COMPANY TAXATION
IMPORTANT CHANGES (From “The Mail’s” Parliamentary Reporter] WELLINGTON, 20th December. An important cliange in the method of assessing the income tax of companies using capital borrowed out of New Zealand is made in the Land and Income Tax Amendment Bill. The Bill provides that where in calculating assessment of income for any year any company carrying on business in New Zealand deducts from its total income derived for that year the whole or any portion of the interest paid to any person or companies not resident in New Zealand, the company making the deduction shall be separately assessed for income tax on the total amount deducted- as if that amount were taxable income derived by the company. Assessments previously made on this basis aro validated, as are also any refunds made in this connection by the Commissioner of Taxes. The clause is not to apply to any action which has been taken in the Courts before the passing of the Bill. At the present time, companies operating in New Zealand may deduct any interest they pay to foreign lenders in respect of capital used in New Zealand. These lenders are assessable for New Zealand income tax on the interest derived from New Zealand. This provision does not apply, however, where the money used in New Zealand has been borrowed from debenture holders through a head ollice out of New Zealand. A recent Court decision was i against the assessment for -New Zealand income tax of English debenture | holders on capital borrowed in Engj land by an English company and employed in New Zealand by the New Zealand branch of the company. The ' section makes it clear that these debenture holders should be assessed upon interest derived from the use of their capital in New Zealand.
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Bibliographic details
Nelson Evening Mail, Volume LXVI, 21 December 1933, Page 5
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297COMPANY TAXATION Nelson Evening Mail, Volume LXVI, 21 December 1933, Page 5
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