Hon Tim Groser
Minister of Trade
New Australia-NZ double tax agreement signed
The introduction of a new double tax agreement between Australia and New Zealand took a major step forward with the signing today of an agreement that, once in force, will replace the existing 1995 double tax agreement.
The new agreement, the result of more than a year's negotiations between the two countries, was signed on behalf of New Zealand by Trade Minister Tim Groser at a ceremony in Paris today.
It will come into force once both countries have given legal effect to it, which in New Zealand will occur through an Order in Council expected to be signed later this year.
"I welcome the signing of the updated double tax agreement, which will have significant benefits for New Zealand," Revenue Minister Peter Dunne said.
"We have a uniquely close relationship with Australia, our most important trading partner, and it is vital that our double tax agreement reflects both that close relationship and the commercial realities of trans-Tasman trade and investment."
"The new DTA will help to reduce barriers to trade and investment even further, and improve certainty for trans-Tasman businesses," Mr Groser added. "It will help to accelerate progress towards the full realisation of the goal of the 'Single Economic Market' to which the New Zealand and Australian Prime Ministers have committed."
"One of the main features of the new double tax agreement will be lower withholding taxes on dividend and royalty payments between Australia and New Zealand," Mr Dunne said.
"The standard withholding tax rate on dividends will stay at 15% in the new agreement, but will reduce to 5% for an investing company has at least a 10% shareholding in the company paying the dividend. The rate will reduce to 0% if the investing company holds 80% or more of the shares in the other company and meets other criteria.
"The new agreement will also resolve the problem of pensions that are tax-free in one country but taxable in the other, which arises when pensioners move across the Tasman. Under the new agreement, pensions that would be exempt in the home country will be exempt in the other. Lump sum pension benefits will be taxed only in the country where the pension is sourced, not in the country to which the pensioner has retired. This complements work underway on the portability of retirement savings across the Tasman.
"Other changes will help to reduce compliance costs, provide certainty of tax treatment, and improve co-operation between the tax authorities of the two countries," Mr Dunne said.
The text of the new double tax agreement is available at www.taxpolicy.ird.govt.nz
Contact: Mark Stewart, Press Secretary to Hon Peter Dunne, 021 243 6985