1: Title
This Act is the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009.
2: Commencement
1: This Act comes into force on the day on which it receives the Royal assent, except as provided in this section.
2: Sections 74 108 319 320 322 323 502 510 546 549 557(26), (45), (53), (132), (145), and (147) 605(1), and (3) 606 610 682 862 863
3: Section 704(5)
a: in relation to the Parliamentary Service, on 1 October 1986:
b: in relation to the Office of the Clerk of the House of Representatives, on 1 August 1988.
4: Section 855
5: Section 850
6: Sections 851 860
7: Sections 847 848 849 852 853 854 856
8: Sections 628(1) 646(1) and (4) 647(1), (3), and (6) 712 735 736 738 741 742 743 746 747 748 749 750 751 754 759 760 761 764(2) 767 769 770 771 772 773 789(2) and (4) 832 844(2), (9), (15), (23), (25), (31), and (33) 845 858(1) and (3) 864
9: Section 647(2)
10: Sections 744 768 844(3), (13), (14), (22), and (32)
11: Sections 646(2) 647(4)
12: Sections 706 739 779 780 781 782 783 784 785 786 787 788 789(1) and (3) 793 794 795 796 797 798 799 800 801 802 819(2) 841 844(8), (11), (18), (21), and (35)
13: Section 684
14: Sections 720 731 733(2) and (4) 844(6) and (17)
15: Sections 612 625 675 677 756 808 809 811 812 813 814 815 816 817 818 819(1) 820 821 822 823 824 825 826 827 828 829 833 834 835 836 837 838 839 840 842 843 844(26)
16: Section 764(1) and (3)
17: Sections 638(2) 757 830 831
18: Section 758
19: Sections 737 740 755 762 790 791 792 803 804 805 806 807 810 844(4), (5), (7), (10), (12), (16), and (27) to (30)
20: Section 763
21: Sections 5(1), (2), (4), (5), and (7) 11 12 15(1)(b) 16 18 19(1), (2), (3) and (5) 20(3) 24 25 26 32 34 35 36 37 38 41(1) and (2) 42 43 44 45 47 48 52 53 54 56(1) and (4) 60 62 68 72 73(3) 76 81 82 83 84 85 93 96(1) and (3) 97 98(1), (3), and (4) 99 100 101 102(1), (3), (5), and (7) 103(1), (3), and (5) 104(1) and (3) 105(1), (3), and (5) 106(1), (3), and (5) 107 109 111 117 118 119 120 121 127 128 129 130 131 133 134 135 136(1) and (3) 137(1), (2), (3), and (5) 138 140 141 142 143 144 145 146 147 150 151 152(1) 161(7) and (15) 166 167 168 169 170 171 172 173(1) to (3), (5) to (7), and (11) 174 176(1) 177(1), (2) to (4), and (6) to (10) 178(1) to (5), and (7) to (11) 179 180(1) 181(1), (2), and (5) 182 183 188 196 197 198 201 202(1) and (3) 203 204 205(1), (4), and (5) 209(2), (3), and (5) 211(3) and (6) 215(1) and (3) 218(1), (4), (5), (7), and (9) 227 230(4) 232 233 234 235 236 238(1) and (4) 239(1) 241 242(1) 251 253 254 255 256 257 258 261 262(1) 263 264(2) and (4) 265 266 268 269 270 271 272 273 274 275 277 280 281 282(1), (3), (4), and (5) 283 284(1), (2), (4), and (6) 285 286 287 288 289 290 291 293 294 296(2), (3), and (8) 297(2) and (5) 298(1) and (4) 299 300 302(2) and (4) 304 306 308(1) 309 311 312 314 317 318 321 324(1), (2), (4), and (6) 329 330 331 332 333 334 335 336(1), (3), (5), and (6) 337 338 339 340(1), (3), (4), and (7) 341 344 345 349 350 352 353 354 355 356 357 358 359 360(1) and (3) 361 362 363 364 365 366 367 368 369 370 371 376 378(1), (2), (4), (5), and (7) 379 381(2) and (4) 383 387 388(2) and (5) 389(2) and (3) 390 391 393 394 397 398 399(1), (4), and (8) 400(2) and (6) 409 420(1) and (3) 421(1) and (3) 422 427 431(1) and (3) 440 441 442 443 444 446 447(2) and (5) 452(3) and (6) 453 455 457 460(2), (4), and (7) 466 470 486 489 490(2), (3) and (5) 491(1), (3), and (5) 492(1) and (5) 493 494 495 496 497 500 503(2), (3), and (4) 504 505 506 507 509 511 512 513 514(1) to (4), (7), and (9) to (11) 515 516 517(1) and (3) to (5) 518(1) and (3) to (5) 519(1) to (6) and (8) to (13) 520 521 522 523 524 525 526 529 530 531(1), (2), and (4) to (7) 532 533 534 536 537 538 539 541 542 543 544 545 547 548 554 555 556 557(5), (7), (10), (25), (28), (29), (36), (37), (39), (42), (49), (50), (51), (52), (54), (55), (57), (58), (59), (62), (63), (64), (68), (69), (76), (84), (85), (88), (93), (95), (98), (99), (109), (114), (118), (119), (130), (134), (137), (138), (139), (140), (141), (142), (143), (144), (146), (149), (156), (157), (164), (170), (171), (175), (176), (184), (187), (191), (193), (195), (197), (198), (199), (200), (202), (204), (210), (214), (217), (219), (222), (224), (225), and (228) 559 560 561 562 564 567 568 569 570 571(1) and (3) 572 573 574 575 576 579(3) to (8) 580 581 582 583 585 590 591 592 593 596(3), (4), (7), and (8) 597(4) 598(1) and (3) 599(1) 609 614 615 616(2) 619(2), (3), (6), and (7) 620 624 627 628(2) to (4) 630(1) 631 632 633 636 637 640 642 643 644 646(3) and (5) 647(5) and (7) 648 649 650 651(1) and (3) 654 659 660 661 664 665 669 671 672 673 680 683 690 691 693 701 702 715(1) to (3) 717 719 724 725 726 727 729 730 733(3) and (5) 765 766 774 775 776 777 778 844(19), (20), (24), and (34) 858(2) and (4) 859 865
22: Sections 88 315 316 360(2) 503(1) 557(148) 732 867 868
23: Sections 40, 58, 61, 243, 244, 745, 752, and 753 are treated as coming into force on 26 September 2008.
24: Section 137(4) and (6)
25: Sections 10 80 112(2) and (3) 115 116 132(2) and (4) 173(8), (13), and (15) 557(32), (48), (60), (82), (105), (127), (131), (159), (160), (181), (186), and (206) 704(2) and (4)
26: Sections 9 27 50 64 92 114 136(2), (4), (5), and (6) 139 173(9) 176(2) and (3) 181(4) and (8) 184 276 278 279 282(2) 284(3), (5), (7), and (8) 301 347(1) 399(2) and (6) 445(1) and (4) 462 463 464 465 492(2) 508 514(5), (6), and (8) 517(2) 518(2) 519(7) 550 557(92), (158), (165), (166), (188), and (209) 571(2), (4), and (5) 587 607 608 619(1), (4), and (5) 623 715(4) 721
27: Sections 5(3), (6), and (8) 6 14 17(2), (3) and (5) 20(1), (2), and (4) 22 23 29 30 39 41(3) and (6) 69 70 71 79 90 91 110 152(2) and (3) 153 154 155 156 160 161(1) to (6), (9) to (14), (16), and (17) 162 163 164 165 175 180(2) to (4) 195 202(2) and (4) 206 207 208 209(1) and (4) 210 211(1), (2), (4), (5), and (7) 212 213 214 215(2), (4), and (5) 216 217 218(3) and (10) 219 220 221 222 223 224 225 226 228 229 230(1) to (3), and (5) to (7) 231 237 238(2), (3), and (5) 240 246 247 248 249 250 252 259 260 302(1) and (3) 303 305 340(2), (5), and (6) 342 343 346 377 385 395 399(3) and (7) 400(3) and (7) 401(2) and (5) 403 404 405 406 407 408 412 413 414 415 416 417 419 421(2) and (4) 423 424 425 426 428 429 430 431(2) and (4) 432 433 434 435 436 437 448 456 459(1) and (3) 460(3) and (8) 461(1) and (3) 468 469(1) and (3) 471 472 473 474 475 476 477 478 479 480 481 482 485 488 490(1) and (4) 491(2), (4) and (6) 492(3), (4), and (6) 527 528 540 557(8), (9), (11), (14), (16), (22), (23), (30), (34), (38), (40), (41), (43), (61), (70), (71), (74), (75), (77), (78), (79), (80), (89), (94), (96), (104), (117), (123), (128), (129), (182), (183), (185), (203), (208), (211), (212), (213), (215), (216), and (229) 558 577(2) 584 586 596(5) and (9) 597(1) to (3), (5) and (6) 605(2) and (4) 617 634 635 651(2) and (5) 652 655 656 657 658 666 668 674 676 678 686 687 688 695 697 700
28: Sections 46 56(2), (3), and (5) 59 86 87 89
29: Sections 95 123 124 125 126 557(108), and (110)
30: Sections 4 7 8 13 15(1)(a) and (2) 17(1) and (4) 19(4), (6), and (7) 21 28 41(4), (5), and (7) 51 63 65 66 67 73(1), (2), and (4) 75 77 78 96(2), (4), and (5) 98(2), (5), and (6) 102(2), (4), (6), and (8) 103(2), (4), and (6) 104(2) and (4) 105(2), (4), and (6) 106(2), (4), and (6) 112(1) 113 122 149 157 158 159 161(8) and (18) 173(4), (10), (12), and (14) 177(5), (11), and (12) 178(6), (12), and (13) 181(3), (6), and (7) 191 192 218(2), (6), (8), and (11) 239(2) and (3) 242(2) to (4) 245 262(2) and (3) 264(1) and (3) 267 292 295 296(4), (6), and (9) 298(2), (3), and (5) 308(2) and (3) 313 324(3), (5), and (7) 328 336(2), (4), and (7) 347(2) 348 351 378(3), (6), and (8) 384 401(1), (3), and (4) 438 498 531(3) and (8) 535 557(2), (3), (4), (13), (15), (17), (18), (19), (21), (24), (31), (44), (66), (73), (81), (83), (91), (97), (100), (101), (102), (103), (106), (107), (111), (115), (116), (121), (126), (133), (136), (150), (154), (155), (167), (177), (179), (180), (192), (196), (220), (221), (223), and (227) 563 565 566 579(1) and (2) 588 594 599(2) 611 613 618 621 622 626 628(5) and (6) 645 651(4) and (6) 679 681 710(3) 713 861
31: Sections 200 487
32: Sections 33 49 55 94 132(1), (3), (5), and (6) 185 186 187 189 190 193 194 199 296(1), (5), and (7) 297(1), (3), and (4) 307 310 325 326 327 372 373 374 375 380 381(1), (3), and (5) 382 386 388(1), (3), and (4) 392 396 399(5) and (9) 400(1), (4), and (5) 402 410 411 418 420(2) and (4) 439 445(2), (3), and (5) 447(1), (3), and (4) 449 450 451 452(1), (2), (4), and (5) 454 458 459(2) and (4) 460(1), (5), and (6) 461(2) and (4) 467 469(2) and (4) 483 484 557(6), (12), (20), (27), (33), (35), (46), (56), (65), (67), (72), (87), (90), (112), (113), (120), (122), (124), (151), (152), (153), (161), (162), (163), (168), (169), (172), (178), (189), (190), (194), (201), (205), (207), (218), and (226) 577(1) and (3) 629 663
1: Amendments to Income Tax Act 2007
3: Income Tax Act 2007
This Part amends the Income Tax Act 2007 2009-10-06 Income Tax Act 2007 all provisions commencing on 1 October 2009 and all treated as coming into force earlier (so, lots of them) 2010-01-01 Income Tax Act 2007 ss 95, 123, 124, 125, 126, 557(108) and (110) 2010-01-06 Income Tax Act 2007 ss 74, 108, 319, 320, 322, 323, 502, 510, 546, 549, 557(26), (45), (53), (132), (145), and (147) 2010-04-01 Income Tax Act 2007 2010-06-30 Income Tax Act 2007 ss 200 and 487 2010-07-01 Income Tax Act 2007
4: Income tax liability of person with schedular income
1: After section BC 7(3) Income tax liability of multi-rate PIEs
4: The income tax liability for a tax year of a multi-rate PIE is determined under subpart HM (Portfolio investment entities).
2: In section BC 7 multi-rate PIE
3: Subsection (1) applies for the 2010–11 and later income years.
