The headline exaggerates the nature of a brief email responding to a CINews question on the current status of NZ superannuants and their obligations under the Cook Islands Income Tax Act.
The Government has indicated a policy position to exempt New Zealand Superannuation from income tax up until 2012. This was the basis of a draft Bill which was prepared and ready to present to the Parliament, and the Opposition has previously outlined they would also exempt the pension from income tax.
There will be those that will argue we should stop collecting immediately as both parties have outlined their intentions to exempt the pension. RMD is bound to follow the law as it stands, not policy intentions, there are a number of people who are currently complying with the law, we simply cannot advise people to stop meeting their obligations under the Act, because the obligations remain, regardless of what policy pronouncements are made.
A further complication is around timing, we do not have certainty of a Parliamentary sitting and when a new Bill will be presented and what form it will take, and therefore we must act on the side of caution. We do not want to be in a position to turn a blind eye and not collect the tax and then have the law remain unchanged or not amended in the way which may have been predicted.
I hope that clarifies the situation for people, it is a sensitive scenario, and understandably there is frustration at the approach but we need to be consistent in our approach to obeying the law when it comes to collecting revenue on behalf of the Crown and managing the finances of the nation.
As I outlined previously, MFEM will work with an elected government to draft a legislative change to achieve policy outcomes if this is what is desired.