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New Zealand's Tax Reform Consultation Ends This Week

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

24 April 2018


New Zealand is to soon begin formulating new tax reform measures, aimed at improving the balance and fairness of the tax regime, based on the feedback to a public consultation that ends April 30.

The feedback to an ongoing government consultation will influence the design of measures that will be put before government ministers in September. The recommendations will be finalized in February 2019.

When the Tax Working Group was announced to lead the reform efforts, Finance Minister Grant Robertson explained the review: "This Government is committed to a fair and progressive tax system. It is important that New Zealanders have confidence in their tax system and know that everyone is paying their fair share. At the moment the tax system appears unfair – for example, it doesn't treat income from speculation in housing as it does income from work. We want to consider how we can create a better balanced system and can encourage a shift to investment in the productive economy."

"Individual wage-earners, businesses, asset owners, and speculators should pay their fair share of tax. Right now we don't think that is happening. This working group is not about increasing income tax or the rate of GST, but rather introducing more fairness across all taxpayers. The Working Group will also consider how the tax system can contribute to positive environmental outcomes and the impact of likely changes to the economic environment, demographics, technology, and employment practices over the next decade."

"As promised before the election, any significant changes legislated for from the Group's final report will not come into force until the 2021 tax year. As we promised during the election campaign, certain areas will be outside the scope of the review, including increasing any income tax rate, the rate of GST, inheritance tax, and changes that would apply to the family home or land beneath it," Robertson said.

The head of the review, Michael Cullen, said the response to the consultation so far has been excellent. "There has been a steady flow of people visiting the website and going through the information. The quick polls have been popular with more than 10,000 responses so far and it's encouraging that a good proportion of those votes have been followed up with a submission."

"It's rare to have an opportunity to influence the future of tax so I would encourage anyone who has been thinking about making a submission to get on to the website and have their say before the window closes. All New Zealanders have a stake in the design of a future tax system so it's important that we hear as many different perspectives as possible."

New Zealand recently enacted The Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act, which reformed the administration of PAYE (wage and salary deductions) to require employers to provide more timely information to New Zealand's Inland Revenue Department and modernized the taxation of employee share schemes. The way banks and other institutions provide information about investment income to the Inland Revenue Department was also reformed, and residential investment properties sold within five years of purchase are now subject to tax under the so-called "bright line test." Previously, properties were subject to tax if sold within two years of purchase.

TAGS: inheritance tax | environment | Finance | tax | investment | business | value added tax (VAT) | speculation | share schemes | goods and services tax (GST) | New Zealand | tax reform | services | Employment | Investment | Work | Invest | Investment | Tax

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