5: Withholding liabilities
1: Section BE 1(1) PAYE income payments
1: A person who makes a PAYE income payment must withhold an amount from the payment under the PAYE rules.
2: Section BE 1(5) Employer's superannuation cash contributions
5: A person who makes an employer's superannuation cash contribution must pay ESCT under the ESCT rules.
3: Section BE 1(6)
4: In section BE 1 retirement savings scheme retirement scheme contribution RSCT RSCT rules
5: In section BE 1
a: employer's superannuation contribution PAYE payment
b: employer's superannuation cash contribution PAYE income payment
6: In section BE 1 FDP FDP rules
7: Subsections (1) and (2) apply for the 2008–09 and later income years.
8: Subsection (3) applies for all income years beginning on or after 1 July 2009.
6: Other obligations
1: Section BF 1(d)
2: In section BF 1 further FDP
3: Subsection (1) applies for all income years beginning on or after 1 July 2009.
7: Disposal: land used for landfill, if notice of election
1: Section CB 8(c)
c: the person acquiring the land is not an associated person; and .
2: Subsection (1) applies for the 2010–11 and later income years.
8: Section CB 26 replaced
1: Section CB 26
CB 26: Disposal of certain shares by portfolio investment entities
When this section applies
1: This section applies when—
a: the income from the disposal by a person (the entity
b: a dividend from the share is—
i: declared before the disposal; and
ii: paid to a holder of the share who, after the disposal, becomes entitled to the dividend. Income
2: The entity is treated as deriving an amount of income calculated using the formula— (shares at declaration – shares on distribution) × dividend. Definition of items in formula
3: In the formula,—
a: shares at declaration
b: shares on distribution
c: dividend Positive result
4: The result of the formula must be a positive amount. Defined in this Act: amount, company, dividend, excluded income, fully imputed, ICA company, income, pay, portfolio investment entity, share 2007 No 97 s CB 26 .
2: Subsection (1) applies for the 2010–11 and later income years.
9: Section CB 27B repealed
1: Section CB 27B
2: Subsection (1) applies for the 2009–10 and later income years.
10: Heading and section CB 36 replaced
The heading before section CB 36 Emissions units under Climate Change Response Act 2002
CB 36: Disposal of emissions units
When this section applies
1: This section applies when a person disposes of an emissions unit. Income
2: The amount that the person derives on the disposal is income. Surrender of unit: deemed sale at given value
3: If the disposal is by surrender under the Climate Change Response Act 2002, the person is treated as having sold the unit, at the time of the surrender, to an unrelated person for an amount equal to—
a: the unit's cost, if none of paragraphs (b) to (f) applies; or
b: the unit's value under section ED 1(7B) (Valuation of excepted financial arrangements), if that subsection applies and none of paragraphs (c) to (f) apply; or
c: zero, if subsection (4) applies; or
d: zero, if subsection (5) applies; or
e: the unit's market value, if subsection (6) applies; or
f: the unit's market value, if subsection (7) applies. Surrender of unit: emissions relating to post-1989 forest land
4: The person is treated as selling the unit for an amount of zero if the person surrenders the emissions unit for emissions in relation to post-1989 forest land. Surrender of unit: deforestation of some pre-1990 forest land
5: The person is treated as selling the unit for an amount of zero if—
a: the person surrenders the emissions unit in relation to the deforestation of pre-1990 forest land; and
b: the person would derive income, other than exempt income or excluded income, from a disposal of the land without timber at the time of the surrender. Surrender of post-1989 forest land unit: emissions not relating to post-1989 forest land
6: The person is treated as selling a post-1989 forest land emissions unit for an amount equal to the unit's market value if the person surrenders the emissions unit other than for emissions in relation to post-1989 forest land. Surrender of unit: free unit other than forest land unit
7: The person is treated as selling a unit that is not a forest land unit for an amount equal to the unit's market value if—
a: the person surrenders the unit before the period of the emissions to which the unit relates; and
b: the unit was transferred to the person under Part 4, subpart 2 of the Climate Change Response Act 2002 at a price of zero. Converted unit treated as sold
8: If a person converts a New Zealand emissions unit, other than a forest land emissions unit, into a Kyoto unit as defined in section 4(1) of the Climate Change Response Act 2002, the person is treated as having sold the converted unit for an amount equal to—
a: the unit's value under section ED 1(7B), if that subsection applies; or
b: the unit's cost, otherwise. Excluded income: post-1989 forest land emissions unit
9: Section CX 51B (Disposal of pre-1990 forest land emissions units) applies to the disposal to another person of a pre-1990 forest land emissions unit. Defined in this Act: amount, convert, emissions unit, forest land emissions unit, income, Kyoto emissions unit, New Zealand emissions unit, pre-1990 forest land emissions unit, post-1989 forest land emissions unit, surrender .
11: New section CC 8B inserted
1: After section CC 8
CC 8B: Certain commercial bills: non-resident holders
When this section applies
1: This section applies when a non-resident holder of a commercial bill who is required to calculate and allocate income and expenditure under neither the financial arrangements rules nor the old financial arrangements rules because of the application of section EW 9(2) to (4) or EZ 45(e) (which relate to the application of the rules)—
a: disposes of the commercial bill other than by redemption; or
b: redeems a commercial bill whose issuer is an associated person of the non-resident. Income: disposal
2: The value of the commercial bill on the day the non-resident holder disposes of it is income of the person. Income: redemption
3: The amount that the non-resident holder receives on redemption is income of the person. Defined in this Act: amount, commercial bill, financial arrangements rules, income, non-resident, old financial arrangements rules 2004 No 35 s CZ 8 .
2: Subsection (1) applies for the 2008–09 and later income years.
12: What is a transfer of value?
1: After section CD 5(2) When shares are cancelled
2B: The market value of any transfer from the shareholder to the company on the cancellation of a share of the shareholder's rights as a shareholder is zero.
2: In section CD 5 market value share shareholder
3: Subsection (1) applies for the 2008–09 and later income years.
13: When is a transfer caused by a shareholding relationship?
1: In section CD 6(1)(a)(ii) shareholder; or shareholder; and
2: Subsection (1) applies for the 2010–11 and later income years.
14: Section CD 21 repealed
1: Section CD 21
2: Subsection (1)
15: Returns of capital: off-market share cancellations
1: In section CD 22(9)
a: in the definition of counted associate is a beneficiary has benefited or is eligible to benefit
b: in the definition of non-participating redeemable share ; or or section FA 2B(2) (Stapled debt securities); or
2: Subsection (1)(a) applies for the 2010–11 and later income years.
16: Treasury stock acquisitions
1: Section CD 25(4)
4: If subsection (2) applies, then, with effect from the cancellation or the first anniversary, depending on which first causes subsection (2) to apply, the available subscribed capital of the class of the share is reduced by the lesser of—
a: the amount paid to the shareholder on the acquisition; and
b: the available subscribed capital per share calculated under the ordering rule and, in the case of the first anniversary, calculated as if the share and any other shares to which this subsection applies on that date were cancelled on that date.
2: Subsection (1) applies for the 2008–09 and later income years.
17: Property made available intra-group
1: Section CD 27(1)(b)
b: in the absence of this section, the transfer would be a dividend under section CD 6(1)(a)(ii) because the associated company is associated with a shareholder in the first company.
2: Section CD 27(3)(a)(ii)
ii: the first company is associated with a company (the parent company .
3: In section CD 27 FDP
4: Subsection (1)
5: Subsection (2) applies for all income years beginning on or after 1 July 2009.
18: Employee benefits
In section CD 32(2) CE 1(c) CE 1(1)(c)
19: Foreign investment fund income
1: In section CD 36, after the heading, Amount not dividend
2: In section CD 36(b)(iv) method; and method.
3: After section CD 36(b) Exclusion for interests in grey list companies
2: Subsection (1)(b)(iv) does not apply if—
a: the FIF is a grey list company; and
b: the person holds a direct income interest of 10% or more in the FIF at the beginning of the income year in which the period falls. Application of rule for certain managed funds
3: Subsection (2) does not apply if—
a: the person is a portfolio investment entity, an entity eligible to be a portfolio investment entity, or a life insurance company; and
b: the FIF is a foreign investment vehicle.
4: Section CD 36(3)(b)
b: the FIF is a foreign PIE equivalent.
5: In section CD 36 direct income interest foreign investment vehicle life insurance portfolio investment entity
6: In section CD 36 foreign investment vehicle foreign PIE equivalent
7: Subsection (4) applies for the 2010–11 and later income years.
20: Available subscribed capital (ASC) amount
1: Section CD 43(8)(b)
b: an amount received by the company if the amount is mainly attributable, directly or indirectly, to the payment by the company of a dividend to a controlled foreign company at a time when the company is also a controlled foreign company, regardless of whether either company is a grey list company or non-attributing Australian CFC.
2: In section CD 43 non-attributing Australian CFC
3: In section CD 43 consideration
4: Subsection (1) applies for all income years beginning on or after 1 July 2009.
21: Available capital distribution amount
1: After section CD 44(10) Associated persons transactions
10B: No capital gain amount is derived or capital loss amount incurred by a company after 31 March 2010 on disposing of property under an arrangement with an associated person. This subsection is overridden by subsection (10C). Close company liquidations
10C: Subsection (10B) does not apply if—
a: the company is a close company; and
b: the associated person is not a company; and
c: the disposal is on the liquidation of the company.
2: Section CD 44(11) and (12)
3: After section CD 44(14) Relationship with section CZ 9B
14B: For capital gain amounts derived or capital loss amounts incurred between 1 April 1988 and 31 March 2010, see
4: Section CD 44(15) to (17)
5: Subsections (1) to (4) apply for the 2010–11 and later income years.
22: Heading and sections CD 45 to CD 52 repealed
1: The heading before section CD 45 and sections CD 45 to CD 52
2: Subsection (1) applies for all income years beginning on or after 1 July 2009.
23: Prevention of double taxation of share cancellation dividends
1: Section CD 53(3) Non-taxable dividends
3: Subsection (2) does not apply to the extent to which the dividend is exempt income of the person under sections CW 9 to CW 11 (which relate to income from equity).
2: Section CD 53(4) and (5)
3: In section CD 53 FDP FDP credit
4: Subsections (1) and (2) apply for all income years beginning on or after 1 July 2009.
24: Amounts derived in connection with employment
1: After the heading to section CE 1 Income
2: Section CE 1(c)
c: the market value of accommodation that the person receives in connection with their employment or service other than an amount paid under section CW 17B (Relocation payments): .
3: After section CE 1(g) Meaning of accommodation
2: For the purposes of this section and section CX 28 (Accommodation), accommodation
4: In section CE 1 accommodation
5: Subsections (1) to (3) apply for the 2008–09 and later income years.
25: Meaning of expenditure on account of an employee
After section CE 5(3)(b)
bb: an amount paid under section CW 17B (Relocation payments) or section CW 17C (Payments for overtime meals and certain other allowances): .
26: Benefits, pensions, compensation, and government grants
In section CF 1(2) accident compensation payment
f: a payment under the Injury Prevention, Rehabilitation, and Compensation Act 2001 paid by the Corporation as defined in that Act, of weekly compensation that is not recovered or recoverable under section 248 of that Act:
g: a payment under section 81(1)(b) of the Injury Prevention, Rehabilitation, and Compensation Act 2001 paid by the Corporation as defined in that Act, for attendant care as defined in schedule 1, clause 12 of that Act:
h: a personal service rehabilitation payment for a person under the Injury Prevention, Rehabilitation, and Compensation Act 2001 .
27: New subpart CO inserted
1: After section CH 10
CO: Income from voluntary activities
CO 1: Income from voluntary activities
Income
1: An amount derived by a person in undertaking a voluntary activity is income of the person. Relationship with section CW 62B
2: This section is overridden by section CW 62B (Voluntary activities). Defined in this Act: amount, income .
2: Subsection (1)
28: Section CP 1 replaced
1: Section CP 1
CP 1: Attributed income of investors in multi-rate PIEs
When this section applies
1: This section applies when a multi-rate PIE attributes an amount of income for an income year calculated under section HM 36 (Calculating amounts attributed to investors) to a person who is an investor in the PIE. Income
2: The amount is income of the person in the income year of the person in which the PIE’s income year ends. Defined in this Act: amount, income, income year, investor, multi-rate PIE, PIE 2007 No 97 s CP 1 .
2: Subsection (1) applies for the 2010–11 and later income years.
29: When attributed CFC income arises
1: Section CQ 2(1)(f)(i)
i: the CFC has net attributable CFC income for the accounting period under section EX 20C (Net attributable CFC income or loss); or .
