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Lease inducement payments by commercial landlords to tenants will be made taxable, but with some important changes as a result of the recent consultation process, Revenue Minister Peter Dunne announced today.

Changes to the initial proposal to tax lease inducement payments include:

Revenue Minister Peter Dunne said today that the Government will move swiftly to tighten the rules relating to financial arrangements.

Mr Dunne said the current rules have a loophole that can allow an unfair tax deduction for what are, in real terms, capital amounts.

“The rules allow taxpayers to elect to treat short-term agreements for the sale and purchase of property or services as financial arrangements to minimise compliance costs,” he said.

Tertiary Education, Skills and Employment Minister Steven Joyce and Revenue Minister Peter Dunne today welcomed significant progress in reducing the cost of student loan lending.

“We are committed to interest-free student loans, and want a long–term affordable scheme for both students and taxpayers,” Mr Joyce says.

“When Labour took the interest off student loans, the write-off of student loans ballooned out to 48 cents in the dollar.

KiwiSaver has hit two million members, Revenue Minister Peter Dunne announced today.

“KiwiSaver continues to be a popular way for New Zealanders to save for their retirement and when you look at the initial hopes for the scheme, to hit this mark in just five years is amazing,” Mr Dunne said.

“It offers a ready-made way to save and New Zealanders have flocked to it. It is easy to join and members have flexibility about how they save with more than 40 schemes to choose from.”

Mr Dunne said KiwiSaver appealed to people across all age groups.

“The student loans scheme is a generous one by world standards and the Government is committed to its future, so it is important to improve the value, efficiency and fairness of the scheme and encourage personal responsibility for loan repayments” Revenue Minister Peter Dunne said today announcing the introduction of the Student Loan Scheme Amendment Bill (No. 2).

Mr Dunne said that the bill contained two important features.

A tax legislation supplementary order paper will benefit Canterbury earthquake victims still facing real and ongoing difficulties, Revenue Minister Peter Dunne said in releasing it today.

“It is nearly 18 months since the big earthquake in Christchurch, and this SOP is another way the Government is supporting the people of Christchurch by providing all the practical help we can,” Mr Dunne said.

The SOP to the Taxation (Annual Rates, Returns Filing and Remedial Matters) Bill addresses a range of issues including:

Revenue Minister Peter Dunne has welcomed the release today of an Inland Revenue tax policy consultation paper on tax issues around cash payments made by commercial landlords to tenants. 

The paper, The taxation of lease inducement payments, suggests that such payments, known as lease inducement payments, be made taxable. 

An officials’ issues paper released today contains proposals which should help new immigrants and returning New Zealanders understand their tax obligations more clearly around their foreign superannuation entitlements, Revenue Minister Peter Dunne said today.

He said that migrants settling in New Zealand or New Zealanders returning after working off shore often do not understand our tax rules applying to pension schemes they set up in another country.

Orders in Council have been made by Cabinet affecting different aspects of the student loan scheme, Revenue Minister Peter Dunne announced today.

The Orders:

Good morning.

KiwiSaver celebrates its fifth birthday today with the first of its almost two million members now able to take their retirement nest eggs out of the scheme, Revenue Minister Peter Dunne said.

More than 1,950,000 people have joined it since KiwiSaver was launched on July 1 2007 and the first 17,500 members – those who joined in their 60s and have now been in KiwiSaver for the full five years – will be eligible to withdraw their funds this month.

Revenue Minister Peter Dunne today welcomed the agreement in principle to a new double tax agreement between New Zealand and Japan.

“This is a very positive step towards modernising our tax treaty arrangements with Japan, which are now quite dated,” Mr Dunne said. ”The updating of the treaty recognises the importance of Japan as a major investment and trading partner.”

Thank you once again for inviting me back to speak to you.

It is always a pleasure to attend your conferences.

Each year as I prepare to attend your conference I think about the various tax initiatives being delivered and how they might affect you, and there are many.

Today, I would like to look forward, to things that will happen and to things that could happen.

