Tax bill reported back to Parliament

The Finance and Expenditure Committee has reported to Parliament on the Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill, which was introduced in July 2008. The bill contains a number of major reforms, including the first stage of the reform of New Zealand's international tax rules, modernisation of the tax rules relating to the life insurance business, introduction of a payroll giving system for charitable donations, and changes to the definitions of "associated persons" in the Income Tax Act. The committee has recommended a number of changes to the proposed legislation, including deferring the application dates of many of the reforms. For more information on the recommended changes see the bill as reported back (PDF 12,113 KB) and the four-volume officials' report on submissions.

New Australia-NZ DTA signed

The introduction of a new double tax agreement between Australia and New Zealand took a major step forward with the signing on 27 June of an agreement that, once in force, will replace the existing 1995 DTA. Features of the new DTA include lower withholding taxes on dividend and royalty payments between the two countries, and making pensions that are tax-free in one country also exempt in the other when the recipients move across the Tasman. The new DTA will come into force once both countries have given legal effect to it. For more information see the media statement and the text of the DTA.

Views sought on PDP tax law changes

The taxation of distributions from profit distribution plans is the subject of an issues paper released today for consultation. The Government announced on 16 April that it intended to clarify the law to ensure that bonus issues of shares distributed under PDPs are taxed in the same way as shares issued under other dividend reinvestment plans, and that a forthcoming consultative document would canvass views on the more technical aspects of the law change. The issues paper released today sets out the details of a proposed legislative solution. Submissions close on 7 August. For more information see "The taxation of distributions from profit distribution plans".

Govt consults on student loan changes

The Government is inviting the public's views on proposed changes to simplify the way student loan repayments are managed, as part of Inland Revenue's move towards greater electronic interaction with the public. For people who have student loans, this means getting rid of yearly letters, square-ups and personal contact with Inland Revenue and gaining instant, online access to the information about their loan accounts. Consultation is taking place by means of an online forum, for those who prefer to make informal comments, and a discussion document, "Making it easier for borrowers to repay their student loans", which gives more details of the proposed changes and invites written submissions. For more information on today's announcement, see the media statement.

Final GST extension for eight local authorities

An Order in Council signed on 22 June gives eight local authorities until 30 June 2013 to change from a payments basis of accounting for GST to an invoice basis. The Far North, Gisborne, Kaipara, Opotiki, Ruapehu, Waitomo, Western Bay of Plenty and Whakatane district councils have been given a final extension of four years to resolve transitional problems associated with moving to an invoice basis of accounting for GST. For more information, see the Order in Council.

More on UOMI rate changes

Yesterday's announcement of changes made to the use of money interest rates for overpayments and underpayments of tax have resulted in a number of requests for more information on how the rates are set. The special report published here explains both the policy background of the rates and the formulas used for setting them – including the new method for setting the underpayment rate.

Use-of-money interest rates down

Use-of-money interest rates for unpaid and overpaid tax will fall from 28 June 2009. The rate for unpaid tax will drop to 8.91%, while the rate for overpaid tax will fall to 1.82%. For more information see the media statement.

FBT rates fall for low-interest loans

The prescribed rate used to calculate fringe benefit tax on low-interest, employment-related loans will fall from 8.05% to 6.41% from 1 July. For more information see the media release.

Budget tax measures legislation enacted

Legislation introduced under urgency on 28 May in the Taxation (Budget Tax Measures) Bill has been enacted. The new legislation passed its final stages in Parliament on 29 May and received Royal assent later that day. For more information see the resulting Act (PDF 208KB) published here.

Budget tax bill introduced

A taxation bill tabled in Parliament this afternoon delays personal tax cuts that were to have come into effect on 1 April 2010 and 1 April 2011 and cancels the associated increase in the Independent Earner Tax Credit, which was to have taken effect from 1 April 2010. The bill also closes the KiwiSaver mortgage diversion facility to new participants from 1 June 2009. For more information see the Taxation (Budget Tax Measures) Bill (PDF 196KB).

Budget 2009 Tax announcements

Budget 2009 announced that:

• Personal tax cuts that were due to take effect on 1 April 2010 and 1 April 2011 have been delayed to prevent further increases in government debt. Tax cuts that came into effect on 1 April 2009 remain.
• The KiwiSaver mortgage diversion facility is to be closed to new applicants from 1 June 2009. It will remain available to existing participants.

Revenue Minister's tax policy update

In a speech today to NZICA's Wairarapa Special Interest Group, Revenue Minister
Peter Dunne updated the audience on the government's plans for tax policy development now and in the medium term. Topics included the government's tax policy work programme, the newly established Tax Working Group, and progress on the omnibus taxation bill that is before Parliament. For more information see the speech.

Exemption for offshore oil & gas exploration extended

Budget 2009 will provide for the five-year continuation of a tax exemption that encourages oil and gas exploration, the government announced today. The exemption from tax on the profits of non-resident operators of offshore rigs and seismic vessels, introduced in 2004, was due to expire in December 2009. Legislation giving effect to the continued exemption will be part of a tax bill to be introduced late towards the end of the year. For more information, see the media statement.

Tax Working Group set up

The Government today welcomed the establishment of a Tax Working Group of private sector and academic experts and tax policy officials that will assist it in considering the key tax policy challenges facing New Zealand. The Working Group, which is co-ordinated by Victoria University's Centre for Accounting, Governance and Taxation, will consider the medium-term direction of the tax system, including assessing policy options. For more information see the media statement.