2: In section CQ 2(1)
h: the CFC is not a non-attributing active CFC for the accounting period, under section EX 21B (Non-attributing active CFCs); and
i: the CFC is not a non-attributing Australian CFC for the accounting period, under section EX 22 (Non-attributing Australian CFCs).
3: After section CQ 2(2) Special rule: attributed CFC amount from personal services
2B: If a person and a non-attributing active CFC or non-attributing Australian CFC meet the requirements of subsection (1)(a) to (e) and the CFC derives income from personal services that is an attributable CFC amount under section EX 20B(3)(h) (Attributable CFC amount), the person has attributed CFC income
a: the person's income interest in the CFC:
b: the amount by which the CFC's income from personal services exceeds the expenditure incurred by the CFC in deriving the income from personal services.
4: Section CQ 2(4)
5: In section CQ 2
a: branch equivalent income
b: attributable CFC amount net attributable CFC income non-attributing active CFC non-attributing Australian CFC
6: Subsections (1) to (4) apply for all income years beginning on or after 1 July 2009.
30: When FIF income arises
1: Section CQ 5(3) FIF income from CFC with FIF interest
3: FIF income section EX 58
2: In section CQ 5 non-attributing Australian CFC
3: Subsection (1) applies for all income years beginning on or after 1 July 2009.
31: Section CQ 7 repealed
Section CQ 7
32: Heading to subpart CR replaced
In subpart CR Income from insurance
33: Sections CR 1 and CR 2 replaced
1: Sections CR 1 CR 2
CR 1: Policyholder base income of life insurer
If, but for this section, a life insurer has an amount of policyholder base income for an income year, and that amount is not income under this Part, the amount is income of the life insurer for the income year. Defined in this Act: amount, income, income year, life insurer, policyholder base income
CR 2: Shareholder base income of life insurer
If, but for this section, a life insurer has an amount of shareholder base income for an income year, and that amount is not income under this Part, the amount is income of the life insurer for the income year. Defined in this Act: amount, income, income year, life insurer, shareholder base income .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
34: New section CR 4 added
1: After section CR 3
CR 4: Income for general insurance outstanding claims reserve
What this section applies to
1: This section applies for—
a: an insurer who––
i: uses IFRS 4, Appendix D for general insurance contracts:
ii: is a life insurer who has general insurance contracts; and
b: general insurance contracts, excluding contracts having premiums to which section CR 3 (Income of non-resident general insurer) applies. Formula for insurer's OCR income
2: For an income year (the current year opening outstanding claims reserve Definition of items in formula
3: In the formula,—
a: opening outstanding claims reserve
i: the amount of the insurer’s closing outstanding claims reserve for the income year before the current year (the prior year
ii: the amount of the insurer's reserve for outstanding claims liability, calculated at the end of the prior year, using the basis the insurer used for tax purposes in that prior year, if the current year is the first year that this section applies to the insurer:
b: closing outstanding claims reserve Defined in this Act: amount, general insurance contract, IFRS 4, income, income year, insurer, life insurer, outstanding claims reserve .
2: Subsection (1) applies—
a: for an insurer who uses IFRS 4,––
i: for the 2009–10 and later income years, unless subparagraph (ii) applies:
ii: for the first income year for which an insurer adopts IFRSs for the purposes of financial reporting and later income years, if that first income year is before the 2009–10 income year and the person chooses to use IFRS 4 in a return of income for that first year:
b: for a life insurer,––
i: on and after 1 July 2010, unless subparagraph (ii) applies:
ii: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
35: Withdrawals
1: Section CS 1(1)(a)(i)
i: a fund to which the member's employer has made for the member's benefit an employer's superannuation cash contribution; or .
2: Section CS 1(7)(b)
b: in the corresponding tax year, the total of the member's taxable income and the employer's superannuation cash contributions made for the member's benefit is less than $60,000.
3: In section CS 1 employer's superannuation contribution employer's superannuation cash contribution
4: Subsections (1) and (2) apply for the 2008–09 and later income years.
36: Exclusions of withdrawals of various kinds
1: In section CS 2 employer's superannuation contributions employer's superannuation cash contributions
2: In section CS 2 employer's superannuation contribution employer's superannuation cash contribution
3: Subsection (1) applies for the 2008–09 and later income years.
37: Exclusion of withdrawal on partial retirement
1: In section CS 6(1)(d) employer's superannuation contributions employer's superannuation cash contributions
2: In section CS 6 employer's superannuation contribution employer's superannuation cash contribution
3: Subsection (1) applies for the 2008–09 and later income years.
38: Exclusion of withdrawal when member ends employment
1: In section CS 7(2) to (5) employer's superannuation contributions employer's superannuation cash contributions
2: In section CS 7 employer's superannuation contribution employer's superannuation cash contribution
3: Subsection (1) applies for the 2008–09 and later income years.
39: Section CV 10 repealed
1: Section CV 10
2: Subsection (1) applies for all income years beginning on or after 1 July 2009.
40: Section CW 3B repealed
Section CW 3B
41: Dividend derived by company from overseas
1: Section CW 9(1)
1: A dividend from a foreign company is exempt income if derived by a company that is resident in New Zealand.
2: After section CW 9(2) Non-application to dividends derived by certain PIEs
3: This section does not apply to a dividend derived by a portfolio tax rate entity.
3: Section CW 9
CW 9: Dividend derived from foreign company
Exempt income
1: A dividend from a foreign company is exempt income if derived by a company that is resident in New Zealand. Exclusions
2: Subsection (1) does not apply to a dividend if the dividend is paid in relation to rights that are—
a: a direct income interest of less than 10% in a foreign company described in—
i: section EX 31 (Exemption for ASX-listed Australian companies):
ii: section EX 32 (Exemption for Australian unit trusts with adequate turnover or distributions):
iii: section EX 36 (Venture capital company emigrating to grey list country: 10-year exemption):
iv: section EX 37 (Grey list company owning New Zealand venture capital company: 10-year exemption):
v: section EX 37B (Share in grey list company acquired under venture investment agreement):
vi: section EX 39 (Terminating exemption for grey list company with numerous New Zealand shareholders):
b: a fixed-rate foreign equity:
c: rights to a deductible foreign equity distribution. Non-application to dividends derived by certain PIEs
3: This section does not apply to a dividend derived by a portfolio tax rate entity. Defined in this Act: company, dividend, deductible foreign equity distribution, exempt income, fixed-rate foreign equity, portfolio tax rate entity, resident in New Zealand .
4: Section CW 9(3)
3: This section does not apply to a dividend derived by a multi-rate PIE.
5: In section CW 9 multi-rate PIE
6: Subsection (3) applies for all income years beginning on or after 1 July 2009.
7: Subsection (4) applies for the 2010–11 and later income years.
42: Proceeds of share disposal by qualifying foreign equity investor
Section CW 12(4)
4: In this section,— foreign exempt entity
a: is established as a legal entity under the laws of a territory that is approved for the purposes of this section by the Governor-General by an Order in Council or under the laws of a part of such a territory; and
b: has persons (the members
c: under the laws of the territory or part of the territory is not subject to a tax on income other than as a body that handles income of the members; and
d: is resident in no territory that has laws that treat the legal entity as being subject to a tax on income other than as a body that handles income of the members; and
e: does not have a member who—
i: has, when treated as holding the interests of any person who is associated with the member, an interest of 10% or more in the capital of the legal entity; and
ii: is resident in no territory that is approved for the purpose of this section by the Governor-General by an Order in Council; and
f: does not have a member who, when treated as holding the interests of any person who is associated with the member, has an interest of 10% or more in the capital of the legal entity and who would—
i: be entitled to receive an amount derived from a disposal to which this section would apply; and
ii: receive an amount referred to in subparagraph (i) that, in the absence of this section, would have been reduced by a tax imposed by the Act on the amount or on the proceeds of the disposal in the hands of the legal entity; and
iii: in any circumstances under the laws of the territory in which the member is resident or under the laws of part of the territory be entitled to receive from the government of the territory or part of the territory a financial benefit in the form of a payment, credit, rebate, forgiveness, or other compensation for the reduction referred to in subparagraph (ii); and
g: does not have a holder of a direct or indirect interest in the capital of the legal entity who,—
i: is resident in New Zealand:
ii: when treated as holding the interests of a person associated with the resident, holds a total direct or indirect interest of 10% or more foreign exempt partnership
a: is established under the laws of a territory that is approved for the purposes of this section by the Governor-General by an Order in Council or under the laws of a part of such a territory; and
b: consists of persons (the partners
c: under the laws of the territory or part of the territory is not subject to a tax on income other than as a body that handles income of the partners; and
d: has at least 1 partner (the general partner
e: has at least 1 partner (the special partner
f: does not have a general partner who is resident in no territory that is approved for the purposes of this section by the Governor-General by an Order in Council; and
g: does not have a partner who—
i: has, when treated as holding the interests of any person who is associated with the partner, an interest of 10% or more in the capital of the unincorporated body; and
ii: is resident in no territory that is approved for the purpose of this section by the Governor-General by an Order in Council; and
h: does not have a partner who, when treated as holding the interests of any person who is associated with the partner, has an interest of 10% or more in the capital of the unincorporated body and who—
i: would under the Act in the absence of this section, be subject to tax on an amount derived from a disposal to which this section would apply; and
ii: would in any circumstances under the laws of the territory in which the partner is resident or under the laws of part of the territory be entitled to receive from the government of the territory or part of the territory a financial benefit in the form of a payment, credit, rebate, forgiveness, or other compensation for a payment of the tax referred to in subparagraph (i); and
i: does not have a holder of a direct or indirect interest in the capital of the unincorporated body who,—
i: is resident in New Zealand:
ii: when treated as holding the interests of a person associated with the resident, holds a total direct or indirect interest of 10% or more foreign exempt person
a: is resident in a territory that is approved for the purposes of this section by the Governor-General by an Order in Council; and
b: is not a legal entity that meets the requirements of paragraphs (a) to (c) of the definition of foreign exempt entity
c: is not part of an unincorporated body that meets the requirements of paragraphs (a) to (c) of the definition of foreign exempt partnership
d: under the laws of the territory or part of the territory derives the proceeds from a disposal of shares or options that are held by the person; and
e: is not a person who—
i: would under the Act in the absence of this section, be subject to tax on an amount derived from a disposal to which this section would apply; and
ii: would in any circumstances under the laws of the territory in which the person is resident or under the laws of part of the territory be entitled to receive from the government of the territory or part of the territory a financial benefit in the form of a payment, credit, rebate, forgiveness, or other compensation for a payment of the tax referred to in subparagraph (i); and
f: does not have a holder of a direct or indirect interest in the capital of the legal entity who,—
i: is resident in New Zealand:
ii: when treated as holding the interests of a person associated with the resident, holds a total direct or indirect interest of 10% or more.
43: Dividends paid by qualifying companies
1: Section CW 15(1)
1: To the extent to which the amount of a dividend that a qualifying company pays to a person resident in New Zealand is more than a fully imputed distribution, the amount is exempt income of the person.
2: In section CW 15 fully imputed
44: Expenditure on account, and reimbursement, of employees
1: After section CW 17(3) Depreciation loss included
4: In this section, expenditure includes an amount of depreciation loss. Relationship with sections CW 17B and CW 17C
5: This section does not apply to an amount referred to in section CW 17B (Relocation payments) or CW 17C (Payments for overtime meals and certain other allowances).
