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Income Tax (Amendment) Act 1994

COOK ISLANDS

INCOME TAX AMENDMENT ACT 1994

ANALYSIS

Title

1. Short Title and commencement
2. Special exemption for life insurance policies
3. Incomes wholly exempt from taxation
4. Dividends distribution tax

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1994, No. 21

An Act to amend the Income Tax Act 1972

(30 November 1994

BE IT ENACTED by the Parliament of the Cook Islands in Session assembled, and by the authority of the same as follows:

1. Short Title and commencement- (1) This Act may be cited as the Income Tax Amendment Act 1994 and shall be read together with and deemed part of the Income Tax Act 1972 (hereinafter referred to as "the principal Act").

(2) Except as provided in section 2, this Act shall come into force on the date it is assented to by the Queen's Representative.

2. Special exemption for life insurance policies - (1) Section 46 of the principal Act is amended by -

(a) omitting from subsection (1) paragraphs (a) and (b), and substituting the words "provided the taxpayer has met his obligations pursuant to section 26A of the Turnover Tax Act 1980";

(b) inserting a new subsection (1A) as follows:

"(1A) A qualifying life insurance policy shall be a policy of which the term is at least 10 years, or 5 years where the maturity date is not before the 60th birthday of the life assured."

(2) This section shall be deemed to have come into force in respect of the income year commencing on the 1st January 1994.

3. Incomes wholly exempt from taxation - Paragraph (x) of subsection (1) of section 48 of the principal Act is amended, by adding after the words "the Government", the words "or any public authority as defined in section 2."

4. Dividends distribution tax - The principal Act is amended by inserting after section 127, a new section 127A as follows -

"127A. Dividends distribution tax - (1) Notwithstanding any other provision of this Act and except as otherwise provided in this section, where any qualifying company declares a dividend between 1 January 1995 and 31 March 1995 (whether from past profits or current year's profits) that dividend shall be subject to the dividends distribution tax prescribed in this section and shall not be subject to any other tax whether on the part of the company paying the dividend or the person receiving the dividend.

(2) The dividends distribution tax shall not apply to any dividend which pursuant to this Act or any other law is non-assessable income or exempt from tax or subject to tax (whether withholding tax or otherwise) at a rate equal to or less than 5 %.

(3) A "qualifying company" for the purposes of this section shall be any company which at the time the dividend is declared -

(a) has filed its return of income with the Collector for the financial year of the Company which ended between the 1 July 1993 and 30 June 1994, and for all preceding financial years; and

(b) has paid or otherwise satisfied all assessments of income tax issued by the Collector for every financial year of the Company; and

(c) has paid or otherwise satisfied all provisional tax due;

(d) has filed its turnover tax returns with the Collector for every month prior to 1 December 1994 for which the company has an obligation pursuant to the Turnover Tax Act l980 to file such a return; and

(e) has paid or otherwise satisfied all turnover tax payable in respect of gross turnover derived prior to 1 December 1994.

(4) The dividends distribution tax shall be 5% of the amount of the dividend.

(5) Where a company claims to be a qualifying company and proposes to declare a dividend which will be subject to the dividends distribution tax, the company may prior to the declaration of the dividend apply to the Collector for a certificate confirming that it is a qualifying company. The Collector shall on receipt of such application either issue a certificate accordingly, or by notice in writing to the company decline the application stating his reasons for declining the certificate.

(6) Any certificate issued by the Collector pursuant to subsection (5) shall in the absence of fraud be binding on the Collector for the purposes of this section but for no other purpose.

(7) In any case where the dividends distribution tax is payable the company declaring the dividend shall give notice in writing to the Collector of the dividend within 30 days of the declaration of the dividend and shall with the same period make payment in full to the Collector of the amount of the dividends distribution tax.

(8) In the event that payment is not made by a company in respect of any dividend in accordance with the provisions of subsection (7), the dividends distribution tax shall thereupon cease to be payable by the company in respect of that dividend, and the dividend shall be subject to tax in accordance with this Act as if this section had no application to that dividend."

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This Act is administered by the Inland Revenue Department