New Zealand

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  • Service: Tax
  • Type: Business and industry issue
  • Date: 15/01/2013

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Greg Knowles 

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Tony Joyce

Partner - Tax

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Taxmail - Proposals to further tighten interest deductibility released 

Issue 1 - January 2013

 
Officials yesterday released an issues paper aimed at further tightening the rules for claiming New Zealand interest deductions where a business is owned by non-residents. Submissions are requested by 15 February 2013.  We discuss the key proposals.   pdf image Issues paper [PDF: 460KB]

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Tax

Our tax advisory team has the skills and commitment to help you to be competitive and compliant in all areas of business tax.

While the thin capitalisation safe harbour thresholds are not set to change, Officials are proposing to plug a number of perceived “gaps” in the thin capitalisation rules.

 

This includes extending the rules to multiple non-residents holding/controlling more than 50% of a NZ company/ group if these parties are “acting together”.

 

A key concern is how this concept will be reflected in legislation, and practically applied/interpreted by Inland Revenue, in such a way that does not penalise non-resident investors who are genuinely operating at arm’s length from each other.

 

A further concern is the potential adverse impact on inbound investment, particularly in large-scale projects, such as infrastructure (at a time when infrastructure investment is a priority for Christchurch, Auckland and many other parts of the country).

 

Given the wide-ranging nature of the proposals, we strongly advise clients to consider the potential impacts on their business and make submissions.

Taxmail - Comment on topical tax issues from KPMG NZ Tax. 
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