Maori Taxation Bill

The select committee hearings began yesterday with submissions presented by four non-Maori organisations (including one individual) and Te Runanga o Ngai Tahu.

The three non-Maori submissions were supportive of the proposal as they saw it as a first step to applying the regime elsewhere in the tax system notably the area of superannuation.

Below is a summary of the points that each organization made during their presentation.

Institute of Chartered Accountants (ICANZ)

ICANZ submitted that the Bill offers a pragmatic solution to a difficult issue. They conceded that although it departs from the general position they supported the proposal and commend it as a model for further application elsewhere in the tax system.

In particular they regard the two key features as acknowledging that tax entity is a proxy for taxing the individual. The two key features being the 19.5% tax rate and allowing excess tax paid to be refunded.

They also submitted that the information gathering powers needed to be fettered in that to give unfettered powers is detrimental to business.

In response to a question regarding Maori authorities having a competitive advantage because of the new tax proposal, they replied that it was their understanding that only a limited group of people who will qualify and that tMaori authorities face unique issues.

KPMG

KPMG are generally supported of the new tax proposal. Their main submission was regarding the tax pooling system.

They submitted that they were concerned with the tax pooling – the PAYE intermediary proposals. They are concerned the taxpayer is afforded no protection when they pay the money to an intermediary. The taxpayer has to then rely on the intermediary to pay the money to IRD. In the event that the intermediary goes bankrupt the taxpayer will have to pay again if the money hasn’t been paid. They also submitted that there was little guidance on how it was to work in practice.

In response to a question regarding Maori authorities having a competitive advantage under the new tax proposal, they replied that their clients do not have the same constraints as Maori authorities.

Business NZ

Business NZ submitted on more general issues regarding the tax system. In particular they submitted that the overall tax burden is too large and that more could be done to reduce the compliance burden.

They regard the tax pooling and PAYE intermediaries as useful steps towards simplifying the tax system for businesses and recommended that the bill proceed.

In response to a question regarding Maori authorities having a competitive advantage because of the new tax proposal, they replied that they would be concerned if subject to abuse but feel there are equity issues that need to be addressed.

Ian Kuperus

Ian Kuperus expressed his support for the passing of the bill and for the tax pooling.

Te Runanga o Ngai Tahu

The submission by TRONT is similar to the submissions that FoMA will be presenting on October the 16th.

They submitted that the definition for Maori Authority should include a ‘generic class or catch all phrase provision. They also submitted that should this not be included that they include organization/persons which/who have been approved by the commissioner to apply the Maori authority regime.

There were a series of questions regarding Ngai Tahu and the amount of business activity consuming their assets. A statement was made about how the restrictions of the Maori land would not impede the business from expanding thereby conferring them a competitive advantage. TRONT’s response was that reinvesting itself was the biggest challenge and that there are definite restrictions on the way the assets are managed.

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