TAX TIDBITS
Issue Fifteen, January 2007


In this months issue:

LAQC Conjecture
Australian Capital Gains Tax Changes
The Year Ahead

 

 

LAQC CONJECTURE

 

There has been considerable media coverage as to the future of Loss Attributing Qualifying Companies (LAQC) and whether their days are numbered. It still remains unclear whether the LAQC regime is history, but the idea has been mooted by government.

 

In a related issue, the government is currently revamping partnership rules which are currently based on early 1900’s legislation. The proposed partnership rules are expected to treat partners of a partnership more like shareholders in a company.

 

If an LAQC is no longer an available option, then the next best choice will probably be a partnership, bearing in mind that these will be structured differently to their current form. What then happens to any existing LAQC?   We can only wait and see, but in the next few years it is important to be pro-active to meet any changes to the law.

 

AUSTRALIAN CAPITAL GAINS TAX CHANGES

 

A recent Australian tax bill that exempts non-residents from capital gains tax (CGT) on the disposal of certain Australian assets has received the Royal assent, (i.e. is passed into law). This means that, for CGT events occurring on or after 12 December 2006, a non-resident will be subject to Australian CGT only in respect of:

  • assets constituting direct and indirect interests in Australian real property; and
  • the business assets of the non-resident’s permanent establishment in Australia .

Those affected by the new rules include all Australian non-residents (companies, trusts and individuals) with a direct or indirect investment in Australia or contemplating Australian investment or operations. These changes are good news for New Zealanders who hold non-business assets in Australia , other than direct or indirect interests in real property. Please contact HWI if you are unsure of how this may affect your circumstances.

 

THE YEAR AHEAD

 

We summarise some of the major New Zealand taxation issues which lie ahead in the upcoming months as follows: -

 

  • Limited Liability Partnerships: As detailed earlier in this publication, the government is looking at formalising these at some point, with possible repercussions for loss attributing qualifying companies.
  • Kiwisaver: This Government initiative is scheduled to start on 1 July in a bid to encourage increased savings by the workforce.
  • GST Payment Dates: For taxable periods on or after 31 March 2007, the GST payment date is moving to the 28 th of the month, from the current last day of the month. This is the first stage of aligning both GST and provisional tax payment dates over the next couple of years.
  • Tax Incentives for Charitable Giving: The Government is scheduled to finalise legislation to this effect this year, however, any changes are not likely to take effect until the beginning of the 2007/2008 year (refer issue 13 of tax tidbits).
  • Tax Cuts: Could the Government spring a surprise later this year and announce income tax cuts or will there be more action in election year (2008)?

 

Upcoming events at HWI:

FREE seminar: Rental Properties:  Ownership structures and deductible expenses.
Wednesday 14th February 2007 at 9am (2 hours), email Mark at maldridge@hwi.co.nz for details or book on line.

 

Disclaimer Information contained within this document is of a general nature and does not constitute advice. Readers are cautioned not to act or reply on it without first seeking professional advice.





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