Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search


Paper addresses loss grouping tax issues

Hon Todd McClay

Minister of Revenue
15 September 2015 Media Statement

Paper addresses loss grouping tax issues

Revenue Minister Todd McClay says that a consultation paper released today focusing on the question of loss grouping and imputation credits could remove obstacles to business growth and provide greater investment opportunities for mum and dad investors.

“Companies paying dividends to shareholders can pass credits (known as imputation credits) on to those shareholders for tax paid on profits at the company level.

“This is good because it makes investment more attractive,” says Mr McClay.

“However if a company has made a loss it may elect to make the benefit of that loss available to another company in its group that is in profit. This is known as loss grouping. But by doing so, this means less tax is paid, and therefore fewer imputation credits to pass on to shareholders.

“If the companies are not wholly owned, the dividend will be taxable, in some cases, resulting in tax to pay for the shareholder, effectively reversing the benefit of the loss grouping,” Mr McClay says.

He says that this is causing problems for businesses and distorting economic decisions.

“For example, the current rules make it more attractive for a company considering buying shares in a company to actually acquire 100 per cent of that company simply to avoid this tax issue,” says Mr McClay.

This can mean that everyday investors can be shut out of investing in successful companies because having multiple investors can be a disadvantage and a barrier to partial corporate listings on the NZX.

“So it’s a good thing for our economy to address this issue. Businesses must be free to make business decisions to enable their business to flourish.

“We want to see more businesses listing on the NZX resulting in a deeper capital market and New Zealanders able to take advantage of those investment opportunities,” says Mr McClay.

The officials’ issues paper Loss grouping and imputation credits can be found The closing date for submissions is 27 October 2015.

© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On How The US Supreme Court Is Undermining American Democracy

If Joe Biden is elected President next week, here comes the bad news. If Biden tries to defend Obamacare, combat climate change (via say, a variant of the Green New Deal) or tries to improve the access of US women to abortion services , he will run afoul of a Supreme Court dominated by judges likely to rule that such matters must be left to the states like Missouri and Alabama to manage as they see fit. Meaning: Even if Biden had a radical agenda, this would be unlikely to survive the current bench on the Supreme Court... More>>


Gordon Campbell: On National Being Shafted By Its Own Creation

As it licks its wounds, let’s hope the National Party can still find time to look back with some pride at what it has achieved in Epsom. The Act Party’s nationwide success on Saturday night has been a tribute to National’s foresight, and to its ... More>>


Green Party: 'Fruitful Discussions ... Further Discussions To Have'

The Green Party says there is a negotiation going on with the Labour Party, but there are more discussions to be had. More>>


Border: No Changes To Border Exemptions After Fishing Crew Test Covid-19 Positive

The cases were detected after routine day three testing but the immigration minister and air commodore agree there's no need to change border exemptions. More>>

PSA: Labour-Led Government Has Mandate For Transformation, Equality And Transparency

The Public Service Association welcomes the progressive electoral landslide New Zealand voters delivered on Saturday, and the union says its members look forward to implementing policies that reduce poverty and inequality, support affordable housing ... More>>


Election: ParityBOT_NZ Processed Nearly 200,000 Tweets To Find And Fight Online Abuse Over The NZ Election

Auckland, New Zealand: Of the almost 200,000 tweets directed at women candidates that Areto Labs’ proprietary election Twitter bot, ParityBOT_NZ, processed over the New Zealand election period, nearly 4,000 were classified as toxic and triggered ... More>>

Stats NZ: New Report Shows Significant Changes To New Zealand’s Climate

Climate change is already happening in New Zealand and could have a profound impact on future generations of New Zealanders, a new report from the Ministry for the Environment and Stats NZ says. Our atmosphere and climate 2020 , released today, includes analysis ... More>>


Judith Collins: Obese People Must Take Responsibility For 'personal Choices'

National Party leader Judith Collins has described obesity as a weakness and says people should not 'blame systems for personal choices'. More>>

Māori Party: Poll Reveals Tamihere On Cusp Of Historic Māori Movement Election Victory

John Tamihere’s election campaign is on the rise and on track to return the Māori Party to parliament, a new Māori TV poll has revealed. The poll released on 11 October during the seventh and final Māori TV Maori Electoral campaign coverage has Tamihere ... More>>




InfoPages News Channels