New Zealand CUs worried about possible tax review

AUCKLAND, N.Z. (10/9/07)--Credit unions' growth in New Zealand has been stalled by outdated laws, but the removal of the statutes' restrictions may come at a price--credit unions' tax exemption, says an article in an New Zealand online business publication.

The article notes that New Zealand's credit unions are shrinking to 52 credit unions, compared with 160 more than a decade ago ( Oct. 7).

Doug McLaren, CEO of the New Zealand Association of Credit Unions (NZACU), a member organization of the World Council of Credit Unions, told the publication that growth has been stalled by outdated laws that prevent credit unions from raising capital through share issues and that limit borrowing to invest in business growth.

The article quotes a banking expert who says that the government, which has pledged to remove the restrictions, likely will consider removing the tax exemption as a tradeoff.

The Reserve Bank would not comment on the tax review but instead commented on providing tougher regulation of financial institutions--including credit unions--due to collapses in the industry.

A statement to the Sunday Star-Times from the office of Finance Minister Michael Cullen, who previously has supported credit unions, said there was "no sound reason" for special treatment for credit unions. (CU New Now)