2: In section CW 17 depreciation loss
3: Subsection (1) does not apply in relation to a tax position taken by a person—
a: in the period from 1 April 2008 to the date on which this Act receives the Royal assent; and
b: in relation to a deduction for an amount of depreciation loss; and
c: relying on section CW 17
45: New sections CW 17B and CW 17C inserted
After section CW 17
CW 17B: Relocation payments
Exempt income
1: An amount that an employer pays to or on behalf of an employee in connection with the expenses of the employee in a work-related relocation is exempt income of the employee. Actual expenditure
2: The amount paid must be no more than the actual cost incurred by or on behalf of the employee on an expense that the Commissioner lists as an eligible relocation expense in a determination made under subsection (6). Time limit
3: Subsection (1) applies only to expenditure incurred to the end of the tax year following that in which the relocation occurs. For the purposes of this subsection, a temporary move that has not been treated as a work-related relocation under this section is ignored. Meaning of work-related relocation
4: Work-related relocation
a: because the employee's workplace is not within reasonable daily travelling distance of their residence; and
b: as a result of the employee—
i: taking up new employment with a new employer; or
ii: taking up new duties at a new location with their existing employer; or
iii: continuing in their current position but at a new location. Exemption from distance test
5: The requirement in subsection (4)(a) for a person's workplace to be beyond reasonable travelling distance of their residence does not apply to a person whose accommodation forms an integral part of their work. Determinations
6: The Commissioner may issue a determination for the purposes of this section under section 91AAR of the Tax Administration Act 1994 to provide a list of eligible relocation expenses, and may extend or modify the list from time to time as required. The Commissioner must give at least 30 days' notice of the implementation date of any alteration. Defined in this Act: amount, Commissioner, employee, employer, exempt income, tax year, work-related relocation
CW 17C: Payments for overtime meals and certain other allowances
Exempt income: overtime meals
1: An amount that an employer pays to or on behalf of an employee for a meal for the employee when the employee is working overtime is exempt income of the employee. Exempt income: certain sustenance allowances
2: An amount that an employer pays to an employee as a sustenance allowance for the employee for a day is exempt income of the employee if—
a: the employee works a minimum of 7 hours on the day; and
b: their employment requires them—
i: to work outdoors and away from their employment base for most of the day; and
ii: to undertake a long period of physical activity in travelling through a neighbourhood or district on foot or by bicycle; and
c: it is not practicable for the employer to provide sufficient sustenance on the day for the period when the employee is working outdoors; and
d: the allowance recognises—
i: the arduous physical nature of the employee's work as described in paragraph (b); and
ii: that the employer would normally provide tea, coffee, water, or similar refreshments at the employment base in the course of their business. Eligibility requirements: overtime meals
3: Subsection (1) applies only if—
a: the employee has worked at least 2 hours' overtime on the day of the meal; and
b: either—
i: the employee's employment agreement provides for pay for overtime hours worked; or
ii: the employer has an established policy or practice of paying for overtime meals. Eligibility requirements: sustenance allowances
4: Subsection (2) applies only if the employer has an established policy or practice of paying a sustenance allowance. Actual cost or reasonable estimate
5: The amount paid must be—
a: the actual cost to the employee, and for an overtime meal referred to in subsection (1), with documentation required for amounts over $20 per meal; or
b: a reasonable estimate of the expenditure likely to be incurred by the employee or a group of employees for whom an amount is payable. Meaning of overtime
6: For the purposes of this section, overtime Defined in this Act: amount, employee, employer, exempt income, overtime, pay .
46: Section CW 37 repealed
1: Section CW 37
2: Subsection (1) applies for an amount derived by a company as a large budget screen production grant if—
a: the final application for the large budget screen production grant is made on or after 1 October 2009; and
b: the company does not incur before 1 July 2008 an amount of $3,000,000 or more in expenditure on the project to which the large budget screen production grant relates.
47: Local and regional promotion bodies
In section CW 40 associated person
48: Charities: business income
In section CW 42(5), (7), (8), and (9) subsection (1)(b) subsection (1)(c)
49: New section CW 59C inserted
1: After section CW 59B
CW 59C: Life reinsurance outside New Zealand
An amount of life reinsurance claim derived by a life insurer is exempt income to the extent to which, for the relevant life reinsurance policy, deductions for premiums are denied under section DR 3 (Life reinsurance outside New Zealand). Defined in this Act: amount, claim, deduction, exempt income, income, life insurer, life reinsurance, life reinsurance policy, New Zealand, premium .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
50: New section CW 62B inserted
1: After section CW 62
CW 62B: Voluntary activities
Exempt income
1: When a volunteer, in undertaking a voluntary activity, derives an amount that is a reimbursement payment to cover actual expenses incurred by them, the amount is exempt income of the volunteer. Estimated expenditure
2: For the purposes of subsection (1)—
a: a person may make a reasonable estimate of the amount of expenditure likely to be incurred by the volunteer for which reimbursement is payable; and
b: the amount estimated is treated as if it were the amount incurred. Payments partly reimbursement and partly honorarium
3: If the person paying the amount to the volunteer makes a payment to them that is only partly a reimbursement of expenses, the person must identify the portion of the amount that is the reimbursement, and treat the remainder as an honorarium, being a schedular payment to which the PAYE rules apply. Who is a volunteer?
4: For the purposes of this section, a volunteer
a: chosen either by themselves or by a group of which they are a member; and
b: that provides a benefit to a community or another person; and
c: for which there is no purpose or intention of private pecuniary profit for the person. Honoraria
5: For the purposes of this section, and schedule 4, part B (Rates of tax for schedular payments), an honorarium
a: is paid at a rate that is less than the market rate for providing the services; and
b: is an amount for which, in the normal course, no payment is fixed for the services provided. Nature of reimbursement payment
6: For the purposes of this section, it does not matter whether—
a: an amount of a reimbursement payment is paid in 1 sum or not:
b: the amount is paid during an income year or at the end of an income year. Relationship with section RD 8(3)
7: A determination made by the Commissioner under section RD 8(3) (Schedular payments) may apply to modify an amount of expenditure under this section. Defined in this Act: amount, exempt income, honorarium, income year, New Zealand, pay, PAYE rules, schedular payment, volunteer .
2: Subsection (1)
51: Meaning of fringe benefit
1: In section CX 2(5)
5: A benefit may be treated for the purposes of the FBT rules as being provided by an employer to an employee under— .
2: In section CX 2 FBT rules
3: Subsections (1) and (2) apply for the 2010–11 and later income years.
52: Contributions to superannuation schemes
1: Section CX 13(2)
2: This section does not apply if the contribution is an employer's superannuation cash contribution.
2: In section CX 13 employer's superannuation contribution employer's superannuation cash contribution
3: Subsection (1) applies for the 2008–09 and later income years.
53: Benefits provided instead of allowances
In section CX 19(1)(b) transport costs). transport costs); or
c: an amount that, if it had been paid, would have been exempt income under section CW 17B (Relocation payments).
54: Section CX 28 replaced
1: Section CX 28
CX 28: Accommodation
The value of accommodation that an employer provides to an employee in connection with the employment or services is not a fringe benefit. Defined in this Act: accommodation, employee, employer, employment, fringe benefit .
2: Subsection (1) applies for the 2008–09 and later income years.
55: Section CX 39 repealed
1: Section CX 39
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
56: Government grants to businesses
1: Section CX 47(1)(d)(i)
i: expenditure that they incur and for which they would be allowed a deduction in the absence of section DF 1 (Government grants to businesses): .
2: Section CX 47(3) Exclusion
3: This section does not apply to a grant made under the Agriculture Recovery Programme for the Lower North Island and Eastern Bay of Plenty, to the extent to which the grant relates to expenditure—
a: incurred by the recipient before the grant; and
b: for which the recipient would be allowed a deduction in the absence of section DF 1.
3: In section CX 47 large budget screen production grant
4: Subsection (1) applies for the 2008–09 and later income years.
5: Subsection (2) applies for an amount derived by a company as a large budget screen production grant if—
a: the final application for the large budget screen production grant is made on or after 1 October 2009; and
b: the company does not incur before 1 July 2008 an amount of $3,000,000 or more in expenditure on the project to which the large budget screen production grant relates.
57: Amounts remitted as condition of new start grant
1: Section CX 48(1)
1: This section applies when in an income year of a person—
a: the person carries on a business of—
i: animal husbandry:
ii: poultry-keeping:
iii: beekeeping:
iv: breeding horses other than bloodstock:
v: horticulture:
vi: cropping; and
b: the person is paid a new start grant for the business for an event that is declared to be an emergency event; and
c: the person in carrying on the business—
i: incurs a liability for expenditure or loss before the declaration of the emergency event; and
ii: before the date that is 3 months after the end of the period for which the declaration applies, takes the liability into account in calculating the person’s taxable income for an income year; and
d: the liability referred to in paragraph (c)(i)
i: as a prerequisite for the payment of the new start grant; and
ii: before the date that is 18 months after the end of the period for which the declaration applies; and
e: the amount of the remitted liability is income of the person under section CG 2 (Remitted amounts).
2: In section CX 48
a: qualifying event
b: emergency event
58: Section CX 48B repealed
Section CX 48B
59: New heading and section CX 48C inserted
Before section CX 49 Government funding of film and television
CX 48C: Government funding additional to government screen production payments
When this section applies
1: This section applies when a public authority makes a payment to a person for a project if—
a: the payment is not in the nature of a grant or subsidy; and
b: the payment is not a grant-related suspensory loan; and
c: the person receives a government screen production payment for the project in addition to the payment. Excluded income
2: The payment is excluded income of the person. Defined in this Act: excluded income, government screen production payment, grant-related suspensory loan, pay, public authority .
60: New heading and section CX 48D inserted
1: After section CX 48C, the following is inserted: Research and development
CX 48D: Tax credits for expenditure on research and development
The amount of a tax credit that a person has under subpart LH (Tax credits for expenditure on research and development) is excluded income of the person. Defined in this Act: amount, excluded income, tax credit .
2: Subsection (1) applies for the 2008–09 and later income years.
61: New heading and section CX 51B inserted
After section CX 51 Emissions units under Climate Change Response Act 2002
CX 51B: Disposal of pre-1990 forest land emissions units
Who this section applies to
1: This section applies to a person who disposes of a pre-1990 forest land emissions unit other than by surrender. Excluded income: disposal
2: An amount of income that the person derives from the disposal is excluded income if, at the time of the disposal, the person would not derive income, other than exempt income or excluded income, from a disposal without timber of the pre-1990 forest land to which the emissions unit relates. Defined in this Act: amount, emissions unit, excluded income, income, pre-1990 forest land, pre-1990 forest land emissions unit, surrender .
62: Proceeds from certain disposals by portfolio investment entities or New Zealand Superannuation Fund
Section CX 55(1)(b)
b: resident in Australia and—
i: not treated as resident in a country other than Australia under an agreement between Australia and the other country that would be a double tax agreement if negotiated between New Zealand and the other country; and
ii: included in an index that is an approved index under the ASX Market Rules, made under Chapter 7 of the Corporations Act 2001 (Aust); and
iii: required under the Income Tax Assessment Act 1997 (Aust) and Income Tax Assessment Act 1936 (Aust) to maintain a franking account.
63: Section CX 55 replaced
1: Section CX 55
CX 55: Proceeds from disposal of investment shares
What this section applies to
1: This section applies in an income year to the following entities unless the entity is assured, under an arrangement with another person, of having a gain on the disposal:
a: a portfolio investment entity other than a life fund PIE:
b: the New Zealand Superannuation Fund:
c: a life insurer. Excluded income
2: An amount that the entity derives from the disposal in the income year of a share issued by a company referred to in subsection (3) is—
a: excluded income of the entity for the income year, if the entity is described in subsection (1)(a) or (b); or
b: excluded income of the entity for the income year to the extent to which the amount is actuarially determined to be policyholder base income, if the entity is a life insurer. Particular company
3: The company referred to in subsection (2) is,—
a: at all times in the income year, a company resident in New Zealand and not treated under and for the purposes of a double tax agreement as not resident in New Zealand; or
b: a company that meets the following requirements:
i: a company that, at all times in the income year, is resident in Australia and not treated as resident in a country other than Australia under an agreement between Australia and the other country, that would be a double tax agreement if negotiated between New Zealand and the other country; and
ii: a company that, at the start of the income year or at the time the shares are first acquired in the income year, is included in an approved index under the ASX Market Rules made under Chapter 7 of the Corporations Act 2001 (Aust); and
iii: a company that, at all times in the income year, is required under the Income Tax Assessment Act 1997 (Aust) and the Income Tax Assessment Act 1936 (Aust) to maintain a franking account. Non-participating redeemable shares
4: This section does not apply to a non-participating redeemable share. Defined in this Act: actuarially determined, amount, arrangement, company, double tax agreement, excluded income, income year, life fund PIE, life insurer, non-participating redeemable share, policyholder base income, portfolio investment entity, resident in Australia, resident in New Zealand, share .
2: Subsection (1) applies—
a: for a portfolio investment entity, including a life fund PIE, and the New Zealand Superannuation Fund, for the 2010–11 and later income years:
b: for a life insurer, other than in relation to a life fund PIE,—
i: on and after 1 July 2010, unless subparagraph (ii)
ii: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year. Section 63(2)(b)(i) amended 8 December 2009 section 166 Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009
64: Portfolio investor allocated income and distributions of income by portfolio investment entities
After section CX 56(3) When trustees choose 19.5% portfolio investor rate
4: Subsection (1) does not apply in relation to portfolio investor allocated income derived by a trustee who has chosen a portfolio investor rate of 19.5%.
