TUESDAY, DECEMBER 31, 1974.
REASSURANCE ON PROPOSED PROVISIONAL PROFITS TAX SYSTEM
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THE TRANSITION FROM THE PRESENT METHOD OF CALCULATING PROFITS TAX TO THE PROPOSED PROVISIONAL SYSTEM WILL HAVE NO EFFECT ON BUSINESSES MAKING SMALLER PROFITS IN THE TRANSITIONAL YEAR 1974-75.
A GOVERNMENT SPOKESMAN EXPLAINED THAT UNDER THE BILL, PROVISION IS MADE FOR A TRANSITIONAL ADJUSTMENT IN 1974-75. THIS WOULD BE IN THE FORM OF AN ADDITIONAL ASSESSMENT IF THE ACTUAL PROFITS FOR 1974-75 WERE HIGHER THAN THOSE OF THE PREVIOUS YEAR (1973-74).
HOWEVER, FOR THOSE BUSINESSES WHICH ARE SHOWING REDUCED PROFITS FOR 1974-75, NO ADDITIONAL ASSESSMENT WILL BE MADE AND THE TRANSITION WILL HAVE A COMPLETELY NEUTRAL EFFECT.
THE FOLLOWING EXAMPLE CLEARLY SHOWS THE POSITION:
YEAR ENDED MARCH 31, 1974
YEAR ENDED MARCH 31, 1975
TAX PAYABLE
PROFIT $100,000
PROFIT $ 80,000
PRESENT SYSTEM
YEAR OF ASSESSMENT 1974/75
YEAR OF ASSESSMENT 1975/76
$15,000
$12,000
PAYABLE
JAN/FEB 1975
JAN/FEB 1976
NEW SYSTEM
PAYABLE
YEAR OF ASSESSMENT 1974/75
$15,000
JAN/FEB 1975
YEAR OF ASSESSMENT 1975/76 (PROVISIONAL TAX - CALCULATED BY REFERENCE TO YEAR ENDED MARCH 31, 1975)
$12,000
JAN/FEB 1976
FROM THIS, THE SPOKESMAN SAID, IT IS CLEARLY EVIDENT THAT THE CASH FLOW POSITION IS PRECISELY THE SAME FOR 1974-75 AND 1975-76 UNDER BOTH SYSTEMS, THUS NEGATING THE ARGUMENT THAT VAST SUMS OF MONEY WILL BE TIED UP BY THE PROVISIONAL PROFITS TAX SYSTEM.
*THE TRANSITION FROM THE PRESENT SYSTEM TO THE PROPOSED SYSTEM IS, THEREFORE, NOT DETRIMENTAL TO TAXPAYERS IN A PERIOD OF LOW PROFITS.+
HE ADDED THAT WHEN THE ACTUAL RESULTS FOR THE YEAR ENDED MARCH 31, 1976 ARE KNOWN, THE PROFITS FOR THE PREVIOUS YEAR (1974-75) WILL DROP OUT AND THE FINAL TAX FOR 1975-76 WILL BE BASED ON THE MARCH 1976 RESULTS.
/HOWEVER,
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