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ABA WELCOMES MOVES TOWARDS NEW TAX ARRANGEMENT BETWEEN AUSTRALIA AND NEW ZEALAND
Sydney, 25 February, 2003; The Australian Bankers’ Association (ABA) welcomed the Federal Government’s signal that Australia and New Zealand will extend their tax imputation regimes to include companies resident in the other country.
The Treasurer announced last week that both governments intend to introduce legislation in May.
The Federal Government’s announcement is an important step towards the reforms outlined in the ABA’s submissions to the Government's Review of International Taxation Arrangements (RITA).
In relation to RITA, the ABA has recommended that an integrated approach to attracting equity capital for offshore expansion should be pursued such that:
· dividend streaming be permitted to enable foreign shareholders of Australian multinationals to receive dividends directly from foreign earnings, without the imposition of Australian franking penalties;
· to the extent that unfranked dividends are paid to Australian resident shareholders out of foreign source income, to provide Australian resident shareholders with an appropriate non-refundable tax credit (at a rate which is sufficient to substantially eliminate the double taxation of foreign earnings); and
· Australian multinationals are permitted to continue paying unfranked dividends out of foreign source income to foreign shareholders without the imposition of Australian dividend withholding tax.
The ABA and its member banks look forward to further more substantial reforms emerging from the RITA process.
David Bell, Chief Executive of the ABA, said: "The Senate Select Committee on Superannuation and Financial Services stated in 2001 that "Australia's taxation regime would appear to be the most active constraint on Australia's competitiveness in the international market place", and these signalled changes will remove a significant impediment to trans-Tasman business."
For further information:
Heather Wellard
ABA PR
Phone: 02 8298 0411
Mobile: 0409 830 439
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