Taxes and the backdating of stock option exercise dates
To this end, the proposed amendments respond directly to this concern only and are not intended to create a preference.(Chapman Tripp, Chartered Accountants Australia and New Zealand, Corporate Taxpayers Group, FNZ, Glendinnings, KPMG, New Zealand Law Society, New Zealand Media and Entertainment, New Zealand Shareholders Association Inc, NZX Limited, Pw C, Roger Wallis, Russell Mc Veagh)(Chapman Tripp, Chartered Accountants Australia and New Zealand, Corporate Taxpayers Group, FNZ, New Zealand Law Society, New Zealand Shareholders Association Inc, NZX Limited, Pw C, Roger Wallis, Russell Mc Veagh) The proposed demerger rules should apply to New Zealand companies and company demergers generally.While there is an argument that the demerger rules should be extended to New Zealand companies, New Zealand companies have available to them a number of mechanisms in the Income Tax Act to prevent demergers giving rise to a taxable dividend for their shareholders.
Listed Australian companies, however, often have several thousand New Zealand shareholders that are taxable on any dividends received, but they do not structure their demergers to be efficient for New Zealand tax purposes.
In the latter situation, this is the case if: Officials note that Australian companies are less inclined to take into account the tax treatment of their minority New Zealand shareholders to prevent dividend treatment when carrying out a demerger.
Australian shareholders are generally not taxed on these transactions under Australian tax law, subject to specific anti-avoidance rules not applying.
Section BB 1 of the Income Tax Act 2007 provides that the income tax rates must be fixed by an annual taxing Act.
The section does not provide that they must be set in advance of the tax year’s commencement.