Tuesday 30th November 2004
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Revenue Minister Michael Cullen said the proposed rules covered transactions involving the lending of shares, units and bonds for a fee.
"Unlike many countries, New Zealand taxes securities lending on the basis of legal form rather than economic substance," Cullen said in a statement.
This might account for the "relatively small" local market for these transactions, he said.
"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."
Cullen said the aim of the proposed rules was to "improve New Zealand's reputation as an investment destination."
The proposed package also included anti-avoidance rules to prevent the use of securities lending to give rise to undue tax advantages or avoidance.
"The focus of the rules will be on economic ownership and preventing shareholders selling imputation credits," Cullen said.
The closing date for submissions is January 31.
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