Contact: Amanda Kennedy
Deloitte
Media & Communication Manager
0419 267 676

Contact: Mike De Palo
Deloitte
Partner, Tax
+61 (0) 2 93225940

Contact: Joanne McCrae
Deloitte
Partner, Tax
+61 (0) 416 026 998

The New Zealand Government has today announced a reduction to their corporate tax rate from 33 per cent to 30 per cent, following a trend of Australia’s trading competitors in Asia-Pacific and Europe said Deloitte Tax Partner, Mike De Palo.

“On the face of it, it might be thought that the New Zealand Government is bringing their corporate tax rate into line with Australia,” Mr De Palo said.

“However Australian companies pay a raft of other taxes that companies in New Zealand don’t pay, such as payroll tax, land tax and stamp duties - that is, the State taxes.

“These of course feed into our competitiveness on a global stage and are often overlooked.”

New Zealand has also announced a new research and development tax credit that is comparable to an Australian deduction of 150 per cent of qualifying expenditure said Deloitte New Zealand Tax Partner Joanne McCrae.

“This levels the playing field in terms of where business decides to undertake its R&D activities, possibly to Australia’s detriment,” said Ms McCrae.

“On a separate note, business may now be subject to a four per cent compulsory superannuation payment - phased in over four years - for each employee that has elected to contribute to a KiwiSaver or a complying Superannuation Fund on a voluntary basis.

“This is an additional cost that NZ businesses may not have anticipated.”

Mr De Palo said that from a competitive trans-Tasman perspective, these changes for business will take effect from 2008-09, which allows the Australian Government time to readdress the tax burden on business.