Announcements
PUBLISHED 17 July 2008

Aus-NZ mutual recognition on agenda

The Australian and New Zealand governments are open to the idea of moving toward mutual recognition of imputation and franking credits between firms that invest in each other's country, Australian Treasurer Wayne Swan and New Zealand Finance Minister Michael Cullen said today. New Zealand will be making a submission on the matter to the Secretary of the Australian Treasury, they said.

Negotiations for a new double tax agreement between the two countries are progressing well, they said, and are expected to be concluded by the end of the year.

For more information see the media statements.


MEDIA STATEMENTS

Australia, NZ agree to progress work on mutual recognition of imputation and franking credits
Australia, NZ progress bilateral economic interests


Hon Dr Michael Cullen
Minister of Finance

Hon Peter Dunne
Minister of Revenue

Australia, NZ agree to progress work on mutual recognition of imputation and franking credits

The Australian and New Zealand governments are open to the idea of moving toward mutual recognition of imputation and franking credits between firms that invest in each other's country, Australian Treasurer Wayne Swan and New Zealand Finance Minister Michael Cullen said today.

Dr Cullen said the lack of mutual recognition was a difficult policy issue, but was of significant concern to the business community.

"Under current arrangements investors on both sides of the Tasman are being
double-taxed," Dr Cullen said. "And investment flows between us are distorted in a way which doesn’t sit well with wider moves towards a Single Economic Market.

"I am pleased that the Treasurer has expressed openness to investigating this issue and to explore possible solutions. It is clear that any solution must be a win-win for both economies."

The first step in the process is to determine whether it is practical and feasible to introduce mutual recognition. And if it is practical, then the second issue is to determine the potential costs and benefits to each economy, the Ministers said.

Hon Swan invited the New Zealand Treasury to make a formal submission on mutual recognition to the Australia's Future Tax System review which was recently established by the Federal Labor Government and is anticipated to issue its final report by the end of 2009.

New Zealand Revenue Minister, Hon Peter Dunne, who attended the session of the bilateral talks on taxation issues, said that he welcomes the fact that mutual recognition is now formally on the agenda for both countries given its importance to the trans-Tasman business community.

Enquiries:
Matthew Martyn-Jones (for Hon Swan) 61 (0) 419 418 394
Jason Knauf (for Hon Dr Cullen) 021 226 9869 or Chris Ritchie 021 270 9013


Hon Dr Michael Cullen
Minister of Finance

Hon Wayne Swan
Treasurer of the Commonwealth of Australia

Australia, NZ progress bilateral economic interests

The first formal meeting of New Zealand Finance Minister Michael Cullen and Australian Treasurer Wayne Swan in Wellington today acknowledged 25 years of Closer Economic Relations and discussed the shared goal of a Single Economic Market (SEM).

The SEM is a long-term strategic objective and a priority for both New Zealand and Australia. A range of related activities are already in progress, as well as a range of supporting technical work.

As well as reviewing a number of significant SEM achievements so far and discussing future development opportunities, Dr Cullen and Mr Swan made several SEM-related announcements.

  • A new arrangement on private retirement savings portability between Australia and New Zealand will be settled by October this year. Both countries will then undertake the necessary steps to allow the transfer of retirement savings between complying Australian superannuation accounts and KiwiSaver accounts.
  • Australia and New Zealand will progress negotiations on an Investment Protocol that aims to encourage investment in both countries. The intention is to conclude an agreement in early 2009.
  • Negotiations are progressing well for a new tax treaty between Australia and New Zealand. Officials expect to conclude negotiations by the end of this year.
  • A treaty on Trans-Tasman Court Proceedings and Regulatory Enforcement Treaty is close to finalisation, and the New Zealand and Australian Governments will sign it on 24 July in Christchurch at the Standing Council of Attornies-General Meeting. This will benefit businesses and individuals on both sides of the Tasman by resolving legal disputes more effectively and at lower cost.
  • Substantial progress has been made across an extensive range of issues under the Memorandum of Understanding on Business Law, in particular the entry into force of the Treaty on the Mutual Recognition of Securities Offerings.
  • Agreement to consider proposals for the mutual recognition of imputation and franking credits.

The Ministers also took the opportunity to discuss challenges currently facing the New Zealand and Australian economies including the global financial crisis, rising global food and oil prices, and to share experiences on these matters. Dr Cullen and Mr Swan also discussed New Zealand and Australia's mutual interests and engagement in regional and international arenas such as APEC, the Pacific Islands Forum and the IMF.

A particular area of interest for both Ministers was climate change and the progress Australia is making towards designing and implementing its Carbon Pollution Reduction Scheme. The Ministers agreed on the importance of New Zealand and Australian officials maintaining close contact to maximise prospects for future compatibility and harmonisation of the Australian and New Zealand systems with each other and with other future emissions trading schemes.

Enquiries:
Matthew Martyn-Jones (for Hon Swan) 61 (0) 419 418 394
Jason Knauf (for Hon Dr Cullen) 021 226 9869 or Chris Ritchie 021 270 9013