Dunbar, David --- "Trans-Tasman Triangular Taxation Relief: An Exercise In Political Futility" [2005] JlATaxTA 13; (2005) 1(2) Journal of The Australasian Tax Teachers Association 142

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David Dunbar is a Senior Lecturer in the School of Accounting and Commercial Law, Victoria University, Wellington New Zealand.

I INTRODUCTION

On 19 February 2003 the Australian Treasurer and the New Zealand Minister of Finance announced a solution to a longstanding taxation problem known as triangular taxation:^[1]

This paper critically examines the extent to which the pro rata allocation (PRA) solution will solve:^[2]

The extent of the tax relief associated with the PRA solution was outlined by the two ministers in a joint Discussion Document released in March 2002.^[3] The current trans-Tasman taxation treatment of a triangular investment by a New Zealand shareholder results in an effective tax rate of 57.3 per cent. The Discussion Document claims that the PRA solution will reduce the effective tax rate to 43.6 per cent. If that claim is true, the effective tax rate will have been reduced by 24 per cent. Is that claim a fair representation of the benefits of PRA? What are the underlying assumptions the calculations were based on and to what extent are they reflected in the ownership structure of a ‘typical’ trans-Tasman company?

II PRO RATA ALLOCATION (PRA): THE DISCUSSION DOCUMENT

A The Hypothetical Trans-Tasman Company

The Discussion Document states that the PRA solution will reduce an individual New Zealand shareholder's effective tax rate by 24 per cent.^[4] This saving is based on the hypothetical group structure illustrated in Diagram 1.^[5]

B Why Was a 50/50 Shareholding Structure Chosen?

The shareholding of the hypothetical Australian parent company that is used in the Discussion Document discloses that 50 per cent of the parent company share capital is owned by individual Australian shareholders. The remaining 50 per cent is held by individual New Zealand shareholders. That is not a typical trans-Tasman shareholding structure. Empirical evidence suggests that a more realistic shareholding is for the dominant group of trans-Tasman shareholders to own approximately 95 per cent of the parent company share capital with the remaining 5 per cent held by the other group of trans-Tasman shareholders (see Table 2).

It would appear that a 50/50 shareholding was chosen because it fits well with one of the key design features of the PRA solution. The available franking credits and imputation credits will be allocated equally to the two groups of trans-Tasman shareholders. This is one of the reasons why the tax saving appears to suggest that the solution will be welcomed by individual shareholders of a typical trans-Tasman company. The second unusual feature of the hypothetical example is the underlying income flows and the distribution policy of the parent company.

C The Hypothetical Income and Dividend Flows

The following diagram includes the tax payments: dividend flows, franking credits and imputation credits. For simplicity, the example assumes a 30 per cent corporate tax rate in both Australia and New Zealand, rather than the actual rates of 30 per cent and 33 per cent, respectively. It should be noted that all figures are in Australian dollars and no currency adjustment has been applied in this diagram or in any other diagrams or tables in the paper.

Under the current law, only the Australian franking credits are attached to the dividend paid by the Australian parent company to trans-Tasman shareholders. However, the New Zealand shareholders are not able to utilise the $300 franking credits. Under the PRA solution, the New Zealand shareholders will be able to access the imputation credits of $225. The Australian shareholders can only access the franking credits of $300.

III TAX BENEFITS OF PRA: THE DISCUSSION DOCUMENT

A The New Zealand Shareholder’s Tax Reduction

The Discussion Document refers to a 24 per cent reduction in the effective tax rate of a New Zealand shareholder who has invested in a trans-Tasman company with the above ownership and income flows. That reduction is calculated as follows:

NZ Shareholder	Before reform $AU	Pro rata allocation $AU
Cash dividend	700	700
Imputation credits	Nil	225
Franking credit	Nil	300
Gross income	700	925
Tax due @ 39%	273	361
Less imputation credit	Nil	(225)
Franking credit	Nil	Nil
Tax payable	273	136
Net dividend	427	564
Effective tax rate	57.3%¹	43.6%²
^1. (273 + 300 (uncredited underlying corporate tax) / 1000) ^2. (361 + 75 (uncredited underlying corporate tax) / 1000)

A significant point to note is that even under this optimal hypothetical company, the effective tax rate is not 39 per cent. This is due to the fact that the dividend is not fully imputed and that follows from the fact that the percentage of profits distributed to the 50 per cent New Zealand shareholders is significantly higher than the 37.5 per cent profit generated from sources within New Zealand. Consequently the dividend is partly generated from Australian source income which was subject to Australian and not New Zealand income tax. Accordingly the 50 per cent New Zealand shareholders will only receive a partly imputed dividend whenever the percentage of the Australian parent company profit distributed (50 per cent) exceeds the percentage of the parent company's income (37.5 per cent), which is generated from sources within New Zealand.

