Schedule C.—For income from the public funds.
Schedule D.—For income from trade, profession, employment, vocation, dis counts, interest of money not taxed by deduction, colonial and foreign securi ties (where the duty is not deducted by the agent entrusted with the pay ment thereof), colonial and foreign possessions, letting furnished houses, and all other income not falling within the other schedules.
Schedule E.—Salaries pAid to Government, corporation, and company officials.
(This schedule includes officials of banking companies.) For the purposes of income tax, income is divided into earned income and unearned income. Schedules A and C are unearned incomes, Schedules B and E are earned incomes. Schedule D is part earned and part unearned.
Income not exceeding /160 is exempt from tax.
Exceeding 1;1(;0 hut not exceeding 1400, /10.) abatement is allowed.
Exceeding E,400 but not exceeding E500, .f150 abatement is allowed.
Exceeding 1,500 but not exceeding e300, 1120 abatement is allowed.
Exceeding OW but not exceeding /700, /70 abatement is allowed.
In the annual return of the profits of a banking company. in order to arrive at the amount on which income tax is to he paid, working expenses, rent, rates, taxes, salaries. bad debts, etc., are deducted from the gross profits, and also all amounts on which tax has already been paid by the banker, e.g. rents received, dividends on investments, interest on fixed mortgages from which income tax was deducted before charging the interest to the customer's account. A list of the fixed mortgages must be given to the Surveyor of Taxes in order to enable him to trace whether the persons have paid to the Revenue the sums deducted. The amount charged to profit and loss account in payment of income tax is not to be taken as a deduction from the profits. An amount used to write down the value of the bank's premises, or an amount transferred to a reserve account, or an expenditure in extend ing a building, are not allowed to be deducted.
Subscriptions which have no connection with the business cannot be deducted.
Fire insurance premiums and also em ployers' liability insurance premiums are allowable as deductions from a bank's profits, but life insurance premiums, if any, cannot be deducted.
In arriving at a banker's profits assessable under Schedule D, deduction of the net Schedule A assessment on premises owned and occupied by the banker for business purposes (including any portion used as a manager's residence) is allowed, less any ground rent payable thereon.
Where a bank official is required to reside on bank premises for the performance of his duties, the annual value of his residence is not treated as an emolument, and is not to be included in a statement of income for the purpose of claiming abatement.
It has been held that where a bank pur chased the business and premises of another bank, the profits of both banks shall be brought into the computation of the three years' average. (Rd/ v. .Va.11aml Provincial Bonk of England, 1904, 1 K.B. 149.) Any person who pays premiums on the insurance of his own or his wife's life, is entitled to deduction of the premiums, if they do not exceed one-sixth of his total income ; but the deduction is not to be taken into account in a claim for statutory abatement.
With regard to premiums paid by a banker upon a policy left in his hands by a defaulting borrower, if the final result (profit or loss) is to be credited or debited to the banker's profit and loss account, the premiums may be regarded as a current expense necessary to guard him against loss and therefore may be deducted when calculating the liability for income tax.
The rules and regulations for calculating the profits of a business are given by the Income Tax Authorities as follow :— AVERAGE.—The amount of profits is to be computed on an average of the three preceding years, ending either on the 5th day of April, or on the date prior thereto to which the annual accounts have been usually made up ; if the trade, etc., has been set up or commenced within three years, on an average from the period of com mencing the same ; c)r, if commenced within the year of assessment, the profits are to be estimated according to the best of your knowledge and belief, and the grounds on which the amount shall have been estimated should be stated for the information of the Commissioners.
In computing the profits upon which the average is to be taken—