Trans-Tasman imputation credits issue still has a pulse
By Pattrick Smellie
Feb. 7 (BusinessDesk) – The Australian government has agreed to make the long-vexed issue of mutually recognising
trans-Tasman imputation credits on dividends a topic for review in a forthcoming white paper on tax reform.
However, just how big a topic remains to be seen. The decision rated the last paragraph in a pro forma press statement
issued by Prime Minister John Key after today’s meeting with his Australian counterpart, Tony Abbott, in Canberra.
In the statement, Key “welcomed Australia’s decision to make mutual recognition of imputation credits a matter for
discussion in Australia’s Tax Reform White Paper.”
Known as franking credits in Australia, imputation credits prevent the double taxation of company dividends in the hands
of shareholders, when the company has already paid tax.
Businesses on both sides of the Tasman have long argued that imputation credits should be recognised by the tax
authorities of one another’s countries, with a significantly greater interest in the subject recently by major
Australian corporates.
However, the Australian Treasury and tax authorities have never favoured the idea, which they argue would trigger
substantial lost corporate tax revenue on the Australian side of the equation, reflecting the comparatively much larger
Australian investment in New Zealand than vice versa.
Both countries have had the systems since the late 1980s, and the argument has continued throughout that time, without
resolution.
Key also announced that foreign visitors to the Cricket World Cup, being jointly hosted by Australia and New Zealand,
would only need one visa to attend the tournament, which could see them travelling to and from both countries to follow
it in its entirety.
(BusinessDesk)