March taxation bill nears enactment

Parliament last night concluded debate on the committee stage of the passage of the Taxation (FBT, SSCWT and Remedial Matters) Bill, introduced in March. The next and final stage is the third reading of the bill, which may take place tomorrow.

The main purpose of the legislation is to support the recent increase in the top personal tax rate to 39%, by means of a multi-rate fringe benefit tax and an anti-avoidance measure in the form of a superannuation fund withdrawal tax of 5% of an employer's contribution

Two further changes to the proposed legislation were made at the committee stage. The first is an amendment extending the application date of the fund withdrawal tax to 14 September this year, rather than from 1 April, as originally proposed, or from 31 July, as recommended by the select committee that considered the bill. The reason for the extension is the delay in passing the bill because of the volume of legislation before Parliament.

The second change was effected by means of a Supplementary Order Paper that amends the Securities Amendment Act 1978. It gives superannuation funds a year in which to bring their investment statements and prospectuses up to date by including information in them about the new fund withdrawal tax. Without this year's grace period, funds could find themselves in breech of that Act for providing 'misleading information' in material that has already been published.