AVOIDING DOUBLE TAXATION

Chronicle (Levin), 25 June 1947, Page 7

AVOIDING DOUBLE TAXATION

-Press Association

AGREEMENT WITH THE U.K. EXPLAINED

By Telegraph

WELLINGTON, June 24. . An Order-in-Council will be published in the next issue of the New Zealand Gazette giving eft'ect to tlie agreement reached between the United Kingdom and New Zealand Governments f or the avoidance of double taxation, said the Minister of Finance, Mr. Nash, tonight. Double taxation arises by the levying of a tax firstly by the country 'in which the inconae has its origin and secondly by the other country in which the recipient of the 'income is resident. The agreement applies to all income .taxed both by United Kingdom and New Zealand and provides for relief from double taxation in two ways: ; (a) By providing for the assessment of certain classes of income ' on .& ' ' residence ' ' basis. This income will be assessed only by' the country in which the recipient resides and will be exempt in the country of origin.. As only one country will tax, there will; be no double taxation. Classes of income to be assessed on the residence basis include, firstly, shipping and air transport profits; secondly, literary and industriai royalties other than niining, timber ahd film royalties; thirdly, . govefnmental and private pensions ; fourtlily, purcliased annuities; fifthiy, income from cek tain types of agencies which do n'ot fall within the definition of a permanent establishment. ' . ' (b) By providing for .the assessment of all other income on an '''origin?' basis. This income will be taxed in priority by the country in ' which .."it originates and may also be taxed by tlie country in which the recipient is resident. If, however, the country of residence also taxes the income, it is yequired to give credit against ,its tax for the tax imposed by the country of origin. New Zealand does not impose an income tax on income which has "its origin in the United Kingdom if tliat income, is taxable in that^country, r|o there is no double imposi'tion-of- income tax in respect of New Zealand ieside'nts. Other phases -J the agreement deal with trading profits, and govefnmental remuneration payments to visiting professors and teachers. The agreement does not in any way aft'ect the assessment of dividends in New Zealand or their use as non-asses-sable income. With regard to dividends received by United Kingdom shareholders from New Zealand companies, the United Kingdom will give credit in respect of the New Zealand tax. The agreement will apply in New Zealand (a) as regards income tax to all income derived during the year ended 31/3/47, and (b) as regards the soeial security charge to all income other than salaries and wages derived during the ycar ended 31/3/47, and to all salaries and wages derived after that date.