New Zealand: Proposed tax changes for “close-companies”

Tax proposals for New Zealand close-companies

An “issues paper” in New Zealand includes suggested changes to the current tax rules for “close-companies” (privately owned companies with five or fewer shareholders). As proposed, the amendments would: (1) remove restrictions on expense deductibility under the “look-through company” (LTC) tax rules; (2) strengthen entry requirements to become an LTC; (3) remove the “tainting” of capital gains made with associates; and (4) remove withholding tax on dividends paid to shareholders in a number of circumstances.

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The changes are the result of a broad review of the close-company tax rules by Inland Revenue Officials, and are generally viewed as being “taxpayer friendly.” However, not all of the changes are positive. For example, there would be additional restrictions on trust shareholders in LTCs, while existing qualifying companies would lose this tax status in a change of ownership.

New Zealand's many privately owned businesses will have to 16 October 2015 to review the 68-page issues paper and submit comments.

 

Read a September 2015 report [PDF 559 KB] prepared by the KPMG member firm in New Zealand: Close-company tax changes

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