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11 September 2006
Introducing the "fraser / flyer"
We are delighted to launch the "fraser / flyer", our new email based newsletter providing important up to date information direct to your inbox. It replaces our "moving / forward" hard copy newsletter. We will send it to you whenever current business and taxation issues arise that we believe maybe of interest to you and your business.
We welcome any comments and suggestions you may have. Please refer to the links for options you have relating to the "fraser / flyer".
The newsletter will continue to appear on this web site in the revised format you see here. If you wish to view past newsletters from the years 2000 - 2006 including those originally printed in hard copy click here.
What will happen with Income Tax Rates?
The government has released the discussion paper on review of business taxation. The aims of the review are to ensure New Zealand's tax arrangements remain competitive with major trading partners, and to encourage investment and promote productivity. It is expected that legislation will be passed through Parliament in 2007 so that the new regime can take effect in 2008.
Most topical is the discussion on income tax rates. There has been strong suggestion that the company tax rate will reduce from 33% to 30%. Also hinted is that the top individual rate will reduce from 39% to 36%, and that the Trustee rate will increase from 33% to 36%. The main reason for aligning the top individual rate with the Trustee rate is to eliminate the current advantage of streaming company profits to individuals via trusts, thus effectively eliminating the 39% rate.
If the company rate drops to 30% then profits are more likely to be retained in the company, rather than paid out to owners. If the rates change as suggested above there will be extra tax of 6% payable when money is distributed to owners. We can look forward to plenty of debate and speculation on this matter. Whatever, for profitable owner operated businesses a company/trust ownership structure is clearly the best now and probably for the future.
Business Tip
When signing a document in the capacity of company director, ensure the word Director is alongside your signature. This may help in limiting your personal liability. A recent Court of Appeal Case (Vuletic v Contributory Mortgage Nominees Ltd CA250/05) held that doing this strengthened the inference that a director was not signing in her personal capacity and was not liable as such.
Important: This is not advice. Readers should not act solely on the basis of the material contained in this report. Items herein are general comments only and do not constitute or convey advice perse. Changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas.
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