Option 3 Does not meet main Supported by submitters No compelling reason – introduce a objective Broadly consistent with why widely offered debt widely offered Does not meet criteria (a) Australia should be preferred test to zero-rate and (b) Increases compliance and AIL Partially meets criterion administration costs on (c) adhering to arbitrary thresholds Option 4 Does not meet main More consistent than Does not address – introduce a objective current exemptions but inconsistency between specific bank Partially criteria (a) only for banks banks and non-banks. exemption from and (b) Very difficult to stop AIL Meets criterion (c) extension to other or all industries Option 5 Meets main objective Achieves objective with Internationally novel – AIL to interest Meets criteria (a), (b) and regard to offshore payments made (c) branches by offshore Raises additional revenue branches to the extent that they lend to New Zealand (preferred option) Option 6 Meets main objective Achieves objective with May encourage – AIL to interest Meets criteria (a), (b) and regard to onshore investment into New payments made (c) branches Zealand directly by to a Prevents circumvention foreign lenders that has of AIL by structuring a New Zealand into this arrangement if branch with a other preferred options banking licence implemented if the lender and Consistent with other borrower are onshore branch changes associated recommended in NRWT RIS (preferred option) Option 7 main objective Achieves objective with May encourage – apply AIL to Meets criteria (a), (b) and regard to funding investment into New notional loans (c) allocated to onshore Zealand directly by to a New branches foreign lenders Zealand branch Raises additional tax revenue (preferred Broadly consistent with option) Australia Option 8 AIL Does not meet main Allows consideration of No reason why changes – defer AIL objective changes at same time as should be aligned with changes until a During deferral criteria widely held bonds widely held bonds review of are the same as option 1 Allows current widely-held which includes not inconsistent treatment exemptions is meeting criteria (a) or (b) and effective subsidy of undertaken Partially meets criteria banks to remain for (a) and (b) longer Does not meet criterion (c)
Option 3 – introduce a widely offered test to zero-rate AIL Does not meet main objective Does not meet criteria (a) and (b) Partially meets criterion (c) Supported by submitters Broadly consistent with Australia No compelling reason why widely offered debt should be preferred Increases compliance and administration costs on adhering to arbitrary thresholds Option 4 – introduce a specific bank exemption from AIL Does not meet main objective Partially criteria (a) and (b) Meets criterion (c) More consistent than current exemptions but only for banks Does not address inconsistency between banks and non-banks. Very difficult to stop extension to other or all industries Option 5 – AIL to interest payments made by offshore branches to the extent that they lend to New Zealand (preferred option) Meets main objective Meets criteria (a), (b) and (c) Achieves objective with regard to offshore branches Raises additional revenue Internationally novel Option 6 – AIL to interest payments made to a that has a New Zealand branch with a banking licence if the lender and borrower are associated (preferred option) Meets main objective Meets criteria (a), (b) and (c) Achieves objective with regard to onshore branches Prevents circumvention of AIL by structuring into this arrangement if other preferred options implemented Consistent with other onshore branch changes recommended in NRWT RIS May encourage investment into New Zealand directly by foreign lenders Option 7 – apply AIL to notional loans to a New Zealand branch (preferred option) main objective Meets criteria (a), (b) and (c) Achieves objective with regard to funding allocated to onshore branches Raises additional tax revenue Broadly consistent with Australia May encourage investment into New Zealand directly by foreign lenders Option 8 – AIL defer AIL changes until a review of widely-held exemptions is undertaken Does not meet main objective During deferral criteria are the same as option 1 which includes not meeting criteria (a) or (b) Partially meets criteria (a) and (b) Does not meet criterion (c) Allows consideration of changes at same time as widely held bonds No reason why changes should be aligned with widely held bonds Allows current inconsistent treatment and effective subsidy of banks to remain for longer
2016-ris-archcrm-bill-06.docx