Law may close tax loophole

Press, 5 March 1980, Page 12

Law may close tax loophole

PA Wellington The Government intends to close a possible loophole in the tax laws that affect companies by passing retrospective legislation effective from last Friday. This has been announced by the Minister in charge of the Inland Revenue Department (Mr Templeton). Recently, schemes had been devised involving many millions of dollars in tax revenue whereby profitable companies hoped to gain benefits by deducting the losses of other, unrelated companies, said Mr Templeton.

“These schemes may or may not be successful under the current legislation. That is for the courts to decide in respect of past cases, but the Government intends to make sure that the tax legislation is strong enough to cope from now on,” he said. Details of the proposed amendments would be announced later.

“The purpose of the amendments is to return to the original principles of the legislation.” In-view of the significant amounts of revenue involved and in the interest of equity for all taxpayers, the new legislation would take effect in respect of any arrangements or transactions — including subvention payments or notices of election to set off losses — which had not been completed by yesterday, said Mr Templeton.