1 00:00:00,720 --> 00:00:02,360 Speaker 1: Heather Duplessy Ellen, it's. 2 00:00:02,200 --> 00:00:03,960 Speaker 2: Coming up eighteen past six. As I said, we're going 3 00:00:04,000 --> 00:00:07,320 Speaker 2: to talk to Jeremy Hutton from Milford Asset Management shortly 4 00:00:07,320 --> 00:00:09,600 Speaker 2: on the Gen Taylor's boost from the t Y announcement. 5 00:00:09,880 --> 00:00:12,080 Speaker 2: But first, the government's tax take has for the first 6 00:00:12,080 --> 00:00:16,520 Speaker 2: time in a while, surpassed Treasury's expectations. Ironically, the positive 7 00:00:16,560 --> 00:00:19,160 Speaker 2: surprise was the result of efforts to minimize the amount 8 00:00:19,160 --> 00:00:21,880 Speaker 2: of tax the trustees pay. Genative Trainee is The Herald's 9 00:00:21,880 --> 00:00:24,880 Speaker 2: Wellington business editor, he jena Hey. Hever, this is basically 10 00:00:24,920 --> 00:00:26,960 Speaker 2: the trust's trying to get as much money out as 11 00:00:26,960 --> 00:00:28,720 Speaker 2: they could before the tax rate went up to thirty 12 00:00:28,800 --> 00:00:29,160 Speaker 2: nine percent. 13 00:00:29,280 --> 00:00:34,280 Speaker 1: Yeah, yeah, Look, essentially, companies that are owned by trusts, 14 00:00:34,560 --> 00:00:38,240 Speaker 1: they appear to have flushed out the excess retained earnings 15 00:00:38,320 --> 00:00:41,440 Speaker 1: ahead of that trustee tax rate rising from thirty three 16 00:00:41,479 --> 00:00:44,320 Speaker 1: to thirty nine percent on the first of April this year. 17 00:00:44,880 --> 00:00:49,360 Speaker 1: So interestingly, I talked to the IID today and they 18 00:00:49,479 --> 00:00:52,520 Speaker 1: told me that the amounts that the value of dividend 19 00:00:52,600 --> 00:00:57,000 Speaker 1: payments in the past tax year or more than doubled 20 00:00:57,080 --> 00:01:01,400 Speaker 1: to nearly fifty billion dollars from the previous year. So 21 00:01:01,520 --> 00:01:05,319 Speaker 1: that just shows the extent to which the companies did 22 00:01:05,360 --> 00:01:09,240 Speaker 1: flush out those retained earnings in advance of that trust 23 00:01:09,640 --> 00:01:10,880 Speaker 1: tax rate rising. 24 00:01:11,080 --> 00:01:13,319 Speaker 2: Is it possible though, that because so much has been 25 00:01:13,360 --> 00:01:15,400 Speaker 2: paid out in that financial year that when the next 26 00:01:15,400 --> 00:01:16,800 Speaker 2: one comes around it drops off again. 27 00:01:17,520 --> 00:01:20,160 Speaker 1: Yeah, for sure. So we saw the same sort of 28 00:01:20,240 --> 00:01:25,760 Speaker 1: spike ahead of the government introducing that new income tax 29 00:01:25,840 --> 00:01:28,720 Speaker 1: rate of thirty nine percent for income over one hundred 30 00:01:28,720 --> 00:01:31,200 Speaker 1: and eighty thousand dollars. So before that came in, we 31 00:01:31,240 --> 00:01:34,160 Speaker 1: saw the same thing happen. The value of dividend payments. 32 00:01:34,200 --> 00:01:38,319 Speaker 1: Payments spiked and then it dropped back down again for 33 00:01:38,360 --> 00:01:42,040 Speaker 1: the same reason, you know, people trying to minimize their 34 00:01:42,120 --> 00:01:45,920 Speaker 1: tax bills. So interesting phenomena. I've got a graph here, 35 00:01:45,920 --> 00:01:48,720 Speaker 1: have prepared a story for tomorrow, and that jump in 36 00:01:48,760 --> 00:01:53,880 Speaker 1: twenty twenty fours is pretty significant. Now, the inland revenue, 37 00:01:53,880 --> 00:01:57,200 Speaker 1: this is not a surprise for them, right, They kind 38 00:01:57,200 --> 00:02:00,680 Speaker 1: of knew this would happen, and they issued some advice 39 00:02:00,800 --> 00:02:04,160 Speaker 1: earlier in the year that said is this is totally legal. 40 00:02:04,240 --> 00:02:08,440 Speaker 1: You know, companies can choose when they pay dividends provided 41 00:02:08,440 --> 00:02:11,440 Speaker 1: that payment is genuine, like, provided they're not just saying 42 00:02:11,520 --> 00:02:14,440 Speaker 1: they're making the payment but can't actually afford to make 43 00:02:14,480 --> 00:02:19,000 Speaker 1: the dividend payment, you know, provided it's real. So yeah, 44 00:02:19,240 --> 00:02:20,120 Speaker 1: interesting situation. 45 00:02:20,280 --> 00:02:22,040 Speaker 2: Other than this, how did the government's box look? 46 00:02:25,040 --> 00:02:27,480 Speaker 1: Well, this was the interesting thing actually that because of this, 47 00:02:27,680 --> 00:02:32,280 Speaker 1: the tax take was about one point seven percent higher 48 00:02:32,280 --> 00:02:34,919 Speaker 1: than expected. So as soon as I saw that, I thought, wow, 49 00:02:34,960 --> 00:02:37,000 Speaker 1: we haven't seen that in a few months at least, 50 00:02:37,000 --> 00:02:41,280 Speaker 1: with a tax stack coming in above expectation, this contributed 51 00:02:41,440 --> 00:02:45,920 Speaker 1: towards the government's deficit not being as deep as expected. 52 00:02:46,360 --> 00:02:51,320 Speaker 1: So yeah, interestingly, tax minimization trick actually resulted in the 53 00:02:51,360 --> 00:02:54,760 Speaker 1: government temporarily receiving more tax revenue than expected. 54 00:02:54,880 --> 00:02:57,120 Speaker 2: Thank you appreciate it mate. That's jen Ajib Trainy, the 55 00:02:57,120 --> 00:02:59,480 Speaker 2: Herald's Wellington Business edit editor. 56 00:03:00,160 --> 00:03:03,320 Speaker 1: For more from Hither Duplessy Allen Drive, listen live to 57 00:03:03,440 --> 00:03:06,480 Speaker 1: news Talks at b from four pm weekdays, or follow 58 00:03:06,480 --> 00:03:08,280 Speaker 1: the podcast on iHeartRadio.