Douglas view on taxing insurance

Press, 16 May 1985, Page 22

Douglas view on taxing insurance

PA Wellington Life insurance and superannuation must be treated the same as any other form of saving if the tax system is to be made “fair and rational,” according to the Minister of Finance, Mr Douglas. He told a gathering of insurers at the opening of New Zealand Insurance House in Wellington that a neutral and equitable tax treatment would benefit both the economy and individual savers in the long run.

At the moment, the law on superannuation disadvantaged the self-employed and allowed early withdrawals from most schemes to avoid tax completely, Mr Douglas said.

Also in life insurance, the underwriting profit of a life office was untaxed.

But Mr Douglas noted that the life offices were unable to deduct all the expenses legitimately incurred in doing their business. There had also been the advent of short-term life bonds which gave negligible insurance cover but offered higher marginal taxpayers a vehicle for tax avoidance through the taxation of life companies net investment earnings at a low rate.