According to a New Zealand Government press release, published on January 29th, the Crown’s operating deficit before gains and losses for the time period was NZD3.7 billion. The figure is NZD700 million better than previously forecast in the 2009 Half-Year Economic and Fiscal Update. The operating deficits including gains and losses for the same period were reported to be NZD1.4 billion, which was NZD1.1 billion better than forecast.

Though the figures are positive, Bill English, Finance Minister of New Zealand , has warned that the news should be taken with some caution. Further, he claimed that the figures serve only to emphasize the need for responsible fiscal and economic management by the New Zealand Government through 2010. He also reminded New Zealanders that while the economy was recovering the Crown would still be facing budget deficits for another six years. Elaborating on this, the Finance Minister said “We face another six years of Budget deficits and we’re borrowing an average $240 million a week, every week, for the next four years.”

Photo by Velvet Android

Double Taxation agreements prevent the situation of taxation on one income by two countries, through coming to an agreement as to what incomes will be taxed in the country of residence and exempt in the country of occurrence. It also deals with the opposite case where the income will be taxed at the country of occurrence and compensation arises in the country of residence.
Double Taxation also extends to more comprehensive sharing of tax information between tax authorities.

New Zealand currently holds double taxation agreements with the following countries:

Australia
Austria
Belgium
Canada
Chile
China
Czech Republic
Denmark
Fiji
Finland-
France
Germany
India
Indonesia
Ireland
Italy
Japan
Malaysia
Mexico
Norway
Poland
Republic of Korea
Russian Federation
Singapore
South Africa
Spain
Sweden
Switzerland
Taiwan
Thailand
The Netherlands
The Philippines
United Arab Emirates
United Kingdom
United States of America

Current imputation credit regulation allows for New Zealand shareholders to offset their income tax obligation with imputation credits attached to the dividends they receive from a New Zealand income tax paying company. These rules do not currently extend to tax-exempt entities or charities, as they have no income tax obligation which needs to be offset. As this means that unutilized imputation credits are effectively wasted when dealing with tax-exempt entities, there have been numerous calls for revisal of the system.

The New Zealand Government has not ruled out the possibility of imputation credit refunds for tax-exempt entities and charities. While not a definite indicator of change, this is still the initial stage to possible future imputation credit system rethinks.