Speaking at a meeting of Grey Power Bay of Plenty on July 9th, Peter Dunne, Revenue Minister and associate Health Minister of New Zealand, stated that he is currently planning to release a proposal for “a tax rebate for health insurance premium payments for over 65s.”

According to Peter Dunne, many elderly New Zealanders have taken out health insurance in the past, but are now struggling under the the financial burden of escalating insurance premiums. The tax rebates would ensure that elderly taxpayers will continue to receive continued levels of access to elective surgery in New Zealand, by subsidizing the price increases. The Minister stated that he plans to reveal the exact details of the tax rebate later this year, and put a proposal in front of the Government before 2011.

The Minister also proposed instating a “warrant of fitness” health-check system for elderly tax payers. Although he added that since the latest Budget, the increased levels health-services funding have provided greater levels of accessibility to elective surgeries in New Zealand. The Governments current levels of cooperation with the health sector are also aiding the elderly in attaining required medical attention.

Photo by IITA Image Library

On June 10th Peter Dunne, Revenue Minister of New Zealand, released a statement revealing the Government’s intentions of abolishing Gift Duty Taxes. According to Peter Dunne, the Government has been investigating the issue for several months and “a strong case has emerged” for the complete repealing of the Gift Duty Tax rules.

According to Peter Dunne’s statement, Gift Duty was initially introduced to prevent individuals circumventing Estate Duty taxes. Estate Duties were subsequently abolished in 1992, although Gift Duty Taxes were retained. The Government’s latest decision to lower the trustee tax rate will serve a similar purpose in avoiding motivation to minimize tax obligations through gifting to trusts, making the measure unnecessary.

Peter Dunne revealed that the Government is currently holding consultations with various departments concerning a few remaining issues with the abolishment of Gift Duty Tax. Specifically, the issues of the undermining of creditor interest and unfair access to social assistance need to be addressed before the abolition is carried out.

Peter Dunne summarized the passage of the repeal of Gift Duties, saying “There will be further consultations over the next few months, and if gift duty is to be repealed, I intend to include it in a tax bill to be introduced in November this year.”

Photo by nznationalparty

On May 12th the New Zealand Government announced the signing of an Order in Council for the DTA between New Zealand and Singapore. The signing of the Order officially incorporates the agreement into national legislation. According to Peter Dunne, New Zealand Revenue Minister, the DTA will come into effect when the equivalent legal ratification process is carried out by the Government of Singapore.

The new agreement is intended to replace the DTA signed by Singapore and New Zealand in 1973. The DTA will lower withholding rates on dividends, royalties and interest. As the bi-lateral agreement will be updated to modern standards it will also serve to increase the levels of protection and certainty for cross-border business. The DTA will also conform to the international recognized standards of taxation transparency and information sharing, as set out by the Organization for Economic Cooperation and Development.

Singapore currently holds 61 Comprehensive Double Taxation Agreements, 7 limited taxation treaties, and 17 signed but un-ratified DTAs. New Zealand holds 35 ratified DTAs, and an additional 15 Tax Information Exchange Agreements.

Photo by beggs

On April 14th Peter Dunne, New Zealand Revenue Minister, announced the release of Allowing a zero percent tax rate for non-residents investing in a PIE, an official New Zealand Government Issues Paper. The release of the paper is spurned by the International Fund Services Development Group (IFSDG), which was formed in April 2010 to advise the New Zealand Government on the changes required to create an international fund-service sector in New Zealand. According to Craig Stobo, Chair of the IFSDG, verified the need for the issues paper, explaining that an anomaly currently exists in the New Zealand tax system whereby a non-resident investing in foreign assets through a PIE would be taxed as a resident. The situation is seen as a strong disincentive for non-residents to utilize New Zealand as a financial services hub.

Two solutions for the situation have been outlined within the issues paper. The first proposes the adaptation of a PIE system for both resident and non-resident investors, with non-residents subjected to a zero percent portfolio investment rate (PIR). The second option proposes the creation of a look-through global investment option where a PIE will have resident and non-resident investors with New Zealand and offshore sourced income and apply different PIRs for each situation.

Both methods are expected to decrease national tax revenues by NZD 10 million annually. Although, according to Peter Dunne and Craig Stobo, the changes are a necessary step for the creation of a financial services hub in New Zealand, which is expected to create up to 5000 new jobs and tax revenues of NZD 250 million per year.

Photo by 350.org

On March 29th Peter Dunne, New Zealand Revenue Minister, announced that the New Zealand Government and the Hong Kong Government expect to start negotiations on a DTA in October. The agreement aims to eliminate instances of double taxation on incomes earned by individuals and businesses entities while operating in the corresponding nation. The DTA will also feature measures to increase taxation transparency between the two nations, and comply with the Organization for Economic Cooperation and Development’s (OECD) international standards on tax information exchange.

Peter Dunne commented on the upcoming negotiation, saying, “I welcome Hong Kong’s change of stance on information exchange matters, which has made the double tax agreement negotiations possible.” Hong Kong has recently signed three similar bi-lateral agreements with Indonesia, the Netherlands, and Brunei, with several more negotiations underway.

