The Taxpayers’ Union is welcoming reports that New
Zealand First and ACT are opposing Inland Revenue’s
proposal to tax shareholder loans. The group says the
parties are right to push back against a plan that risks
creating unfair double taxation.
Taxpayers’ Union
spokesperson Tory Relf said:
“We’re pleased to see
New Zealand First and ACT taking a principled approach to
what is a complex issue. Company loans to shareholders are
common in companies with only one or a few shareholders. As
long as the loan is repaid in full, there is no
issue.”
“Shareholders would have had to repay the
loan from tax-paid income. Inland Revenue hasn’t proposed
refunding the tax if the loan is repaid, which creates an
obvious double taxation problem.”
“Other countries
have already recognised this issue. The United Kingdom has
rules that prevent this sort of double
taxation.”
“The solution is simple. If Inland
Revenue is worried about loans that are never repaid, the
law should simply deem any outstanding shareholder loans to
be dividends when a company is liquidated and tax them
accordingly.”
“We simply do not understand why
Inland Revenue has made this issue so complicated and
unreasonable when the fix could be so
straightforward.”
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