Announcements
PUBLISHED 24 November 2009

Urgent measures to be added to bill

A supplementary order paper released today proposes the addition of urgent tax measures to the Taxation (Consequential Rate Alignment and Remedial Matters) Bill, which is nearing its final stages in Parliament. One set of amendments clarifies the GST treatment of facilitation services for tour packages for overseas visitors. A second repeals the general availability of supplementary dividend tax credits, while a third updates income tax law to reflect recent changes to portability arrangements for New Zealand superannuation and the veteran’s pension. The six remaining amendments are of a minor remedial nature. For more information see the media statement and Supplementary Order Paper No. 93.


Hon Peter Dunne
Minister of Revenue

MEDIA STATEMENT

Dunne: Urgent measures to be added to taxation bill

Revenue Minister Peter Dunne today released a supplementary order paper that proposes the addition of urgent tax measures to the taxation bill that is nearing its final stages in Parliament.

GST on inbound tour package services

"One of the main additions to the tax bill is designed to resolve the long-standing uncertainty and debate that has surrounded the GST treatment of facilitation services for tour packages for overseas visitors to New Zealand," Mr Dunne said.

"The proposed changes, which were announced earlier this year, clarify that the services in question are subject to GST at the standard rate of 12.5%.

"The legislation includes a transitional provision allowing inbound tour operators to zero-rate the services for the year to 1 July 2008, which will help to minimise any adverse effects on inbound tour operators, including those operators who did not zero-rate the services for that year, who will be able to claim refunds.

"Consultation on the changes has been completed only very recently and, given the lengthy history of this issue, it is very important that it be resolved as soon as practicable – hence the inclusion of the legislation in the Taxation (Consequential Rate Alignment and Remedial Matters) Bill.

Non-resident withholding tax rate reductions

"The second set of substantive additions to the bill is intended to prevent delays to the coming into force of new tax treaties with Australia, Singapore and the United States.

"The new treaties reduce the withholding tax on non-portfolio dividends paid to non-residents from 15% to either 5% or zero percent, depending on the circumstances.

"These reductions affect the supplementary dividend rules in the Income tax Act, which must be amended accordingly before these very important tax treaties can come into force.

Updating tax law to reflect superannuation portability

"The third group of substantial additions to the bill bring income tax law into line with recent changes to portability arrangements for New Zealand superannuation and the veteran's pension.

"Accordingly, recipients of these pensions will remain subject to New Zealand tax while they are travelling overseas, but if they decided to live overseas the pensions will not be subject to New Zealand tax," Mr Dunne said.

These and a number of minor technical amendments are proposed in Supplementary Order Paper No. 93 to the Taxation (Consequential Rate Alignment and Remedial Matters) Bill.

Mark Stewart - Press Secretary, Office of Hon Peter Dunne
Cell +64 21 243 6985