27 Apr 2013

Cooks government defends tax on pensions

6:23 am on 27 April 2013

The Cook Islands government is defending its tax regime for pensioners collecting New Zealand superannuation.

The president of the newly-formed Cook Islands Grey Power says some of its members owe the government thousands of dollars in back taxes they weren't aware they should have paid.

The Cooks Islands' finance secretary, Richard Neves says the law has been in place for some years but under its compliance programme the government has only recently acquired a full list of New Zealand pensioners living in the country.

He says a 2009 agreement means even if the Cook Islands exempted the pension from its tax system, New Zealand would have the right to deduct the tax.

"And for pensioners here the first 10,000 dollars of income is tax-free whereas in New Zealand you start paying tax from the first dollar you earn. There is no such thing as an income tax-free threshold."

Richard Neves says the Cook Islands government is not trying to send anyone bankrupt and will help people with tax arrears to find a way of paying them.