B Reaction to the February 2003 Announcement

The professional advisers to trans-Tasman companies and the business community did not share the minister’s euphoria. For example, the National Business Review reported:^[6]

The problem Michael Stanley alludes to is the fact that the PRA method allocates the available imputation and franking credits according to the respective shareholding in each country. Secondly, the shareholder can only utilise the appropriate imputation or franking credit. It therefore follows that a parent company with a small shareholder presence in the other jurisdiction would find it difficult to justify the compliance and administrative costs of implementing a regime which only provided a small benefit to a minority group of non-resident shareholders. The only type of trans-Tasman company which would derive a significant benefit from the PRA solution, is the hypothetical company described in the Discussion Document.

The Discussion Document implicitly acknowledges that the hypothetical Australian parent company has very few (if any) incentives to implement a solution, which will only benefit its 50 per cent New Zealand individual resident shareholders. There is no benefit to the Australian individual shareholders and the inevitable compliance costs will be partly borne by that group of shareholders who receive no increase in their after tax income.^[8]

IV A MORE REPRESENTATIVE EXAMPLE OF THE PRA SOLUTION

A A Sample of Trans-Tasman Companies

The Discussion Document support of the PRA solution is based on a hypothetical trans-Tasman company with, inter alia, a 50 per cent New Zealand and 50 per cent Australian shareholding. However, the following table demonstrates that the Discussion Document example is not a reliable indicator of a representative company.

Company	Year Ending	New Zealand Shareholding	Australian Shareholding
Australian Gas Light Company	2003	1.66%	97.71%
AXA	2003	2.95%	97.05%
Goodman Fielder Wattie	2003	4.64%	94.86%
National Australia Bank	2002	0.64%	98.58%
Telstra	2002	0.50%	93.20%
The Warehouse Group*	2003	97.02%	2.47%
Tower*	2003	78.81%	20.64%
Westpac	2003	3.34%	95.15%
* A New Zealand company

The New Zealand shareholding in this sample of Australian parent companies is less than 5 per cent. In the case of Westpac, the approximately 95 per cent Australian shareholders will gain no advantage from the PRA solution, and only approximately 4 per cent of the total tax paid by the New Zealand group will be passed on as an imputation credit to the small minority of New Zealand shareholders. It is perhaps not surprising that as at I July 2004, no major trans-Tasman public company has announced that it will implement the PRA solution.

The following diagram illustrates the impact of the PRA solution on an Australian parent company, which is dominated by Australian individual shareholders. The diagram is based on selected information taken from the Annual Report of Westpac Australia.^[9] The shareholding percentages, income mix and distribution were taken from the 2002 Concise Annual Report and the 2002 Financial Report. However, the combined total pre tax income of both the New Zealand and Australian and operating subsidiaries ($4000) is based on the example used in the Discussion Document.

The Australian operating subsidiary earns 85 per cent of the total combined income.

Both subsidiaries distribute 100 per cent of their net profit after tax to the parent.

The Australian parent distributes 60 per cent of its after tax income as a dividend.

C PRA: The Tax Saving Revisited

The total income of the two subsidiaries is $4000. In Diagram 3, the New Zealand Subsidiary Company only contributes 15 per cent (compared to 37.5 per cent) of the income earned by the Australian Parent Company whereas the Australian Subsidiary Company contributes 85 per cent of the income (compared to 62.5 per cent in the example portrayed in the Discussion Document.) The following table illustrates the change in the effective tax rate, which a New Zealand shareholder would expect to derive from a company such as Westpac. The fall in the effective tax rate is from 57.3 per cent to 52.5 per cent (5 per cent), which is only an 8 per cent reduction in the effective tax rate. This is significantly less than the 24 per cent benefit referred to in the Discussion Document. The difference between the respective results reflects the change in shareholding and the change in the underlying sources of income.

