NZ Legislates For GST, Pension Withdrawal Changes

by Mary Swire, Tax-News.com, Hong Kong

26 August 2010

New Zealand’s Revenue Minister, Peter Dunne, has tabled legislative amendments to cut compliance costs before the upcoming increase to 15% in the goods and services tax (GST) rate on October 1 and the repeal of fund withdrawal tax.

Dunne said the GST transitional measures in the legislation largely focus on contracts that straddle the rate change date. Certain successive supplies, such as insurance contracts and finance leases, will be able to continue at the 12.5% rate for a transitional period to reduce compliance costs. The transitional periods will vary according to the type of supply.

He also commented on the phasing out of the 5% fund withdrawal tax payable on some superannuation funds, which had been planned from October1 this year. He said that there were significant compliance costs associated with phasing this out, and, accordingly, the fund withdrawal tax will be repealed from April 1, 2011, instead.

In that case, measures set out in the 2010 budget for complying with the requirement to track superannuation contributions will no longer be required. Instead, Inland Revenue will monitor salary arrangements entered into until April 1, 2011.

"These changes will ensure that businesses and individuals are not unduly affected by tax compliance requirements," Dunne said.

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