The Australian government has agreed to make the long-vexed issue of mutually recognising transtasman imputation credits on dividends a topic for review in a forthcoming white paper on tax reform.
However, just how big a topic remains to be seen. The decision rated the last paragraph in a pro forma press statement issued by Prime Minister John Key after today's meeting with his Australian counterpart, Tony Abbott, in Canberra.
In the statement, Key "welcomed Australia's decision to make mutual recognition of imputation credits a matter for discussion in Australia's Tax Reform White Paper."
Known as franking credits in Australia, imputation credits prevent the double taxation of company dividends in the hands of shareholders, when the company has already paid tax.
Businesses on both sides of the Tasman have long argued that imputation credits should be recognised by the tax authorities of one another's countries, with a significantly greater interest in the subject recently by major Australian corporates.
However, the Australian Treasury and tax authorities have never favoured the idea, which they argue would trigger substantial lost corporate tax revenue on the Australian side of the equation, reflecting the comparatively much larger Australian investment in New Zealand than vice versa.
Both countries have had the systems since the late 1980s, and the argument has continued throughout that time, without resolution.
Key also announced that foreign visitors to the Cricket World Cup, being jointly hosted by Australia and New Zealand, would only need one visa to attend the tournament, which could see them travelling to and from both countries to follow it in its entirety.
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