Double Taxation Relief (United Kingdom) Order 1966, Amendment No 1

This commentary item was published in Public Information Bulletin Volume 105, June 1980

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Protocol to Amend the 1966 New Zealand/United Kingdom Double Tax Agreement

A Protocol to amend certain provisions of the New Zealand/United Kingdom double taxation agreement was signed in London recently.

The Protocol covered two points:-

• The new dividend Article extends the United Kingdom company tax credit to all New Zealand individuals who are in receipt of dividends paid by a United Kingdom company. Previously the tax credit was allowed only to individual British subjects resident in New Zealand. The withholding tax will continue to be deducted at the 15 percent rate of the aggregate of the dividend and the tax credit. However, where the tax credit is more than the 15 percent then the difference is refunded by the United Kingdom tax authorities on request.
• The redrafting of Article IX of the 1966 Agreement in relation to capital gains in the United Kingdom does not alter the previous intention and interpretation of the Article. The only effect it has for New Zealand residents is to relieve them from United Kingdom capital gains tax unless the gain is from business property of a permanent establishment in the United Kingdom, or in the case of independent personal services, is property pertaining to a fixed base in the United Kingdom.

The Protocol will have effect in New Zealand for any income year commencing on or after 1 April 1978 and will enter into force on the day the official exchange of notes is effected by the two Governments. This is expected to occur within a few months.