12 March 2008 Media Statement

Ministers welcome passage of limited partnerships legislation

Finance Minister Michael Cullen and Revenue Minister Peter Dunne have welcomed the passage yesterday of legislation that gives effect to new regulatory and tax rules for limited partnerships and updates the tax rules for general partnerships.

The changes were introduced in August 2007 in the Limited Partnerships Bill, which was split into two – the Limited Partnerships Bill and the Taxation (Limited Partnerships) Bill – at the end of the Committee stage of the debate.

“These are timely changes that make it easier for New Zealand businesses to attract investment capital and to compete internationally,” they said.

“Limited partnerships are widely used internationally as a vehicle for investing into another country, particularly in relation to private equity and venture capital investment. New Zealand law now provides for them.

“The new legislation removes barriers to this investment into New Zealand in two ways – by providing separate legal entity status for limited partnerships and by making it possible for foreign investors to have their gains and losses recognised for tax purposes in their own countries.

“As a complementary measure, the new legislation modernises and clarifies the tax rules on partnerships generally, which will provide greater clarity and certainty for all partnerships, large or small.

“Minor technical changes made to the tax provisions as a result of recommendations of the Commerce Committee and by means of a supplementary order before the final reading of the bill have helped to make the rules as clear as possible and easier to comply with,” they said.

ENDS

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