Land and Income Tax Amendment Act 1969

This commentary item was published in Public Information Bulletin Volume 42, September/October 1967

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Public Information Bulletin No. 53 — November 1969 (PIB No 53)

Land And Income Tax Amendment Act 1969

Application of Act

Section 2. Except where otherwise stated the amendments apply to tax on income derived during the income year that began on 1 April 1969.

Depreciation on Certain "Temporary" Buildings

Section 3 amends the definition of "temporary building" to include buildings built around plant or machines when the removal or replacement of the plant or machine would involve the demolition of the building.

Dates for Filing Certain Annual Returns

Section 4 alters the date some tax returns are to be furnished. Persons with investment income between $100 and $200 who were relieved from provisional tax last year will now furnish their return of income on or before 7 June in each year. This amendment applies for the first time to returns of income for the year ending on 31 March 1970.

Grouping of Companies for Land Tax

Section 5 inserts new subsections (2) and (3) in section 62 of the Tax Act defining when two or more companies are deemed to "consist substantially of the same shareholders" for land tax purposes. The effect is to adopt the same general rules for land tax purposes as already apply for income tax under section 141 as discussed in PIB No. 48. The tests are applied at a specific point of time noon on 31 March preceding the year of assessment. The section first applies to land tax on land held as at noon on 31 March 1969.

Special Development Projects Carried Out by Non-Resident Companies

Section 6 is a complete rewrite of section 78F which provides tax rate concessions for non-resident companies carrying on special industrial undertakings processing minerals through branches in New Zealand.

Universal Superannuation Rebate

Section 7 removes the limit of $48 on this rebate. The rebate is now $4 for event four-weekly pay period for which the benefit is received, subject to the rebate not exceeding the tax payable by the superannuitant. In a normal year of 13 four-weekly pay periods the maximum rebate will be $52.

Special exemption for Gifts and School Fees

Section 8 removes the distinction, for special exemption purposes, between gifts to charities, and donations and school fees paid to private schools. The limit for all gifts including school fees paid to private schools will, in future, be either

• (a) the amount actually paid, or
• (b) $100,

whichever is the lesser.

Special exemption for Life Insurance Premiums and Superannuation Contributions

Section 9 amends section 85 to increase the special exemption for life insurance premiums and superannuation contributions. The exemption is -

• member of employer-subsidised scheme - the aggregate amount of life insurance premiums and superannuation contributions paid in the year or $500, whichever is the lesser.
• other taxpayers - the aggregate of the life insurance premiums and superannuation contributions paid in the year or $650, whichever is the lesser.

The new exemption applies for the whole of the income year ending 31 March 1970.

Interest Exemption Increases

Section 10 increases from $60 to $100 the exemption for interest and investment society dividends received by individuals resident in New Zealand. Interest on Post Office National Development Bonds is excluded from this exemption.

Post Office National Development Bonds — Interest Exemption

Sections 11 and 15 relate to the new Post Office National Development Bonds.

Section 11 provides an exemption of up to $500 in any one year for income from interest on these bonds.

Section 15 provides that interest on these bonds is income in the income year the bond matures, or is surrendered.

Post Office Bonus Bonds — Prizes Exempt from Tax

Section 12 exempts from income tax prizes won in ballots by holders of Post Office Bonus Bonds.

Treasury Bills

Section 13 provides that the discount on Treasury Bills is assessable income for tax purposes.

Retiring Allowances for Members of regular Forces

Section 14 takes into account the particular circumstances of the Regular Forces by defining the "Appropriate retiring age" in section 88B of the principal Act as the age at which the member was discharged or transferred from regular service on completion of the term for which appointed or enlisted. The amended definition relates expressly to "any bonus, gratuity or retiring allowance" payable to the member of the forces. The effect is that the tax concessions for retiring allowances apply to these gratuities.

Special Depreciation Allowances Extended

Section 16 extends the Special Depreciation allowance on -

• Plant and machinery (Section 114A (1)(a)).
• Employee Accommodation (Section 114A (1)(b)).
• New farm buildings (Section 114A (1A)).
• Certain facilities in hotels (Section 114A (1B)) now to expire on 31 March 1971.
• Frozen Export Meat Storage buildings (Section 114A (1BB)) now to expire on 31 March 1973.

Each of these is an extension of one further year. The other conditions of the allowance remain unaltered.

Additional Depreciation Allowance to Meat Exporters Extended

Section 17 extends the allowance of additional depreciation on capital expenditure to meet hygiene standards for buildings used as meat export slaughterhouses or meat packing houses (Section 114B) for two years — now to expire on 31 March 1972.

Special Depreciation on Tourist Accommodation Extended

Section 18 extends for a further year until 31 March 1973 the Special Depreciation Allowance granted to new approved hotels or motels, or extensions of either, erected to provide tourist accommodation.

West Coast Investment Allowance Rate Increased for Plant and Machinery

Section 19 relates to the West Coast Investment Allowance.

• The qualifying period is extended for a further year — until 31 March 1971.
• The qualifying plant and machinery acquired or installed after June 1969 will attract the allowance at the increased rate of 20%.

Farm Development Expenditure — Incentive Extended

Section 20 amends section 119D of the principal Act which relates to development expenditure by a farmer.

• The allowance for development expenditure is extended for a further year — until 31 March 1971.
• The period of five years previously allowed lot spreading the deduction has now been increased to nine years.

Remission of Additional Tax

Sections 21 and 22 relate to the restrictions on the amounts of additional tax (penalty), or relief from Land or Income Tax that the Commissioner may remit without obtaining the approval of the Minister of Finance. They are purely administrative amendments.