Aus-NZ mutual recognition on agenda

The Australian and New Zealand governments are open to the idea of moving toward mutual recognition of imputation and franking credits between firms that invest in each other's country, Australian Treasurer Wayne Swan and New Zealand Finance Minister Michael Cullen said today. New Zealand will be making a submission on the matter to the Secretary of the Australian Treasury, they said.

Negotiations for a new double tax agreement between the two countries are progressing well, they said, and are expected to be concluded by the end of the year.

For more information see the media statements.

Deemed rate of return set

The deemed rate of return for taxing foreign investment fund interests has been set at 10.87% for the 2007-08 income year, up from 10.27% for 2006-07. For more information see the media statement.

Finance Minister's policy update

Finance Minister Michael Cullen's update to the Deloitte Tax Seminar today included a description of the follow-up work on RWT and PIE tax rates that is being done as a result of the personal tax cuts announced in Budget 2008. He also described business tax reforms contained in the bill introduced today and the process set up to deal with unintended law changes that result from the recent rewrite of the Income Tax Act. For more information see the speech.

Tax bill introduced

A bill tabled in Parliament today introduces a number of major business tax reforms, including:

• Reform of New Zealand's international tax rules to help New Zealand-based companies compete more effectively overseas.
• Raising tax thresholds to reduce compliance costs for smaller businesses.
• Clarifying the law to ensure employer payments for relocation and overtime meal allowances are tax-free.
• Reform of the taxation of the life insurance business.
• Introduction of a voluntary payroll giving system for charitable donations.
• Updating the petroleum mining tax rules.
• Changes to strengthen the definitions of "associated persons" in income tax law.

More time for submissions on GST paper

The closing date for submissions on the issues paper "Options for strengthening GST neutrality in business-to-business transactions" has been extended by one month, to 11 August 2008. The extension is in response to requests for more time to complete submissions.

Rewrite Advisory Panel chair appointed

Wellington barrister David McLay has been appointed chairman of the Rewrite Advisory Panel, the body that oversees the rewrite of income tax law. Although the 15-year rewrite of the Income Tax Act was completed in December last year, the Rewrite Advisory Panel will have a continuing role in reviewing any unintended changes in the law and monitoring the operation of the new 2007 Act for consistency with Rewrite principles. For more information see the media statement.

Climate change bill reported back

The Finance and Expenditure Committee has reported to Parliament on the Climate Change (Emissions Trading and Renewable Preference) Bill, introduced in December 2007. The bill introduces the Emissions Trading Scheme and amends income tax legislation to provide for the tax treatment of emission units dealt with by forest owners. The main tax changes recommended by the committee are to allow deductibility of unit purchases for owners of pre-1990 forests who do not hold the land on capital account, and to treat emission units generally as excepted financial arrangements. For more information see the bill as reported back and the Climate Change website.

Dr Cullen speech to Aus-NZ Leadership Forum

In a speech today to the Australia-New Zealand Leadership Forum, Finance Minister Michael Cullen described work under way to contribute to the development of a Single Economic Market between the two countries, including investigating ways to improve the portability of retirement savings and the re-negotiation of the DTA between the two countries. He also proposed a mutual recognition system under which each country would provide tax credits to resident individuals who receive company distributions from the other country. That would remove a barrier to trans-Tasman investment flows, he said. For more information see the speech.

GST issues paper released

A tax policy issues paper released today for public consultation looks at legislative options for strengthening the GST neutrality of business-to-business transactions and reducing the risks that GST can present to both businesses and the government. The paper also looks at possible changes to simplify and clarify the change-in-use rules and to clarify the GST treatment of short-term accommodation. For more information see the government's media statement and the issues paper, "Options for strengthening GST neutrality in business-to-business transactions".

Budget tax legislation enacted

Legislation introduced on 22 May in the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Bill has been enacted. It passed through its final stages in Parliament on 23 May and received Royal assent on 29 May 2008. The resulting Act is published here, courtesy of Legislation Direct.

Revenue Minister's speech to NZICA

In a speech today to an NZICA special interest group, Revenue Minister Peter Dunne outlined his views on tax matters announced in Budget 2008. For more information see the speech.

Parliament passes Budget tax bill

The bill introducing tax changes announced in Budget 2008 passed its final stages in Parliament today. The Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Bill, introduced under urgency on 22 May, gives effect to personal tax cuts that are to be phased in over three and a half years and makes complementary changes to Working for Families tax credits. Remedial amendments include changes to give tax-certainty to a variety of organisations in the lead-up to the 1 July deadline for registration with the Charities Commission. The new legislation is expected to receive Royal assent early next week.