Securitisation tax changes close to a reality

Tuesday 22 January 2019

Authors: Graham Murray and Catherine Bunting

​The proposed tax rules for securitisation vehicles remain on track for enactment in the first half of 2019. Recent tweaks to the proposed rules will clarify their operation and, most significantly, will extend the rules to existing securitisation structures as well as newly formed structures.  

Proposed changes to the securitisation regime

The Taxation (Annual Rates for 2018-19, Modernising Tax Administration, and Remedial Matters) Bill (the Bill) is currently before Parliament. The Bill as introduced contained new tax rules for securitisation structures, extending flow-through tax treatment to these entities. We outlined these changes in an earlier newsletter, which can be found here.

The Officials' Report on submissions on the Bill was released late last week, together with a second reading of the Bill. The proposed rules have been tweaked to reflect various concerns of submitters, but the thrust of the proposal remains the same (flow through tax treatment).

Existing structures can access the new rules

Existing debt funding special purpose vehicles (SPVs) will now be able to adopt flow through tax treatment. In the Bill as introduced, existing SPVs were effectively excluded, due to the requirement that an election to treat the SPV as transparent be made in the first return after the originator transferred assets to the SPV. The Bill as reported back remedies this situation by permitting an originator to make an election in their return for an income year starting on or after the date the Bill receives royal assent.

Including existing SPVs might result in a deemed transfer of securitised assets back to the originator upon the election being made. To prevent this from occurring the originator will be treated as effectively stepping into the shoes of the SPV when it elects into the regime. No income or expenditure will arise when the election is made, but the originator will need to account for income and recognise expenses in relation to the SPV as if it had always held the SPV's assets and liabilities.

Other clarifying changes to be aware of

Other changes of a clarifying nature include:

  • Clarifying that the originator is treated as holding the assets of the SPV for tax purposes when an election is made. For tax purposes, the originator is attributed the SPV's status, intention and purpose to the extent of the relevant originator's transfer of assets to the SPV. It was previously unclear whether the originator or some other entity which consolidated the SPV for financial reporting purposes would be the owner of the assets for tax purposes. 

  • Limiting the regime to situations where the SPV and the originator are New Zealand tax residents. 

  • Clarifying the requirements that the assets be included as assets of the originator or a member of the same wholly-owned group as the originator for financial reporting purposes.

Where to from here?

With the proposals close to being finalised the securitisation industry can look forward to utilising flow through treatment shortly.

The proposed regime remains "elective", and with the rules in near final form interested parties should start considering the consequences of making an election for their current and future SPVs.

The Bell Gully tax team has market leading experience in securitisation structures and can advise you of the pros and cons of making an election under the new rules.

If you would like to discuss the implications of the Bill, please contact your usual Bell Gully adviser or any of the contacts listed.​


This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

For more information
  • Graham Murray

    Partner Auckland
  • Mathew McKay

    Partner Auckland
  • John Bassett

    Consultant Auckland
  • Hayden Roberts

    Senior Associate Auckland
Related areas of expertise
  • Tax
  • Securitisation