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Taxation (Depreciation, Payment Dates Alignment, and Miscellaneous Provisions) Bill (Consistent) (Section 19(1)) [2005] NZBORARp 16 (11 May 2005)
Last Updated: 6 April 2021
TAXATION (DEPRECIATION, PAYMENT DATES ALIGNMENT, AND
MISCELLANEOUS PROVISIONS) BILL
11 May 2005
Attorney-General
LEGAL ADVICE
CONSISTENCY WITH THE NEW ZEALAND BILL OF RIGHTS ACT
1990:
TAXATION (DEPRECIATION, PAYMENT DATES ALIGNMENT, AND
MISCELLANEOUS PROVISIONS) BILL
- We
have considered whether the Taxation (Depreciation, Payment Dates Alignment, and
Miscellaneous Provisions) Bill (the "Bill") (IRD
20050419/1) is consistent with
the New Zealand Bill of Rights Act 1990 ("Bill of Rights Act"). We understand
the Bill will be considered
by Cabinet at its meeting on Monday, 16 May
2005.
- The
Bill does not appear to be inconsistent with the rights and freedoms affirmed by
the Bill of Rights Act. However, the Bill does
raise certain issues in relation
to section 19(1) of that Act.
Summary and Objectives of the
Bill
- The
Bill seeks to introduce a number of important changes to current taxation laws.
In particular, the Bill will amend the Income
Tax Act 2004 to align the three
current provisional tax payment systems to GST due dates and provide an
alternative method of calculating
provisional tax by basing it on a percentage
of GST taxable supplies. Changes are also proposed to tax depreciation rules
(which
will move the tax depreciation rates closer to estimates of economic
depreciation) and Fringe Benefit Tax (which will reduce compliance
costs and
remove anomalies in the rules). Further amendments address the issue of
corporate migration and reform the tax treatment
of securities.
- There
are also a number of amendments to the Tax Administration Act 1994, which
establish a framework to authorise subsidised payroll
intermediaries to perform
PAYE, and require New Zealand resident trustees of foreign trusts to disclose,
amongst other matters, to
the Inland Revenue Department prescribed financial
records relating to foreign trusts for New Zealand tax
purposes.
Right to freedom from discrimination
Section 19 of the Bill of Rights Act
- We
have considered whether certain clauses of the Bill could give rise to various
issues of discrimination under section 19 of the
Bill of Rights Act. Section
19(1) of that Act provides the right to freedom from discrimination on the
grounds set out in section
21 of the Human Rights Act 1993 (the ‘Human
Rights Act’). These grounds include, inter alia, age (defined
as any age commencing with the age of 16 years), and sexual orientation.
- In
our view, taking into account the various domestic and overseas judicial
pronouncements as to the meaning of discrimination, the
key questions in
assessing whether discrimination under section 19(1) exists are:
i
Does the legislation draw a distinction based on one of the prohibited grounds
of discrimination?
ii Does the distinction involve disadvantage to one or more classes of
individuals?
- If
these questions are answered in the affirmative, we consider that the
legislation gives rise to a prima facie issue of "discrimination"
under section
19(1) of the Bill of Rights Act. Where this is the case, the legislation falls
to be justified under section 5 of the
Bill of Rights
Act.
Provisions affording benefits to de facto partners
- The
Bill contains two provisions that accord rights and entitlements to a tax-payer
based on the type of relationship they have with
another person. New sub-clause
CX17(2) of the Income Tax Act 2004 will allow an employee who is required to
temporarily change their
place of work to claim reimbursement of any travel
costs incurred by the employee’s spouse or partner for the purpose of
visiting
the employee in their new place of work. New sub-clause 91K(2)(e)(v) of
the Tax Administration Act 1994 will specify that for the
purposes of resident
certificate eligibility a source deduction payment does not include a payment
made to a person by his or her
spouse, civil union partner or de facto partner.
We consider that these provisions do not give rise to an issue of discrimination
on the grounds of sexual orientation.
