channelled through a branch or an entity that has a branch. This ensures that funding transactions that are economically equivalent have a consistent tax treatment. Offshore branch exemption Changes to the source rules apply NRWT or AIL to an interest payment from the offshore branch of a New Zealand resident to a non-resident to the extent that the offshore branch lends money to New Zealand Onshore branch exemption Changes to the NRWT rules apply NRWT or AIL to an interest payment from a New Zealand (or New Zealand branch of a non-resident) to a non-resident if that non-resident has a New Zealand branch, unless the interest is derived by the New Zealand branch. These changes do not apply to a New Zealand resident (or New Zealand branch of a non-resident) that pays interest to a non-resident that they are not associated with and that has a New Zealand branch that holds a banking licence. Onshore notional loans New subpart FG and changes to the NRWT rules apply NRWT or AIL (to the extent it was 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 apply to interest payments on or after the date shown in the table below. For all other arrangements, the branch amendments apply to interest payments on or after the day the bill was enacted, being 30 March 2017. Application date Scenario Borrower Lender for existing Intended regime arrangements Onshore branches Related party NZ Corporate Foreign associate Royal assent NRWT with NZ Branch Group NZ Bank Sub Foreign parent Income years five NRWT or AIL with NZ Branch years after Royal assent Intra-bank Entity NZ Bank Branch Foreign head Income years two NRWT or AIL office years after Royal assent Corporate NZ Corporate Party with Income five NRWT or AIL including NZ Bank NZ Branch years after Royal assent Third party bank NZ borrower Foreign bank No change Net income tax with NZ Branch Offshore branches
channelled through a branch or an entity that has a branch. This ensures that funding transactions that are economically equivalent have a consistent tax treatment. Offshore branch exemption Changes to the source rules apply NRWT or AIL to an interest payment from the offshore branch of a New Zealand resident to a non-resident to the extent that the offshore branch lends money to New Zealand Onshore branch exemption Changes to the NRWT rules apply NRWT or AIL to an interest payment from a New Zealand (or New Zealand branch of a non-resident) to a non-resident if that non-resident has a New Zealand branch, unless the interest is derived by the New Zealand branch. These changes do not apply to a New Zealand resident (or New Zealand branch of a non-resident) that pays interest to a non-resident that they are not associated with and that has a New Zealand branch that holds a banking licence. Onshore notional loans New subpart FG and changes to the NRWT rules apply NRWT or AIL (to the extent it was 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 apply to interest payments on or after the date shown in the table below. For all other arrangements, the branch amendments apply to interest payments on or after the day the bill was enacted, being 30 March 2017. Scenario Borrower Lender Application date for existing arrangements Intended regime Onshore branches Related party NZ Corporate Foreign associate with NZ Branch Royal assent NRWT Group NZ Bank Sub Foreign parent with NZ Branch Income years five years after Royal assent NRWT or AIL Intra-bank Entity NZ Bank Branch Foreign head office Income years two years after Royal assent NRWT or AIL Corporate NZ Corporate including NZ Bank Party with NZ Branch Income five years after Royal assent NRWT or AIL Third party bank NZ borrower Foreign bank with NZ Branch No change Net income tax Offshore branches
2017-sr-nrwt.docx