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Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010

The Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill was introduced into Parliament on 19 November 2009. It received its first reading on 8 December 2009, its second reading on 22 June 2010 and the third reading on 24 August 2010.

Several changes included in Supplementary Order Papers 105, 156 and 157 were made after the bill’s introduction. They included measures to change the tax treatment of expenditure on films that receive a New Zealand screen production incentive, repeal the fund withdrawal tax, address the tax treatment of certain optional convertible notes, clarify RWT rates, introduce transitional arrangements for the GST rate and address "overreach" in the imputation credit rules.

The resulting Act received Royal assent on 7 September 2010. It amends the Income Tax Act 2007, Tax Administration Act 1994, KiwiSaver Act 2006, Goods and Services Tax Act 1985, the Estate and Gift Duties Act 1968, Income Tax Act 2004, Taxation (Budget Measures) Act 2010, Local Government Act 2002 and the Tax Administration (Binding Rulings) Regulations 1999.

Trans-Tasman portability of retirement savings

The KiwiSaver Act 2006 and the Income Tax Act 2007 have been amended to give effect to trans-Tasman portability of retirement savings. The portability arrangements will allow a person who has retirement savings in both Australia and New Zealand to consolidate them in one account in their current country of residence.

KiwiSaver

Amendments have been made to the KiwiSaver Act 2006.

Distributions to co-operative company members

The bill extends the scope of sections DV 11 and CD 34 of the Income Tax Act 2007, which allow a co-operative company to deduct a distribution to a member if the distribution is in proportion to the sale and purchase of trading stock between the member and the co-operative

Cancellation of BETA debit balances relating to conduit relief

The recently enacted Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 restricts the use of debit balances in branch equivalent tax accounts to the extent that those balances arose from conduit tax relief. A taxpayer may elect to use debit balances to satisfy income tax liabilities that relate to attributed CFC income. However, the Act restricts use to cases in which the attributed CFC income arose in an income year beginning before 1 July 2009 and there is a timely election.

Gift duty exemptions

Several new exemptions from gift duty have been added to the Estate and Gift Duties Act 1968.

Binding rulings

Amendments have been made to binding rulings.

Further changes to help businesses transition to the new GST rate

The Government has made a number of amendments as part of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010, designed to further help businesses transition to the new GST rate of 15%.

Annual income tax rates for 2010-11 tax year

The annual income tax rates for the 2010-11 tax year are the rates for that year specified in schedule 1 of the Income Tax Act 2007.

Five-year extension of exemption for non-resident offshore drilling rigs and seismic ships

The exemption for income derived by a non-resident company from drilling exploratory or development wells and from undertaking seismic survey work in an offshore permit area has been extended to 31 December 2014.

Charitable donee status

Cure Kids is recognised as a charitable donee organisation from the 2010-11 tax year.

Emissions Trading Scheme issues

Read about emissions units allocated to owners of fishing quota, anti-avoidance rules, consequences of transfer of emissions units between forestry rights holders and the Permanent Forest Sink Initiative, transfers to interim entities as part of Treaty settlement arrangements, and zero-rating of certain transfers under Negotiated Greenhouse Agreements.

Repeal of fund withdrawal tax

As a consequence of the alignment of the top ESCT rate and the top personal tax rate at 33% in Budget 2010, fund withdrawal tax (FWT) was to be phased out so that it would not apply to contributions made after 1 October 2010. However, FWT has instead been repealed for all withdrawals from 1 April 2011, which is the date from which there is no discrepancy between the top ESCT rate and the top actual tax rate.

RWT withholding certificates and reconciliation statements

The requirements for RWT withholding certificates and reconciliation statements have been made more flexible. Some drafting clarifications to the requirements have also been made.

Facilitation of Budget 2010 PIE tax rate changes

To coincide with the personal tax cuts announced in the 2010 Budget, the tax rates that apply to portfolio investment entity (PIE) investments (known as prescribed investor rates or PIRs) are being reduced from 1 October 2010. The Taxation (Budget Measures) Act contained some provisions to facilitate this change in rate, including a transitional method for applying the new rates.

Imputation additional tax on leaving and joining wholly-owned groups

What are colloquially known as the imputation credit shopping rules are being amended to remove their over reach.

Remedial matters

Amendments have been made to various Acts and tax rules.

Rewrite amendments

The amending Act includes a number of remedial changes to the Income Tax Act 2007, at the recommendation of the Rewrite Advisory Panel. The Panel sets out submissions relating to these changes on its website (www.rewriteadvisory.govt.nz). It also lists its conclusions and recommendations for each submission. Unless otherwise stated, the following amendments apply from the beginning of the 2008-09 income year.

 

 


Date published: 05 Nov 2010

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