New bill aims to make paying tax debt easier

New tax laws enacted today will provide relief for many people who get into tax debt, according to the Finance Minister, Michael Cullen.

The Taxation (Relief, Refunds and Miscellaneous Provisions) Act is aimed at creating a fairer environment for paying off tax debt and giving Inland Revenue more flexibility to deal with debt problems.

Dr Cullen said the new bill "clarifies, for both the public and Inland Revenue, the appropriate treatment for taxpayers who are finding it difficult to pay their tax bills".

The problem of spiralling tax debt was highlighted in a parliamentary finance and expenditure committee inquiry into the powers of Inland Revenue in 1999.

Dr Cullen said the new rules worked on the principle that tax laws that were either too lenient or too harsh dissuaded people from compliance.

"This goes a long way towards meeting those concerns and complements reductions in late payment penalties legislated for last year."

The new Act introduces new rules governing the transfer of overpaid tax within a taxpayers account or to another taxpayer; removes the risk that warranty deals with offshore warrantors, such as for imported motor cars, will attract GST twice; and clarifies the law relating to the tax treatment of wage-related provisions when a business is sold and staff are transferred.

The new law also brings in changes to prevent the over-taxation of unit trusts and "category A" group investment funds; introduces further measures to simplify the tax system; and clarifies the law to ensure charities and other non-profit bodies can claim GST refunds on most activities.

- NZPA