifying administra tion of the Sales Tax Act, passed last session. It did not proposed any major alteration in the system of collecting the tax. It had been pointed out by the Controller and Auditor-General that the original Act did not bind the Crown, and that, therefore, sales tax could not be recovered by wholesalers who sold taxable goods to the Crown. It was recognised that as the Crown had imposed on purchasers from wholesalers the liability to recoup such wholesalers for the tax paid by them, it was obviously fair that the Government should adopt the same principle in cases where it purchased goods from whoosalers in New Zealand. An undertaking had accordingly been given by the Government that if claims by retailers which included the sales tax were passed by the Audit Office, legislation would be introduced by this session to validate the matter, and this was dealt with in the Bill. . , Provision was contained in another clause to make it quite clear that a sales tax was payable by a person who manufactured goods for the erection or construction of buildings in cases where such goods were of a like class or kind to those sold by other manufacturers in the same business. This clause would ensure that builders making their own joinery, or fabricating their own steel work would be placed on the same footing in respect to sales tax as joiners and engineers making up similar goods for sale. This provision was made retrospective, as it was designed merely to clarify the existing U lt has beet found that in some industres it is the practice for a merchant owning material to forward such material to another merchant to be made up into manufacture darticles, the material remaining the property of the first-mentioned merchant, and a charge being made by the latter merchant merely for the cost of manufacture. Doubts have arisen as to whether such transactions are covered by the definition of “manufacture- in the Sales Tax Act, and the opportunity has been taken in the Amendment Bill introduced to-night to remove such doubts. This provision is retrospective. , , Considerable difficulty has been experienced bv both merchants and the department in cases where taxable goods are sold by retailers to wholesalers for re-sale by the latter Under the existing law. when a retailer sells goods to a wholesaler he is entitled to a refund of the tax from the department, provided he sells the goods imported by him at a price exclusive of 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 eases where goods sold by a retailer are New Zea-land-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 re-sold. These methods of adjusting the 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 buying prices to competitors, and in some eases 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 is now proposed that when taxable goods are sold by a retailer to wholesaler for re-sale, or for use as materials in the manufacture of goods for sale, the wholesaler may deduct from the sale value of the goods sold bv him in any one month the tax. inclusive of the price paid to retailers. The wholesaler will, of course, pay the tax on the price at which he sells the goods. A 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 sum out of the assets as appears necessary to provide for any sales tax that is or mav become, payable by the company. It is now proposed to require a similar action on the part of a receiver who enters into possession of assets ot company on behalf of debenture h °lt had been found desirable, for the convenience of traders, to make a definite statutory provision for a codec tor to accept returns m respect to ordinary monthly accounting periods ot merchants in lieu of ca ]® na “, I mo ”Ts 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 procedure, it « P™? 08 ®* to make provision for a collector to sue tor tax which has become payable.