Phil has some good thoughts as usual on the new investment tax.
The following is what was said in the House according to Hansard:
John Key: Will the Government cave in to any other companies if they too start to take out full-page ads in the newspaper, and in that case, which companies?
Michael Cullen: No. I see suggestions are made that those who set up UK investment trusts should have some kind of transitional exemption. Those trusts are set up deliberately as avoidance mechanisms using the grey list.
Phil goes on to say:
Cullen is wrong, wrong, wrong. Many UK listed investment trusts like Foreign and Colonial have been around for more than a century. They are a bonafide investment structure both in the UK and New Zealand. They are another form of legitimate managed fund but with a number of differences to the traditional NZ-domiciled fund.
It’s a pretty bad move by Cullen to call the UK listed trusts tax dodges. There are many possible reasons why trusts may be resident in the UK. In any case, by using the phrase tax avoidance this automatically paints the trusts in a bad light. If the can legally reduce their tax liability, this isn’t avoidance Dr. Cullen.