This paper reviews the taxation of optional distributions in New Zealand. Three types of optional dividend plan have been used: bonus election plans, dividend reinvestment plans and profit distribution plans. This paper also looks at share repurchases which are similar to optional dividends as they also give shareholders a choice between cash and shares. Originally each type of optional dividend was taxed according to its component transactions, but their taxation was subsequently aligned due to their economic similarity and to minimise opportunities for dividend streaming. However, although share repurchases are similar they are taxed differently, potentially allowing dividend streaming. Dividend reinvestment plans are the most common form of optional dividend used in New Zealand, despite profit distribution plans providing much higher levels of reinvestment. This paper identifies issues with calculating resident withholding tax (RWT) on taxable bonus issues and the misalignment of company, RWT and personal tax rates as possible reasons why companies are not using profit distribution plans.

This article critically examines the Australian Taxation Office (ATO) interpretation of the second statutory test for company residence found in the definition of ‘resident’ in sub-section 6(1) of the Income Tax Assessment Act 1936. The statutory test consists of three components: first, if the company is incorporated in Australia then it is a resident; second, if the company is not incorporated in Australia but the company is carrying on a business in Australia and has its central management and control in Australia then it is a resident; and third, it is not incorporated in Australia but it is carrying on business in Australia and has its voting power controlled by shareholders who are resident in Australia then it is a resident of Australia for taxation purposes. The central management and control test contained in the public Taxation Ruling TR 2004/15 has been the subject of considerable conjecture and confusion for many years. The ruling states that the test of residency for a company not incorporated in Australia consists of two requirements: the company must be carrying on business in Australia and it must have its central management and control located in Australia. A company not incorporated in Australia and thus not satisfying the first test of residency must have its central management and control in Australia or have the majority of shareholders resident in Australia coupled with the carrying on of a business in Australia before it is held to be a resident. The contrary view is that the central management and control test on its own may be sufficient to deem a non-Australian incorporated company to be a resident for taxation purposes. It is contended that there is no need to demonstrate that the company is also carrying on a business in Australia. This article contends that the approach of the Commissioner of Taxation contained in TR 2004/14, is open to serious doubt.

As part of its controversial forced amalgamation program, the Baird Government announced that merged councils would fall under a rate path freeze for a period of four years. During that time, merged municipalities would face the same rate increases they would have experienced had they not been amalgamated. The NSW Government also requested the Independent Pricing and Regulatory Tribunal (IPART) to offer recommendations on how the rate freeze policy should best be implemented and IPART released Freezing Existing Rate Paths for Newly Merged Councils in August 2016. This paper examines the rate freeze policy and the IPART report and demonstrates that they would impose serious efficiency, equity and financial sustainability problems on compulsorily consolidated councils.