2 Comments 2 Commentsby Susan Edmunds
Revenue Minister Todd McClay has announced changes to the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Bill.
From April 1, people will be taxed when they receive a withdrawal or transfer from their foreign scheme, unless it happens within their first 48 months of residency.
That replaces the foreign investment fund regime, which taxes on an accrual basis. The system had become very complicated and there was a large amount of non-compliance.
The Bill offered an amnesty for those who had made withdrawals and transfers between January 1 2000 and April 1 this year and had not complied with the tax law in force at the time.
It allowed them to pay tax on just 15% of the amount that was withdrawn.
Today’s amendment extends that 15% option to those who have started the transfer process but won’t complete it in time for the April 1 deadline.
McClay said: ““Funds transfers can be a lengthy process, so this extension is good news for those wishing to take up the 15% option.”
Tax consultant Terry Baucher said there would be a lot of people in that position. He said, in many cases, transfers were taking six months.
He said many transfers were done via cheque rather than electronic transfer. Paperwork and compliance requirements, such as new AML rules, slowed the process considerably.
But people would still have had to have made a decent start on the transfer to qualify, he said. Exactly how that would be defined was yet to be revealed.
“If you haven’t got it under way by the end of the month, you could still be out of luck,” he said.
Investors needed to look at all the factors before deciding whether to transfer money."Don’t let the tax tail wag the investment dog.”
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