Move to stop double tax impost

Press, 6 September 1989, Page 38

Move to stop double tax impost

The Government is acting to prevent a double tax impost on investors with the new withholding tax on dividends and interest. Provisional tax is payable on the basis of 110 per cent of the previous year’s income with the second instalment due on November 7 and the third on March 7. With the new withholding tax on dividends and interest being introduced from October 1, there would be a once-only double impost for those paying both provisional tax and receiving interest and dividends net of the withholding tax. However, the Minister of Revenue, Mr Caygill, said yesterday that those who had estimated their provisional tax already would be able to reestimate their tax and reduce payments to take account of the withholding payments. “Those taxpayers who do not estimate provisional tax but use last year’s (1989) tax as the base will also be able to reduce their provisional tax payments by using a special formula which will be provided to them by the Commissioner of Inland Revenue,” Mr Caygill said. “Taxpayers following this special formula will be protected from under-estimation penalties or interest on underpaid tax.” The Government intends to introduce legislation shortly on the matter. The Commissioner of Inland Revenue, Mr David Henry, said he would write to all provisional taxpayers who could be affected by the new changes. “We will be setting out how the new formula will work and advising them of the options they can use.” A toll-free advice service on the tax is being offered on phone 0800-802-803.