Companies Assessed. Section 13.

The Interpretation Clause states, "Company means an incorporated body or company, or society of persons, other than an association for purposes of banking or insurance, formed wholly or mainly for the purpose of gain or profit divisible amongst the shareholders." These companies are, so says Clause 13, to be taxed on their capital, but in reality each company is to be taxed just as a person is; that is to say, on the amount by which the assets exceed the liabilities. The clause does not say this concisely, but that is its meaning. In the assets no unpaid-up capital is to be included, and amounts received in respect of shares issued are not to be reckoned as liabilities. That is, capital which has been paid and capital which is unpaid are both to be discarded in arriving at the "capital" on which a company is to be taxed. "The assets of the company shall be taken to be the marketable value of the property of the company." This does not mean the market price of shares, because that is supposed to represent, more or less approximately, the difference between the assets and liabilities, and from the marketable value of the property of a company the debts have to be deducted to ascertain the taxable value. Example: The Penguin Quartz Company, Limited, has assets or property, the marketable value of which is £12,000, and the liabilities or debts are £3000, leaving a taxable value of £9000. No account is taken of the capital, the subscribed amount being £10,000 in 5000 shares of £2 each, of which £1 10s. per share has been called up and paid. A schedule specially prepared for companies will be delivered to the public officer. See page 26.