Power tool for the investment market

Eliminating tax on stock lending is like adding a power tool to the local investment market toolbox, New Zealand Exchange chief Mark Weldon says.

He said Government changes to the present scheme would bring the country into line with leading economies and make it more attractive as an investment destination.

"To date, New Zealand market participants have been like master builders missing critical tools from their toolbox."

Weldon said the lack of a market for borrowing stock - a result of tax laws - had been a "significant impediment" to market investment.

The Government is proposing new tax rules to cover transactions involving the lending of shares, units and bonds for a fee.

The proposals also include anti-avoidance rules to prevent the use of securities lending giving rise to undue tax advantages or avoidance.

Submissions on the discussion document close on January 31.