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01 Jun 1965

Land and Income Tax Amendment Act 1965 (budget proposals)

Archived legislative commentary on Land and Income Tax Amendment Act 1965 from PIB vol 23 Jun 1965.

This commentary item was published in Public Information Bulletin Volume 23, June 1965.

More information about Public Information Bulletins.

1965 Budget Proposals

The Minister of Finance Hon HR Lake announced several tax proposals in his 1965 Budget statement. They will require validating legislation to have the force of law.

Here are brief details of the Budget proposals:

Income Tax

Incentives Extended

The following incentive deductions will continue for another year to 31 March 1967. This will bring them into line with the 20% West Coast, South Island, investment allowance and the incentive deduction for increased export sales:

  • The 150% deduction for export market and tourist promotion expenditure.
  • The 10% investment allowances on manufacturing and agricultural plant and machinery.
  • Special depreciation of 20% on plant, machinery and accommodation for employees.
  • Initial depreciation of 20% on accommodation for employees and farm buildings.
  • The deduction in full of "Class B" farm development expenditure previously limited to £400.

The incentive deduction for the increased use of fertiliser and lime ended on 31 March 1965 or equivalent balance date. This is being replaced by a subsidy on the transport of fertiliser. In appropriate cases the increased fertiliser and lime incentive deduction will be allowed in the 1966 income year. The circumstances were stated on page 11 of Public Information Bulletin No. 21.

Farm Income Equalisation Scheme

Legislation will be introduced to confirm the scheme which began shortly before 31 March 1965. Details of this scheme were given in Public Information Bulletin No. 21.

Farm Development Incentives

Incentive Allowances for Other Industries


The 10% investment allowance can be claimed on plant and machinery used in catching fish for sale, and purchased after 1.4.1964. This will include cost of fishing vessels, structural alterations to fishing vessels and also conversion costs of a vessel for fishing. The cost of second hand fishing vessels will qualify in certain circumstances. Refrigerated trucks used to carry fish will also qualify.


Forestry companies will be able to claim the cost of development against current assessable income from any source.


The special provisions for assessing companies which mine certain specified minerals will be extended to include those companies mining all minerals which are shown to be important to the development of New Zealand.

Taxpayers will be allowed to deduct from their assessable income 1/3 of calls paid on shares in any such mining company.

Donation to Universities for Research Purposes

Companies making such donations will be allowed a deduction of the smaller of 5% of assessable income or £500.

Housekeeper Exemption

This special exemption will be allowed when

  • married persons employ a housekeeper because of the incapacity of either spouse;
  • separated or deserted spouses employ a housekeeper to care for children so the spouse can earn a living;
  • when an incapacitated single person, widow or widower employs a housekeeper to tend the house and care for the person.

Bonus Shares

Companies making an assessable bonus issue after 10 June 1965 will pay 3/6 in the £1 on it. The shareholder will have no further tax to pay on the shares. Some safeguards will be introduced.

Streamlining Procedures

From 1.4.1966 salary and wage earners with provisional income of under £50 from interest rent or dividends will not be asked to pay provisional tax. Tax will be assessed in an end of year assessment.

Ordinary Income Tax Rebates

The 10% rebate, maximum £100 will apply for the year ending 31 March 1966.

Amusement Tax

This will be abolished and the Amusement Tax Act 1960 repealed.

Duties Paid By Racing Clubs

Totalisator Tax

The rebate will be increased from 2 1/2% of the first £20,000 of gross investment on the totalisator to 2 1/2% on the first £50,000.

Stake Duty

This will be abolished from 1 August 1965.

Estate Duty

The increased exemptions announced in the budget will apply to the estates of all persons who die on or after 10 June 1965.

The value of the succession of a widow for which on exemption is given will be increased from £12,000 to £15,000 and that of a widower from £5,000 to £7,000.>The effect of the increased exemptions is shown in the following charts.

Whole Estate To Widow

Value of estate Duty before budget Duty after budget Saving
£ £ £ £
15000 286 Nil 286
20000 960 600 360
25000 1888 1452 436
30000 3060 2550 510
40000 6160 5500 660
50000 10138 9338 800
60000 14400 13500 900


Whole Estate To Widower

Value of estate Duty before budget Duty after budget Saving
£ £ £ £
7000 60 Nil 60
10000 300 180 120
15000 953 763 190
20000 1800 1560 240
25000 2904 2614 290
30000 4250 3910 340
40000 7700 7260 440
50000 12006 11472 534
60000 16500 15900 600