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NZ Ministers Highlight Tax Changes

Monday, March 28, 2011

New Zealand’s second round of Budget 2010 tax changes will help make businesses more competitive and further rebalance the economy towards savings and exports, Finance Minister Bill English and Revenue Minister Peter Dunne have said.

"Cutting the company tax rate will make New Zealand more competitive and increase incentives for businesses to reinvest earnings back into jobs and growth," English said.

"A number of property and other tax changes will encourage sound investment decisions, make the tax system fairer and ensure the overall tax package is broadly fiscally neutral."

"Pressing on with policies that encourage faster growth is one of the best ways we can meet the costs associated with the repair of Christchurch. Treasury estimates all the Budget 2010 tax package will add about 1% to economic growth over the next few years," said the Finance Minister.

The changes, which take effect on April 1 for the 2011/12 income year, include:

  • a cut in the company tax rate from 30% to 28%;
  • a cut in the tax rate faced by unit trusts, life insurance policyholders and some other savings vehicles from 30% to 28%; ending landlords' and businesses' ability to claim depreciation on buildings with an estimated useful life of 50 years or more;
  • abolishing loss attributing qualifying companies (LAQCs) and replacing them with a new structure that ensures owners cannot claim a tax deduction on losses at a higher rate than they pay on profits;
  • tightening the definition of income for Working for Families and the Community Services Card so income from sources like family trusts are counted and rental and other investment losses are excluded;
  • changes to the thin capitalization tax rules to limit the scope for foreign multinationals to reduce their New Zealand tax liability; and
  • ending the automatic CPI indexation of the Working for Families abatement threshold to stop higher-income recipients getting bigger increases than those on lower incomes.

Lowering the company tax rate will cost about NZD1.1bn (USD826m) over four years, while changes to some savings vehicles tax rates will cost NZD170m. This is offset by the other measures, which are expected to raise about NZD3bn over four years – ensuring the government's overall tax package is broadly fiscally neutral.

"These measures help tilt the economy further towards savings, investment and exports and away from the unsustainable borrowing, consumption and over investment in housing of the past decade," English said.

The government believes that the changes will make the tax system fairer by ensuring the treatment of property is consistent with other forms of investment.

"Ending depreciation tax breaks on buildings made sense. On average, New Zealand buildings actually increase, rather than decrease, in value over time."

"Changes to the LAQC rules and the introduction of the new look-through company tax rules will reduce the opportunities for tax structuring."

"Closing loopholes that allow families to structure their income through the use of trusts or to use investment losses to increase their eligibility for Working for Families payments will also make the tax system fairer," Dunne said.

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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