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Inland Revenue has updated the regulations that impact on low-interest loans made by companies to employees and shareholders.

The interest rates regulations provide a benchmark between when a loan is either a fringe benefit and therefore subject to Fringe Benefit Tax or in the case of a loan provided to a shareholder or a relative of a shareholder, when the loan might be regarded as a dividend.

The regulations were changed at the end of February and have provided for the rate of interest to be reduced from 5.99% to 5.77% stop

This reduction comes into effect for the quarter beginning 1 January 2016 and will continue for subsequent quarters unless advised by further regulation.

 

The information in this article is indicative of NZ tax rules and changes and not intended to be complete for all intents or purposes and does not constitute advice. It is recommended that you obtain professional advice, suited to your particular circumstances, from us before acting on anything you read.