65: Section CX 56 replaced
1: Section CX 56
CX 56: Attributed income of certain investors in multi-rate PIEs
When this section applies
1: This section applies when an investor in a multi-rate PIE derives income attributed under section CP 1 (Attributed income of investors in multi-rate PIEs) in an income year, and—
a: the prescribed investor rate for the investor in the relevant calculation period is more than zero; and
b: that rate is not more than the tax rate notified under section HM 60 (Notified rates) in relation to the investor when the PIE calculates—
i: its income tax liability under section HM 47 (Calculation of tax liability or tax credit of multi-rate PIEs) in relation to the income; or
ii: a voluntary payment under section HM 45 (Voluntary payments) that is intended to be a final payment of its income tax liability in relation to the income. When this section does not apply
2: This section does not apply when—
a: the PIE calculates its income tax liability using the quarterly calculation option under section HM 43 (Quarterly calculation option) and the amount is attributed to an investor who is treated under section HM 61 (Certain exiting investors zero-rated) as zero-rated:
b: an amount of attributed PIE income is derived by a trustee who has chosen an investor rate of 19.5% under section HM 58 (Optional investor rates for trustees: 30%, 19.5%). Excluded income
3: The amount is excluded income of the investor. Defined in this Act: amount, attribution period, calculation period, excluded income, income, income tax liability, income year, investor, multi-rate PIE, pay, PIE, prescribed investor rate, quarter
CX 56B: Distributions to investors in multi-rate PIEs
An amount of income derived by an investor in a multi-rate PIE as a distribution of or dividend of the PIE is excluded income of the investor. Defined in this Act: amount, dividend, excluded income, income, investor, multi-rate PIE
CX 56C: Distributions to investors by listed PIEs
Resident investors
1: If an investor in a listed PIE derives an amount in an income year as a distribution by or dividend of the PIE, the amount is excluded income of the investor if they—
a: are resident; and
b: are a natural person or a trustee; and
c: do not include the amount as income in a return of income for the income year. Imputed dividends
2: If subsection (1)(a) to (c) does not apply to the investor, the amount is excluded income to the extent to which the amount of the distribution or dividend is more than the amount that is fully credited as described in section CD 43(26) (Available subscribed capital amount). Defined in this Act: amount, dividend, excluded income, income year, investor, listed PIE, PIE, resident, return of income, trustee .
2: Subsection (1) applies for the 2010–11 and later income years.
66: Section CX 57 replaced
1: Section CX 57
CX 57: Credits for investment fees
When this section applies
1: This section applies when—
a: a multi-rate PIE includes a credit for fees in the calculation of its tax liability under section HM 47 (Calculation of tax liability or tax credit of multi-rate PIEs) in relation to an investor in an investor class of the PIE; and
b: an amount of the credit is attributed to the investor as a member of the class. Excluded income
2: The amount allocated is excluded income of the investor. Defined in this Act: amount, excluded income, investor, investor class, multi-rate PIE, PIE .
2: Subsection (1) applies for the 2010–11 and later income years.
67: New section CZ 9B inserted
After section CZ 9
CZ 9B: Available capital distribution amount: 1988 to 2010
When this section applies
1: This section applies for the purposes of section CD 44 (Available capital distribution amount) in relation to capital gain amounts derived or capital loss amounts incurred in the period that starts on 1 April 1988 and ends on 31 March 2010. Related person transactions
2: No capital gain amount is derived or capital loss amount incurred by a company disposing of property under an arrangement with a related person. But this subsection does not apply if—
a: the company is a close company; and
b: the related person is not a company; and
c: the disposal is not on the liquidation of the company. Meaning of related person
3: In this section, related person first company
a: the person owns, can control, directly or indirectly, or has the right to acquire 20% or more of the first company's ordinary shares; or
b: the person owns, can control, directly or indirectly, or has the right to acquire 20% or more of the voting rights of shareholders in the first company; or
c: the person is a company and the first company owns, can control, directly or indirectly, or has the right to acquire 20% or more of the ordinary shares in the person; or
d: the person is a company and the first company owns, can control, directly or indirectly, or has the right to acquire 20% or more of the voting rights of shareholders in the company; or
e: the person is a company and 20% or more of the shares or voting rights in the person are owned or controlled by persons that also own, control, or have the right to acquire 20% or more of the shares or voting rights in the first company; or
f: the person is a partner or co-venturer of the first company; or
g: the person is the trustee of a trust and the first company, or a person who is a related person of the first company under this subsection, benefits or can benefit under the trust, directly or indirectly; or
h: the person is a partnership and 1 or more persons, that are related persons of the first company under this subsection, are entitled to 50% or more of the partnership's assets or profits or are able to control the partnership. Look-through relatives and nominees
4: For the purposes of subsection (3), a person is treated as holding anything held by—
a: their spouse, civil union partner, or de facto partner; or
b: their child; or
c: a child of their spouse, civil union partner, or de facto partner; or
d: a spouse, civil union partner, or de facto partner of their child, or of a child of their spouse, civil union partner, or de facto partner. Look-through interposed companies
5: For the purposes of subsection (3)(e), if shares or voting rights in a company are owned or controlled by another company, a look-through approach must be applied. The look-through approach requires that—
a: the shares or voting rights are treated as if owned or controlled by the shareholders in the other company; and
b: if a shareholder in the other company is a company, that shareholder's portion of the shares or voting rights are treated as if owned or controlled by the shareholders in the shareholder company; and
c: the approach is applied in the same way to any chain of companies, whatever the length of the chain. Defined in this Act: amount, close company, company, liquidation, related person, share, shareholder, trustee .
68: Determining tax liabilities
1: Section DB 3(4)
4: This section supplements the general permission and overrides the capital limitation, the private limitation, and the employment limitation. The other general limitations still apply.
2: In section DB 3 capital limitation
3: Subsection (1) applies for the 2008–09 and later income years.
69: Interest: not capital expenditure
1: Section DB 6(3)
2: Subsection (1) applies for all income years beginning on or after 1 July 2009.
70: Interest: most companies need no nexus with income
1: Section DB 7(7)
2: Subsection (1) applies for all income years beginning on or after 1 July 2009.
71: Interest: money borrowed to acquire shares in group companies
1: Section DB 8(7)
2: Subsection (1) applies for all income years beginning on or after 1 July 2009.
72: New section DB 10B inserted
After section DB 10
DB 10B: Interest or expenditure connected to stapled debt security
No deduction
1: A company that issues a stapled debt security is denied, while section FA 2B(2) (Stapled debt securities) applies to the security, a deduction for—
a: interest payable under the security:
b: expenditure or loss incurred in connection with the security:
c: expenditure or loss incurred in borrowing the money secured by or owing under the security. Relationship with sections DB 5 to DB 8
2: This section overrides sections DB 5 to DB 8. Link with subpart DA
3: This section overrides the general permission. Defined in this Act: deduction, general permission, interest, pay, stapled debt security .
73: Cost of revenue account property
1: Section DB 23(2)(a)
2: In section DB 23(2)(b) Proceeds from certain disposals by portfolio investment entities or New Zealand Superannuation Fund Proceeds from disposal of investment shares
3: In section DB 23 portfolio investment entity
4: Subsections (1) and (2) apply for the 2010–11 and later income years.
74: Charitable or other public benefit gifts by company
1: In section DB 41(2) a society, institution, association, organisation, trust, or fund of any of the kinds described in section LD 3(2) (Meaning of charitable or other public benefit gift) or set out in schedule 32 (Recipients of charitable or other public benefit gifts) a donee organisation
2: In section DB 41
a: close company company recognised exchange share
b: donee organisation
75: Property misappropriated by employees or service providers
1: Section DB 42(2)
2: This section does not apply when a person who misappropriates property is associated with the person who carries on the business.
2: Subsection (1) applies for the 2010–11 and later income years.
76: Portfolio investment entities: zero-rated portfolio investors and allocated losses
1: Section DB 53(1)
1: This section applies in relation to an investor in a portfolio investor class of a portfolio tax rate entity when—
a: either—
i: the entity pays tax under section HL 22 (Payments of tax by portfolio tax rate entity making no election) and the investor exits from the entity during a portfolio calculation period; or
ii: the investor is a zero-rated portfolio investor for the period; and
b: the period includes a portfolio allocation period for which the investor is allocated an amount of portfolio investor allocated loss under subpart HL (Portfolio investment entities).
2: Subsection (1) applies for the 2008–09 and later income years.
77: Section DB 53 replaced
1: Section DB 53
DB 53: Attributed PIE losses of certain investors
When this section applies
1: This section applies to an investor in a multi-rate PIE when—
a: an amount of attributed PIE loss is attributed under section HM 36 (Calculating amounts attributed to investors) to an investor for an attribution period in a tax year; and
b: either the investor is—
i: a zero-rated investor; or
ii: treated under section HM 61 (Certain exiting investors zero-rated) as zero-rated. Deduction
2: The investor is allowed a deduction for the amount allocated to the investor's income year in which the PIE's tax year ends. Link with subpart DA
3: This section supplements the general permission. The general limitations still apply. Defined in this Act: amount, attributed PIE loss, attribution period, deduction, exit period, general limitation, general permission, income tax liability, income year, investor, multi-rate PIE, PIE, quarter, tax year, zero-rated investor 2007 No 97 s DB 53 .
2: Subsection (1) applies for the 2010–11 and later income years.
78: Section DB 54 replaced
1: Section DB 54
DB 54: Treatment of credits for investment fees
When this section applies
1: This section applies when an investor in an investor class of a multi-rate PIE incurs expenses in relation to their investor interest, and the entity includes the amount in the calculation of its tax liability under section HM 47 (Calculation of tax liability or tax credit of multi-rate PIEs) in relation to the investor. No deduction
2: The investor is denied a deduction for the amount. Link with subpart DA
3: This section overrides the general permission. Defined in this Act: amount, deduction, general permission, investor, investor class, investor interest, multi-rate PIE 2007 No 97 s DB 54 .
2: Subsection (1) applies for the 2010–11 and later income years.
79: Expenditure incurred in deriving exempt dividend
1: Section DB 55(1) and (2) Deduction
1: A company that derives a dividend that is exempt income of the company under section CW 9 (Dividend derived from foreign company) is allowed a deduction of the amount of the expenditure incurred by the company in deriving the dividend.
2: In section DB 55 CTR company
3: Subsection (1) applies for all income years beginning on or after 1 July 2009.
80: Heading and section DB 60 replaced
The heading after section DB 59 section DB 60 Emissions units and liabilities under Climate Change Response Act 2002
DB 60: Acquisition of emissions units
When this section applies
1: This section applies when a person is transferred an emissions unit under section 64, or Part 4 subpart 2, of the Climate Change Response Act 2002 for a price of zero. No deduction
2: The person is denied a deduction for an amount of expenditure or loss incurred as consideration for the emissions unit. Link with subpart DA
3: Subsection (2) overrides the general permission. Defined in this Act: amount, emissions unit, general permission, loss .
81: New section DB 60B inserted
1: After section DB 60
DB 60B: Liabilities for emissions
When this section applies
1: This section applies when a person incurs a liability under the Climate Change Response Act 2002 for emissions relating to post-1989 forest land or pre-1990 forest land. No deduction
2: The person is denied a deduction for the liability. Link with subpart DA
3: Subsection (2) overrides the general permission. Defined in this Act: amount, deduction, general permission, post-1989 forest land, pre-1990 forest land .
2: Subsection (1) applies for deductions accrued on or after 1 January 2008.
82: Contributions to employees' superannuation schemes
1: In section DC 7(1), for a contribution for a superannuation contribution
2: In section DC 7(1B) for a contribution for a superannuation contribution
3: In section DC 7 superannuation contribution
4: Subsections (1) and (2) apply for the 2008–09 and later income years.
83: Criteria for approval of share purchase schemes: before period of restriction ends
1: Section DC 13(5)(d)
d: the trustee to be prohibited from applying the amount of any dividend to the repayment of a sum owing to the company or to the trustee; and .
2: Subsection (1) applies for the 2008–09 and later income years.
84: Employment-related activities
1: The heading to section DD 4(3) Relocation expenses, employees' meals, and sustenance allowances
2: Section DD 4(3)(a)
a: an amount that is exempt income of an employee under sections CW 17B and CW 17C (which relate to relocation expenses, expenditure on overtime meals, and sustenance allowances): .
3: In section DD 4 amount
85: Interpretation: reimbursement and apportionment
In section DD 10(a) section CW 17 (Expenditure on account, and reimbursement of employees) sections CW 17, CW 17B, and CW 17C (which relate to expenditure and reimbursement of employees)
86: Heading to subpart DF
In the heading to subpart DF , funding, grants
87: Government grants to businesses
1: Section DF 1(6)
2: In section DF 1 large budget screen production grant
3: Subsection (1) applies for an amount derived by a company as a large budget screen production grant if—
a: the final application for the large budget screen production grant is made on or after 1 October 2009; and
b: the company does not incur before 1 July 2008 an amount of $3,000,000 or more in expenditure on the project to which the large budget screen production grant relates.
