With the passing of the Bill Wednesday night, six pensioners are expected to see the return of roughly $30,000 of the money seized by the treasurer last Christmas. A broader group of superannuitants will also be relieved of paying back taxes on their NZ superannuation payments.
Finance Minister Mark Brown said the back tax provision exempts the seniors from paying tax on all pension earnings earned until the end of 2012. Pensioners are now liable to pay tax from 2013 and onwards.
Brown said any pensioners who have paid tax during the exemption period will be entitled to a credit on any taxes owed.
The seized money will be returned once the Bill obtains the stamp and signature of Queen’s Representative Tom Marsters. “Then it becomes law,” said Brown.
Once those processes are completed, funds will be disbursed “within days”, he said.
“This is something we said we would do, and we couldn’t do it without getting into Parliament,” said Brown.
Pensioner activist group Grey Power has waged a lengthy battle with government officials over the pension tax issue, saying they should not be subject to back taxes as the pension was previously allowed to be earned tax-free.
Previously, Government claimed the pension payments had been taxable and the seized money was owed as back taxes.
In a letter to the editor this week, Grey Power Vice President Dennis Tunui said, “We’ll believe when we see the money”, and also made a demand for interest.
A second part to the bill includes a provision that permits the Ministry of Internal Affairs to make tax deductions on social service payments.
Roughly 350 pensioners have already volunteered to have tax deductions made as the payments are disbursed by the Ministry, and Brown says the bill will prevent other recipients from a surprise tax bill come tax return time.