CA ANZ considers Inland Revenue’s interpretation to be well thought out and technically correct but notes that it may be difficult to implement in practice.

The submission highlights that the interpretation fragments economic arrangements into multiple taxable events with little or no net economic gain, leading to outcomes that are not intuitive and may not be well understood.

CA ANZ also raises concern that treating transfers as disposals based on loss of control does not sufficiently consider whether beneficial ownership has, in substance, been relinquished, particularly where taxpayers retain full economic exposure and a right to receive equivalent assets.

In addition, a strict transaction-by-transaction approach is seen as creating significant compliance costs without a corresponding revenue benefit, increasing the risk of error, omission, and inadvertent non-compliance.

CA ANZ therefore encourages an alternative approach that distinguishes genuine changes in ownership from temporary transfers, and suggests that simplified compliance methods or legislative change be considered.