Joint media statement

The Australian and New Zealand governments are consulting with taxpayers in both countries about possible changes to deal with concerns relating to the taxation of certain trans-Tasman investments.

Proposed changes are set out in a discussion document, "Trans-Tasman triangular tax", released today by Australian Treasurer Peter Costello and New Zealand Finance and Revenue Minister Michael Cullen.

Triangular taxation occurs where Australian shareholders in a New Zealand company operating in Australia are unable to access Australian-sourced franking credits, with the same problem applying in reverse for New Zealand shareholders in Australian companies operating in New Zealand.

"We are pleased to be examining this issue, which business in both countries has long highlighted as a barrier to trans-Tasman investment flows," Mr Costello and Dr Cullen said today. "The release of this discussion document is a further example of the commitment of both governments to the CER relationship and the facilitation of trans-Tasman business."

"Clearly, triangular tax reform requires a bilateral approach that preserves the Australian and New Zealand tax bases and is acceptable to business and government in both countries."

"The mechanism under consideration is one that allocates both Australian franking credits and New Zealand imputation credits to shareholders in proportion to their ownership of a company."

"We are inviting the views of businesses, the tax community and other interested parties on the workability of the proposed changes. Their responses will contribute to the decision of whether or not to proceed with the proposals," Mr Costello and Dr Cullen said.

The discussion document is available in electronic format at www.taxpolicy.ird.govt.nz or at www.treasury.gov.au

Submissions, which close on 3 May 2002, should be addressed to either:

Assistant Commissioner or The General Manager
Law, Design and Development Policy Advice Division
(Entities and Imputation) Trans-Tasman Triangular Tax
Tax Design Group Inland Revenue Department
Australian Taxation Office PO Box 2198
PO Box 900 WELLINGTON
Civic Square ACT 2608
CANBERRA

Or email: Australia ATO-Triangular@ato.gov.au
New Zealand policy.webmaster@ird.govt.nz

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