New OIO rules require acquisition structure and other tax-related information to be provided up-front

Tax Alert - August 2021

By Campbell Rose, Matthew Scoltock & Greg Mitchell

The Overseas Investment Amendment Act (No. 3) 2021 (“Amendment Act”) received Royal Assent on 24 May 2021, and contains a new requirement for commercially significant tax-related information to form part of certain applications for Overseas Investment Office (“OIO”) consent.

Regulations under the Amendment Act have been a long time coming (we published a high-level summary of their likely content in mid-2020), and were publicly released on 1 July 2021. They apply to certain applications for OIO consent made on or after 5 July 2021. The regulations represent a material change to deal processes involving OIO consent, requiring acquisition structure and other tax-related information to be provided at the time of applying for consent. Read on for a summary of what this means in practice.

Summary of the Regulations

Regulations 69C and 69D require a relevant investor to disclose:

  • A short description of the investor’s plan for the acquired assets over the three-year period from completion, including information as to any significant capital expenditure likely to be made or needed. Inland Revenue expects that this will include a brief summary of material new investment, expansion/divestment of assets, integration with other assets, or any major restructuring.
  • The tax residence of the investor and, if relevant, of its immediate holding company and its ultimate holding company.
  • The investor’s capital structure, including the likely level of debt funding, equity funding, and whether or not the investment is likely to involve a hybrid arrangement or hybrid entity.
  • The likely nature and extent of any inbound or outbound arrangements that are likely to be subject to New Zealand’s transfer pricing laws (e.g., goods, raw materials, administration and/or management services, technical services, research and development, commissions, rents, royalties, licence fees, interest, guarantee fees, insurance premiums/recharges, etc.).
  • Any “relevant” tax treaty (which, we understand, Inland Revenue considers to be any tax treaty between New Zealand and any country or territory to or from which there are likely to be significant flows of funds).
  • Whether or not an application is likely to be made to Inland Revenue for a ruling or advance pricing agreement in respect of any aspect of the investment.

Interestingly, the scope of the regulations is limited to “… overseas investment in significant business assets…”, and does not appear to extend to overseas investment in “sensitive land” (although the enabling legislation does seem to permit the regulations to cover the latter).

The tax information must be accurate at the time it is disclosed. It must be disclosed in a separate tax-specific section of the application for OIO consent, and must be accompanied by a signed statement by the investor (or its duly authorised representative) verifying that, to the best of its knowledge, the tax information is accurate.

To facilitate (and, presumably, simplify and standardise) the complete disclosure of tax information, Inland Revenue has issued a new form, IR 1245 (and related information), which allows for the use of “reasonable estimates” based on the likely facts and circumstances as of the date of the overseas investment.


When the prospect of new regulations was first raised, we flagged in a May 2020 Tax Alert article the need for a balance to be struck between protecting the integrity of New Zealand’s tax base, and ensuring that the disclosure of tax information is not unreasonably onerous.

Encouragingly, the tax information prescribed by the regulations has largely aligned with the high-level list of tax information that the OIO previously indicated was likely to be required. The regulations also do not – on their face – demand the same granularity of disclosure that we have seen in Australia, where the Australian Taxation Office and the Foreign Investment Review Board can require the interest rate on cross-border related-party debt to be disclosed, resulting in detailed transfer pricing analysis and a self-assessed risk rating.

It is also helpful that Inland Revenue has – to some extent – eased the compliance burden created by the new tax information disclosure, by issuing IR 1245.

While we expect that it should generally be a straightforward exercise to complete the disclosure itself, it will need to be underpinned by up-front thinking on the key features of acquisition structuring and related matters; some of the tax information may require greater depth of analysis prior to the OIO consent application being submitted than has been the case to date. Deloitte is well placed to assist with every aspect of the tax information disclosure – and with tax structuring more broadly – including by helping to identify a suitable country/territory for the immediate holding company. We can also advise on the potential application of New Zealand’s transfer pricing or “hybrid mismatch” laws to ensure that all relevant issues have been considered as appropriate given that all information is passed on to Inland Revenue.

As noted above, with the new regulations, it will be critical that the acquisition structure is considered far earlier in the M&A lifecycle than has ordinarily been the case, and that it is known (or largely known) at the time of the application for OIO consent. For any overseas investment in “sensitive New Zealand assets,” it will be critical that the investor engages with its New Zealand tax advisor as early as possible so that that the most tax-efficient investment structure can be finalised before applying for OIO consent. If an investment structure is not well considered, or if the information disclosed on the IR 1245 is incomplete, OIO consent is likely to be delayed.

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