Taxation Anomalies Corrected

Press, Volume CIII, Issue 30477, 26 June 1964, Page 10

Taxation Anomalies Corrected

The changes in taxation of overseas companies trading in New Zealand and in the system of provisional tax payments, announced last night by Mr Lake, are designed to remove anomalies. The institution of a withholding tax on dividends paid to non-residents of New Zealand brings New Zealand into line with Australia, the United Kingdom, and other countries. The Australian Government, however, merely imposes the tax on dividends, whereas the New Zealand Government has extended the tax to cover royalties and interest paid to individuals. These changes will necessitate alterations to the present tax agreement between New Zealand and the United Kingdom.

The Government continues to make haste slowly with its proposed legislation to control take-overs of New Zealand companies by overseas interests. It is reassuring to hear that Government policy will continue “to encourage worth-while overseas invest- “ ment in New Zealand and not to limit unduly the “ right of New Zealand residents to dispose of their “ property as they see fit ”. Any other policy might prove costly for a country which will need huge sums for development for many decades. The Irritating restrictions on retention of profits by private companies have been removed, as has the petty provision for distinguishing between bonus share issues from profits made before and since 1958. For many taxpayers, particularly farmers, the new P.AY.E. provisions will be more welcome than a tax concession. Under the old system, provisional tax was payable in two equal instalments. The change will enable payers of provisional tax to pay a third of their tax bill in August and the remainder in February; provision is made for three equal instalments in some cases. This change, and others announced by Mr Lake, should remove the grievances held by many self-employed taxpayers against the P.A.Y.E. system. It is a high compliment to Mr L. N. Ross’s committee on provisional taxation that the Government has adopted so much of its report