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Govt Announces Business Tax Law Changes

Contributor:
Fuseworks Media
Fuseworks Media

The Government has introduced a bill to Parliament that ministers say will reduce tax costs for businesses.

Finance Minister Michael Cullen and Revenue Minister Peter Dunne said the central feature of the bill was a fundamental change in the way offshore income of New Zealand controlled foreign companies was taxed.

"The present system of taxing that income as it is earned will be replaced by one that exempts the active offshore income of these companies," they said.

"That reform will bring our tax rules into line with the practice in other countries and help New Zealand-based business to compete more effectively in foreign markets by freeing them from a tax cost that similar companies in other countries do not face."

The bill also reduces compliance costs for smaller businesses by raising several tax thresholds.

The PAYE once a month filing and payment threshold is being raised from $100,000 to $250,000.

That will allow a greater number of small employers to file and pay their PAYE deductions once a month instead of twice a month.

Other changes in the bill will affect taxation of the life insurance business, charitable donations through voluntary payroll deductions, petroleum mining, emissions trading and film grants.

The ministers said the proposed changes would help New Zealand-based companies compete more effectively overseas.

They are designed to encourage businesses with international operations to remain in New Zealand and enable them to compete on an equal tax footing in foreign markets.

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