Cross-Sector Initiative: Tax and Compliance Regulations
[ Last Updated 14 October 2005 ]
The taskforces called for tax laws and compliance regulations that enable greater access to finance and global connections, thereby helping to retain and attract key talent and removing barriers to rapid growth.
There was a call for simplicity and transparency in the tax area as well as for changes that would assist in facilitating the rapid growth of New Zealand-based companies. These tax issues are in fact experienced by many growing businesses and are not limited to just the taskforce sectors.
The taskforces proposed several different options, including limited liability partnerships that would allow flow-through treatment to investors, the tax treatment of employee share options and rules regarding the carrying forward of tax losses.
Tax policy work on access to finance is well underway. This work programme has a strong growth and innovation focus and already incorporates analysis of many of the taskforce recommendations concerning access to capital. The programme acknowledges the importance of small growing businesses having adequate access to finance and the role that tax may play as an impediment to that access.
Inland Revenue, Ministry of Economic Development and Treasury officials are also investigating whether limited liability partnerships, that would allow flow through treatment to investors, are appropriate for the New Zealand context. Work is also underway on the tax treatment of share options and patents and the carry forward of tax losses. The recent changes to the tax treatment of research and development are being evaluated to ensure the rules are working as intended.
The Business Law Reform Bill, due to be passed into law by April 2004, proposes to relax the restrictions that constrain the offer of options to employees and "qualified investors". The Bill:
- includes new exemptions from prospectus requirements for wealthy and experienced investors, people who are experienced in the industry to which the securities relate and all employee Superannuation schemes, whatever their size.
- extends the exemption for close business associates and relatives of the issuer to close business associates and relatives of company directors; and
- allows people to provide advertisements that seek expressions of interest on the offer, without an offer being produced. This allows small and medium enterprises to assess the level of public support for proposed issues of securities before incurring the expense of preparing the prescribed disclosure documents.
Other than the Business Law Reform Bill, the government has not yet committed to any definite changes to existing laws. At this stage of the policy development process, the fiscal costs associated with any modifications to tax laws have yet to be fully evaluated. Inland Revenue and Treasury officials are due to report back to the Minister of Finance by December this year on the tax policy work programme.
Contact:
Tax Issues - David Carrigan, Inland Revenue Department, 04-474 7146
Regulatory Issues - Kirstie Hewlett, Ministry of Economic Development, 04-474 2887
Back to Top