88: Payments for social rehabilitation
In section DF 4(3)(b) part H, part I,
89: New section DF 5 added
After section DF 4
DF 5: Government funding additional to government screen production payments
When this section applies
1: This section applies when a public authority makes a payment (the funding payment
a: the funding payment is not in the nature of a grant or subsidy; and
b: the funding payment is not a grant-related suspensory loan; and
c: the person receives a government screen production payment for the project in addition to the funding payment; and
d: the person would be allowed a deduction for the expenditure in the absence of this section; and
e: the payment is excluded income under section CX 48C No deduction for expenditure
2: The person is denied, to the extent of the amount of the funding payment, the deduction for the expenditure that would be allowed in the absence of this section. Deduction for payments to public authority
3: The person is allowed a deduction for the amount of a payment (the return payment Links with subpart DA
4: In this section—
a: subsection (2) overrides the general permission; and
b: subsection (3) supplements the general permission and overrides the capital limitation; the other general limitations still apply. Defined in this Act: capital limitation, deduction, excluded income, general limitation, general permission, government screen production payment, grant-related suspensory loan, pay, public authority .
90: When attributed CFC loss arises
1: After the heading to section DN 2 General rule
2: Section DN 2(f) and (g)
f: the CFC has a net attributable CFC loss for the accounting period under section EX 20C (Net attributable CFC income or loss); and
h: the CFC is not a non-attributing active CFC for the accounting period, under section EX 21B (Non-attributing active CFCs); and
i: the CFC is not a non-attributing Australian CFC for the accounting period, under section EX 22 (Non-attributing Australian CFCs).
3: After section DN 2(i) Special rule: Attributable CFC amount from personal services
2: If a person and a non-attributing active CFC or non-attributing Australian CFC meet the requirements of subsection (1)(a) to (e) and the CFC derives income from personal services that is an attributable CFC amount under section EX 20B(3)(h) (Attributable CFC amount), the person has attributed CFC loss
a: the person's income interest in the CFC:
b: the amount by which the CFC's expenditure incurred in deriving the income from personal services exceeds the income from personal services.
4: In section DN 2
a: branch equivalent loss
b: attributable CFC amount net attributable CFC loss non-attributing active CFC non-attributing Australian CFC
5: Subsections (2) and (3) apply for all income years beginning on or after 1 July 2009.
91: When FIF loss arises
1: Section DN 6(3) FIF loss from CFC with FIF interest
3: FIF loss
2: In section DN 6 non-attributing Australian CFC
3: Subsection (1) applies for all income years beginning on or after 1 July 2009.
92: Section DO 11B repealed
1: Section DO 11B
2: Subsection (1) applies for the 2009–10 and later income years.
93: Forestry business on land bought from the Crown, Maori owners, or holding company: no deduction
1: In the heading to section DP 8(3) section FA 2 sections FA 2 and FA 2B
2: In section DP 8(3) as it applies to substituting debentures, does , as it applies to substituting debentures, and section FA 2B (Stapled debt securities) do
94: Sections DR 1 to DR 3 replaced
1: Sections DR 1 to DR 3
DR 1: Policyholder base allowable deduction of life insurer
Deduction
1: If, but for this section, a life insurer has an amount of policyholder base allowable deduction for an income year and that amount is neither a deduction under this Part nor denied as a deduction under this Part, the amount is a deduction of the life insurer for the income year. No cross-deducting: section EY 2
2: A policyholder base allowable deduction is not allowed against shareholder base income. Section EY 2 (Policyholder base) deals with allowing policyholder base allowable deductions against policyholder base income, and deals with deductions that relate to the life insurer's schedular income derived by their life fund PIE that is a multi-rate PIE. Link with subpart DA
3: Subsections (1) and (2) override the general permission. Defined in this Act: amount, deduction, general permission, income year, life fund PIE, life insurer, multi-rate PIE, policyholder base allowable deduction, policyholder base income, shareholder base income
DR 2: Shareholder base allowable deduction of life insurer
Deduction
1: If, but for this section, a life insurer has an amount of shareholder base allowable deduction for an income year and that amount is neither a deduction under this Part nor denied as a deduction under this Part, the amount is a deduction of the life insurer for the income year. No cross-deducting
2: A shareholder base allowable deduction is not allowed against policyholder base income. Link with subpart DA
3: Subsections (1) and (2) override the general permission. Defined in this Act: amount, deduction, general permission, income year, life insurer, policyholder base income, shareholder base allowable deduction
DR 3: Life reinsurance outside New Zealand
No deduction A life insurer is denied a deduction for life reinsurance premiums they incur if the relevant life reinsurance policy,––
a: was not offered in New Zealand:
b: was not entered into in New Zealand. Defined in this Act: amount, deduction, general permission, income year, life insurer, life reinsurance, life reinsurance policy, New Zealand
DR 4: Life insurers' claims reserves
No deduction on account of claims
1: For a life insurer's life insurance policies, the life insurer is denied a deduction relating to the life insurer's outstanding claims or for a claim's expenditure or loss for an income year, except as provided by––
a: section EY 24 (Outstanding claims reserving amount: non-participation policies not annuities):
b: subsection (2). Deduction for payments of current claims
2: The life insurer is allowed a deduction for the amount of expenditure or loss of a claim paid under a life insurance policy for the income year. Link with subpart DA
3: This section supplements the general permission. The general limitations still apply. Defined in this Act: claim, deduction, general limitation, general permission, life insurance policy, life insurer .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
95: Film production expenditure
1: Section DS 2(4) Timing of deduction
4: The deduction is allocated under—
a: section EJ 4 or EJ 5 (which relate to expenditure incurred in acquiring film rights) if the film is one for which a government screen production payment is made; or
b: section EJ 7 or EJ 8 (which relate to film production expenditure) if the film is not one for which a government screen production payment is made.
2: In section DS 2
a: large budget screen production grant
b: government screen production payment
96: Meaning of film reimbursement scheme
1: Section DS 4(5)
5: For the purposes of subsection (3), a shareholder in a loss-attributing qualifying company and the company are associated persons, in addition to the associated persons described in the provisions of subpart YB (Associated persons and nominees) that apply for the purposes of the whole Act (excluding the 1973, 1988, and 1990 version provisions) or in the 1988 version provisions.
2: Section DS 4(5)
5: For the purposes of subsection (3), a shareholder in a loss-attributing qualifying company and the company are associated persons, in addition to the associated persons described in subpart YB (Associated persons and nominees).
3: In section DS 4 1973 version provisions 1988 version provisions 1990 version provisions
4: In section DS 4 1973 version provisions 1988 version provisions 1990 version provisions
5: Subsection (2) applies for the 2010–11 and later income years.
97: New section DT 1A inserted
1: Before section DT 1
DT 1A: Ring-fenced allocations
When this section applies
1: This section applies to an amount of a person's deductions for expenditure and loss for an income year to the extent to which it is—
a: petroleum exploration expenditure:
b: petroleum development expenditure:
c: residual expenditure. Basis for allocation of deductions
2: If, but for this subsection, an amount that relates to petroleum mining operations undertaken outside New Zealand would be allocated to an income year (the current year Excess allocations: carried forward and re-instated next year
3: Any excess not allocated to the current year because of subsection (2) is carried forward and treated as—
a: relating to petroleum mining operations undertaken outside New Zealand for the next income year; and
b: allocated to that next income year. Restriction on reinstating excess allocations
4: Despite subsection (3), the excess is not allocated to the next income year, and no deduction is allowed or allocated to any income year for the excess, if sections IA 5 and IP 3 (which relate to the carrying forward of tax losses for companies) would not have allowed the excess to be carried forward to that next income year in a loss balance, treating the excess as a tax loss component arising on the last day of the current year. Defined in this Act: deduction, income year, loss balance, New Zealand, petroleum development expenditure, petroleum exploration expenditure, petroleum mining operation, residual expenditure, tax loss component .
2: Subsection (1) applies for expenditure incurred on or after 4 March 2008.
98: Arrangement for petroleum exploration expenditure and sale of property
1: In section DT 2(1)(b)
b: the person or a person associated with them under the provisions of subpart YB (Associated persons and nominees) that apply for the purposes of the whole Act (excluding the 1973, 1988, and 1990 version provisions) or the 1988 version provisions may dispose of property— .
2: In section DT 2(1)(b)
b: the person or a person associated with them may dispose of property— .
3: In section DT 2(1)(c)
ii: a petroleum permit; or
iii: material or a permit that relates to petroleum mining operations undertaken outside New Zealand, and that material or permit are substantially the same as those described in subparagraphs (i) or (ii), with necessary modifications made to this subpart and the Crown Minerals Act 1991.
4: In section DT 2 1973 version provisions 1988 version provisions 1990 version provisions
5: In section DT 2 1973 version provisions 1988 version provisions 1990 version provisions
6: Subsection (2) applies for the 2010–11 and later income years.
99: Petroleum development expenditure
1: Section DT 5(1) and (2) Deduction
1: A petroleum miner is allowed a deduction for petroleum development expenditure incurred by them. Timing of deduction
2: For an income year, an amount of the deduction is allocated to that year, as provided by—
a: section EJ 12 (Petroleum development expenditure: default allocation rule); or
b: section EJ 12B (Petroleum development expenditure: reserve depletion method).
2: Subsection (1) applies for expenditure incurred on or after 1 April 2008.
100: Disposal of petroleum mining asset to associate
1: In section DT 9(1)(b) section EJ 12 (Petroleum development expenditure) section EJ 12 or EJ 12B (which relate to petroleum development expenditure)
2: Section DT 9(2)(b)
b: the amount of the deduction allocated under section EJ 12 or EJ 12B to the income years after the income year in which the miner disposes of the asset.
3: Subsections (1) and (2) apply for expenditure incurred on or after 1 April 2008.
101: Amount written off by holding company
1: In section DU 12(3)(a) tax year income year
2: Section DU 12(3)(b)
b: the prescribed proportion of the total amount of mining exploration expenditure and mining development expenditure incurred by the mining company before the end of the income year in which the amount referred to in subsection (1) is written off, reduced by the total amount of deductions the holding company is allowed under this section in all income years before the income year in which that amount is written off.
3: Subsection (2) applies for the 2008–09 and later income years.
102: Transfer of expenditure to master fund
1: Section DV 2(6)
6: The expenditure is treated as being incurred by the master superannuation fund as follows:
a: for a master fund that is a portfolio tax rate entity, in the income year in which the expenditure is transferred by the member superannuation fund; or
b: for other master funds, in the same income year as that in which it was incurred by the member superannuation fund.
2: Section DV 2(6)
6: The expenditure is treated as being incurred by the master superannuation fund as follows:
a: for a master fund that is a multi-rate PIE, in the income year in which the expenditure is transferred by the member superannuation fund; or
b: for other master funds, in the same income year as that in which it was incurred by the member superannuation fund.
3: After section DV 2(8) Amount of deduction when master fund is portfolio tax rate entity
8B: Despite subsection (8), a master superannuation fund that is a portfolio tax rate entity is allowed a deduction for expenditure transferred to it by a member superannuation fund. However, the maximum amount transferred must be no more than the member fund's share of the entity's taxable income for the income year in which the amount is transferred, any excess being treated as not transferred.
4: Section DV 2(8B)
8B: Despite subsection (8), a master superannuation fund that is a multi-rate PIE is allowed a deduction for expenditure transferred to it by a member superannuation fund. However, the maximum amount transferred must be no more than the member fund's share of the taxable income of the PIE for the income year in which the amount is transferred, any excess being treated as not transferred.
5: In section DV 2 portfolio investor interest portfolio tax rate entity
6: In section DV 2
a: portfolio investor interest portfolio tax rate entity
b: investor interest multi-rate PIE
7: Subsections (1) and (3) apply for the 2008–09 and 2009–10 income years.
8: Subsections (2) and (4) apply for the 2010–11 and later income years.
103: Carry forward of expenditure
1: After section DV 4(1) What this section does not apply to
1B: This section does not apply to a transfer of expenditure to a master superannuation fund that is a portfolio tax rate entity.
2: Section DV 4(1B) What this section does not apply to
1B: This section does not apply to a transfer of expenditure to a master superannuation fund that is a multi-rate PIE.
3: In section DV 4 portfolio tax rate entity
4: In section DV 4
a: portfolio tax rate entity
b: multi-rate PIE
5: Subsection (1) applies for the 2008–09 and 2009–10 income years.
6: Subsection (2) applies for the 2010–11 and later income years.
