This book is only available in PDF format 
Published: 13 September, 2005
Pages: 72

Introduction

In addressing New Zealand income tax aspects of a business structure, two fundamental questions arise:

• Which entity should be used for conducting the business operations?
• How should that entity be capitalised?

In this paper, we first identify the different entities that are available for conduct of business operations in New Zealand and consider the New Zealand income tax treatment applicable to those entities under the New Zealand Income Tax Act 2004 as amended (“Act”) (chapter 1). We then address the tax issues that arise in the context of financing the business operations and, in particular, the considerations that are important in choosing between equity and debt funding (chapter 2).

In the case of companies operating in New Zealand there are complex rules for taxation of transactions between the company and its employees, shareholders and their associates. An outline of these rules is contained in chapter 3.

Having outlined the general principles, we then consider with more specificity the New Zealand income tax issues that arise in the context of:

• New Zealand investment by New Zealand resident investors (chapter 4);
• New Zealand investment by non-New Zealand resident investors (chapter 5); and
• foreign investment by New Zealand resident investors (chapter 6).