AUT tax changes missing from bill

By Rob Hosking

Tuesday 6th April 2004

Promised tax changes to block the loophole relating to New Zealanders investing in Australian unit trusts (AUT) are missing from the tax bill introduced to Parliament last week; but they are still on the way.

Finance Minister Michael Cullen's office told Good Returns the changes have yet to be finalised but they will be tacked onto the tax bill during the select committee process.

Those affected will have the opportunity to make submissions on the changes, Cullen's office says.

The bill - the Taxation (Annual Rates, Venture Capital and Miscellaneous Provisions) Bill, to give it its full title � will be referred to the finance and select committee later this week, and that committee will decide on the deadline for submissions.

Officials are not likely to report to Cullen until the end of the month, and Parliament is in recess for the school holidays from the end of this week.

Recommendations will go to Cabinet, which "will then make a decisions whether to proceed with an interim solution," Cullen's tax adviser told Good Returns.

The Investment Savings and Insurance Association has been pressing for the government to hold off a "band-aid" solution to the AUT tax leakage, and to instead deal with the whole issue of taxing investments. Cullen earlier signalled a preference for this approach but has repeatedly said that if that looked like taking too long separate legislation would be introduced to deal with the AUT investments.

Cullen first signalled the governments concern at tax leakage from the AUT investments back in August. In December he again highlighted this issue, and said the critics of the governments approach so far were ignoring the alternative, which was "early legislation with no consultation".

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