New Zealand shareholder	$AU	Australian shareholder	$AU
Cash dividend	84	Cash Dividend	1,596
Imputation credit	9	Imputation Credit	171
Franking credit	36	Franking credit	684
Taxable income	93	Taxable income	2,280
Tax due @ 39%	36	Tax due @ 48.5%	1,106
Less imputation credit	9	Less imputation credit	0
Less franking credit	0	Less franking credit	684
Tax payable	27	Tax payable	422
Net dividend	57	Net dividend	1,174
Effective tax rate	52.50%	Effective tax rate	48.50%

Pre-tax cash dividend	120	Pre tax cash dividend	2280
Company tax	36	Company tax	684

D Compliance Costs

The Discussion Document acknowledges that, from an individual shareholder’s perspective, the PRA method does not provide the optimal solution. This conclusion is based on the fact that only a proportion of the tax paid in each country is available to the resident shareholders of that country.

Secondly, the PRA solution will result in additional compliance costs for any company that elects to adopt it. For example, the Australian Parent Company, described in Diagram 1 and Table 1, will be required to maintain an additional memorandum account which would track the imputation credits generated in New Zealand and to attach those credits to any dividend paid to its trans-Tasman shareholders. The PRA method will only increase the after tax return of an individual New Zealand shareholder.

Unless the pro rata allocation solution provides significant additional benefits to individual Australian shareholders, the Australian Parent Company may have difficulty justifying the increased compliance costs. This could become an issue if there are alternative and more cost effective ways of achieving the desired benefits for shareholders.

V FULL STREAMING

A Introduction

One of the major criticisms of the PRA solution is that it will force an Australian parent company to allocate its available imputation and franking credits to individual shareholders that are unable to utilise them. Under the alternative of full streaming, all tax paid by the hypothetical Australian Parent Company would be allocated to the Australian shareholders whereas the tax paid by the New Zealand Subsidiary Company would be allocated solely to the New Zealand shareholders’ in the Australian Parent Company. From a trans-Tasman shareholder’s perspective, this is the optimal solution because it does not involve the wastage or misallocation of a proportion of the available imputation and franking credits and is therefore superior to the pro rata solution. It would appear from the Discussion Document that both governments rejected this alternative because they did not wish to signal that the streaming of available credits should become more acceptable.^[10] One of the four design features of both countries’ imputation regimes, which have not altered since their introduction, is the principle that credits must be allocated equally to all shareholders irrespective of their ability to utilise the credit. For example, a shareholder on a marginal rate of 19.5 per cent who receives an imputation credit at the maximum rate of $33 on a $67 cash dividend is not able to effectively utilise the surplus imputation credit, unless he/she has alternative sources of unimputed income.

Diagram 4 is based on the Australian parent company used in Diagram 3 to demonstrate the actual tax saving associated with the PRA solution. This will enable a valid comparison to be made between the two alternatives. The key difference is that the Australian shareholder no longer receives an imputation credit and the New Zealand shareholders no longer receive a franking credit. A second important difference is that the respective operating subsidiaries’ franking and imputation accounts now disclose a credit balance. In other words, there are surplus tax credits that are available even after the payment of a fully imputed dividend. The wastage associated with the PRA solution is avoided under the full streaming alternative. There is no longer any wastage of domestic credits that are otherwise allocated to the Australian Parent Company's non-resident shareholders.

C An Effective Tax Rate That is Equal to a Comparable Domestic Market Investment

Table 4 demonstrates the significant reduction in the effective tax rate associated with the full streaming option. Under this option, there is no improvement in the Australian shareholder's after tax return. However, the full streaming option enables the New Zealand shareholders to receive a dividend with an effective tax rate that is comparable to an equivalent domestic investment. Double taxation is completely eliminated.

New Zealand shareholder	$AU	Australian shareholder	$AU
Cash dividend	84	Cash Dividend	1596
Imputation credit	36	Imputation Credit	0
Franking credit	0	Franking credit	684
Taxable income	120	Taxable income	2280
Tax due @ 39%	47	Tax due @ 48.5%	1106
Less imputation credit	36	Less imputation credit	0
Less franking credit	0	Less franking credit	684
Tax payable	11	Tax payable	422
Net dividend	73	Net dividend	1174
Effective tax rate	39.00%	Effective tax rate	48.50%

Pre tax cash dividend	120	Pre tax cash dividend	2280
Company tax	36	Company tax	684

For a New Zealand investor Table 4 demonstrates that their after tax position has substantially improved. Full streaming enables the New Zealand shareholders to gain the benefit of the total amount of New Zealand company tax paid by the New Zealand subsidiary,^[11] whereas PRA solution links the tax benefit to an investor's ownership in the Australian Parent Company.^[12] The profile of the Australian Parent Company summarised in Diagram 4 will completely eliminate double taxation, reducing the New Zealand tax rate to 39 per cent. This amounts to a reduction of approximately 32 per cent compared to the approximately 8 per cent reduction associated with the PRA method.

