Income Sharing Legislation Tabled
August 17, 2010 New Zealand Taxation
Over 310 000 New Zealand families could soon experience significant tax reliefs, if new legislations are passed allowing income sharing for the purpose of tax calculation.
Couples with children could be given the option of working fewer or more flexible hours, if a new legislation passes through Parliament. On the 16th of August the Taxation (Income-sharing Tax Credit) Bill was tabled in Parliament. The bill proposes that a couple with dependent children be able to choose to be taxed on an equal share of their combined incomes, and receive an end of year tax credit on any tax benefits calculated. Explaining the benefits, Peter Dunne, Revenue Minister of New Zealand, said, “Because income tax rates rise according to the amount earned, many families could ultimately end up paying less tax if, for example, one parent works fulltime and the other chooses to remain home to care for their children.”
Peter Dunne has proposed the income sharing system before, in his role as the leader of UnitedFuture party. He claims that the scheme would empower families and parents who choose to stay at home to provide fulltime care to children.
Some doubt has already thrown on the proposal, as it could potentially breach the New Zealand Bill of Rights Act. Those opposing income sharing have claimed that it discriminates against solo parents. Petr Dunne has accepted the view, but maintains that solo parents have access to a selection of fiscal support mechanisms like childcare subsidies, the minimum family tax credit, the childcare rebate and the domestic purposes benefit.
If the Bill passes through all stages of Parliament approval and legal ratification the credit will apply from the tax year beginning 1 April 2012.
Photo by nznationalparty