KEY POINTS:
The Government wants to change the law to ensure the death of a spouse in a husband-wife business partnership does not result in immediate tax liabilities, Revenue Minister Peter Dunne said today.
The problem arose in two-person partnerships in which the partners were married or in a defacto relationship, he said.
"Under the law, the death of a spouse in that kind of partnership automatically dissolves the partnership, which may require tax to be paid on the surviving partner's original shares of the partnership assets."
He said under the proposed change surviving spouses would not have to pay tax on their own share of partnership assets upon the dissolution of the partnership and any tax payable on assets would be delayed until they were sold.
It is unlikely the change will be legislated before the election, but Mr Dunne said the plan was to have it done at the "earliest opportunity" so it could apply at the start of the 2008-09.
- NZPA