VI BEHAVIOURAL IMPLICATIONS: CAPITAL RAISING SOLUTIONS

A Introduction

The combined effect of the waste of credits associated with the pro rata allocation solution and its complexity and compliance costs will limit its appeal. The Australian Parent Company in the hypothetical example considered in the Discussion Document has very few (if any) incentives to implement a solution which will only benefit its 50 per cent New Zealand individual resident shareholders. There is no benefit to the Australian individual shareholders and there will be inevitable compliance costs arising from the PRA solution.

The rejection by both governments of the full streaming alternative is likely to see a continuation of ad hoc solutions which achieve the same underlying benefits associated with the full streaming option. Recent examples include:

An obvious solution to triangular taxation is for an Australian Parent Company to incorporate a special purpose New Zealand subsidiary that pays a fully imputed dividend to the New Zealand shareholders. This solution would involve the New Zealand shareholders realising their investment in the Australian parent company and subscribing for shares in the new New Zealand subsidiary. The most significant example of the strategy is the $A800 million successful capital raising which was undertaken by Westpac in late 1999. Following the successful Westpac $A800 million float, the ANZ Banking Group announced a similar proposal but it has yet to proceed to making a public offer.

As part of the capital raising exercise, Westpac obtained a binding product ruling from the Inland Revenue Department which stated that the proposal did not contravene the specific anti imputation streaming provisions contained in the Income Tax Act 1994 (ITA94) including the general anti avoidance provisions. The essential features of the proposal are described in BR Prd99/13.^[13] The relationship between the parties is summarised in the following diagram, which has incorporated the actual shareholding, disclosed in the 2002 Annual Report. The combined income of the Australian branch and the New Zealand branch of $A4000 is the same as the income flow used in the Discussion Document.

D De Facto Full Streaming

A key feature of the capital raising exercise is to enable the New Zealand issuer to earn taxable income and thereby generate imputation credits. The New Zealand issuer derived rental income from their ownership of a property portfolio which was leased to Westpac affiliates throughout New Zealand. The issuer also lent the funds raised from the float to another member of the New Zealand group which generated gross interest income. Finally, a swap was entered into to ensure that the dividend payment to the New Zealand shareholders was based on the dividend paid by the Australian parent company to its Australian shareholders. The tax advantage arising from the structure was the creation of imputation credits for the New Zealand shareholders. The following table shows the advantage for the New Zealand shareholders from investing in the New Zealand issuer (which is essentially the same as Table 4).

VII BEHAVIOURAL IMPLICATIONS: FUNDING THE NEW ZEALAND GROUP

The Westpac solution effectively provides its New Zealand shareholders with all of the advantages of the full streaming option which has been rejected by both the Australian and New Zealand Governments. Note that with the Westpac solution there is no inefficient allocation of the available tax credits. All of the transaction costs are effectively borne by the New Zealand investors who derive all of the taxation advantages.

In view of the high level of wastage associated with the PRA solution, there are very few (if any) taxation reasons why an Australian parent company would wish to fund its New Zealand subsidiary in a manner that created imputation credits. A more efficient solution is for the Australian Parent Company to finance the New Zealand operations in a manner that creates franking credits. A possible response to the rejection of the full streaming alternative is for Australian companies to refinance their New Zealand operations in the following tax effective way.

The following diagram summarises the New Zealand tax implications of a typical trans-Tasman group. The Australasian tax group consists of inter alia a New Zealand Holding Company and New Zealand Operating Company. Finance is provided via the Australian Parent Company subscribing for equity in the New Zealand Holding Company (NZHC). The NZHC lends the proceeds its wholly owned New Zealand Operating Company (NZOC). The NZOC pays interest (which is an allowable deduction) to NZHC (which is gross income). Finally, the NZOC remits the after tax income to the Australian Parent Company in the form of a dividend. The total New Zealand tax ($33) consists of $22.11 company tax and 11.82 NRWT (met via supplementary dividend).

