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Healthy Food

The Goods and Services Tax (Exemption of Healthy Food) Amendment Bill (a private Member’s Bill sponsored by Rahui Katene) was pulled from the ballot last week. This Bill proposes to exempt “healthy foods” from GST so that these foods will be more affordable to low-income households. While the motivation for this is laudable, the question that needs to be asked is whether the cost of exempting a relatively narrow range of food groups would place a disproportionate burden on retailers. If this Bill is passed, the doors will be open to questions such as that recently decided in Lansell House Pty Ltd v FCT where the Federal Court of Australia held that the supply of a mini ciabatte (bread) that snaps like a cracker was a taxable supply of a cracker and not a GST-free supply of bread.

See Lansell House Pty Ltd v FCT [2010] FCA 329, Federal Court, Sundberg J, 9 April 2010.

Corporate trustee up-date

The recent decision in Newmarket Trustees Limited v CIR is a timely reminder of the risks inherent in the appointment of an assetless corporate trustee.  Newmarket Trustees Limited is the trustee for a number of trusts, one of which (the Southern Lights Trust) has substantial unsatisfied tax obligations.  Newmarket Trustees Limited acknowledged its liability for the tax obligations (about which it had been unaware when it accepted the appointment as trustee) but sought to have a statutory demand set aside on grounds that included the disruption to other trusts if the trustee was liquidated and the trustee’s lack of involvement in the day to day management of the debtor trust.  Declining the application the Court was critical of the trustee’s failure to meet its obligations as a trustee and the absence of any information regarding the Southern Lights Trust’s financial position. 

Although it could be hoped that this case can be limited to its facts, it would be interesting to hear readers’ views on whether the practice of using a single corporate trustee company for multiple trustee appointments is still common .

The Contract Pacific Decision – a blank cheque for the IRD?

Has the Court of Appeal decision in C of IR v Control Pacific Limited [2009] NZCA 568 given the Commissioner of Inland Revenue a blank cheque to…well…close the cheque book?

At stake was whether the Commissioner was bound to pay Contract Pacific Ltd a GST refund totalling $6,669,061.74 because he had not complied with section 46 of the Goods and Services Tax Act 1985 which sets out the circumstances in which the Commissioner may withhold a GST refund.

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Mixed entity, confused identity?

I suspect all practitioners with clients selling businesses at some time ask the fundamental question: just who (what entity) is selling what (shares, assets, contractual interests, licences, etc).  Most of the time this may not be a difficult matter to sort out – the nature of the consequences of selling one type of interest as opposed to another are usually relatively clearcut.  Recent experiences in relation to two wine businesses have highlighted that this can be more complicated, however, with sometimes unforeseen consequences.

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A simpler alternative to income splitting?

In a speech to the Tax Agents Institute conference in Greymouth last Wednesday, Revenue Minister Peter Dunne confirmed that he would push ahead with legislation on income splitting.

His prospects of success look bleak.  With marginal rate tax cuts for the wealthy already on the table for this year’s budget there is unlikely to be any money or political appetite for another middle class tax break.

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Recent comments

  • Joanne Martin: Hi Would you be able to email me to discuss a small company that is an LTC which I need some advice on...
  • Rizwana Saheed: You are on the right track that there is an exemption when employees work overtime but whether or not...
  • bryan: as a group of employees we get paid meal money if we exceed 11hrs on any day. Employer says he wants to tax...
  • linda: My mother is 94 and has dementia. With govt assisted carers she is still living in a home gifted within the...
  • Sharon: Hi Daniel, Can you please advise how owners of a profit-making LTC pay themselves? The owners used to pay...
  • Another Anne: My Dad is in care on full subsidy. I am EPOA. Are we able to gift some money to my brother in UK so...
  • Twagilayesu Isaya: I agree with the author of this article that Inland Revenue Department need to provide clear...
  • Quinn: Hi. I would like some clarification regarding the valuation of the investments component of the owners basis...
  • QROPS Pensions: Interesting piece of writing, you always write the most useful content & TalkTax is no exception...
  • Davo: Jo, quite likely is that the transition to an LTC was not done in time and the company became a normal company...

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