July 10, 1940

LIB
NAT

Karl Kenneth Homuth

National Government

Mr. HOMUTH:

My impression was that everybody who came under the national defence tax had to make a return.

Topic:   INCOME WAR TAX ACT
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LIB

Paragraph agreed to. Income ITar Tax Act



(7) That the national defence tax be applicable to the income of 1940 and all subsequent years except that in respect of the income of the year 1940 the tax shall be imposed only on one-half of the income if the income for the whole year exceeds the relevant amount specified in resolution No. 18 (1);


NAT
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

It simply means that the tax applies only for the last half of the present calendar year.

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NAT

Karl Kenneth Homuth

National Government

Mr. HOMUTH:

That is, those who instead of paying the national defence tax each week turn in at the end of the year their income tax return on which the national defence tax will be imposed, will have that defence tax imposed only for the last half of the year?

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

It applies to everyone. The national defence tax applies only to the income received in the last half of the year 1940.

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NAT

Grote Stirling

National Government

Mr. STIRLING:

But will the exemption

of $300 apply then? Take the case of the workers in the agricultural and fruit-growing districts of British Columbia. They work for a certain time picking a particular variety of fruit; then they move on to some other district, where they are employed by some other person. During the course of the season they may make three or four of those moves. Each employer takes note of the fact that he has deducted so much money from the wages of these men. Eventually, somehow or other, those operatives are going to appeal for a return on that tax. Will they do so through local officers, through the Vancouver office or through the Ottawa office; and how is it supposed that they will be able to give an address to which a cheque can be sent?

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

The procedure will have

to be worked out. When they apply for a refund they can give an address and the money will be sent on if they are entitled to the refund. By the way, I think when I said the tax would only apply to income for the last half of 1940 I should have said that it would apply to half of the income for the whole year 1940.

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NAT
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

There is no exemption of

$300. It is put on a yearly basis and half the tax payable for the year must be collected. That is to say, if a person does not earn $600 in the year 1940 he is not liable to the tax. If he does earn $600 in the year 1940 he is liable for half the tax that would be payable if he paid for the whole year. You apply the rules applicable to the whole year, which

are very carefully defined here, to the income for the year 1940 and then divide it by two, because it is intended only to take half the tax for this year.

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NAT

Harry Rutherford Jackman

National Government

Mr. JACKMAN:

If a man were to receive, say $2,000 a year as a salary, and if it were the custom of that particular business to give a bonus at the end of the year of, let us say $500, does he pay on half the amount for the current year 1940-that is, $250-or is the tax on the $1,000, which represents the salary from July 1 to December 31, plus the year-end bonus?

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

It depends upon the year in which the $500 was earned. If it were earned within the year 1940 the man's income for that year would be $2,500. The tax is calculated accordingly, and he pays half.

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NAT

Harry Rutherford Jackman

National Government

Mr. JACKMAN:

It is earned as part of the year's effort,, but it is only payable at the end of the year.

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LIB
NAT

Harry Rutherford Jackman

National Government

Mr. JACKMAN:

But it is properly spread over the whole year, and divided into two, in the application of this tax.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I should think that would be part of the 1940 income. The 6ame rules apply to this as apply to ordinary income, and ordinary income tax. There are well established rules for choosing the year to which income is allocated. In that year the $500 bonus would be the income of the year 1940.

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NAT

Harry Rutherford Jackman

National Government

Mr. JACKMAN:

As I read the resolution, and as I interpret it, the department would take a half year's income for the year in question, and subject that to the national defence tax.

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July 10, 1940