Tax bill reported back to Parliament

The Finance and Expenditure Committee has reported back to Parliament on the Taxation (Consequential Rate Alignment and Remedial Matters) Bill, which was introduced in July. The main feature of the bill is the alignment of resident withholding tax rates on interest and portfolio investment entity tax rates with personal and company income tax rates. The committee's main recommendation is that the default RWT rate for existing bank accounts should not automatically rise from 21% to 38% from 1 April 2011, as originally proposed; instead, Inland Revenue should instruct banks to change individual taxpayers' RWT rates when they are using a rate that is inconsistent with their marginal tax rates. For more information on this and other recommended changes to the proposed legislation, see the bill as reported back and the officials' report on submissions.