Appendix List of detailed design decisions OECD Recommendations 1 and 2 A person who receives a payment is deductible to the payer in another country will not be entitled to the benefit of any imputation credit attached to the payment. When the hybrid rules apply to a hybrid financial instrument issued by a New Zealand taxpayer and denominated in a foreign currency, the deduction denied will take into account any foreign currency fluctuations on the instrument which would otherwise be taken into account for tax purposes, and any net income from the instrument including any foreign currency fluctuations will be When the hybrid rules apply to a hybrid financial instrument held by a New Zealand taxpayer and denominated in a foreign currency, the taxpayer will not take into account any foreign currency fluctuations on the instrument, unless the instrument is an interest in a FIF which is subject to the comparative value method. To the extent that a payment on a hybrid financial instrument can be proven to give rise to taxation of an investor in the payee entity under another country’s controlled foreign company (CFC) regime, the payer will be allowed a deduction for the payment. If a person holds a FIF interest as part of a share repo arrangement, that person will be required to use the comparative value or attributed foreign income method to determine their income from the FIF interest. If a person holds New Zealand shares as part of a share repo arrangement, where the borrower is a non-resident, the person is not entitled to the benefit of an imputation credit attached to any dividends on the shares. OECD recommendation 1 will only apply to timing mismatches if: the mismatch arises on an instrument with a term of 3 years or more or on an instrument that has been extended to beyond 3 years; and
Appendix List of detailed design decisions OECD Recommendations 1 and 2 A person who receives a payment is deductible to the payer in another country will not be entitled to the benefit of any imputation credit attached to the payment. When the hybrid rules apply to a hybrid financial instrument issued by a New Zealand taxpayer and denominated in a foreign currency, the deduction denied will take into account any foreign currency fluctuations on the instrument which would otherwise be taken into account for tax purposes, and any net income from the instrument including any foreign currency fluctuations will be When the hybrid rules apply to a hybrid financial instrument held by a New Zealand taxpayer and denominated in a foreign currency, the taxpayer will not take into account any foreign currency fluctuations on the instrument, unless the instrument is an interest in a FIF which is subject to the comparative value method. To the extent that a payment on a hybrid financial instrument can be proven to give rise to taxation of an investor in the payee entity under another country’s controlled foreign company (CFC) regime, the payer will be allowed a deduction for the payment. If a person holds a FIF interest as part of a share repo arrangement, that person will be required to use the comparative value or attributed foreign income method to determine their income from the FIF interest. If a person holds New Zealand shares as part of a share repo arrangement, where the borrower is a non-resident, the person is not entitled to the benefit of an imputation credit attached to any dividends on the shares. OECD recommendation 1 will only apply to timing mismatches if: the mismatch arises on an instrument with a term of 3 years or more or on an instrument that has been extended to beyond 3 years; and
2017-other-beps-19-cabinet-paper-hybrids-july-2017.docx