CO129-589-12 War Revenue Ordinance 1941 8-5-1941 - 19-6-1941 — Page 6

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effect in practice, but it looks as though yield will be rather less under the new legislation.

They have added a definition of "British Empire" in this Clause, which is in accordance with suggestions we made last year, but have taken en bloc the definition under the Empire Preference Ordinances which excludes Palestine. This happened in the Straits Settlements too, and in that case we drew the attention of the Governor to the omission, and we should presumably do the same here.

Clause 8. A proviso has been added here exempting from salaries tax any gratuity received on the termination of employment, or any sum received by commutation of pension or annuity, or any sum drawn from a provident fund.

The

Clause 11. This replaces Clause 10 of the 1940 Ordinance and revises the system of assessment. old system, which provided for assessment based on residence, has, according to the table of receipts proved unsatisfactory in practice and given rise to discontent and ill feeling, and the new Clause is an attempt to simplify the arrangement.

Clause 12. is a new Clause dealing with double taxation. Under it as it now stands exemption would be granted (1) in respect of income on which income tax has been charged in the United Kingdom or any other part of the Empire, and (2) in respect of any other country in which income tax is paid, the persons concerned can have deducted from assessable income a sum equal to the amount of income tax which has or will be paid in the year of assessment.

Clause 13. There has been a readjustment in respect of allowances for wife and children. The allowance in respect of a wife has been raised from $2,000 to $3,000. The old allowances in respect of children applied only to children under the age of 18 which was raised to 25 if they were receiving full-time education. They have now omitted the educational provision on the grounds that it is unsuitable for the Colony, but the allowance which was originally granted at the rate of $1,000 for each child under 18 has been raised to $2,000 for the first child under 21, $1,000 for the second, and $750 each for the third and fourth. The raising of the age for children does not seem so drastic as at first might appear since under the proviso to the Clause no allowances shall be made in respect of children drawing an income over $2,000 or carrying on a trade, business, profession, vocation or employment. No allowances are made in respect of any children exceeding four.

Clause 16. contains the new business profits tax. It will be recalled that in the first year of the Var Revenue Ordinance's operation, the yield from this tax was disappointingly low. new clause provides for a tax of 7. on the first $50,000 of profit, and of 14% on the remainder subject to a proviso for no taxation where the profits do not exceed $5,000.

Clause 26. is new but apparently based on Rule 1 of the Rules issued under the old Ordinance. It applies to the profits of shipowners, aircraft owners, and charterers liable to tax.

Clauses 30 35. These form the new Chapter 5 which provides for the new interest tax referred to in my

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