Global

Details

  • Service: Tax, International Tax
  • Type: Regulatory update
  • Date: 6/12/2014

New Zealand - Debt capitalisation, look-through elections as “tax avoidance” 

June 12:  Debt capitalisation and look-through company elections by liquidating companies are addressed in a recent draft “questions we’ve been asked” item by the Inland Revenue Department.

The position of the Inland Revenue in this draft guidance concludes that both debt capitalisation and look-through company elections are tax avoidance arrangements because there are alternatives to each that would create taxable income.

KPMG observation

The Inland Revenue’s draft position raises a fundamental issue—i.e., the basic proposition is that a taxpayer can no longer have due regard to the tax consequences of their actions when determining what to do. This suggests that taxpayers must take the course of action that results in the highest tax payable. Tax professionals note that this would be a significant change in approach.


There is an opportunity for taxpayers to comment on the draft guidance.


Read a June 2014 report [PDF 109 KB] prepared by the KPMG member firm in New Zealand: Debt capitalisation and look-through company elections potentially tax avoidance




©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


The KPMG logo and name are trademarks of KPMG International.


KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.


The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

 

Share this

Share this

Subscribe

Subscribe to receive the latest TaxNewsFlash email alerts (you must select the option for TaxNewsFlash)


Already a Subscriber? Login


Not a member? Subscribe now