Tax oversight to affect superfund Members

The Association of Superannuation funds of Papua New Guinea (ASFPNG) has asked the Treasury Department to look into an assumed oversight in the proposed Income Tax (Amendment) Bill 2017 which could create a double to triple taxing effect for super funds’

ASFPNG Interim President and Chief Executive Officer (CEO) of the National Superannuation Fund (NASFUND), Ian Tarutia, said a letter has been addressed to the Secretary, Dairi Vele, to look into the issue.

Tarutia said some of the taxation laws in the proposed amendments have resulted in some ‘unintended consequences,’ such as double or triple taxing of dividend income from companies.

This he said will have an impact on dividends paid to members at the end of the year.

In a letter dated February 24, The ASFPNG has asked Treasury to repeal Section 216 (3) which removes the dividend rebate.

The association says the dividend rebate ensures that profits which are distributed through companies are only taxed once.

“When say for example, we invest in Company A directly, when they declare dividend and then it’s paid to us and there’s a certain amount of tax that’s paid but its only taxed once.

“If we have an investment in company A who also has an investment in Company B, and company A pays dividend to us; Company B that pays dividend to company A is then taxed, and company A that pays that dividend to us is then taxed again, so its like to triple tax, to put it in simple terms,” Tarutia said.

He added “If it’s not changed, it will have an impact in future on the returns that we derive for our members, and we don’t want that to happen.

“I don’t think Government in its wisdom intended for this to happen but through some oversight this was the consequence.

“But we as an industry on behalf of all the members that contribute to superannuation, we have half a million and there’s another 150 or so thousand with our colleagues at NSL (Nambawan Super Limited)  and 2000 with Comrade Trustee we don’t feel that its best serving our members interests and hence  we have joined up with all these other peak bodies and we formally conveyed our concerns to relevant government authorities so that they can take corrective actions, so at the end of this year it does not impact on our returns because members look forward to seeking the contributions grow and we as trustees its our job that we are promoting their interests at all timesTa,” said Tarutia.

Cedric Patjole