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Alesco decision released - Inland Revenue continues its winning streak

As we were finalising this month’s Tax Alert, we received news that the Alesco Judgement from the Court of Appeal had been released.  The taxpayer, Alesco New Zealand Limited, appealed against the 2011 High court decision in the Commissioner’s favour (see our December 2011 Tax Alert article).  Broadly the case concerned the deductibility of interest claimed arising from the use of optional convertible notes (OCNs) in intra group arrangements to finance the acquisition of two New Zealand businesses.

The Court has found in favour of the Commissioner, concluding that the OCNs entered into by Alesco were a tax avoidance arrangement.  In addition the Court has found that Alesco took an abusive tax position within the meaning of s141D of the Tax Administration Act, upholding the High Court’s decision on the Commissioner’s imposition of shortfall penalties.  

 We will digest the case over the next few days and share our thoughts on what this means for taxpayers in an upcoming edition of Tax Alert.  In the meantime the full judgement can be found here.


Snippets

31 March 2013 is fast approaching

While many clients and tax practitioners are focused on finalising and filing 2012 tax returns by 31 March 2013, it is also time to give consideration to the next year end for entities with a 31 March balance date before it passes. While most issues can be dealt with after 31 March 2013, some (e.g. writing off bad debts, check on the thin capitalisation ratio, dealing with debit imputation accounts) must be considered before 31 March to ensure tax paid is no more than it should be. We have written about these matters on many occasions before, so for a reminder of the issues to check, please see our Alert article from last year on this topic.

KiwiSaver contribution rates increase from 1 April 2013

Just a reminder that the minimum contribution rate for employers and employees will increase from 2% to 3% of gross salary or wages from the first pay period commencing on or after 1 April 2013.


Tax Alert March 2013 contents

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