Tax bill promotes economic growth
A major taxation bill tabled in Parliament today introduces key tax changes announced in Budget 2005 and over recent weeks.
"The focus of the bill is on promoting economic growth," Revenue Minister Michael Cullen said.
"Some changes ensure that investment is as productive as possible and increase our access to worldwide labour, skills and capital. Others reduce tax-related compliance costs to allow people more time to grow their businesses," he said.
Measures to ensure a more productive use of capital include:
- Changes to tax depreciation rates to better reflect how assets decline in value. Changes to R&D rules to give better access to R&D deductions for companies that bring in new equity investors.
Measures to reduce the cost of tax for business include:
- Fringe benefit tax changes that reduce the valuation on motor vehicles, raise the minimum value thresholds for unclassified fringe benefits and exempt the private use by employees of work tools that cost less than $5000.
- Alignment of GST and provisional tax payment dates to reduce the number of payment dates and allow businesses to base provisional tax payments on a percentage of GST turn-over.
- A new subsidy to PAYE agents to encourage their use by small businesses.
Measures to improve access to worldwide capital, skills and labour include:
- A temporary tax exemption on certain foreign income of new migrants and returning New Zealanders who have been non-resident for tax purposes for at least ten years.
- Improvements to the New Zealand tax treatment of accrued entitlements in foreign superannuation schemes
- Updating the tax rules on securities lending to make New Zealand more attractive to international investment.
The bill also includes revenue base maintenance measures. Changes ensuring that companies that migrate from New Zealand pay tax on worldwide income earned while resident in New Zealand will apply from 21 March. Other changes prevent avoidance of GST by using third parties to import goods, such as luxury cars, that were offshore at the time of supply and will apply from today.
Details of these and other changes in the bill are available in the commentary on the bill 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 Helen McDonald [tax advisor, Dr Cullen's office] 471-9728 or 021-270-9052