Mutual recognition of imputation credits on agenda again

The vexed question of trans-Tasman imputation credits will be on the agenda again at the end of the month when Australian Prime Minister Kevin Rudd visits New Zealand.

Rudd's visit was announced by Prime Minister John Key on Monday and Minster of Revenue Peter Dunne confirmed that the issue of mutual recognition of imputation credits will be raised again with Rudd and his officials.

The question was raised by both the New Zealand Tax Working Group report at the end of last year and by the Australian Henry Tax Review earlier this year.

"That is still on our agenda and still with the Australian government," Dunne told MPs on Parliament's finance and expenditure select committee this week.

"It's fair to say the Australian government's position has been cautious if not resistant on that point."

But he says officials in both governments had been monitoring this and other issues emerging from respective tax reviews.

Previously Australian officials have estimated that allowing recognition of imputation credits across the Tasman would cost the Australian Treasury too much to be worthwhile.

The Australian tax review actually suggested eventually abolishing imputation completely and moving to some other system - New Zealand and Australia are the only two OECD countries with an imputation regime.

Any change on Australia's part though would have to be discussed with the New Zealand government, due to the ongoing work on a single economic market.

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