Tax laws out, and out of favour
Last minute changes to the investment tax reforms have been denounced as pandering to the concerns of one company – and one political party.
Thursday, May 18th 2006, 6:41AM
Yesterday afternoon the government introduced its new tax bill into Parliament, which includes the investment tax reforms it has been mulling over for five years.Within just over an hour of the bill being introduced, it was followed by a supplementary order paper, which will allow investors in certain firms a five-year holiday from the rules.
To qualify, the firms need to have a substantial New Zealand shareholder base, such as GPG which has been lobbying for changes.
To qualify, firms must meet all of five criteria:
- Be resident, and listed on a recognised exchange in Canada, Germany, Japan, Norway, Spain, the United Kingdom or the United States; and
- Be liable to income tax in the foreign country, because they have their domicile, residence, place of incorporation, or place of management there; and
- Be listed on a recognised exchange in New Zealand; and
- Be widely held and have a substantial New Zealand shareholder base; and
- Not be a mutual fund, investment or trust.
“They are very carefully distinguishing New Zealand shareholders in one British company from New Zealand shareholders in another British company. If the government does not want to be seen to be pandering to one company, they should really take another look at this.”
Irwin is writing to other UK-listed investment trusts which New Zealanders invest in, to get their support for a similar holiday from the tax changes.
The change seems to have come as the result of political pressure from GPG and the Shareholders Association, applied through New Zealand First.
As Good Returns reported on Tuesday, New Zealand First acknowledged it was pressing for changes to the tax bill, although it would not say specifically what those were.
PriceWaterhosue Coopers tax partner Paul Mersi says the changes “will not cover very many companies, but they will cover GPG.
“It is, I suppose, a concession to public pressure. But ill-founded changes will imply the concerns are not real and I think this will encourage people who see themselves in similar positions to put pressure on.”
It's becoming clear that the government's new bill on taxing investments is going to be a shambles and the outcome is likely to, therefore, be a mess. [Read On]
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