CA ANZ recently provided comment on draft public rulings PUB00338. This consultation document contains five rulings and commentary. It sets out the income tax treatment and availability of foreign tax credits for New Zealand investors in a US LLC that is taxed on a fiscally transparent basis as a partnership in the United States, but as a company in New Zealand. The rulings demonstrate the different treatment depending on whether the interest in the US LLC is classified as:
- Not being a FIF
- A FIF or as a CFC, or
- As a non-attributing active CFC.
There is also an analysis of the relevant fiscal transparency and double tax relief provisions in the NZ/US double tax agreement.
These rulings and commentary are clear and concise and provide a detailed analysis of the tax law and how it applies to five different scenarios.