Tax changes could help local NZ integrators

Local IT service companies could benefit from tax changes signalled by New Zealand’s finance minister Michael Cullen in the 2003 Budget, delivered to Parliament yesterday.

Cullen has promised a tax bill that will subject “some imported services” – likely to include computer services – to greater goods and services tax (GST) rigour, which should indirectly aid the local industry.

The government also plans “to bring forward proposals to enable overseas venture capital to be invested in New Zealand in accordance with normal international tax rules.”

In this Cullen is looking over his shoulder at “similar Australian initiatives” already in place.

On bringing skills from overseas, “the government will this year consider measures to provide a temporary exemption for migrants from tax on foreign income, the cost of which, in many cases, must now be paid by New Zealand businesses that require the skills of those migrants.”

In the course of reducing business’s financial barriers to compliance with government requirements, government may have given heart to payroll computing services firms. It is providing a subsidy for companies to engage employees to link with such external payroll services.

On the negative side Cullen spoke of measures to tighten up on tax avoidance: “One such measure is aimed at schemes that are structured to offer high-income investors a return from tax deductions to the extent that the investors need not be concerned with the underlying economics of the arrangement.”

One of the best known of these schemes, still being considered by Inland Revenue lawyers, was centred on the purchase of software.

Government-subsidized technology was called into play in a number of other law- enforcement roles from money for improved X-ray equipment at the borders to more cross-departmental data matching schemes to combat benefit fraud.