104: New section DV 4B inserted and replaced
1: After section DV 4
DV 4B: Carry forward of expenditure by member funds investing in portfolio investment entities
When this section applies
1: This section applies when—
a: a master fund that is a portfolio tax rate entity has a deduction under section DV 2(8B) for an income year for expenditure transferred to it by a member fund; and
b: the amount of the expenditure that meets the tests set out in section DV 2(2) is more than the amount transferred for the income year, so there is surplus expenditure for the member fund. Member fund carrying expenditure forward
2: The member fund may carry forward the surplus expenditure for transfer under section DV 2(8B) in a later income year. Expenditure as loss balance
3: If the member fund carries forward surplus expenditure in an income year, the member fund may treat some or all of the expenditure as a loss balance for the corresponding tax year. Defined in this Act: amount, deduction, income year, loss balance, master fund, portfolio tax rate entity, tax year .
2: Section DV 4B
DV 4B: Carry forward of expenditure by member funds investing in portfolio investment entities
When this section applies
1: This section applies when—
a: a master fund that is a multi-rate PIE has a deduction under section DV 2(8B) for an income year for expenditure transferred to it by a member fund; and
b: the amount of the expenditure that meets the tests set out in section DV 2(2) is more than the amount transferred for the income year, so there is surplus expenditure for the member fund. Member fund carrying expenditure forward
2: The member fund may carry forward the surplus expenditure for transfer under section DV 2(8B) in a later income year. Expenditure as loss balance
3: If the member fund carries forward surplus expenditure in an income year, the member fund may treat some or all of the expenditure as a loss balance for the corresponding tax year. Defined in this Act: amount, deduction, income year, loss balance, master fund, multi-rate PIE, tax year .
3: Subsection (1) applies for the 2008–09 and 2009–10 income years.
4: Subsection (2) applies for the 2010–11 and later income years.
105: Investment funds: transfer of expenditure to master funds
1: After section DV 5(7) Amount of deduction when master fund is portfolio tax rate entity
7B: Despite subsection (7), a master fund that is a portfolio tax rate entity is allowed a deduction for expenditure transferred to it by a member fund. However, the maximum amount transferred must be no more than the member fund's share of the entity's taxable income for the income year in which the amount is transferred, any excess being treated as not transferred.
2: Section DV 5(7B) Amount of deduction when master fund is multi-rate PIE
7B: Despite subsection (7), a master fund that is a multi-rate PIE is allowed a deduction for expenditure transferred to it by a member fund. However, the maximum amount transferred must be no more than the member fund's share of the taxable income of the PIE for the income year in which the amount is transferred, any excess being treated as not transferred.
3: In section DV 5 portfolio investor interest portfolio tax rate entity
4: In section DV 5
a: portfolio investor interest portfolio tax rate entity
b: investor interest multi-rate PIE
5: Subsection (1) applies for the 2008–09 and 2009–10 income years.
6: Subsection (2) applies for the 2010–11 and later income years.
106: Formula for calculating maximum deduction
1: After section DV 6(4), Portfolio tax rate entities
5: This section does not apply to an amount of expenditure transferred to a master fund that is a portfolio tax rate entity.
2: Section DV 6(5) Multi-rate PIEs
5: This section does not apply to an amount of expenditure transferred to a master fund that is a multi-rate PIE.
3: In section DV 6 portfolio tax rate entity
4: In section DV 6
a: portfolio tax rate entity
b: multi-rate PIE
5: Subsection (1) applies for the 2008–09 and 2009–10 income years.
6: Subsection (2) applies for the 2010–11 and later income years.
107: Carry forward of expenditure
1: Section DV 7(1) When this section applies
1: This section applies when a member superannuation fund incurs expenditure that is more than—
a: the member fund and master fund agree can be transferred; or
b: the maximum amount that can be transferred. Member fund carrying expenditure forward
1B: The member fund may carry forward the expenditure for transfer in a later income year.
2: Subsection (1) applies for the 2008–09 and later income years.
108: Maori authorities: donations
1: In section DV 12(1)(b) a society, institution, association, organisation, trust, or fund to which section LD 3(2) (Meaning of charitable or other public benefit gift) or schedule 32 (Recipients of charitable or other public benefit gifts) applies a donee organisation
2: In section DV 12 donee organisation
109: New section DW 4 added
1: After section DW 3
DW 4: Deduction for general insurance outstanding claims reserve
When this section applies
1: This section applies for—
a: an insurer who––
i: uses IFRS 4, Appendix D for general insurance contracts:
ii: is a life insurer who has general insurance contracts; and
b: general insurance contracts, excluding contracts having premiums to which section CR 3 (Income of non-resident general insurer) applies. No deduction on account of claims
2: For an insurer's general insurance contracts, the insurer is denied a deduction relating to the insurer's outstanding claims liability or for a claim's expenditure or loss, except as provided by this section. Formula for insurer's OCR deduction
3: For an income year (the current year opening outstanding claims reserve Definition of items in formula
4: In the formula,—
a: opening outstanding claims reserve
i: the amount of the insurer's closing outstanding claims reserve for the income year before the current year (the prior year
ii: the amount of the insurer's reserve for outstanding claims liability, calculated at the end of the prior year, using the basis the insurer used for tax purposes in that prior year, if the current year is the first year that this section applies to the insurer:
b: closing outstanding claims reserve Deduction for payments of current claims
5: The insurer is allowed a deduction for the amount of expenditure or loss of a claim paid to an insured under a general insurance contract for the income year. Link with subpart DA
6: This section supplements the general permission. The general limitations still apply. Defined in this Act: amount, deduction, general insurance contract, general limitation, general permission, IFRS 4, income year, insurer, life insurer, outstanding claims reserve .
2: Subsection (1) applies—
a: for an insurer who uses IFRS 4,––
i: for the 2009–10 and later income years, unless subparagraph (ii) applies:
ii: for the first income year for which an insurer adopts IFRSs for the purposes of financial reporting and later income years, if that first income year is before the 2009–10 income year and the person chooses to use IFRS 4 in a return of income for that first year:
b: for a life insurer,––
i: on and after 1 July 2010, unless subparagraph (ii) applies:
ii: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
110: Section DX 2 repealed
1: Section DX 2
2: Subsection (1) applies for all income years beginning on or after 1 July 2009.
111: Prepayments
In section EA 3(7) sections CW 17 (Expenditure on account, and reimbursement, of employees) and CW 18 (Allowance for additional transport costs) sections CW 17, CW 17B, CW 17C, and CW 18 (which relate to expenditure, reimbursement, and allowances of employees)
112: Meaning of trading stock
1: In section EB 2(3)(e) Proceeds from certain disposals by portfolio investment entities or New Zealand Superannuation Fund Proceeds from disposal of investment shares
2: Section EB 2(3)(i)
i: an emissions unit:
j: a non-Kyoto greenhouse gas unit.
3: In section EB 2
a: ETS unit
b: emissions unit non-Kyoto greenhouse gas unit
113: Low-turnover valuation
1: In section EB 13(2) YB 8 YB 3
2: Subsection (1) applies for the 2010–11 and later income years.
114: New heading and section EC 26B inserted
1: After section EC 26 Partnerships: cost price and national standard cost scheme
EC 26B: Entering partners' cost base
When this section applies
1: This section applies when an entering partner has acquired specified livestock that includes female breeding livestock for which section HG 10 (Disposal of livestock) applies, and the partners use the cost price method or the national standard cost scheme. Existing cost base
2: For the specified livestock, the entering partner is treated as having the same existing cost base that the exiting partner would have had for the purposes of the cost price method or national standard cost scheme for an income year, if they had not disposed of the interests. Addition to cost base
3: For the purposes of determining the value of the specified livestock at the end of an income year for the purposes of section EC 2, the entering partner must add to the existing cost base, described in subsection (2), the amount for the income year (the current year livestock cost base difference × current year count allowed years. Definition of items in formula
4: In the formula,––
a: livestock cost base difference
b: current year count
i: is the allowed years reduced by the number of years between the current year and the income year in which the entering partner's acquisition of the specified livestock occurred, ignoring years in which the partners do not use the cost price method or national standard cost scheme (for example: current year count 1 4
ii: may equal the allowed years (for example: the current year is the same year as the income year in which the entering partner's acquisition of the specified livestock occurred), but must not be a negative number:
c: allowed years
i: 4, if the partners acquire or dispose of any partnership interests that include any livestock after the entering partner's acquisition of the specified livestock and before the end of the income year in which that acquisition occurred; or
ii: 5, if the partners do not acquire or dispose of any partnership interests that include any livestock after the entering partner's acquisition of the specified livestock and before the end of the income year in which that acquisition occurred. Defined in this Act: amount, cost price, dispose, income year, national standard cost scheme, partner, partner's interest, specified livestock .
2: Subsection (1) applies for the 2009–10 and later income years.
115: Valuation of excepted financial arrangements
1: Section ED 1(5B) Certain emissions units not pooled with other types of emissions unit
5B: No emissions unit described in 1 of the following paragraphs may be pooled for the purposes of subsection (5) with an emissions unit described in another of the paragraphs:
a: pre-1990 forest land emissions units relating to pre-1990 forest land, if the holder of the units would derive income, other than exempt income and excluded income, from a disposal of the land without timber:
b: post-1989 forest land emissions units:
c: replacement forest land emissions units:
d: pre-1990 forest land emissions units relating to pre-1990 forest land, if the holder of the units would derive no income other than exempt income and excluded income from a disposal of the land without timber:
e: emissions units issued for no consideration—
i: to which section ED 1B applies; and
ii: that have not been assigned a cost under section ED 1B(3)(a). Exceptions: types of emissions units pooled with other types
5C: Despite subsection (5B), emissions units described in paragraphs (a) to (c) of that subsection may be pooled for the purposes of subsection (5).
2: After section ED 1(7) Valuation of emissions units issued for zero price
7B: Despite subsection (1),—
a: an emissions unit transferred under section 64, or Part 4 subpart 2, of the Climate Change Response Act 2002 for no payment of a price has a value of zero during the period beginning with the day of the transfer and ending before the end of the income year in which the transfer occurs:
b: a forest land emissions unit has a value of zero at the end of each income year:
c: a replacement forest land emissions unit has a value of zero at the end of each income year:
d: an emissions unit to which section ED 1B applies has the value at the end of each income year that is given by that section.
3: Section ED 1(8B)
4: In section ED 1
a: replacement ETS unit
b: emissions unit excluded income exempt income forest land emissions unit post-1989 forest land emissions unit pre-1990 forest land pre-1990 forest land emissions unit replacement forest land emissions unit
116: New section ED 1B inserted
After section ED 1
ED 1B: Valuation of emissions units issued for zero price
What this section applies to
1: This section applies to emissions units, held by a person at the end of an income year, that—
a: are transferred to the person under section 64, or Part 4, subpart 2 of the Climate Change Response Act 2002 for a price of zero; and
b: are held continuously by the person to the end of the income year; and
c: relate to a quantity (the unit-related quantity emissions unit period
d: are not forest land emissions units; and
e: are not replacement forest land emissions units; and
f: are not assigned a cost under subsection (3)(a) for an earlier income year. Value at end of income year
2: The value under section ED 1(7B) of the emissions units at the end of the income year is—
a: zero, if the emissions unit period begins after the end of the income year; or
b: the amount determined under subsection (3), if paragraph (a) does not apply and the emissions unit period ends after the end of the income year; or
c: the market value of the emissions units at the end of the income year, if the emissions unit period ends in or at the end of the income year. Value if emissions unit period ends after end of income year
3: The value under section ED 1(7B) of the emissions units at the end of an income year referred to in subsection (2)(b) is,—
a: for the number of the emissions units given by subsection (4), the market value of the emissions units at the end of the income year; or
b: for the balance of the units, zero. Formula based on emissions
4: The number of units referred to in subsection (3)(a) is the number, treating negative numbers as equal to zero and ignoring fractions, calculated using the formula— held units – ﴾issued units × remaining quantity ﴿. total quantity Definition of items in formula
5: The items in the formula are defined in subsections (6) to (9). Held units
6: Held units Issued units
7: Issued units Remaining quantity
8: Remaining quantity
a: if the total unit-related quantity for the person can be determined for each part of the emissions unit period included in an income year, the greater of the following amounts:
i: the part of the total expected unit-related quantity for the emissions unit period that was not emitted or incurred before the end of the income year:
ii: zero; or
b: if paragraph (a) does not apply, the number of days in the emissions unit period after the end of the income year. Total quantity
9: Total quantity
a: if the total unit-related quantity for the person can be determined for each part of the emissions unit period included in an income year, the total unit-related quantity that was expected to be emitted or incurred for the emissions unit period; or
b: if paragraph (a) does not apply, the number of days in the emissions unit period. Defined in this Act: emissions unit, income year .