The DTA announcement was accompanied by the signing of a Closer Economic Partnership (CEP) agreement between Hong Kong and New Zealand. According to Peter Dunne, Hong Kong is currently New Zealand’s ninth biggest export recipient, and provides significant foreign investment into the country.

Photo by hugolim.com

At the International Fiscal Association conference held in Christchurch on March 19th Peter Dunne, New Zealand Revenue Minister, released an issues paper on the tax treatment of New Zealand companies with offshore subsidiaries. The paper aims to build upon reforms carried out last year in an effort to allow national companies to compete in foreign markets without major tax hindrance. Particularly the issues paper seeks feedback on how tax exemptions could be extended to investments made by New Zealand companies into foreign entities in which they are not a controlling partner, commonly called a foreign investment fund.

According to the minister’s speech, New Zealand companies wishing to expand overseas often make a sizeable investment into a foreign partner or creating a jointly owned entity. Encouragement and fostering of such activity has the potential of bringing significant economic benefits to New Zealand. It could also endow New Zealand firms with improved market knowledge, access to customers and suppliers, while facilitating higher levels of growth and high-value research.

Commenting on the potential changes, Peter Dunne said, “…it is important that the tax system does not act as a barrier to New Zealand companies looking for opportunities to expand into new and emerging markets…. so that New Zealand firms can reap the commercial advantages of global investment more easily.”

Photo by Ewan-M

On March 17th Peter Dunne, New Zealand Revenue Minister, announced that New Zealand had signed two new TIEA agreements, bringing the national total to 15. The newly signed bilateral agreements are Organization for Economic Cooperation and Development (OECD) model documents which provide a internationally agreed upon standard for the exchange of tax data between participating nations in civil and criminal investigations. The new TIEAs will come into effect when each country in the agreement gives legal effect to the document, which in New Zealand occurs by Order of the Council.

TIEAs have become an important benchmark for nations as means of demonstrating commitment to internationally agreed upon standards of taxation transparency. A jurisdiction with 12 or more signed TIEAs will be considered to have adequately implemented these standards, and be placed on the “White List” of nations. New Zealand currently resides on the White List, while both signing parties are ranked in the Grey List.

Photo by ctsnow

In an effort to foster a greater sense of charitable work amongst New Zealanders, Peter Dunne, New Zealand Revenue Minister, announced on February 23rd that individuals who are working overseas for Partners Relief and Development NZ will now be eligible for an interest write-off on their student loans. The change is scheduled to come into effect on April 1st.

Typically, student loans are charged interest when an borrower works outside of New Zealand, and an individual is required to reside within New Zealand for at least six months to receive an interest-free student loan; exceptions apply when the employer is charitable organization which is named by an Order of Council by the New Zealand Government. Although, the New Zealand Inland Revenue Department (IRD) retains a legal right deny eligibility to an individual, if it finds adequate reason to do so.

The interest-free allowance for was initiated by the New Zealand Government in March 2006, and featured 48 recognized charitable organizations. At the time of the current announcement, the legislation concerning interest free loan had grown to include 76 applicable organizations.

Photo by nznationalparty

According to a statement by Peter Dunne, New Zealand Revenue Minister, low-income families who are eligible for minimum family tax credits, will see a small rise in their received amount on April 1st 2010. Explaining the change, Peter Dunne said “The minimum family tax credit provides a guaranteed minimum family income to families who are in work. It currently guarantees recipients a net income of $20,540 a year. This will rise to $20,800 from 1 April 2010″. The tax credit aims at making sure that eligible families are at a net gain from entering the workforce. As at March 2009, over 2,700 families were entitled to receive the minimum family tax credit.

Peter Dunne also announced that the rate used to calculate the FBT on low-interest employment related loans has been reduced from 6.41% to 6.00%, and will take effect retroactively from October 1st. The move follows a review, comparing the rate to the Reserve Bank’s survey of variable first mortgage housing rates.

Both changes were approved by Order of the Council, on November 23rd.

Photo by nznationalparty

With the aim of decreasing the government’s revenue loss in GST, Peter Dunne, New Zealand Revenue Minister, announced the release of “GST: Accounting for land and other high-value assets,” on November 5th. He explained the government’s current GST revenue loss situation, saying “The proposal targets sellers and buyers in transactions involving high-value assets. In these transactions GST revenue can be lost by the government from a small minority of taxpayers deliberately using differing GST accounting treatments or winding up a vendor company so that no GST is paid.”

According the statement, the government experiences an approximated NZ$50 million in lost GST revenue through the property development sector, on an annual basis. It is believed that this figure is only rising. The principal proposal of the paper, according to the Revenue Minister “is to introduce a mechanism known as a domestic reverse charge, whereby the obligation to account for GST in transactions involving land, other assets worth more than $50 million, and those involving ‘going concerns’, would be shifted from the seller to the buyer.”

The paper calls for comment and appraisal of the proposal. “GST: Accounting for land and other high-value assets” can be seen on the IRD’s Policy Advice Division’s website, here.