Qualifying for zero-rating

Some interest payments can qualify for a 0% rate of Approved Issuer Levy (AIL) instead of the standard 2% rate. This exception is limited to certain debt securities that are widely held and issued in New Zealand dollars.

Requirements to qualify for zero-rating

To qualify for the zero rate on interest payments all the following must be met:

• be shown in New Zealand dollars
• be a regulated offer for the purposes of the Financial Markets Conduct Act 2013
• not be issued as a private placement
• not be an asset-backed security
• be conducted through a registry and paying agent with a fixed establishment in New Zealand
• be listed on a licenced market or satisfy a widely-held test
• be registered with us.

Meeting the widely-held test

To meet the widely-held test a security must:

• be held by 100 separate persons who the issuer could reasonably assume are not associated at the time the test applies
• have no person or group of associated persons holding a 10% or greater interest at the time of applying the test.