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Inland Revenue

Tax Policy

PUBLISHED 27 November 2009

Rate alignment bill passes

The Taxation (Consequential Rate Alignment and Remedial Matters) Bill, introduced in July, passed its final stages in Parliament late yesterday. The main feature of the omnibus bill is the alignment of RWT rates on interest with recent changes to personal tax rates and the company tax rate, and alignment of PIE tax rates with personal tax rates. The new legislation will be available here once it has received Royal assent, which is expected within a few days. For more information see the media statement.

Hon Peter Dunne
Minister of Revenue


Dunne: Tax bill brings greater certainty, clarity

Revenue Minister Peter Dunne has welcomed the passage of a tax bill that brings "greater certainty and clarity" into New Zealand tax law.

"The Taxation (Consequential Rate Alignment and Remedial Matters) Bill was technical in nature, but important," Mr Dunne said.

"It introduced a number of measures to fine-tune earlier changes to the tax rules, and updated several areas that will give taxpayers greater certainty," he said.

The main features of the bill included aligning resident withholding tax (RWT) rates on interest with recent changes to personal tax rates, and the 30% company tax rate introduced last year, and aligning portfolio investment entities (PIE) tax rates with new personal tax rates, thus making them 12.5%, 21% and 30%.

The bill, introduced in July and passed in Parliament last night, also adjusts the income thresholds at which the PIE rates apply to ensure that those who invest in PIEs are not disadvantaged relative to direct investors.

A Supplementary Order Paper (SOP) brought in further amendments, including providing some certainty in the long-standing debate around the GST treatment of facilitation services for tour packages for overseas visitors, Mr Dunne said.

These services will be subject to GST at the standard rate of 12.5%.

The legislation includes a transitional provision allowing inbound tour operators to zero-rate these services for the year to 1 July 2008, which will help minimise any adverse effects on in-bound tour operators who have not zero-rated the services.

The SOP also changed the supplementary dividend rules in the Income Tax Act to allow newly signed tax treaties with Australia, Singapore and the United States to come into force.

The SOP also ensured that those who get New Zealand superannuation and the veterans' pension will remain subject to New Zealand tax while travelling overseas, but if they decide to live overseas the pensions will not be subject to New Zealand tax.

"The issue of portability has concerned a lot of New Zealanders. It needed to be cleared up," Mr Dunne said.

"Overall, this was an important omnibus bill that served to tie up a number of loose ends and anomalies.

"It is a meaningful step towards greater certainty and clarity in New Zealand tax law," he said.

Mark Stewart - Press Secretary, Office of Hon Peter Dunne
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