Option 4: Charities should be able Allows for unlimited charitable donations. Does not achieve the goal of ensuring that LTCs are not able to own LTC interests (status quo). to be held by what is effectively a wide pool of beneficiaries. Has no effect on existing structures. May encourage more charities to use LTCs. No legislative change is required. Eligibility criteria: LTCs Option 1: Māori Authorities are Achieves the goal of ensuring that LTCs are not able to be held For Authorities which currently own LTCs directly, this owned by Māori Authority precluded from owning LTCs by what is effectively a wide pool of beneficiaries. proposal would result in restructuring their separate business directly or indirectly. operation to either: Should a Māori Authority be To achieve equivalent transparent tax treatment, Māori precluded from owning a LTC Authorities would have to use limited partnerships, which are an alternative look-through vehicle to achieve the same (which is ordinarily reserved for intended for use as widely held investment vehicles. outcome, which may result in compliance cost; or closely held businesses) either to a standard company in which case there will be directly or indirectly (as a situations in which excess imputation credits cannot be beneficiary of a trust) because a readily utilised. Māori Authority typically has a wide pool of beneficiaries? Requires legislative changes. Option 2: Māori Authorities are Achieves the goal of ensuring that LTCs are not able to be held May provide Māori Authorities which currently own LTCs precluded from owning LTCs by what is effectively a wide pool of beneficiaries. with some small advantage (through lower on-going directly or indirectly, but existing operational costs) over Māori Authorities which do not structures are grand-parented. Saves Māori Authorities the cost of restructuring their current currently own LTCs. LTC interests. Requires legislative changes. Option 3: Māori Authorities are Has no effect on existing or future structures. Does not achieve the goal of ensuring that LTCs are not able not precluded from owning LTCs to be held by what is effectively a wide pool of beneficiaries. directly or indirectly (status quo). No legislative change is required.
Option 4: Charities should be able to own LTC interests (status quo). Allows for unlimited charitable donations. Has no effect on existing structures. No legislative change is required. Does not achieve the goal of ensuring that LTCs are not able to be held by what is effectively a wide pool of beneficiaries. May encourage more charities to use LTCs. Eligibility criteria: LTCs owned by Māori Authority Should a Māori Authority be precluded from owning a LTC (which is ordinarily reserved for closely held businesses) either directly or indirectly (as a beneficiary of a trust) because a Māori Authority typically has a wide pool of beneficiaries? Option 1: Māori Authorities are precluded from owning LTCs directly or indirectly. Achieves the goal of ensuring that LTCs are not able to be held by what is effectively a wide pool of beneficiaries. To achieve equivalent transparent tax treatment, Māori Authorities would have to use limited partnerships, which are intended for use as widely held investment vehicles. For Authorities which currently own LTCs directly, this proposal would result in restructuring their separate business operation to either: an alternative look-through vehicle to achieve the same outcome, which may result in compliance cost; or to a standard company in which case there will be situations in which excess imputation credits cannot be readily utilised. Requires legislative changes. Option 2: Māori Authorities are precluded from owning LTCs directly or indirectly, but existing structures are grand-parented. Achieves the goal of ensuring that LTCs are not able to be held by what is effectively a wide pool of beneficiaries. Saves Māori Authorities the cost of restructuring their current LTC interests. May provide Māori Authorities which currently own LTCs with some small advantage (through lower on-going operational costs) over Māori Authorities which do not currently own LTCs. Requires legislative changes. Option 3: Māori Authorities are not precluded from owning LTCs directly or indirectly (status quo). Has no effect on existing or future structures. No legislative change is required. Does not achieve the goal of ensuring that LTCs are not able to be held by what is effectively a wide pool of beneficiaries.