NZIT wins GPG-style tax holiday

By David Chaplin

Monday 8th January 2007

The UK-domiciled New Zealand Investment Trust (NZIT) has received a two-year exemption from complying with new tax rules which are due to come into force this April.

In an announcement to the New Zealand Stock Exchange late last year Donald Campbell, NZIT chair, said the government granted the exemption "in response to representations by your Board... which means that there will be no change in the New Zealand taxation on our company until 2009".

"In addition, the new tax bill provides important new incentives for qualified investment companies in New Zealand, which may permit us to propose a reorganisation of our Company in such a way as to benefit all shareholders, including those resident in New Zealand," Campbell said.

The tax bill, which received royal assent on December 18, will revolutionise the taxation of New Zealanders overseas holdings when the new 'fair dividend rate' method for calculating tax on foreign investments comes into play.

While the government has already made some substantial exemptions to the new tax impost - most notably to Australian shares and investors in the dual UK/NZ-listed Guinness Peat Group - the two-year NZIT tax holiday was a surprise given the Revenue Minister, Peter Dunne, had specifically targeted UK listed investment trusts to be caught by the rules.

NZIT, which is a UK listed investment trust with dual listing on the NZX, is controlled by Exeter Asset Management in the UK but acts under the advice of Brook Asset Management for its New Zealand product.

"The two-year exemption from the application of the new rules will provide time for your Board to propose measures that will best address all shareholders' interests in the future and prevent the need for any New Zealand-resident shareholders to sell their shares to avoid new taxes on foreign investments," Campbell said.

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