Strong warning on special partnerships

Press, 6 December 1985, Page 20

Strong warning on special partnerships

PA Wellington The Government has issued a strong warning to people investing in special partnerships or other arrangements which were mainly tax shelters — and not a real interest in the investment itself. The Under-secretary for Finance, Mr de Cleene, said the previous Government had removed much of the tax deductibility of such arrangements that financed the film industry. The Government had now noticed that there were certain projects in the music and recording industry and the entertainment industry based on similar “non recourse loan” provisions. Legislation was. being considered which would abolish non-recourse loans as a basis of tax deductibility, he said in a statement. Where tax avoidance was so blatant, retrospective legislation would even be

considered to the date of warning. The Government neither liked nor used such legislation as a matter of choice.

But, he said, when prospectuses were issued which showed that somebody, could put up a dollar and attract $2.60 worth of taxation losses, then the morality of the situation demanded very close scrutiny. Mr de Cleene said the Government was determined to block such loopholes where some arrangements called into question the whole process of special partnerships and non-re-course lending.