1 Dec 2020

Parker considering tax hike for trusts if avoidance prevalent

5:11 pm on 1 December 2020

The government could increase the tax rate for trusts if people use them to avoid the new top income tax rate, Revenue Minister David Parker says.

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Revenue Minister David Parker. Photo: RNZ/ Dom Thomas

Debate on legislation introducing a rate of 39 percent for people earning over $180,000 a year will begin tonight.

It is expected the bill will pass through all stages this week.

Trusts pay a 33 percent tax on income. Heading into the House for question time this afternoon, Parker told reporters the government would be keeping an eye on whether people were using the 33 percent trust rate as a loophole.

"Well, we're going to monitor it - if that behaviour becomes apparent then we'll move to increase the trust rate to stop that being used as an avoidance loophole," he said.

Parker was reluctant to repeat the comments following question time, saying the government had not "taken those decisions".

"We've got no current plan, we're going to gather information to see if there is large-scale tax avoidance around that particular issue and then make a decision," he said.

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