Review of credit unions tax free status deferred
Credit unions will retain their tax exemption for at least another three years following a Government decision to defer a review of their tax status until the end of 2002.
Announcing the deferral today, Revenue Minister Michael Cullen said it would allow time to assess whether some credit unions had received a competitive advantage from the recent increase in their deposit limit.
The deposit limit applying to credit unions was raised this year from $40,000 to $250,000.
The Government released a discussion paper on the issue in August and received 13 submissions.
"Opinion is divided," Dr Cullen said.
"Generally the credit unions believe they should continue to be tax exempt because any benefit it may confer is outweighed by other restrictive provisions the law places upon them.
"However other submitters, including the Institute of Chartered Accountants and
the Financial Services Federation, consider that the tax exemption should be withdrawn.
"Given this, the Government has decided to test drive the new regime before making any further changes," Dr Cullen said.
New Zealand has 98 credit unions which together have over 180,000 members, total assets of over $400 million, and annual income of over $46 million. The tax exemption dates back to 1891.
Contact: Patricia Herbert [press secretary] 471-9412 or 025-270-9013; email, [email protected]