In 1987, New Zealand taxpayers could avoid tax by establishing foreign corporations in which they held a controlling shareholding in low tax jurisdictions. This avoidance could occur in two ways. First, through using the foreign corporation to intercept passive income, such as interest or...

As commercial transactions and tax law have both become more complex, tax practitioners have called for the establishment of procedures whereby taxpayers can find out in advance the official opinion of the revenue authorities as to the tax implications of their proposed transactions. If formally...

Sections 126 and 127 of the Income Tax Act 1976 authorise farmers to deduct certain capital development expenditure from their assessable income. It is possible that these sections could be used to avoid tax but section 129 goes some way to frustrate avoidance by requiring that any profit from...

New Zealand has an advance rulings procedure but because the rulings are not binding they cannot be relied upon. The article argues that a formal, binding, advance ruling procedure for income tax questions should be instituted in New Zealand. The two most relevant models for New Zealand are the...

In 1984 the Under-Secretary to the Minister of Finance announced that section 188A of the Income Tax Act 1976 would be amended in the light of the decision in Grieve [1984] 1 NZLR 101. The case related to the offsetting of farming losses against other income in years before the offset was...

Proposals to the change the Income Tax Act 1976 included amendments to exempt from taxation the distribution of certain capital gains when a company is being wound up. The expected method of the change will be through a redefinition of the term “dividend”. The significance of the proposal is...

Commissioner of Inland Revenue v. New Zealand Plumbers' Merchants Society Ltd. (1983) 6 NZTC 61,632, 6 TRNZ 489 (HC) concerned the interpretation of section 167A of the Income Tax Act 1976 concerning the deduction of trading stock rebates from income. Although the case is limited to...

Does a payment paid to a contractor as an incentive to complete the contract early constitute a redundancy payment under section 68 of the Income Tax Act 1976? Thorburn v. Commissioner of Inland Revenue (1983) 6 NZTC 61,618 (HC) held that it did constitute a redundancy payment, since one of the...

Does a cooked flounder or sole packed in a plastic bag constitute a “prepared fish dinner” or “prepared consumer fish pack” for the purposes of the Income Tax Act 1976? In Taspac Seafoods Ltd. v. Commissioner of Inland Revenue (1983) 6 NZTC 61,636, 6 TRNZ 513, Justice Barker found that...

Does a cooked lobster packed in an individually sealed plastic bag constitute a “prepared fish dinner” or “prepared consumer fish pack” for the purposes of the Income Tax Act 1976, section 156? In Taspac Seafoods Ltd. v. Commissioner of Inland Revenue (1983) 6 NZTC 61,636, 6 TRNZ 513,...