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

 


“The PIE” and other Investment Income Tax Changes

17 May 2006

“The PIE” and other Investment Income Tax Changes Introduced

The Tax Bill containing the proposed changes to the taxation of investment income was introduced into Parliament today.

The changes in the Bill are broadly in line with the proposals announced on 11 April 2006 by the Ministers of Finance and Revenue, according to Matthew Hanley, Ernst & Young Tax Partner.

The domestic changes seek to have the income of particular investment entities - to be called “Portfolio Investment Entities” (PIEs) - taxed at the tax rates of the investors in the PIEs.

The PIEs will be taxable on income using a blended tax rate of their investors which will be allocated among investors to achieve a rate of 19.5% for those with incomes up to $48,000 and 33% for those with incomes over $48,000.

Mr Hanley says this approach should provide the promised neutrality where the managers of the PIEs can allocate this tax back to investors.

“The Bill contains details, unknown until now, about how the PIEs will operate which now enables the required implementation work of PIE managers and their registry providers to proceed.

“There are some modifications to the expected bad news for offshore investors, both bad and good,” he says.

“Listed Australian Unit Trusts will be excluded from the listed Australian exemption for both PIEs and direct investors. This is disappointing given the requirement for Australian unit trusts to distribute all income and realised capital gains each year. This means that New Zealand already collects its required “earnings” tax. This exclusion will impact on many direct individual investors and I encourage submissions on this point.

“There will be an exclusion from the proposed new offshore investment rules where 100 or fewer New Zealanders collectively own 10% or more of a “grey list” foreign company. This may provide some relief for those owning employee shares, for those who take shares when they sell businesses to offshore parties and those migrating offshore to raise finance. There should be a specific exemption for employee shares and again, I encourage submissions on this point.

Mr Hanley observes there has been no change to the 85% mark to market basis for taxing offshore portfolio share investments which, in his view, is an overstated proxy for the “current year earnings” the Government says it wishes to tax.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>

ALSO:

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