New tax start dates unfair
Changes, announced last week, to the start date for tax rules have been described as a "tax grab".
Tuesday, August 29th 2006, 6:15AM
by Rob Hosking
Revenue Minister Peter Dunne last week announced the tax rules relating to portfolio investment entities (PIEs) will now not come into effect until October 1.
KiwiSaver’s introduction date has been put back until July 1.
However the tax rules not relating to KiwiSaver – including the controversial expansion of the offshore capital gains tax to all offshore investments except direct portfolio investments into Australia – still take effect from 1 April.
The change has been described as a “tax grab” by Liontamer’s Janine Stark.
“This hardly seems fair,” she says. “Funds which are not part of KiwiSaver will pay more tax.”
PIEs will not be taxed on realised gains made on shares in New Zealand and Australian companies, and will pay tax on their investment income on the basis of investors’ tax rates – the ‘flow through’ regime.
The wider tax changes copped a barrage of heavy criticism from a number of groups, including the Institute of Chartered Accountants and the Law Society, at last week’s select committee hearings on the bill containing the changes.
Several financial adviser and fund manager submissions are due to be heard tomorrow, as are submissions from UK-based investment trusts.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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