While they were not allowed to reveal the contents of the proposal, some clues were provided to changes and its direction.
Dunne repeated that there will be winners and losers in the changes.
“In achieving a reasonable balance it is inevitable that there will be winners and losers – the many winners will be those who lose disadvantages and the losers will be those who lose their advantages.”
While details are being protected at the moment, one group which are likely to be losers are the “higher wealth direct investors” who invest offshore directly rather than through managed funds.
Another loser is the government.
Dunne says the changes will cost the government $100 million in lost revenue.
He says if the government wants people to make changes to their budgets so that they save some of their income rather than spend it, then it is only right that that the government makes some room in its Budget to make the taxation of retirement savings fairer.
Carrigan reinforced this point stressing that the changes “are not a tax grab.”
He also acknowledged IRD had taken a hit over the discussion paper released last year which receieved a staggering 800 submissions – all in opposition.
Dunne hinted that Australian companies will be treated in a similar manner to New Zealand ones where tax will be paid “broadly on dividends.”
The reasoning behind this included the fact that like New Zealand, Australian companies generally pay high dividends compared to other countries. Also it could be justified on the grounds of Closer Economic Relationship between the two countries.
Carrigan made that point that such an approach isn’t a “grey list of one”.
While an announcement on the proposal is expected before Easter, final certainty won’t be achieved until the end of the year when a new Act gets royal ascent.
Carrigan said it is likely to go to Parliament as a Bill in May, and then to a Select Committee. During that stage “a lot of technical stuff does change.”
While there will be some detail in May at the Bill stage, there “will be no absolute certainty till December” – just three months before the changes come into effect.
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