Lawyer’s proposal to reform company tax a winner

Lawyer’s proposal to reform company tax a winner 2

 

Lawyer’s proposal to reform company tax a winner 3A young lawyer was named co-winner of a competition run by the Tax Policy Scholarship Charitable Trust (TPSCT) after outlining fundamental reform of how companies and their shareholders are taxed.

Treasury’s Matt Woolley impressed judges with his proposal and joined fellow winner, Talia Smart from Inland Revenue (IRD), in receiving $7000.

He was one of three lawyers – Chris Park (KPMG) and Nicholas Coyle (IRD) were the others – among the competition finalists.

Woolley discussed a fully integrated tax system that attributes all company income to shareholders.

Under that approach, businesses would pay tax on behalf of shareholders based on their marginal rates.

Woolley pointed out full corporate-personal income tax integration would deliver a noticeable improvement in New Zealand’s overall economic wellbeing, as it would address the distortions created by the different tax treatments for businesses currently in place.

It would decrease the excess burden of income tax and increase company tax revenue, while improving vertical and horizontal equity and allowing realised capital gains to be distributed without being taxed, he said.

Woolley felt technology improvements meant something similar to the PIE regime could be a feasible approximation for full integration.

Smart’s proposal looked at removing the business income exemption for charities.

Park revisited the idea of a land tax and Coyle’s presentation reconsidered the claw back of interest deductions. Both received $1000.

Presentations were judged by a panel comprising TPSCT chair and former PwC chair John Shewan, ex-Bell Gully tax partner Joanne Hodge, former IRD deputy commissioner Robin Oliver, Victoria University Business School dean Bob Buckle and ex-secretary of Treasury John Whitehead.

Tax professionals under the age of 35 were invited by the TPSCT to submit proposals that outlined a significant reform of the tax system. Twenty-five entries were received.

The TPSCT was established in 2012 by Tax Management NZ and its founder Ian Kuperus to inspire the next generation of leaders in New Zealand tax policy and administration.

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