Accountants concerned

Press, 23 February 1987, Page 26

Accountants concerned

The New Zealand Society of f Accountants considers that income tax legislation needs to be rewritten. In Submissions on the Income Tax Amendment Bill (No. 2), now before the Finance and Expenditure Select Committee, the society’s taxation committee expresses its concern that the bill is adding provisions to rectify deficiencies in the act rather than correcting the defective sections. The society points particularly to the sections on business profits and interest in the Income Tax Act 1976.

The society suggests instead that the proposed legislation should be linked to a full review of that act. In its submissions the society also expresses its concern at the long delay between the Budget night announcements on taxation and the related empowering legislation, which it suggests will not be passed until next month. A number of the proposals in the consultative document on the proposals are not yet in the form of draft legislation. The society says in a statement that while it

appreciates the Government’s desire to consult with affected parties, it is concerned about the lack of certainty for the taxpayer caused by the time lag. The society notes particularly that no action appears to have been taken on the subject of dividend imputation despite the fact that it was envisaged that this would remove or reduce many of the problems in the area of debt/equity business funding. The submission from the society suggests that legislation for a full divi-

dend imputation system is urgently required. Other issues discussed in the paper from the society are: • Concern that the timing of interest deductions is being considered in isolation from the question of deductibility of interest. • The timing of foreign tax credits in respect of accessible income derived overseas. • The need for inflation indexing of thresholds for cash-basis holders. • The deduction of unrealised exchange losses consistent with the new provisions on taxing financial arrangements.