The Investment Savings and Insurance Association (ISI) has decided to put its weight behind the proposed TOLIS tax legislation, despite it being only a second-best option.
The Investment Savings and Insurance Association (ISI) has decided to put its weight behind the proposed TOLIS tax legislation, despite it being only a second-best option.
The bill, which is currently before Parliament, aims to allow people who have savings in various managed funds and insurance products taxed at their personal tax rate, rather than the company rate. Currently all these savings vehicles are taxed at 33 per cent, yet many New Zealanders are now on much lower tax rates.
The bill hasn't had broad support across the industry and it looked like foundering in Parliament following the collapse of the Coalition as neither Labour, the Alliance or ACT would support it.
However, New Zealand First has now said it will support the legislation and the Government is lobbying the Independent MPs for their support.
Finance minister Bill Birch is confident the necessary majority can be mustered to pass the bill.
ISI chairman Ross McEwan acknowledges industry concerns that the bill is only a second-best option and it is complex and will be expensive to administer. Also he says it won't be applied to all schemes.
However, the ISI is now supporting its passage.
"We are pragmatic enough to see second-best as being better than nothing at all," he says.
McEwan says it allows investors to be taxed at the correct tax rate, and it gives some certainty to existing and future investors.
The Investment Savings and Insurance Association (ISI) has decided to put its weight behind the proposed TOLIS tax legislation, despite it being only a second-best option.