16 November 2004

Banks to pay more tax under new rules

A bill introduced into Parliament today will ensure that foreign-owned banks operating in New Zealand pay sufficient tax on their New Zealand income.

“New rules specific to banks will ensure that their income cannot be sheltered by interest deductions arising from excessive debt,” said Revenue Minister Michael Cullen.

“Banks will be denied interest deductions if they do not hold capital equivalent to 4 per cent of their New Zealand banking assets, weighted for risk. They must also have enough capital in New Zealand, on which no interest is deductible, to fully fund their offshore investment.

“The changes, which will apply from 1 July next year, are expected on current levels of bank profitability to result in the payment of another $360 million a year in tax; revenue which has already been factored in to current budget planning.

“The bill also closes a loophole in the imputation and dividend rules to prevent inappropriate refunds of prepaid tax. Once enacted, the change will apply from today,” Dr Cullen said.

Other important changes in the bill include the introduction of statutory “privilege” to tax advice provided by tax advisors such as chartered accountants and changes to the tax depreciation rules to improve their operation and reduce compliance costs.

The bill also clarifies a number of tax rules, including those on tax deductibility for business environmental expenditure.

Information on these and other matters in the bill can be found in the commentary on the Taxation (Base Maintenance and Miscellaneous Provisions) Bill, available at http://www.taxpolicy.ird.govt.nz.

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>>