The Wool Industry Restructuring Bill continues producer board reform by requiring the New Zealand Wool Board to prepare a restructuring plan by 16 May 2003. The restructuring plan must specify a date on which the following restructuring will take place.
The Board will convert into a company called Wool Board Disestablishment Limited.
Board assets will be allocated to two separate companies, Wool Equities Limited and Merino Grower Investments Limited, and to Sheepco, an incorporated society that will take over the Board's industry-good activities.
Shares in Wool Board Disestablishment Company Limited will be issued to wool growers. These may subsequently be redeemed or exchanged for shares in Wool Equities Limited or Merino Grower Investments Limited, depending on whether the grower is a grower of merino or other sheep.
The restructuring raises tax issues. Government policy is that ordinary tax rules should apply to the extent practicable. The bill contains provisions (clauses 28 to 31) to achieve this. Key features are:
- The issue of shares to wool growers does not constitute a gift for the purposes of the Estate and Gift Duties Act 1968 or gross income for the purposes of the Income Tax Act 1994.
- Wool Board Disestablishment Company Limited is deemed to have available subscribed capital for the purposes of the Income Tax Act 1994.
- Continuity provisions allow the Board's tax losses and imputation credit account debits to be maintained.