- In
reaching this conclusion, we note that new sub-clause CX17(2) of the Income Tax
Act 2004 uses the phrase "spouse or partner" and
thus avoids the restricted
definition of de facto partner (which applies until 1 April 2007 to different
sex de facto couples only)
that was inserted into that Act as part of the Income
Tax Amendment Act 2005. While new clause 91K(2)(e)(v) of the Tax Administration
Act 1994 uses the term "de facto", we note that the definition contained in the
Interpretation Act 1999 - which is inclusive of both
same and different sex
couples - will apply in this case.
Age Discrimination
- New
sub-clause 91K(5) of the Tax Administration Act provides that a natural person
is eligible to hold a dependent resident certificate
- which exempts the
certificate holder from paying New Zealand tax on foreign sourced income for
five years - if the person is less
than 20 years of age, financially dependent
on a person who is a certified employed resident (or certified general resident)
and
being maintained as a member of the family of the certified resident. This
provision creates a distinction between financially dependent
persons less than
20 years of age and those who are 20 years or older that appears to be
disadvantageous to individuals in the older
age group.
- While
age limits of any kind are likely to involve a degree of arbitrariness or
generalisation without regard for the particular circumstances
of individuals
within that age group, the choice of 16 as a starting point under the Human
Rights Act means that any differential
treatment based on an age over 16 that
results in disadvantage is prima facie inconsistent with the
right to freedom from discrimination. It is therefore necessary to consider
whether the inconsistency in sub-clause
91K(5) can be justified in terms of
section 5 of the Bill of Rights Act.
- The
Inland Revenue Department has advised that, by permitting persons under 20 years
of age who are financial dependent on their parents
and being maintained as a
member of the family to hold a dependent resident certificate, sub-clause 91K(5)
acknowledges that such
persons are likely to have no real choice as to whether
to move to New Zealand with their parents (whereas a person aged 20 years
or
older is more likely to have the emotional and financial maturity to continue to
live outside New Zealand without their parents).
The provision also recognises
that despite being financially dependent on their parents, persons under 20 may
earn a limited amount
of foreign sourced income in their own right: for example,
from a family trust and, consequently, ensures that they are not disadvantaged
vis-à-vis their parents, who enjoy temporary tax exemption by virtue of
their employment.
- We
consider that the identified discrimination appears to be justified in terms of
section 5 of the Bill of Rights Act. In reaching
this conclusion, we note that
under new sub-clause 91K(1) a person aged 20 years or older who accompanies
their parents to New Zealand
will be eligible to hold a general resident
certificate for three years.
Conclusion
- We
have concluded that the provisions of the Bill appear to be consistent with the
rights and freedoms contained in the Bill of Rights
Act.
- In
accordance with your instructions we attach a copy of this opinion for referral
to the Minister of
Justice.
Jeff Orr Chief Legal Counsel Office of Legal Counsel
|
Stuart Beresford Senior Legal Adviser Bill of Rights / Human Rights
Team
|
CC Minister of Justice
|
|
In addition to the general disclaimer for all documents on this website,
please note the following: This advice was prepared to assist
the
Attorney-General to determine whether a report should be made to Parliament
under s 7 of the New Zealand Bill of Rights Act 1990
in relation to the Taxation
(Depreciation, Payment Dates Alignment, and Miscellaneous Provisions) Bill. It
should not be used or
acted upon for any other purpose. The advice does no more
than assess whether the Bill complies with the minimum guarantees contained
in
the New Zealand Bill of Rights Act. The release of this advice should not be
taken to indicate that the Attorney-General agrees
with all aspects of it, nor
does its release constitute a general waiver of legal professional privilege in
respect of this or any
other matter. Whilst care has been taken to ensure that
this document is an accurate reproduction of the advice provided to the
Attorney-General,
neither the Ministry of Justice nor the Crown Law Office
accepts any liability for any errors or omissions.
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