Double Taxation Avoidance

Grey River Argus, 30 June 1947, Page 5

Double Taxation Avoidance

An Order-in-Council will be published in the next issue of the New Zealand Gazette giving effect to an agreement reached on May 27 between the United Kingdom and New Zealand Governments for the avoidance of double taxation, said the Minister of Finance (Mr W. Nash) to-night. “Double taxation arises by the levying of a tax first by the country in which the income has its origin, and second, by the other country, in which the recipient of the income is resident.

“The agreement applies to all income taxed both in the United Kingdom and New Zealand and provides for relief from double taxation in two ways: (a) by providing for the assessment of certain classes of income on a ‘residence’ basis. This income will be assessed only by the country in which the recipient resides, and will be exempt in the country of origin. As only one country will tax( there will be no double taxation.

“Classes of fticome to be assessed on a residence basis include: first, shipping and air transport profit; second, literary and industrial royalties other than mining, timber and film royalties; third, governmental and private pensions; fourth, purchased annuities; fifth, income from certain types of agencies which do not fall within the definition of a permanent establishment. “(b” By providing for the assessment of all other income on an ‘origin’ basis. This income will be taxed in priority by the country in which it originates, and may also be taxed by the country in which the recipient is resident. If, however, the country of residency also taxes the income, it is required to give credit against its tax for the tax imposed by the country of origin. New. Zealand does not impose income tax on income which has its origin in the United Kingdom if that income is taxable in that country, so there is no double imposition of income tax in respect of New Zealand residents.

“Other- phases of the agreement deal with trading profits, governmental remuneration, and payment to visiting professors and teachers. The agreement does not in any way affect the assessment of dividends in New Zealand or their use •as nonassesable income. With regard to dividends received by United Kingdom shareholders from New Zealand companies, the United Kingdom will give credit in respect of New Zealand tax.

“The agreement will apply in New Zealand: (a) as regards income tax to all income derived during the year ended March 31, 1947; (b) as regards the social security charge, to all income other than salaries and wages derived during the year ended March 31, 1947, and to all salaries and wages derived after that date.”