Home > Updates > Potential changes to dividend and attribution rules
With accountants buried deep in the March rush to get client’s tax returns filed by 31 March 2022, now is not the time for Tax Policy to release a 54 page discussion document with only a six week submission period, especially when the topic is of material significance to a wide group of taxpayers. Or depending on where you sit, perhaps it is the right time?
Titled, “Dividend integrity and personal services income attribution” you would be forgiven for it not immediately grabbing your attention. Essentially the document is looking at proposals that would limit the ability of individuals to circumvent the top personal income tax rates by diverting their income through entities taxed at a lower rate.
The focus is mostly on closely-held companies and trusts used by high income individuals.
This is just the first of three tranches that the Government is intending to work through. Tranche two will look at trust integrity and company income retention issues, while tranche three will look at integrity issues with the taxation of portfolio investment income. Details on tranches two and three are not expected until Tax Policy have reviewed the data from the 2022 income year tax returns, which incidentally will contain significantly more information under the new trust reporting requirements.
The closing date for submissions on the above proposals is only weeks away, 29 April 2022. We encourage you to take the time to read through the discussion document and submit your views as the outcome will likely affect you in years to come.
Please contact your Nexia advisor if you would like to discuss this further.