8.—5.

22

[D. G. CLARK

Is that the only trading Department of the Government that does not pay income-tax ? —That is so—unless you include the Railways Department as a trading Department. The Railways Department and the. Postal Department, of course, do not pay income-tax. What is the precise meaning of subclause; (g) on. page; 19, which enumerates among the exemptions from income-tax " Dividends and other profits derived from shares or other rights of membership in companies, other than companies which are exempt from income-tax " ? —When that clause was first inserted dairy-factory companies were, exempt from income-tax ; and it covered building society dividends too. They are exempt from income-tax ? —The building societies themselves are. The dividends are assessable in the hands of the recipients. But is not this contradictory ? You exempt dividends derived from shares in companies, other than companies which are exempt from income-tax ?—We exempt them. If the company itself is liable to income-tax, the shareholder is exempt. Thank you. It is quite clear. With regard to subclause, (m) on page 19,1 presume that that refers principally to the exemption of Government loans by other Acts —loans free of income-tax ?—Yes. It saves the special exemptions that are granted under any other Act. The That' exemption applies really in practice to the free-of-income-tax Government loans, does it not ?—Yes. Mr. Shirtcliffe.] There are no other important exemptions ? -No. The allowance for prompt payment of tax has been, done away with, has it not ?—Yes ; but there is still an allowance if payment is made three months prior to due date. Does that take the place of the old 5 per cent. ? —ln a sense it does. The Chairman.] Do many people take advantage, of that provision and pay in advance '!■ —Not a great many. At times some of the large institutions have a fair sum by them and they pay it in. To get this allowance you have, to pay at least three months before due date ?—Yes. Mr. Shirtcliffe.] I suppose a great many people took advantage, of the 5-per-cent. rebate ? —Yes. The majority ? —Yes —all those that were able to pay at all. Mr. Weston: With regard to that allowance if you pay three months before, you cannot get it if you pay within the three months ? —No. The due date is fixed. We do not accept such a payment after three months. Do you take any amount ? Do you take £2,000 or £3,000 ?— We confine it to larger amounts. If a person with a small amount comes in we recommend him to go to the Post Office Savings-bank and place it on deposit there. Mr. Shirtcliffe.] At page 21 of your statement there is this passage : " The Commissioner may, in the case of the shareholder whose, total income does not, exceed £400, pay to the shareholder a sum equal to the difference between the tax paid by the company in respect of an amount of its inoome equal to the shareholder's dividends and the amount which would have been paid by such shareholder in respect of the dividends if they had. formed part of his taxable income " : how does that operate ? Is it really operative ? —I do not think that any concession has been granted under that provision. There was one very strong application made to me, I remember, but it was by the shareholders of a company that had never paid a dividend, before, and I ruled the application out on the ground that this provision was intended to relieve taxpayers from the loss of dividend occasioned by the Act. As these shareholders had never received a dividend before they could not be held to have lost any dividend. My ruling was not contested. Mr. Weston.] You have only had one application ? —We, have, had more than one application, but, speaking from memory, I do not think any of them have complied with the conditions. Mr. Shirtcliffe.] Referring to page 21, why are the two industries of gold-mining and schcelitemining specially treated under the heading " Mining Concerns " ? —I can give no reason whatever for that. They pay tax only on half of the dividends paid to shareholders ? —Yes. Mr. Weston.] It is because they are, speculative companies. It is an arbitrary method, is it not ? —-It is an arbitrary method. The, provision with regard to gold-mining companies was introduced into the Land and Income Assessment Act in 1893, just a year after the Act started. Soheelitemining was included during the war. It was added to gold-mining, to encourage scheelite-mining. Mr. Weston.] 1 think there are only three or four scheelitc companies in the Dominion, and they are not doing very well now. They have been rather a "frost " since the war concluded. Mr. Shirtcliffe.] Still, if they are not doing very well and are not paying dividends they will not be asked to pay income-tax ?—No. At page 21 of your statement, under the, heading " Insurance Companies," there is this paragraph : " No deduction is allowed for premiums paid for reinsurance with companies not carrying on business in New Zealand ": do you know what the special reason for that was ? I notice that the amounts received under such reinsurances are not treated as income as a set-off against that ; but do you know why the provision was made ?—lt was to bring in the net results of the whole of the, business carried on in New Zealand. By allowing the deduction of the reinsurances it was dividing the business between the company here and the company beyond New Zealand which did no business here. Mr. Weston.] The State Fire Department is allowed to deduct reinsurances, is it not ? —Yes ; there is a special exception made in favour of the State Fire Department. Mr. Begg.] What is the reason for that ? —lt was a State institution, and it was carrying on in opposition to the other companies. It was intended to make it independent of the other companies. Is the clause in question an old clause ? —Yes. When was it introduced ? —I think it was in the original Act.