Parliament Passes TaxationAssociate Minister of Revenue
A bill passed by Parliament last night reforms the complex rules that govern the taxation of debts, forward contracts and other financial arrangements.
Associate Revenue Minister, Hon David Carter, said the basic objectives underlying the 'accrual rules' had not changed, but the rules themselves had been made "more workable".
"The rules have been simplified and clarified, as far as is possible given their complex subject matter," he said.
"When it was considered by Parliament, the legislation was further refined to make it clear that debt forgiven to trusts set up primarily to benefit family members and charities is not subject to tax. This means that ordinary family trusts will not be exposed to income tax on gifting programmes."
"The result of this clarification is bound to be greater certainty for people who set up family trusts and for their lawyers," said Mr Carter.
"The bill also introduces a number of changes that demonstrate the Government's continuing commitment to improving tax law, making it more effective, and preventing revenue loss," Mr Carter said.
The changes include:
ovements to the system of binding rulings on tax matters. legislation enabling New Zealand to enter into reciprocal tax recovery agreements with other countries. closing a loophole that has permitted investors in complex tax schemes to gain double deductions for expenditure on films and petroleum mining exploration. a change to the use-of-money interest rules as they affect provisional taxpayers, clarifying that interest on late payments is to be charged on a simple, non-compounding basis.