12 May 2004

Unit trust loophole to be closed

A loophole through which New Zealand residents receive income from Australian unit trusts that is taxed neither in New Zealand nor Australia will be closed, Revenue Minister Michael Cullen announced today.

“Changes closing a technical gap in the way the New Zealand dividend tax rules operate are to be added to the taxation bill now before Parliament,” Dr Cullen said.

“At present, New Zealand beneficiaries of offshore unit trusts – which are frequently Australian – can avoid paying tax on dividends by agreeing in advance to have amounts that vest absolutely in them to be reinvested in new units that are then distributed as a tax-free bonus issue of new units.

“That is patently unfair when identical investments in New Zealand products would be subject to income tax.

“The New Zealand tax rules will be clarified to ensure that amounts that vest absolutely in unit holders are treated as taxable dividends, and issues of units will be excluded from the definition of ‘bonus issue’.

“Although the changes are expected to affect New Zealand investments in Australian unit trusts, they will also apply to New Zealand investments into unit trusts everywhere, and will be effective from enactment.

“To look at the wider picture, the government shares the concern of many in the savings industry that there is a lack of consistency in the body of tax rules that apply to income from different types of investments. Under the current rules, the tax treatment of investments can differ according to a number of factors, which can lead to the disparities influencing investors’ savings decisions.

“For this reason, the government will be working with the private sector to review the whole, complex area of the taxation of offshore and domestic savings,” Dr Cullen said.

ENDS

© Scoop Media

Gordon Campbell: On the Sony cyber attack

Given the layers of meta-irony involved, the saga of the Sony cyber attack seemed at the outset more like a snarky European art film than a popcorn entry at the multiplex.

Yet now with (a) President Barack Obama weighing in on the side of artistic freedom and calling for the US to make a ‘proportionate response’quickly followed by (b) North Korea’s entire Internet service going down, and with both these events being followed by (c) Sony deciding to backtrack and release The Interview film that had made it a target for the dastardly North Koreans in the first place, then ay caramba…the whole world will now be watching how this affair pans out. More>>