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Inland Revenue

Tax Policy

Announcements
PUBLISHED 14 May 2002

Tax bill introduced

A bill introduced into Parliament today proposes a major reform of the taxation of organisations that manage communally owned Maori assets. It also proposes changes resulting from the 1999 inquiry into the powers and operations of Inland Revenue, including measures that take into account "good behaviour" on the part of taxpayers. Other measures include a new penalty on promoters of certain tax "arrangements", and changes relating to charities, tax simplification and GST. The bill is published here courtesy of Legislation Direct. See:


Hon Dr Michael Cullen
Minister of Revenue

MEDIA STATEMENT

Tax bill raises maximum charity rebate

A bill introduced today will raise the maximum rebate for donations to charities from $500 to $630 and will extend the corporate tax deduction to include a wider range of companies.

The legislation will also modernise the tax rules on organisations that manage Maori assets held in communal ownership.

"The present rules date from 1952 and are unnecessarily complex and restrictive so an update is long overdue," Revenue Minister Michael Cullen said.

"The rule changes will affect Maori authorities ranging from small trusts managing blocks of land to the Treaty of Waitangi Fisheries Commission. They will also simplify the income tax requirements for people who derive benefits from these organisations," Dr Cullen said.

Other major features of the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill are:

  • Further changes arising from the government's review of the taxpayer compliance and penalty legislation, including a new penalty on promoters of certain tax schemes.
  • Further tax simplification measures aimed at small and medium-sized businesses.
  • Changes clarifying the GST treatment of cross-border telecommunications.

"The Government had considered including in the bill the proposals arising from the recent issues paper on mass-marketed tax schemes but consultation indicated that further analysis is needed," Dr Cullen said.

Full information on matters in the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill is available in the commentary on the bill published on the website of the Policy Advice Division of Inland Revenue at www.taxpolicy.ird.govt.nz.

Contact: Patricia Herbert [press secretary] 04-471-9412 or 021-270-9013. E-mail [email protected]. Technical inquiries to Michelle Davie, [tax advisor, Dr Cullen's office] 471-9728.


Hon Paul Swain
Associate Minister of Revenue

MEDIA STATEMENT

Tax simplification measures introduced

Associate Revenue Minister Paul Swain has welcomed the business tax simplification measures contained in a bill introduced today.

"The Government is seeking ways to involve the private sector in helping businesses to meet their tax obligations with less stress and hassle," Mr Swain said. "Two of the proposed changes in today's bill have a lot of potential for doing that, by allowing businesses to use intermediaries to meet their tax obligations."

Pooling provisional tax payments

The bill introduces new rules allowing businesses to pool their provisional tax payments with those of other businesses. Tax underpayments will be offset by overpayments within the same pool, thus reducing the participating businesses' exposure to use-of-money interest.

Commercial intermediaries will be able to set up pools and will arrange for participants to be charged or compensated for the offset.

"Small and medium-sized businesses often find it difficult to estimate with accuracy how much income they will earn during the year," Mr Swain said. "If they underestimate it, they will have to pay use-of-money interest on the difference. The pooling proposal should reduce the amount of interest they have to pay and help remove some of the uncertainty and worry to do with estimating provisional tax."

Using PAYE intermediaries

Another simplification measure in the bill makes it easier for employers to transfer the bulk of their PAYE obligations to accredited intermediaries, who will be legally responsible for calculating and paying PAYE deductions to Inland Revenue, meeting return filing requirements and paying employees.

"The proposal was developed in response to employers' concerns about the time they spend keeping up to date with the PAYE tax rules and calculating and paying deductions," Mr Swain said. "And if they get it wrong they risk penalties and interest."

"The measure is intended to help make it easier for small businesses to employ staff. By making the intermediaries legally responsible for meeting the employer's obligations, the measure also reduces barriers that may prevent employers from using intermediaries as well as supporting those who already use them but at present bear the risk themselves," he said.

These two measures are part of the government's continuing programme of tax simplification.

Detailed information on these and other matters in the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill is available in the commentary published on the website of the Policy Advice Division of Inland Revenue (www.taxpolicy.ird.govt.nz).

Andrew Janes - Press Sec for Paul Swain - 04 4719889/021 270 9106 or [email protected]
For other releases by Paul Swain: www.beehive.govt.nz
For business information from the government: www-nzbusiness.govt.nz [site no longer available - see Internet Archive for archived version]


Hon Parekura Horomia
Minister of Maori Affairs

MEDIA STATEMENT

Reform of tax laws for Maori organisations welcomed

Maori Affairs Minister Parekura Horomia has welcomed the announcement of the long awaited reform of the tax rules on organisations managing Maori assets held in communal ownership.

"These are very important changes for the future of the Maori estate," Parekura Horomia said.

"They replace a set of outdated tax rules that impose a lot of complexity, and even double taxation in some cases, on the many organisations, large and small, that manage communally owned Maori assets.

"The changes will be welcomed by the many Maori who, over the years, have made repeated calls for these cumbersome tax rules to be updated.

"The reforms will provide greater flexibility for organisations that manage communally held assets and give them access to more efficient tax rules, which will remove barriers to Maori economic and social development," Parekura Horomia said.

The main features of the proposed changes to the Maori authority tax rules are:

  • The definition of "Maori authority" for tax purposes will be tightened to include only organisations that manage Maori assets held in communal ownership.
  • New tax rules relating to Maori authorities will be based on the company imputation model.
  • The tax rate applying to Maori authorities will continue to be lower than the company tax rate because most members are taxed at a lower personal tax rate. The new withholding tax rate will reduce from 25% to 19.5%.

"The reforms also include changes to the charitable status of Maori organisations for tax purposes, in recognition that these organisations may provide charitable services that are often based on bloodlines, through hapu or iwi," Parekura Horomia said.

"Under the proposed legislation, organisations that qualify as charities for tax purposes will not be excluded from charitable status simply because their members are connected by blood ties. This change will apply to both Maori and non-Maori.

"As well, marae on Maori reservations whose funds are solely applied to the administration and maintenance of the marae will qualify for the 'charitable' income tax exemption.

"All these changes are the result of months of consultation with Maori organisations up and down the country. The proposals have been met with enthusiasm, and many people and organisations have made a major contribution to their development. I thank them for that contribution.

"The next stage of consultation is when the proposals are considered by a parliamentary select committee. I urge all those who are interested in this very important legislation to take the opportunity to send a submission to the committee," Parekura Horomia said.

Contact: Keri Iti (press secretary) 04 471 9386 or 021 570 869
Email: [email protected]

PLEASE NOTE
Detailed information on these and other matters in the Taxation (Annual Rates, Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill is available in the commentary published on the website of the Policy Advice Division of Inland Revenue at www.taxpolicy.ird.govt.nz.