What’s on the cards for taxpayers from the new Labour Government?

What's on the cards

Ramanie de Zoysa, Love to Grow’s Tax and Business Services Manager, has selected highlights from the opening address of the Revenue Minister Hon Stuart Nash at the Chartered Accountants Australia New Zealand (CAANZ) Annual Tax Conference 2017.  Details below.

Minister Nash spoke about the Government’s priorities in the tax space for the first 100 days. The 100-day plan intends to:

  1. Repeal the previous government’s tax cuts and redirect that to families in need. His comment was that with so much investment needed to support the country’s social services and infrastructure, now is not the time for tax cuts.
  2. Legislate to pass the Families Package, including the Winter Energy Payment, Best Start and increases to Paid Parental Leave.

Hon Minister continued that the Government is establishing a Tax Working Group, led by the Minister of Finance and the Revenue Minister, with the terms of reference and membership of the Tax Working Group to be announced by Christmas.   (The opposition believe this is a process to get a Capital Gains Tax across the line.)

Hon Minister Nash also emphasised the need to continue with public consultation when planning tax changes but accepted that there may be times when proposals need to be rushed through without lengthy consultation.

The Minister identified certain future challenges for the tax system; the first being the changing shape future of work. He commented that “one job for life is yesterday’s reality, not tomorrow’s opportunity. So let’s understand the consequences of this from a tax perspective”.

Secondly, the Minister stated that New Zealand must continue to be an innovative place with high economic growth, where businesses thrive and create jobs. He noted that internationally the trend of declining tax rates continues quoting the recent US House of Representatives tax proposal containing a reduction in the company tax rate from 35% to 20%. How this vision will reconcile with his 100-day plan to do away with the previous Government’s proposed tax cuts, remains to be seen.

The Minister also mentioned plans to support the on-going international tax initiatives that ensure that all companies operating in NZ pay their fair share. “The Government will take strong action to ensure multinational companies comply based on their genuine activity”, Minister Nash said. This action will be balanced to ensure that New Zealand remains a great place to do business.

He also mentioned the issue of ageing population and increased costs of New Zealand Super and healthcare, and observed that tax base must be able to fund the services needed.

Interestingly, the Minister also talked about the need for tax policy to reign in what he termed as “even more disruptive technologies on the horizon” such as the block chain technology, Bitcoin, and other decentralised methods of operating.

We’ll keep an eye out for any relevant changes and let you know as they come through.  Give us a call if you want to discuss how any changes may affect your financial situation, email cheryl@lovetogrow.co.nz with any topics you would like covered in our newsletters and ramanie@lovetogrow.co.nz with any tax queries.

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