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Reform of tax laws for Maori organisations welcome

17 May 2002

Reform of tax laws for Maori organisations welcomed

Maori Affairs Minister Parekura Horomia has welcomed the announcement of the long awaited reform of the tax rules on organisations managing Maori assets held in communal ownership.

"These are very important changes for the future of the Maori estate," Parekura Horomia said.

"They replace a set of outdated tax rules that impose a lot of complexity, and even double taxation in some cases, on the many organisations, large and small, that manage communally owned Maori assets.

"The changes will be welcomed by the many Maori who, over the years, have made repeated calls for these cumbersome tax rules to be updated.

"The reforms will provide greater flexibility for organisations that manage communally held assets and give them access to more efficient tax rules, which will remove barriers to Maori economic and social development," Parekura Horomia said.

The main features of the proposed changes to the Maori authority tax rules are:
- The definition of "Maori authority" for tax purposes will be tightened to include only organisations that manage Maori assets held in communal ownership.
- New tax rules relating to Maori authorities will be based on the company imputation model.
- The tax rate applying to Maori authorities will continue to be lower than the company tax rate because most members are taxed at a lower personal tax rate. The new withholding tax rate will reduce from 25% to 19.5%.

"The reforms also include changes to the charitable status of Maori organisations for tax purposes, in recognition that these organisations may provide charitable services that are often based on bloodlines, through hapu or iwi," Parekura Horomia said.

"Under the proposed legislation, organisations that qualify as charities for tax purposes will not be excluded from charitable status simply because their members are connected by blood ties. This change will apply to both Maori and non-Maori.

"As well, marae on Maori reservations whose funds are solely applied to the administration and maintenance of the marae will qualify for the 'charitable' income tax exemption.

"All these changes are the result of months of consultation with Maori organisations up and down the country. The proposals have been met with enthusiasm, and many people and organisations have made a major contribution to their development. I thank them for that contribution.

"The next stage of consultation is when the proposals are considered by a parliamentary select committee. I urge all those who are interested in this very important legislation to take the opportunity to send a submission to the committee," Parekura Horomia said.


Detailed information on these and other matters in the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill is available in the commentary published on the website of the Policy Advice Division of Inland Revenue at www.taxpolicy.ird.govt.nz.

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