Stobo report ideas may be shelved
Tax officials have admitted they are looking at options other than those raised in the Stobo report last for year for the tax treatment of managed funds.
Tuesday, March 15th 2005, 6:24AM
Inland Revenue Department senior policy adviser David Carrigan confirmed this when asked a question at last week’s Conferenz-organised Super Funds conference in Auckland.
“Yes, we are looking at other options,” he said.
Carrigan described the proposals put forward in the Stobo report as being essentially the risk free rate of return (RFRM) method as previously outlined in a tax report written by Rob McLeod, but with a different name.
He says one of the problems with RFRM is that investors would have to pay tax even if they had made losses.
This is one of the aspects of the idea which Finance Minister Michael Cullen is uncomfortable with and may make the idea politically hard to sell.
Also there are issues with how the regime would be applied simply to individual investors, particularly those with small investment balances that make a couple of transactions a year. “We are considering other simpler ways (of taxing managed funds),” he says.
“RFRM is still on the table, but we are looking at other options.” Carrigan could not comment on details about any other options; these will be released by the government later this year.
But he did say capital gains tax had been ruled out. “We are not going to introduce capital gains tax in New Zealand. It’s just not on the agenda.”
He says any changes that come in will probably take effect from 2007.
Any regime that is implemented will be voluntary, he says.
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