XN000022-1983-01-28 — Page 4

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FRIDAY, JANUARY 28, 1983

PROPOSAL TO BASE PROPERTY TAX ON ACTUAL RENT

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A BILL PUBLISHED IN TODAY'S GAZETTE SEEKS TO AMEND THE INLAND REVENUE ORDINANCE TO CHANGE THE EXISTING NOTIONAL BASIS FOR CHARGING PROPERTY TAX,

UNLIKE THE OTHER TAXES UNDER THE ORDINANCE, PROPERTY TAX IS NOW CHARGED BY REFERENCE TO NOTIONAL OR CONTROLLED RENTS, RATHER THAN THE ACTUAL INCOME FOR THE YEAR OF ASSESSMENT.

DESPITE PROVISIONS FOR RELIEF FOR OWNER-OCCUPIED OR VACANT PREMISES, MANY CASES ARISE WHERE THE ASSESSABLE VALUE IS MORE OR LESS THAN THE ACTUAL RENT RECEIVABLE.

THIS IS UNSATISFACTORY FOR BOTH THE TAXPAYER AND THE INLAND REVENUE DEPARTMENT, A SPOKESMAN FOR THE DEPARTMENT SAID.

THE BILL PROPOSES THAT PROPERTY TAX SHOULD BE CHARGED ON THE ACTUAL RENT RECEIVED.

HOWEVER, IT RETAINS A FIXED DEDUCTION OF 20 PER CENT FROM THE RENT TO COVER REPAIRS AND OTHER RECURRENT EXPENSES.

THIS WILL AVOID THE NEED FOR THE TAXPAYER TO RECORD AND SUBSTANTIATE SUCH ITEMS AND FOR THE INLAND REVENUE DEPARTMENT TO EXAMINE LARGE NUMBERS OF INDIVIDUAL EXPENSE CLAIMS, THE SPOKESMAN SAID.

THE BILL ALSO PROVIDES FOR PROPERTY TAX TO FOLLOW THE SALARIES AND PROFITS TAXES BY INTRODUCING A PROVISIONAL TAX SYSTEM.

THIS MEANS THAT A PROVISIONAL PAYMENT IS MADE DURING EACH YEAR AND THE FINAL LIABILITY IS ASSESSED IN THE FOLLOWING YEAR, WHEN THE ACTUAL INCOME IS KNOWN, WITH THE PROVISIONAL PAYMENT BEING SET AGAINST THE FINAL LIABILITY.

FOR THE YEAR OF ASSESSMENT 1983-84 THE PROVISIONAL PAYMENT WILL BE BASED UPON EXISTING ASSESSABLE VALUES ASCERTAINED UNDER THE PRESENT SYSTEM.

AFTER MARCH 31, 1984, RETURNS WILL BE ISSUED REQUIRING TAXPAYERS TO STATE THE ACTUAL RENT RECEIVED IN THE YEAR UP TO THAT DATE AND THE FINAL ASSESSMENT WILL THEN BE MADE IN ACCORDANCE WITH THE ACTUAL RENT.

RETURNS WILL THEREAFTER BE ISSUED ON AN ANNUAL BASIS.

THE BILL INCLUDES PROVISION FOR THE DEDUCTION OF IRRECOVERABLE RENT BY REASON OF DEFAULT.

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