IRD unveils solution to AUT issue

Sunday 18 April 2004

The IRD has backtracked on previous indications that the proposed AUT solution would be narrow and designed to deal only with the “mischief” of New Zealanders investing tax free into NZ government stock.

By The Landlord

The full extent of official determination to hit perceived tax leakages from Australian unit trust investments was unveiled to the financial services industry last week.

Inland Revenue officials handed their proposals to the industry on Wednesday, giving them until 5pm Friday to respond.

The proposals come as fresh questions are asked as to just how much tax leakage there really is from AUTs.

Investment Savings and Insurance Association chief executive Vance Arkinstall could not divulge the details of the IRD’s proposal, citing a confidentiality.

However he says the IRD’s proposals go too far. The main concern from officials – and public comments from Revenue Minister Michael Cullen seem to support this – appears to have been New Zealand investments in AUTs which then invest in New Zealand debt securities, in particular, New Zealand government stock.

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