Tax Change Would Boost Trans-Tasman Economy

September 3, 2012 International TaxationNew Zealand Taxation

Life, the universe, and everythingCalls have been raised to take further steps to create closer economic ties between Australia and New Zealand by bringing the two countries’ tax systems closer.

Last week a new research was co-published by the Sydney’s Centre for International Economics and New Zealand Institute of Economic Research, showing that the economies of Australia and New Zealand could grow by a additional NZD 6.9 billion over the next 18 years if changes were made to the trans-Tasman tax rules to stop the double taxation of dividends.

The research was commissioned by the Australian Leadership Forum to examine the potential effects of scrapping the current system for franking and imputation credits, and establishing a new “streamlined” tax system which would allow taxpayers to claim personal tax refunds on the taxes that have already been paid by companies on the dividends they distribute.

The change would have an immediate negative effect on the tax revenues of both countries, with Australia expected to see an NZD 494 million drop and New Zealand forecasted to see revenues fall by NZD 156 million.

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