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Unfair tax penalty must go

Hon Lockwood Smith MP National Party Revenue Spokesman

16 March 2006

Unfair tax penalty must go

National will attempt to axe an unfair tax penalty in tax legislation it is supporting through Parliament, says National Revenue spokesman Lockwood Smith.

The Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Bill had its second reading in Parliament today.

"There are a number of measures in the bill that are business-friendly. There are also provisions that will help make New Zealand more attractive to migrants and ex-pats returning home," says Dr Smith.

"That's why we will support it.

However Dr Smith says he wants a change made during the bill's committee stage, which is due next week.

"At present an 'Unacceptable Tax Position Shortfall Penalty' of 20 percent is imposed on taxpayers if they file a return, find an error in it, correct it, and pay the correct amount by due date.

"Such a penalty is crazy, as it discourages taxpayers from being open with Inland Revenue about their tax returns.

"Where the taxpayer voluntarily corrects a return and pays the correct amount by the due date, there should be no penalty at all."

Dr Smith says National had pushed hard on the issue during the select committee examination of the bill.

"We want to ensure the Labour Government introduces an amendment during the committee stage of the bill to fix this totally unfair penalty provision.

"If Labour doesn't move on this, it is clearly putting revenue collection ahead of fairness to taxpayers. That would damage the goodwill of taxpayers - which the system is so dependent on."

ENDS

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