Government moves on tax initiatives
The Government has taken action on key tax issues in a compendium taxation bill introduced into Parliament today.
"The legislation picks up on several things that need doing now," says Revenue Minister Michael Cullen.
"The Government is implementing changes arising from the Finance and Expenditure Committee inquiry into the powers and operation of the Inland Revenue Department. They introduce more flexibility into the rules that deal with overdue tax, and reduce penalties for people whose tax is late. Work on other recommendations is in progress.
"We are introducing major tax simplification measures to make GST more workable and to reduce the associated compliance costs. These include raising the threshold for compulsory registration for GST and making it easier for people who file returns to make adjustments for private use.
"We are clamping down on tax avoidance and rorts of the tax system. For example, the bill removes a recently identified loophole that some are attempting to exploit by claiming GST on ships bought elsewhere and brought into New Zealand temporarily. Once enacted, the measure will be backdated to 1 October 1986, unless IRD has agreed in writing to the claim before today.
"The bill stops high-income employees avoiding the new 39 percent tax rate by seeking a lower tax rate through use of a company, trust or partnership as a shelter for what is clearly employment income. This measure complements legislation already before Parliament to counter the use of employer contributions to superannuation funds to avoid the top tax rate. When enacted, it will take effect from 1 April 2000.
"And long overdue is the enactment of anti-avoidance legislation dealing with the abuse of foreign tax credits. Similar legislation has been before Parliament since 1994 pending the outcome of what later became known as the 'Wine-box inquiry'. Such legislation was desirable then and it is desirable now, so has been included in this bill," Dr Cullen said.
Detailed information on the bill can be found in the commentary on the Taxation (Annual Rates, GST and Miscellaneous Provisions) Bill. It is available on the web site of the Policy Advice Division of Inland Revenue at http://www.taxpolicy.ird.govt.nz.