Both
here and in Australia, the
unique commercial and tax features of joint venture are finding favour in
forestry, fishing, technology and infrastructure projects. For New
Zealand mining companies, joint ventures
provide a means of access to foreign know how and investment funds, while
retaining their corporate independence and their hard-earned tax losses.

This
paper discusses some of the practical income tax and GST considerations where a
joint venture structure is contemplated. The first part of the paper considers
income tax, and in particular how joint ventures enable companies to access and
carry forward tax losses. It explains why a joint venture may be advantageous
relative to a jointly owned company.

The
second part of the paper concerns GST and the focus is on two
aspects:
1. Joint ventures may be registered
for GST. In some instances they have no choice and are required to do so. Where
a joint venture is registered in respect of a taxable activity, the members are
not permitted to register in respect of the same activity. This may be problem
where the member has incurred its own expenses and the member wishes to register
in its own right to claim back the GST on those expenses. This paper explores
the issue and possible solutions.
2. It is not uncommon to see joint
ventures claiming GST on the costs of production, and the production being sold
(and GST is being charged) by the members. In this paper we consider whether
these arrangements have a tax risk, and what can be done to make them
technically sound.