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LAWCOMM 403 long notes.docx
LAWCOMM_403_long_notes.docx
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LAWCOMM 403 long notes.docx-CONTENTS Tips ...........
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
LAWCOMM 403 long notes.docx-CONTENT...
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
Page 6
INTRODUCTION
This course is designed to teach basic ideas of tax policy and tax theory, then look at the legislaon as reflecng the
government’s approach to pung those theories and policies into pracce
There are two main taxes in New Zealand – income tax and goods and services tax
Tax law is a specialized area of commercial law, but is also fundamental to the operaon of the constuon, legal
system, polical system and economy
o
Most constuonal conflicts have reflected tax – Magna Carta 1215 was all about tax
o
Different polical pares have different ideas about tax policies (e.g. whether to introduce capital gains tax)
You should
understand the overall structure of the New Zealand tax system and how different parts relate to each
other
TAX POLICY
We should look at tax policy because the legislaon reflects the policies and the theories they are based on
Adam Smith (author of “The Wealth of Naons”)
o
The best way to allocate economic resources is to leave it to the “invisible hand of the market”
o
Smith’s work is relevant in two main respects:
If you agree with his theory, you are likely to agree that the state’s intervenon in the economy
should be as small as possible – therefore, the government should only impose very light taxes (some
tax should be imposed to account for the few things that the market will not supply (“market
failures”))
Came up with a coherent theory of taxaon – what tax ought to achieve and what makes a perfect tax
system
Karl Marx
o
The best way to allocate economic resources is to have an intervenonist state – everything should be dictated
by government
John Maynard Keynes
o
Took a posion in between Smith and Marx
o
The market is good, but a fair degree of government intervenon is necessary if the market is to perform
opmally
Henry Simons
o
Focused on what should count as “income” – this is important as tax is imposed on income
o
Some things are obviously income (e.g. salaries, business profits, rent, interest, royales; these are called
“
income according to ordinary concepts
”) but other things are more difficult to define as income (e.g. capital
gains, giſts, inheritances)
CORE PROVISIONS OF TAX LEGISLATION
Income Tax Act
o
Different parts of the ITA deal with a parcular aspect of the income tax system
o
Each part (A, B, C…) has different subparts (BA, BB, BC…) – each subpart is then divided into secons (BA1,
BA2, BA3…)
Part B contains the core provisions – the fundamentally important rules
o
Every obligaon/liability, right and entlement in respect of income tax is provided for in Part B
o
However, these provisions are expressed at a general level – therefore, it is necessary to look at the other
parts of the Act to find the detail
The jurisdicon to tax
o
New Zealand income tax is only imposed on income that has some connecon to New Zealand
o
The jurisdiconal scope of the tax system is based on the
twin jurisdiconal pillars of “residence” and
“source”
Resident principle – if you are resident in New Zealand, you are obliged to pay tax on your worldwide
income (income derived from New Zealand and anywhere else in the world)
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