Minister Comments On Overseas Pension Tax

Press, Volume CIV, Issue 30764, 31 May 1965, Page 7

Minister Comments On Overseas Pension Tax

Taxation of pensions going; to and from New Zealand and ' overseas was still under close) consideration, said the Min-1 ister of Finance (Mr Lake),) commenting on a letter to the) editor of “The Press” from Mr A. G. Robb, of Huntsburyj avenue. Mr Robb's letter was as follows: “The announcement that P.A.Y.E. collections on overseas pensions will be suspended is of no help. The pensioner must still pay the double tax. “A point most unsatisfactory to the person forced to pay double taxation is the procedure of assessing the tax on the same original earnings by all governments concerned, there being variations where reliefs are claimed. “For example, take a likely ease of a New Zealand resident with wife, but no depen-

dents, only income beingi £1460, all drawn from an) overseas government. Tax toI a non-resident at 40 per cent j is £584, but if the income is pension, certain reliefs could be claimed which could reduce tax to about £lOO. i “This resident then has an income of £1360 to be sent to this country from his total earnings abroad. In New Zealand he is assessed for tax on £1460, and tax is £230 (1964-65 provisional tables). Deducting £lOO already paid overseas, £l3O is paid to Inland Revenue here. “It is interesting to note that New Zealand income tax on £1360. the amount of income the resident receives, is £2OO. The difference of £3O represents the amount of tax levied by the New Zealand Government on the tax paid overseas. “Unlike social security income tax, no benefits can . accrue from the overseas tax and it should be reasonable to consider overseas tax as a deductible expense in earning £1360.

“It must be remembered that pensions are paid by the governments of the countries in which they are earned and are subject to the taxes of those countries. They are unlike investments, which may be moved when conditions become uneconomic.

“It is indeed a shock andi most depressing to learn that in New Zealand, a country so renowned in the past for assistance given to the elderly, that the Government should choose to obtain more revenue by double taxing overseas pensions.

“This is the second cut within two years suffered by many New Zealanders drawing pensions from overseas while the members of Parliament have had salaries increased during the same period. Can Mr Lake explain why this discrimination?” Commenting on the latter, Mr Lake said that on Mr Robb’s own figures, he could not see that any real anomaly existed. The taxpayer was still required to pay the same over-all tax as he did previously. Whereas he formerly paid £230, all in New Zealand, he was now paying £lOO to an overseas Government and £l3O in New Zealand tax.