Wednesday, 21 June, 2006

Further measures added to tax bill

Revenue Minister Peter Dunne today released Supplementary Order Papers that add three further measures to the taxation bill currently before Parliament.

"The first measure is a technical change to the GST grouping rules that will prevent unexpected GST liabilities arising under certain circumstances," Mr Dunne said.

"It will allow companies that form a New Zealand group for income tax purposes to be treated as a group, and hence a single entity for GST purposes, even if a member of the group is not registered for GST.

"The change is in line with the principle that business-to-business transactions should generally be tax-neutral unless they involve exempt transactions or entities.

"The change will be limited to groups that predominantly make taxable supplies and will apply from 1 October 2001.

"The second measure concerns a previously announced amendment to the proposed tax rules for taxing offshore share investment.

"It will allow investors in widely held foreign companies that have a substantial New Zealand shareholder base to have a five-year exemption from the proposed rules once they are enacted.

"The five-year exemption will give those companies time to consider shifting their headquarters to New Zealand, which would bring considerable benefits to New Zealand.

"The exemption will be limited to investment in companies that meet certain criteria and will apply from the date the new offshore investment rules come into force.

"The third measure amends the application date of a change in the bill relating to consolidated groups. It protects the position of taxpayers who were members of a consolidated group before 17 May 2006 ? the date of introduction of the bill ? and for income years for which the first provisional tax date was before 17 May 2006," Mr Dunne said.

The Supplementary Order Papers are available at www.taxpolicy.ird.govt.nz.

ENDS

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