Tuesday 7th July 2009 |
Text too small? |
Tax rate alignment with the new personal and company tax regimes is coming for a clutch of commonly used withholding and investment taxes. Resident withholding tax (RWT) rates on interest, and portfolio investment entities (PIE) tax rates will align with recent changes to personal income tax rates and the 30% company tax rate, Revenue Minister Peter Dunne announced today.
"The changes will be part of taxation bill to be introduced later this month, with passage expected by December," he said. "This is catch-up legislation that couldn't be put in place late last year when the personal tax cuts were enacted because of the time needed to consult with banks and other financial institutions over the changes.
"I am announcing the changes today to give financial institutions as much time as possible to start preparing for them. "Resident withholding tax on interest is based on the marginal tax rate of the recipient of the interest income. Its purpose is to ensure that tax is paid at source on that income at a rate that closely approximates the recipient's tax rate.
"New resident withholding tax (RWT) rates will be 12.5%, 21%, 33% and 38%, depending upon the personal tax rates of individual recipients. The new RWT rates will generally apply from 1 April 2010.
"The default rate for individuals who do not specify their tax rate to their bank will rise from 19.5% to 38%. This will apply from 1 April 2010 for new bank accounts. "There will be a new 30% RWT rate on interest for companies that invest in financial institutions. Its use will be optional for financial institutions for a year from 1 April 2010, and compulsory thereafter.
"Tax rates on portfolio investment entities (PIEs) will also reflect the new personal tax rates, with rates ranging from 12.5% to 30% for income over $70,000. The changes will ensure that people who invest in PIEs are not disadvantaged relative to direct investors. Once enacted, the new PIE rates will apply from 1 April 2010.
"The changes will mean that savers who choose a rate with their bank do not pay more tax on interest than they need to, and that PIE investors are not over-taxed on their investment," Dunne said.
Businesswire.co.nz
No comments yet
Scott Secures NZ$18 million in Global Contracts for Protein
January 14th Morning Report
AFT - NEW YEAR LETTER TO INVESTORS
TruScreen Invited to Present WHO AI Collaboration Meeting
January 13th Morning Report
January 10th Morning Report
January 9th Morning Report
FCG - Migration to NZX Main Board
FSF - Application to delist FSF from ASX has been submitted
January 8th Morning Report