The expression “foreign” or “overseas investment fund regime” can be misleading. The direct targets of such a regime are local residents of the country that enacts the regime. Overseas investment fund regimes aim only indirectly at investment funds in other countries. The objective of a...

The adoption of mildly progressive taxation by the New Zealand government in the early 2000s meant that it became more attractive for parents to channel income to their children via trusts. This development led to the passage of the Taxation (Beneficiary Income of Minors, Services-Related...

This is the second of a series of four articles on the taxation of financial services under a value added tax. The first article considered whether, from a theoretical viewpoint, financial services should be included under a value added tax. It concluded that the arguments in favour of treating...

Value added tax (VAT) is a relatively modern development. Designers of VAT recognized from the outset that the way in which financial institutions are remunerated creates significant difficulty when the tax is applied to their services. Administrative difficulties relate to imposing...

Exemption of financial services from Value Added Tax (VAT) is commonly accepted as being an anomaly in the New Zealand goods and services tax legislation. While exempting financial services from VAT is attractive to the legislature because it is a simple way of addressing the difficulties of...

The New Zealand Commissioner of Inland Revenue issues several kinds of statements that are in effect legal opinions. This article relates to certain public statements formerly known as “policy statements” and now called “interpretation guidelines”.The Commissioner issues interpretation...

In 2001, Parliament determined to tax income that children under sixteen derive from trusts at 33 per cent rather than at the individual rates of the children concerned. This change in policy resulted in the Taxation (Beneficiary Income of Minors, Services-Related Payments, and Remedial Matters)...

This paper addresses the issue of the several kinds of statements issued by the New Zealand Commissioner of Inland Revenue, in particular focusing on policy statements and interpretation guidelines. These statements are essentially legal opinions but unlike binding rulings, these are not...

We cannot have an income tax without a concept of income. For a number of reasons, our concept of income must be artificial. A principal reason is that income tax law generally taxes the results of legal transactions rather than their underlying economic substance, which causes a dislocation...

There are several fundamental problems with the judicial concept of income, that is, the concept of income that the courts employ for tax purposes. First, the judicial concept sees income as a flow, rather than as a gain. Secondly, as a consequence, it taxes some apparent flows that do not...