I want to talk about upcoming changes to tax rules and about changes to the tax administration as we know it.

The Government’s programme to collect overdue student loan repayments from overseas-based borrowers has now brought in $20 million, with a further $2.9 million under payment arrangements, Tertiary Education, Skills and Employment Minister Steven Joyce and Revenue Minister Peter Dunne say.

The scheme began in late October 2010 as a pilot targeting 1000 Australian-based borrowers and has recently been extended to 57,000 borrowers, largely in Australia and the United Kingdom, over the next two and a half years.

Revenue Minister Peter Dunne today welcomed Finance and Expenditure Committee recommendations for changes to the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill which was reported back to Parliament yesterday.

The Committee has recommended two changes:

The Government is taking a number of steps to tighten the tax system by closing loopholes and updating the tax credit system, which will generate hundreds of millions of dollars of extra revenue over the next four years.

Budget 2012 will provide Inland Revenue with an extra $78.4 million over the next four years to bolster its successful tax compliance activities in dealing with the hidden economy, debt collection, and following up on unfiled returns, Revenue Minister Peter Dunne says.

In Budget 2010, the Government allocated an additional $119.3 million over four years for the department to strengthen its compliance and debt activities.

The return on investment from that funding in the first year was encouraging, Mr Dunne says.

Revenue Minister Peter Dunne today thanked the New Zealand Institute of Chartered Accountants (NZICA) for its contribution to the wider discussion on simplifying tax for small and medium sized businesses in New Zealand.

NZICA today released a paper on the subject.

Mr Dunne said the Government was constantly committed to having a tax system that was efficient and minimised the burden on business.

The Child Support Amendment Bill now before Parliament is the culmination of “the most major review of the Child Support scheme since its inception”, Revenue Minister Peter Dunne told Parliament at the Bill’s first reading today.

He said issues of fairness had come to dog the scheme, with around 40 percent of the correspondence he received as Minister relating to child support issues.

“The scheme is long overdue for updating and today it has come a big step closer to becoming fairer for all concerned,” Mr Dunne said. 

Revenue Minister Peter Dunne said taxpayers not being able to access Inland Revenue’s website for three hours today was human error, and not an issue of the system’s capacity or robustness.

He also assured taxpayers that no one unable to file their GST returns today would be disadvantaged.

“It was a settings issue rather than a system capacity issue on a day when there was particularly heavy use of the website for the filing of GST returns.

Revenue Minister Peter Dunne today launched Inland Revenue’s new mobile web application that will allow people to manage more of their tax and social policy entitlements on the move.

“The app will offer a faster and simpler service for accessing and maintaining contact details and viewing account information,” he said.

“For example, if you have a student loan, you can look up your balance wherever you are to help manage your loan, or you can use it for simple things like payment reminders or changing your contact or bank account details.”

New Zealand and Canada this morning signed a new double tax agreement (DTA) to replace their 1980 treaty.

The updated agreement was signed at Parliament by Canada’s Minister of International Trade, Ed Fast, and Revenue Minister Peter Dunne.

Mr Dunne said the agreement will help New Zealand-based businesses compete in Canada and make New Zealand a more attractive place to invest in.

Revenue Minister Peter Dunne and Associate Minister of Social Development Chester Borrows today announced the signing of an Order in Council to expand information sharing between Inland Revenue and the Ministry of Social Development.

Mr Dunne described the order as a positive and welcome step forward for improving efficiency and fairness.

“This is a great example of government agencies finding new, more efficient ways to work smarter to deliver a great result for the New Zealand taxpayer,” Mr Dunne said.

GST is a tax on consumption and not a tax on business and therefore should be neutral for both resident and non-resident businesses, Revenue Minister Peter Dunne said today in announcing his intention to introduce measures to remove GST impediments for non-resident businesses.

Mr Dunne said that there are cases where GST represents a real cost to non-resident businesses when the same cost may be able to be claimed by a New Zealand business as an input tax credit.