Loopholes bill back, and altered

Press, 3 December 1982, Page 1

Loopholes bill back, and altered

PA Wellington Budget measures aimed at blocking tax-avoidance loopholes and at taxing superannuation schemes have been eased for the second time by the Government.

Legislation implementing the measures announced by the Prime Minister. Mr Muldoon. in his August Budget contained further changes when it returned to Parliament last evening. The bills, originally introduced in October, .’at that stage already contained significant changes from the Budget-night announcements.

Since then, the tax bill has been held up to give interest groups time to lobby the Government, and the superannuation legislation has been before a Parliamentary select committee.

The Superannuation Schemes Amendment Bill (No. 2) had been rewritten extensively. Its companion bill, the Income Tax Amendment (No. 2) Bill, also contained significant changes when both were returned to the House.

The Minister in charge of the Inland Revenue Department, Mr Falloon, said the changes had been made after submissions “highlighted various areas where changes were desirable to best reflect the Government’s intent.”

Labour immediately accused the Government of bowing to the vested interests of its political supporters.

The amended tax bill will allow three years before tax on loss-showing farming activities has to be paid. The tax will accrue interest at 15 per cent a year but the interest will itself be taxdeductible.

Extensive rewriting of the superannuation bill is de-

signed to ease the administrative burden on scheme managers and trustees imposed by the original legislation.

The amendments also allow an increase in company subsidies to the superannuation schemes of employees meeting age or long-service criteria, and extend the taxfree status of existing lumpsum schemes to the end of the financial year, past the original deadline of Budget night.

In a further change, the $7OO maximum deduction limit for contributions by employers to lump-sum schemes has been scrapped. In its place the Government has now set 10 per cent of wages or salary as the maximum deductible limit.

Mr D. F. Caygill (Lab., St Albans) said it showed the complexity of the superannuation bill that the original five-page measure had been supplemented by six pages of proposed amendments.

“That is also a measure of the haste with which this important bill has been considered and of the confusion over it in the minds of the Government,” he said. The bill did not treat everyone consistently and fairly. In changing it’s mind on principle and detail, the Government had shown “a total lack of conviction and understanding." Speaking to the tax bill, Mr Falloon said the practice of tax-sheltering was not acceptable “to this Government or indeed to any responsible government concerned with the welfare of the community in general." Up to $l5O million was being lost through tax shelters such as farms, films, and export partnerships.