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TUESDAY, DECEMBER 31, 1974
HOWEVER, THE SPOKESMAN POINTED OUT THAT IF PROFITS ARE HIGHER IN 1974-75 THAN IN THE PREVIOUS YEAR, A TRANSITIONAL ADJUSTMENT WILL BE NECESSARY AS SHOWN BY THE FOLLOWING EXAMPLE1
PROFIT $80,000
YEAR ENDED MARCH 31, 1974
YEAR ENDED MARCH 31, 1975
TAX PAYABLE
PROFIT $100,000
YEAR OF ASSESSMENT 1974/75
YEAR OF ASSESSMENT 1975/76
YEAR OF ASSESSMENT 1974/75
YEAR OF ASSESSMENT 1974/75 (TRANSITIONAL ADJUSTMENT - ADDITIONAL ASSESSMENT)
YEAR OF ASSESSMENT 1975/76
(PROVISIONAL TAX)
OLD SYSTEM
PAYABLE
J
$12,000
JAN/FEB 1975
$15,000
+
NEW SYSTEM
$12,000
JAN/FEB 1976
PAYABLE
JAN/FEB 1975
$ 3,000
JAN/FEB 1976
$15,000
JAN/FEB 1976
THE SPOKESMAN SAID ARGUMENTS HAD BEEN PUT FORWARD THAT THE MAIN DISADVANTAGE WAS THAT A YEAR OF LOW PROFITS (1974-75) WILL DROP OUT DURING A PERIOD OF RECESSION, AND THAT IT WOULD BE BETTER IF THE TRANSITION WERE MADE AT A TIME WHEN PROFITS WERE BUOYANT. THIS WOULD HAVE THE EFFECT OF A YEAR OF HIGH PROFITS DROPPING OUT TO THE GENERAL ADVANTAGE OF THE BUSINESS COMMUNITY.
HOWEVER, THE SPOKESMAN ADDED, THE FALLACY OF THIS ARGUMENT IS ILLUSTRATED BY THE ABOVE EXAMPLE WHICH SHOWS THAT IF 1974-75 WERE A HIGH YEAR THEN IT WOULD BE THE LOWER 1973-74 PROFITS WHICH WOULD DROP OUT. THIS MEANS THAT ADDITIONAL TAX WOULD BE PAYABLE IN VIRTUALLY EVERY CASE.
+IT IS OBVIOUS, HE SAID, THAT THE HIGHER THE PROFITS, THE GREATER THE ADDITIONAL TAX THAT WOULD HAVE TO BE PAID IN THE TRANSITIONAL YEAR.+
HOWEVER, AS 1974-75 APPEARS TO BE A YEAR OF FALLING PROFITS FOR MANY, IF NOT MOST, BUSINESSES, THEN THE EFFECTS OF THE CHANGEOVER FROM THE PRESENT METHOD TO THE PROVISIONAL SYSTEM WILL BE NEUTRAL.
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