Income Splitting

RESOLUTION 9 : Income Splitting for Tax Purposes

“THAT the New Zealand Federation of Business and Professional Women Inc urges the Minister of Women’s Affairs and relevant Ministers to unite to implement Income Splitting for families as part of the tax reform policy because it places a dollar value on the contribution made by the women or non-wage earners through the caring and raising of their children in the home.”
Moved by BPW Franklin
Rationale:

  • Income splitting allows couples to split their combined income for tax purposes providing tax relief as each half falls into lower tax brackets. It would recognise and value the significant contribution of these families and women as primary caregivers who provide the care, support and strengthens the family unit through providing care for their children in the home.
  • It will support couples who choose to have a spouse/partner/mother stay at home as a care giver and have their contribution to the family budget recognized.
  • This sends a clear message that care giving and home making is a valued and necessary skill contributing to the family income.

Action Plan
1. BPW Clubs to lobby their MP’s.
2. BPW NZ to write to the Minister of Finance, the Minister of Women’s Affairs and other relevant Ministers.
3. Issues Vice President to take an active role in monitoring and encouraging clubs to be engaged with the issue.

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NCW Action Item: from Family Affairs SC

 Discussion Document: Income Splitting

 The Government has released a Discussion Document on Income Splitting. It seeks views on allowing families with children to split their income to reduce the amount of tax they pay.

 Two income splitting options are canvassed. The first would aggregate a family’s income and split it evenly between the two partners. The total tax liability would then be determined by applying the current tax rate schedule to each partner’s income. The second would be to provide a separate rate schedule for families, where the tax thresholds are twice that for individuals. Both would result in the same outcome.

 The government is seeking responses to the following questions:

 Is income splitting the best way to provide additional support for families with children? (please give reasons for your answer).

  1. If not, what other options could be considered to provide additional support for families with children?

 If income splitting is favoured:

  1. Should the split be on a 50/50 basis, a 70/30 basis or some other way?
  2. How should a “family” be defined?
  3. What restrictions should be placed on the children’s ages for a family to be eligible?
  4. Should it be optional or compulsory?

The Discussion Document is available at http://www.taxpolicy.ird.govt.nz/publications/files/incomesplittingdd.pdf

You may make submissions by writing to “Income splitting, c/- Deputy Commissioner, Policy Advice Division, Inland Revenue Department, PO Box 2198 Wellington or by email to policy.webmaster@ird.govt.nz . Submissions are due 30 June.

Responses to NCWNZ for the NCWNZ submission are due on 18 June.

 

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