The New Zealand government on Tuesday released a discussion document which outlined proposals for new tax rules related to lending transactions involving securities such as shares, units and bonds.
"The aim of the proposed changes is to help remove barriers to these commercial transactions and improve New Zealand's reputation as an investment destination," commented Revenue Minister Michael Cullen.
Dr Cullen added:
"Unlike many countries, New Zealand taxes securities lending on the basis of legal form rather than economic substance, which may account in part for the relatively small local market in these transactions.
"Other benefits of the new rules will be greater consistency with other tax jurisdictions, especially Australia, greater consistency with the treatment of other commercial transactions, and increased taxpayer certainty."
The proposals will also feature anti-avoidance provisions in an attempt to prevent the use of securities lending to give rise to undue tax advantages, explained Dr Cullen.
The closing date for submissions on the proposals has been set for 31st January 2005, and the amended legislation is expected to reach the statute book next year.
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