New Zealand


  • Service: Tax
  • Type: Business and industry issue
  • Date: 22/02/2013

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John Cantin

John Cantin

Partner - Tax

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Submission - Review of thin capitalisation rules 

The Issues Paper states that the rationale for thin capitalisation is to discourage excessive debt funding of the New Zealand operations of multi-national enterprises. In effect, the thin capitalisation rules are a proxy for determining an arm’s length debt amount. The proposals need to be evaluated against this objective.

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Another concern with potential wider application of the thin capitalisation rules is the scope for unintended consequences, including impediments to genuine commercial transactions which involve debt funding.


Unlike the case with a single non-resident controller, where control of the New Zealand entity can be easily identified, situations involving multiple investors can be complex as each investor will have their own investment drivers.


Identifying joint control (if in fact there is any) will often be difficult.

Tax submissions - Submissions on draft tax legislation, Government discussion documents and issues papers, & various tax interpretation statements released by the New Zealand Inland Revenue.