Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Govt welcomes passage of omnibus tax legislation

Govt welcomes passage of omnibus tax legislation

Finance Minister Michael Cullen and Revenue Minister Peter Dunne have welcomed the passage today of legislation giving effect to a range of major tax reforms, including the new R&D tax credit and employer-related KiwiSaver enhancements announced in Budget 2007.

The legislation was introduced in May in the Taxation (Annual Rates, Business Taxation, KiwiSaver, and Remedial Matters) Bill, which was split into three bills at the Committee stage of proceedings.

“The 15% R&D tax credit has been introduced to encourage New Zealand businesses to invest more in research and development, which will generate wider benefits for all businesses, ” Dr Cullen and Mr Dunne said.

“It is part of the $3.4 billion investment and innovation package announced in Budget 2007, which also included the recently enacted reduction in the company tax rate from 33% to 30% from the 2008-09 income year.

“The present legislation introduces a number of transitional and consequential amendments resulting from the new company tax rate, most of which concern imputation credit handling in the two-year transitional period.

“Another major focus of the new legislation is to strengthen incentives to save for retirement through joining KiwiSaver or a complying superannuation scheme. It requires employers to match their employees’ contributions up to 4 percent of their gross salary or wages – phased in over four years. That measure is accompanied by a new employer tax credit of up to $20 a week to help offset the costs to employers.

“These changes complement KiwiSaver incentives enacted in May in the form of a new tax credit to match member contributions of up to $20 a week, which means that members who save $20 a week will receive an extra $1,040 in their accounts.

“The new legislation relaxes a whole range of tax penalties, such as the penalty for taking an unacceptable tax position, to promote voluntary compliance. The aim of the changes is for penalties to better reflect the seriousness of the offence to which they pertain – so they distinguish between people who try to do the right thing and fail, and those who have no intention of doing the right thing.

“The new legislation also increases tax incentives for making donations to charitable organisations, as announced in Budget 2007. The changes include removing the rebate threshold on donations made by individuals, and removing the deduction limit on charitable donations made by companies and Maori authorities.

“These are the main changes in the wide-ranging legislation that results from the three bills that passed through their final stages in Parliament today. We welcome the passage of this very important legislation,” the Ministers said.

Other reforms in the new legislation include:

Child support information matching
The new legislation introduces information matching between Inland Revenue and the New Zealand Customs Service. That will enable Inland Revenue to identify when people with outstanding child support debt enter and leave New Zealand, so that it can take steps to recover that debt before they leave the country.

Redundancy payments
A new redundancy payment rebate will make the taxation of redundancy payments fairer to people who find themselves in a higher tax bracket as a result of receiving a lump sum redundancy payout. Calculation of the rebate will be based on the flat rate of six cents per dollar of redundancy payment, up to a maximum payout of $60,000 per redundancy.

Finance lease amendments
Changes to the finance lease tax rules are intended to prevent people entering tax schemes involving depreciation deductions for leases on overseas assets that result in a loss to the New Zealand Revenue.

Further savings measures
Several technical improvements have been made to the new portfolio investment entity (PIE) rules, which alleviate a number of long-standing problems associated with the taxation of managed funds. Other changes allow policyholders in unit-linked life insurance products to access some of the benefits of the new PIE rules. Certain contributions to retirement schemes will be subject to withholding tax rather than income tax, meaning that contributions will not be taken into account for social assistance measures.

Adoption of IFRS
Changes have been made to the financial arrangement tax rules so that the timing of income and expenditure from financial arrangements follows their accounting treatment under IFRS. Consequential changes have been made to incorporate the adoption of IFRS into the trading stock and R&D expenditure tax rules.

Annual income tax rates
The annual income tax rates for the 2007-08 year have been set.

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

Breed Laws Don’t Work: Vets On New National Dog Control Plan

It is pleasing therefore to see Louise Upston Associate Minister for Local Government calling for a comprehensive solution... However, relying on breed specific laws to manage dog aggression will not work. More>>

ALSO:

Corrections Corrected: Supreme Court Rules On Release Dates

Corrections has always followed the lawful rulings of the Court in its calculation of sentence release dates. On four previous occasions, the Court of Appeal had upheld Corrections’ practices in calculating pre-sentence detention. More>>

ALSO:

Not Waiting On Select Committee: Green Party Releases Medically-Assisted Dying Policy

“Adults with a terminal illness should have the right to choose a medically assisted death,” Green Party health spokesperson Kevin Hague said. “The Green Party does not support extending assisted dying to people who aren't terminally ill because we can’t be confident that this won't further marginalise the lives of people with disabilities." More>>

ALSO:

General Election Review: Changes To Electoral Act Introduced

More effective systems in polling places and earlier counting of advanced votes are on their way through proposed changes to our electoral laws, Justice Minister Amy Adams says. More>>

Gordon Campbell: On Our Posturing At The UN

In New York, Key basically took an old May 2 Washington Post article written by Barack Obama, recycled it back to the Americans, and still scored headlines here at home… We’ve had a double serving of this kind of comfort food. More>>

ALSO:

Treaty Settlements: Bills Delayed As NZ First Pulls Support

Ngāruahine, Te Atiawa and Taranaki are reeling today as they learnt that the third and final readings of each Iwi’s Historical Treaty Settlement Bills scheduled for this Friday, have been put in jeopardy by the actions of NZ First. More>>

ALSO:

Gordon Campbell: On The Damage De-Regulation Is Doing To Fisheries And Education, Plus Kate Tempest

Our faith in the benign workings of the market – and of the light-handed regulation that goes with it – has had a body count. Back in 1992, the free market friendly Health Safety and Employment Act gutted the labour inspectorate and turned forestry, mining and other workplace sites into death traps, long before the Pike River disaster. More>>

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news