New subpart FG and changes to the NRWT rules will apply NRWT or AIL (to the extent it is not already) to a notional interest payment from a New Zealand branch of a bank to its head office. This interest payment will be equal to the amount already included in the branch’s financial statements and claimed as a deduction against New Zealand income of the branch. Application date For existing arrangements, the branch amendments will apply to interest payments on or after the date shown in the table below. For all other arrangements, the branch amendments will apply to interest payments on or after the day the bill is enacted. Scenario Borrower Lender Application Clause Intended date regime Onshore branches Related party NZ Corporate Foreign associate Royal assent 5(5) NRWT with NZ Branch Intra-bank NZ Bank Sub Foreign parent with 5 5(4)(b) NRWT or Group NZ Branch AIL NZ Bank Branch Foreign head office 2 years 83(2) NRWT or Entity AIL Corporate NZ Corporate Third Party with 5 5(4)(a) NRWT or including NZ NZ Branch AIL Bank party NZ borrower Foreign bank with No change 247(1) - Net income bank NZ Branch RF tax 2(1)(d) Offshore branches Wholesale NZ Bank Sub Third parties or 5 years 5(6) NRWT or funding branch Foreign parent AIL The ability for a member of a banking group to pay AIL on an interest payment to an associated party will apply from the date of enactment. Further detail is provided on application dates under below. Key features Key features Offshore branch exemption (Clauses 5, 269, 270, 279 and 333) NRPI includes only income that has a New Zealand source. One of the exclusions from having a New Zealand source is the offshore branch exemption. This applies when the interest is derived from money lent outside New Zealand to a New Zealand resident that uses that money for the purposes of a business it carries on through a fixed establishment offshore. This exemption is intended to apply to a New Zealand resident operating an active business through a branch in another country. If that offshore branch borrows money
New subpart FG and changes to the NRWT rules will apply NRWT or AIL (to the extent it is not already) to a notional interest payment from a New Zealand branch of a bank to its head office. This interest payment will be equal to the amount already included in the branch’s financial statements and claimed as a deduction against New Zealand income of the branch. Application date For existing arrangements, the branch amendments will apply to interest payments on or after the date shown in the table below. For all other arrangements, the branch amendments will apply to interest payments on or after the day the bill is enacted. Scenario Borrower Lender Application date Clause Intended regime Onshore branches Related party NZ Corporate Foreign associate with NZ Branch Royal assent 5(5) NRWT Intra-bank Group NZ Bank Sub Foreign parent with NZ Branch 5 5(4)(b) NRWT or AIL Entity NZ Bank Branch Foreign head office 2 years 83(2) NRWT or AIL Corporate NZ Corporate including NZ Bank Third Party with NZ Branch 5 5(4)(a) NRWT or AIL party bank NZ borrower Foreign bank with NZ Branch No change 247(1) - RF 2(1)(d) Net income tax Offshore branches Wholesale funding NZ Bank Sub branch Third parties or Foreign parent 5 years 5(6) NRWT or AIL The ability for a member of a banking group to pay AIL on an interest payment to an associated party will apply from the date of enactment. Further detail is provided on application dates under Key features below. Key features Offshore branch exemption (Clauses 5, 269, 270, 279 and 333) NRPI includes only income that has a New Zealand source. One of the exclusions from having a New Zealand source is the offshore branch exemption. This applies when the interest is derived from money lent outside New Zealand to a New Zealand resident that uses that money for the purposes of a business it carries on through a fixed establishment offshore. This exemption is intended to apply to a New Zealand resident operating an active business through a branch in another country. If that offshore branch borrows money
2016-commentary-archcrm.docx