C A More Tax Efficient Alternative: Hybrid Instruments

The following more complex diagram is designed to reduce the amount of New Zealand tax and create a corresponding increase in the dividend paid to the Australian parent company. Under a conventional funding arrangement, an after tax dividend of $67 is paid to the Australian parent company. Under the following rearrangement, the net after tax New Zealand sourced dividend is increased from $67 to $90.

For the purposes of illustration only the underlying assumption is that the structure will be used to refinance the existing NZ group. The concepts are equally applicable to financing an expansion of the NZ group associated with for example a merger or acquisition. The ‘anti avoidance’ risks and implications have been ignored.

The initial rearrangement (Steps 1–5) is designed to replace the NZ group’s original equity (which created the tax consequences described in section 7.2) with a more tax effective alternative.

Step one. The Australian Parent Company subscribes for equity issued by the NZHC. The proceeds from that transaction are ultimately returned to the Australian Parent Company via, for example, a share repurchase of the original equity.

Step two. The NZHC uses the proceeds from step one to finance the acquisition of a hybrid instrument issued by the NZ Branch of the Australian Finance Company. The transaction is undertaken by the NZ branch to avoid non-resident withholding tax (NRWT) that would otherwise be payable if the transaction was booked with the Australian Finance Company instead of its New Zealand branch. The hybrid instrument will be treated as debt for Australian tax purposes, and as equity for New Zealand tax purposes. Despite the recent Australian changes to the debt/equity boundaries it is still possible to create tax efficient hybrid instruments which contain all of the tax attributes and advantages of, for example, the pre July 2001 ‘Section FC 1 Debentures’. The tax advantages associated with the hybrid instrument arise from the period cash flows described below and summarised in Table 6.

Step three. The New Zealand branch of the Australian Finance Company leads the proceeds (raised from issuing the hybrid instrument to NZHC) to the NZOC. For New Zealand tax purposes this is a transaction between two resident entities and therefore the non-resident withholding tax provisions are not applicable.

Step four. The NZOC uses the loan finance to repay the original loan shown as Step 2 in Diagram 6. From the NZOC perspective it has simply replaced its current creditor (NZHC) with a new creditor (the New Zealand branch of Australian Finance Company), which means that everything else being equal, the new arrangement will have no impact on its current business activities.

Step five. NZHC will use the loan repayment (from NZOC) to return the original equity obtained from the Australian Parent Company. One tax effective method of unwinding the original transaction would be for NZHC to repurchase the original shares from Australian Parent Company. Provided all the technical requirements contained in s CF 3(1)(b) of the ITA94 are satisfied, this transaction will not constitute a dividend and no NRWT would be payable.

The New Zealand tax consequences associated with Steps 1–5 described in section VII C above are designed to reduce the current level of New Zealand company tax from $33 to zero. The only tax payable will be $10 Australian NRWT. If everything else has been equal, the Australian Parent Company will receive a dividend of $90 from the NZHC. This represents an increase of $23 or a 34 per cent increase in the Australian Parent Company’s after tax return from its investment in the NZHC. The Australian Parent Company is in a position to invest the additional $23 in a manner that will increase the franking credits which can be distributed to, inter alia, its Australian shareholders.

(1) Periodic cash flow (a). NZOC plays interest to the New Zealand branch of Australian Finance Company. The interest is deductible to NZOC, and forms part of the New Zealand branch’s gross income. In other words, this transaction is tax neutral from a New Zealand perspective. Secondly, there are no NRWT implications because this transaction is between two New Zealand tax residents.

(2) Periodic cash flow (b)/(c). Australian Finance Company pays interest/dividend to the NZHC pursuant to the terms and conditions of the hybrid instrument. For Australian tax purposes, the transaction constitutes interest and therefore Australian NRWT (at 10 per cent) is payable to the Australian Tax Office (ATO). This is the only tax leakage associated with all of the transactions. For New Zealand tax purposes, the payment is recharacterised as a dividend. In view of the subsequent payment by NZHC of a dividend to the Australian Parent Company the conduit tax relief (CTR) provisions apply. This is the key feature of the entire transaction which eliminates all of the New Zealand company tax and New Zealand NRWT associated with the original ‘plain vanilla’ financing. However, it would be fair to say that the CTR provisions contained in the ITA94 were never intended to be used in this way.

