by Rob Hosking
Revenue Minister Michael Cullen announced fund managers will be allowed, on behalf of investors, to withhold tax on dividends from Australian unit trusts.
The tax simplification changes of the late 1990s mean many taxpayers do not have to file tax returns.
The initial tax changes to close up the Australian unit trust anomaly, enacted before Christmas, would have meant many taxpayers would have had to start submitting a return again.
The changes announced yesterday, which will be enacted later this year, will avoid that, and include such dividends within the existing resident withholding tax rules
However fund managers will not have to offer such a service, and it is not clear at this stage how many will offer it, says Investment Savings and Insurance Association chief executive Vance Arkinstall.
“But we have a feeling there will be a number of investors whose personal circumstances will probably lead them towards submitting tax returns.”
When the government made its initial changes to how returns from Australian unit trusts are taxed last year the industry suggested what the government is doing now, says Arkinstall.
“At that stage they didn’t want to do that, but on reflection they seem to have decided this is a good idea.”
The change will be tacked onto the current omnibus taxation bill, which is still before Parliament, and will be effective from 21 December 2004 – when the rest of the tax related changes to Australian unit trusts will take effect.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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