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Inland Revenue

Tax Policy

Tax relief on redundancy payments should be made available to persons appointed a director for administrative/secretarial purposes


(67 – New Zealand Institute of Chartered Accountants)

The redundancy rebate should be made available to persons (not being shareholders) who are appointed a director of a company for administrative/secretarial purposes only. The amendment should be retrospective from 1 December 2006.


The redundancy tax credit (rebate) provisions include certain exclusions to mitigate the risks associated with the availability of tax relief for redundancy payments. One exclusion applies to company directors, who are often in a position to influence both redundancy contracts and the event of redundancy.

In the time available, we have not fully reconsidered the matter. However, our view is still that the line that was drawn is appropriate. As with any hard line, there may be the odd person who is disadvantaged, however, we have integrity concerns if the line were to be moved.


That the submission be declined.