(c) Periodic cash flow (d). The final transaction is the payment of a dividend by NZHC to the Australian Parent Company. This transaction is linked to the periodic cash flow (b) / (c) because it is the second stage of the CTR. The original purpose of the CTR provisions were to reduce the amount of New Zealand company tax, and NRWT which is payable associated with International Paper (Inc)’s investment in Carter Holt Harvey Limited who in turn owned forestry investments in Chile and Canada. However, there is nothing in the CTR regime which prevents the relief from New Zealand tax applying to trans Tasman companies.

Table 6 summarises the New Zealand tax consequences of the periodic cash flows described above in section 7.4. The main purpose of Table 6 is to demonstrate that the original after tax dividend of $67 (paid by NZHC to Australian Parent Company) has increased to $90, as discussed in section VII D. This represents an increase of $23 or 34 per cent in the after New Zealand tax return of the Australian Parent Company. This only occurs because of the CTR regime which effectively enables the New Zealand group to more efficiently utilise the underlying New Zealand company tax (imputation credits) paid by the NZOC associated with the commercial activities that were originally financed by the Australian Parent Company.

Table 6

The tax saving associated with a hybrid instrument

(a)	Interest NZOC to Aus Finance Co (NZ Branch)		100
	- No liability to deduct NZ NRWT	-
	- NET CASH PAID		100

(b)	Hybrid Aus Finance Co (NZ Branch) to NZHC	100
	- Aust NRWT – interest	(10)
	NET CASH		90

(c)	FDWP Relief s NG 7 (Hybrid)
	- Net cash	90
	- add Aust NRWT	10
	- Gross dividend	100
	- Foreign Dividend Withholding Payment (FDWP) 33%	33
	Less Aust NRWT	(10)
	Less Underlying Foreign Tax Credit (UFTC)	(Nil)
	Net FDWP	23
	S NH 7(1) Conduit Tax Relief (CTR)	(23)
	NET FDWP	(Nil)
	NET CASH RECEIVED		90

(d)	Dividend NZHC to Aus Parent Co
	- Cash	90
	FDWP credits	Nil
	Section LGI conduit tax relief dividend	23
	Gross dividend	123
	NRWT 15%	*NIL
	Net cash paid		90

* Sufficient imputation credits would be attached to the gross dividend of $123 to eliminate the amount of NRWT which would otherwise be payable, that is, $61 of imputation credits will ensure a fully imputed dividend.

VIII CONCLUSION

Prior to the enactment of the PRA solution there were no logical reasons why the hypothetical trans-Tasman group of companies outlined in the Discussion Document (and reproduced as Diagram 1) would wish to pay New Zealand company tax. All of the imputation credits created by the New Zealand subsidiary were wasted because they could not be utilised by any of the shareholders.

What then are the key behavioural implications of the recently enacted PRA solution?

The profile of trans-Tasman companies outlined in Table 2 suggest that the PRA solution will provide the New Zealand individual shareholder with a modest increase in their after tax dividend income. The dilution effect means that most of the New Zealand imputation credits will still continue to be wasted because they will be allocated to the Australian shareholders who cannot offset them against their Australian tax liability.

Accordingly, the PRA solution is unlikely to have a significant impact on the current range of trans-Tasman tax strategies utilised by the major trans-Tasman public companies. The PRA solution is likely to encourage the development of Westpac/ANZ ad hoc solutions, which in substance provide the same taxation benefits as the full streaming alternative.

Alternatively, Australian public companies may simply ignore the PRA solution to the detriment of their New Zealand shareholders.

^[6] Rob Hosking, ‘Tax Specialists Pour Scorn on Tax Deal’, National Business Review, 21 February 2003, 5.

^[7] Minter Ellison Rudd Watts, Tax Newsletter, May 2002, 5, available online at http;//www.minterellison.co.nz.

^[9] Shareholding statistics taken from Westpac Australia Concise Annual Report 2002. Income statistics taken from Westpac Financial Report 2002, Note 29, 114. Both documents are available online at http://www.westpac.gov.au.

^[12] We saw earlier in Table 3, section IV C that a small NZ shareholding will only create a reduction of 8 per cent in the New Zealand shareholder’s tax liability.

^[13] BR Prd 99/13, Tax Information Bulletin, Vol 11:10 (November 1999) 7. This ruling was replaced with BR Prd 02/14, Tax Information Bulletin Vol 14:11 (November 2002) 5.

Journal of the Australasian Tax Teachers Association