Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Tax Bill a Mixed Bag Says ICANZ

Tax Bill a Mixed Bag Says ICANZ

29 March 2004

"The latest tax bill, the Taxation (Annual Rates, Venture Capital and Miscellaneous Provisions) Bill, contains significant changes to the Disputes rules which govern the ability to alter a tax assessment to correct errors,"

John Cantin, the Chair of the Institute of Chartered Accountants of New Zealand's Tax Committee, said today. "These changes are important to taxpayers and the tax system. The Institute is concerned the balance between a taxpayer's right to a refund, Inland Revenue's right to increase a tax liability and finality has not been well enough struck.

"In particular, the Institute's concern is whether the overall message to Inland Revenue is strong enough to ensure that taxpayers can have assessments changed in their favour without having to argue for that right."

In practice, taxpayers and Inland Revenue too often find themselves disputing whether there is an ability to amend an assessment.

"We will be working to ensure that the balance between taxpayer and Inland Revenue rights is appropriately struck and in particular that the time Bar remains for taxpayers who have conscientiously prepared and filed returns."

The Bill contains changes to the way that intangible assets are treated.

"The Government has listened to the submissions on the need for these changes to be prospective so that taxpayers have certainty," Mr Cantin said.

"By making these changes prospective the government has ensured that taxpayers have time to consider these difficult technical issues before they enter into a transaction involving intangibles.

"The Bill also rehabilitates special partnerships and makes them into a more useful vehicle. We congratulate the Government for doing this.

"Two major obstacles to the use of special partnerships as an investment vehicle have been the rules that ring-fenced losses by special partnerships and the restriction on the special partnerships duration to only seven years.

"This Bill contains measures that will get rid of both these obstacles. The focus should rightly be on the substantive rules and not on the type of vehicle used by taxpayers. The Bill exempts from New Zealand Tax certain foreign investors who are not taxed in their home jurisdiction. To the extent that these investors are tax sensitive, these changes will remove tax impediment to their investments.

"Other measures in the Bill will help business by allowing the deduction of the costs of failed patents and the cost of failed applications under the Resource Management Act. These two costs have previously fallen into a so-called black hole as they have been neither deductible nor depreciable. We endorse the Government's move to resolve these problems.

"The 6.7% discount for the early payment of provisional tax in the first year will be welcome for those commencing business. The real issue is whether those who most need it will be able to use it. Anyone sufficiently organised in that first year of paying provisional tax will probably be putting their provisional tax in the bank anyway.

"The real problems arise for the people who don't realise that they will have a double whammy of provisional tax and terminal tax in year two and who therefore do not put anything aside. It is important that those new to business are advised of the discount as early as possible."

Mr Cantin said the Bill did not deal with any of the issues arising from The recent floods.

"We are working with Inland Revenue to identify and resolve the many tax issues that have come out of that natural disaster," said Mr Cantin.

"There are pages of the Bill which contain corrections of errors in previous legislation. This highlights the difficulty of getting things right in our tax system and confirms our view that the penalties regime can be harsh."

The Institute will be making a submission to the Select Committee on the Bill.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Half A Billion Accounts: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>

Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>

ALSO:

Half Full: Fonterra Raises Forecast Payout As Global Supply Shrinks

Fonterra Cooperative Group, the dairy processor which will announce annual earnings tomorrow, hiked its forecast payout to farmers by 50 cents per kilogram of milk solids as global supply continues to decline, helping prop up dairy prices. More>>

ALSO:

Results:

Meat Trade: Silver Fern Farms Gets Green Light For Shanghai Maling Deal

The government has given the green light for China's Shanghai Maling Aquarius to acquire half of Silver Fern Farms, New Zealand's biggest meat company, with ministers satisfied it will deliver "substantial and identifiable benefit". More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news