Look-through companies

Clauses 147 and 148

Issue: Support for the amendment

Submission

(New Zealand Institute of Chartered Accountants)

The submitter supports the amendment which proposes that the references in the promoter (section 141EB) penalty legislation which refer to loss attributing qualifying companies be updated to refer to look-through companies (LTCs), and that the penalty relief provision for loss attributing qualifying companies be repealed.

Recommendation

That the submission be noted.

Issue: Further reforms to the LTC rules

Submission

(New Zealand Institute of Chartered Accountants)

The amendment corrects a minor technical error rather than deals with any of the fundamental and more significant issues with the look-through company rules that we and others have raised over the last two years. We submit that the Committee should consider asking the Government and officials to treat the reform of the LTC rules as an urgent priority.

Comment

The amendment is concerned with correcting the terminology. Officials note that this submission raises issues that would require further analysis as part of the Government’s tax policy work programme. The Government’s tax policy work programme, announced on 8 November 2013, includes a review of the tax rules for closely held companies. This work will consider simplification, technical and base maintenance issues that arise under current tax rules applying to closely held companies, including improving the overall coherence of the rules. These include the rules for look-through companies and other close company regimes.

Recommendation

That the submission be noted.