117: Pool method: calculating amount of depreciation
1: Section EE 21(5) to (8) Starting adjusted tax value
5: Starting adjusted tax value
a: the pool's adjusted tax value at the start of the income year, increased as applicable by the amount referred to in section EE 22(2)(b); or
b: zero, if the pool did not exist at the start of the income year. Ending adjusted tax value
6: Ending adjusted tax value
a: increased by the amounts referred to in section EE 22(1) and (2)(a):
b: decreased by the amount referred to in section EE 22(3). Months
7: Months
2: Subsection (1) applies for the 2008–09 and later income years.
118: Economic rate for plant, equipment, or building, with high residual value
In section EE 30(1)(b) of cost 13.5%
119: Annual rate for item acquired in person's 1995–96 or later income year
1: Section EE 31(2)(a)
a: the item's economic rate, special rate, or provisional rate, for an item not described in either paragraph (b) or (c): .
2: In section EE 31(2)(b)
b: the item's economic rate, special rate, or provisional rate, multiplied by 1.2, for an item that— .
120: Meaning of adjusted tax value
1: Section EE 55(1)(b)
b: for a pool, the total adjusted tax value determined under section EE 21.
2: Subsection (1) applies for the 2008–09 and later income years.
121: Employer's superannuation contribution tax
1: In section EF 2 employer's superannuation contributions employer's superannuation cash contributions
2: In section EF 2 employer's superannuation contribution employer's superannuation cash contribution
3: Subsection (1) applies for the 2008–09 and later income years.
122: Section EG 3 repealed
1: Section EG 3
2: Subsection (1) applies for the 2010–11 and later income years.
123: Expenditure incurred in acquiring film rights in feature films
1: Section EJ 4(1)(b)
b: the deduction is allowed under section DS 2 (Film production expenditure) and the film is one for which a government screen production payment is made.
2: In section EJ 4 government screen production payment
124: Expenditure incurred in acquiring film rights in films other than feature films
1: Section EJ 5(1)(b)
b: the deduction is allowed under section DS 2 (Film production expenditure) and the film is one for which a government screen production payment is made.
2: In section EJ 5 government screen production payment
125: Film production expenditure for New Zealand films having no large budget screen production grant
1: In the heading to section EJ 7 large budget screen production grant government screen production payment
2: Section EJ 7(1)(a)
a: the film is not one for which a government screen production payment is made; and .
3: In section EJ 7 government screen production payment
126: Film production expenditure for other films having no large budget screen production grant
1: In the heading to section EJ 8 large budget screen production grant government screen production payment
2: Section EJ 8(1)(a)
a: the film is not one for which a government screen production payment is made; and .
3: In section EJ 8 government screen production payment
127: Section EJ 12 replaced
1: Section EJ 12
EJ 12: Petroleum development expenditure: default allocation rule
When this section applies
1: This section applies to a petroleum miner's petroleum development expenditure that relates to petroleum mining developments in a permit area and that is incurred on or after 1 April 2008, when section EJ 12B does not apply to the expenditure. Default allocation rule
2: For the purposes of section DT 5(2)(a) (Petroleum development expenditure), a deduction for the petroleum development expenditure is allocated in equal amounts over a period of 7 income years. The period of 7 years starts with the income year in which the expenditure is incurred. Relationship with other petroleum mining provisions
3: Sections EJ 13 to EJ 16 override subsection (2). Sections DT 7, DT 8, DT 10, DT 11, DT 16, and IS 5 (which relate to petroleum miners) override this section. Defined in this Act: amount, deduction, income year, permit area, petroleum development expenditure, petroleum miner, petroleum mining development
EJ 12B: Petroleum development expenditure: reserve depletion method
When this section applies
1: This section applies to a petroleum miner's petroleum development expenditure that relates to petroleum mining developments in a permit area, when the expenditure is incurred––
a: on or after 1 April 2008; and
b: an election to apply this section, described in subsection (2), is made for the permit area. Choice: first year of commercial production and later years
2: An election to apply this section may be made by a petroleum miner for a permit area, in a return of income for an income year, only if that income year is the first one in which petroleum is produced in commercial quantities in the permit area. The election is irrevocable, and applies this section to petroleum development expenditure that relates to petroleum mining developments in the relevant permit area for the income year and later income years. Reserve depletion method expense allocation rule
3: For the purposes of section DT 5(2)(b) (Petroleum development expenditure), the deduction allocated to an income year for the petroleum development expenditure that relates to a petroleum mining development in the relevant permit area is the amount calculated using the following formula, if the amount is positive: (reserve expenditure − previous expenditure) × reserve depletion for the year probable reserves. Definition of items in formula
4: The items in the formula are defined in subsections (5) to (8). Reserve expenditure
5: Reserve expenditure Previous expenditure
6: Previous expenditure Reserve depletion for the year
7: Reserve depletion for the year Probable reserves
8: Probable reserves Relationship with other petroleum mining provisions
9: Sections EJ 13 to EJ 16 override subsection (3). Sections DT 7, DT 8, DT 10, DT 11, DT 16, and IS 5 (which relate to petroleum miners) override this section. Defined in this Act: amount, deduction, income year, permit area, petroleum development expenditure, petroleum miner, petroleum mining development .
2: Subsection (1) applies for expenditure incurred on or after 1 April 2008.
128: Relinquishing petroleum mining permit
1: In section EJ 13(2)(b) section EJ 12(1) section EJ 12(2) or EJ 12B(3)
2: Subsection (1) applies for expenditure incurred on or after 1 April 2008.
129: New sections EJ 13B and EJ 13C inserted
1: After section EJ 13
EJ 13B: Dry well drilled
When this section applies
1: This section applies when—
a: the petroleum miner has petroleum development expenditure for a well, the drilling of which stops in an income year, and, from the time of stopping, the well—
i: will never produce petroleum in commercial quantities; and
ii: is abandoned; and
b: part of a deduction under section DT 5 (Petroleum development expenditure) for the petroleum development expenditure described in paragraph (a) has not been allocated under section EJ 12 or EJ 12B. Allocation
2: The part of the deduction described in subsection (1) is allocated to the income year. Defined in this Act: amount, deduction, income year, petroleum development expenditure
EJ 13C: Well not producing
When this section applies
1: This section applies when—
a: the petroleum miner has petroleum development expenditure for a well that, in an income year—
i: stops producing petroleum in commercial quantities; and
ii: is abandoned; and
b: the petroleum miner has elected to apply section EJ 12B for the petroleum development expenditure described in paragraph (a) before the start of the income year; and
c: part of a deduction under section DT 5 (Petroleum development expenditure) for the petroleum development expenditure described in paragraphs (a) and (b) has not been allocated under section EJ 12B. Allocation
2: The part of the deduction described in subsection (1) is allocated to the income year. Defined in this Act: amount, deduction, income year, petroleum development expenditure .
2: Subsection (1) applies for expenditure incurred on or after 1 April 2008.
130: Disposal of petroleum mining asset
1: Section EJ 15(2)(b)
b: it has not been allocated under section EJ 12 or EJ 12B to the income year in which the miner disposes of the asset or to an earlier income year.
2: Subsection (1) applies for expenditure incurred on or after 1 April 2008.
131: Sections EJ 19 and EJ 20 replaced
1: Sections EJ 19 EJ 20
EJ 20: Meaning of petroleum mining development
Meaning
1: In sections EJ 12 and EJ 12B, petroleum mining development Activities: inclusions
2: The activities are those carried out in connection with—
a: developing a permit area for producing petroleum:
b: producing petroleum:
c: processing, storing, or transmitting petroleum before its dispatch to a buyer, consumer, processor, refinery, or user:
d: removal or restoration operations. Activities: exclusions
3: The activities do not include further treatment to which all the following apply:
a: it occurs after the well stream has been separated and stabilised into crude oil, condensate, or natural gas; and
b: it is done—
i: by liquefaction or compression; or
ii: for the extraction of constituent products; or
iii: for the production of derivative products; and
c: it is not treatment at the production facilities. Defined in this Act: permit area, petroleum, removal or restoration operations .
2: Subsection (1) applies for expenditure incurred on or after 1 April 2008.
132: What is an excepted financial arrangement?
1: In section EW 5(2) financial arrangement financial arrangement to the extent to which it is not life financial reinsurance
2: Section EW 5(3B) Emissions unit
3B: An emissions unit is an excepted financial arrangement. Non-Kyoto greenhouse gas unit
3C: A non-Kyoto greenhouse gas unit is an excepted financial arrangement.
3: In section EW 5(8) insurance contract insurance contract to the extent to which it is not life financial reinsurance
4: In section EW 5
a: ETS unit
b: emissions unit non-Kyoto greenhouse gas unit
5: In section EW 5 life financial reinsurance
6: Subsections (1) and (3) apply—
a: on and after 1 July 2010, unless paragraph (b) applies; or
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
133: What spreading methods do
After section EW 14(2)(d)
e: a financial reporting method, to which sections EW 21 and EW 23 are relevant; or .
134: Applying IFRSs to financial arrangements
After section EW 15B(2) Functional currency
3: Even if another currency may be used as the functional currency under IFRSs, the methods must be applied using New Zealand dollars. Financial statements
4: Unless the context otherwise requires, references to IFRSs in sections EW 15D to EW 15I are references to IFRS rules used to prepare the person's financial statements.
135: IFRS financial reporting method
1: In section EW 15D(2)(a) income year income year. However, when the fair value method is used, adjustments for financial arrangements held by the person are excluded from this paragraph, if the financial arrangements are not derivative instruments and the person's business includes dealing in those financial arrangements:
2: After section EW 15D(2)(a)
ab: borrowing costs are not capitalised under NZIAS 23: .
3: After section EW 15D(2) Fair value method not used for certain financial arrangements
2B: A person must not use the fair value method for a financial arrangement if—
a: the financial arrangement is treated under IFRSs by the person as a hedge of another financial arrangement; and
b: the person uses a method other than the IFRS financial reporting method for the other financial arrangement.
4: In section EW 15D derivative instrument NZIAS 23
5: Subsection (2) does not apply for a taxpayer and an income year if the taxpayer has,—
a: before 30 June 2009, filed a return of income for the income year; and
b: taken a tax position in the return which ignores subsection (2).
136: Determination alternatives
1: Section EW 15E(1)(c)
c: the financial arrangement––
i: is not treated under IFRSs by the person as a hedge; or
ii: is treated under IFRSs by the person as a hedge of other financial arrangements, for each of which the person does not use the fair value method.
2: In section EW 15E(2)
2: The person must use 1 of the following methods modified, as applicable, under subsection (3) or (3B): .
3: Before section EW 15E(2)(a)
aa: Determination G3: Yield to maturity Determination G3 Determination G25: Variation in the terms of a financial arrangement .
4: After section EW 15E(3) Modifications
3B: For a determination alternative that is Determination G27
a: method C must be used, and not methods A, B, or D:
b: for method C, if relevant, Determination G9C Determination G9A
5: In section EW 15E derivative instrument New Zealand
6: Subsections (2) and (4)
137: Expected value method
1: Section EW 15F(1)(c)
c: the financial arrangement––
i: is not treated under IFRSs by the person as a hedge; or
ii: is treated under IFRSs by the person as a hedge of other financial arrangements, for each of which the person does not use the fair value method; and .
2: Section EW 15F(1)(d)
d: the person and all companies in a group of companies to which the person belongs have chosen to use the expected value method and have notified the Commissioner at the time of filing a return of income.
3: After section EW 15F(1) Exception for some group members and financial arrangements
1B: A person who is a member of a group of companies and has notified an election under subsection (1)(d)
a: the person does not have a business of a substantially similar nature to a business of another company in the group; and
b: the financial arrangement is with other parties, of which—
i: none are associated with the person or a member of the group; or
ii: all are associated with the person and use the method used by the person for the arrangement.
4: Section EW 15F(3)
5: In section EW 15F associated person
6: Subsection (4) applies for the 2009–10 and later income years.
138: Modified fair value method
1: Section EW 15G(1)(c)
c: the financial arrangement––
i: is not treated under IFRSs by the person as a hedge; or
ii: is treated under IFRSs by the person as a hedge of other financial arrangements, for each of which the person does not use the fair value method; and .
2: Section EW 15G(1)(d)
d: the person and all companies in a group of companies to which the person belongs have chosen to use the modified fair value method and have notified the Commissioner at the time of filing a return of income.
3: After section EW 15G(1) Exception for some group members and financial arrangements
1B: A person who is a member of a group of companies and has notified an election under subsection (1)(d)
a: the person does not have a business of a substantially similar nature to a business of another company in the group; and
b: the financial arrangement is with other parties, of which—
i: none are associated with the person or a member of the group; or
ii: all are associated with the person and use the method used by the person for the arrangement; and
c: subsection (3)
4: Section EW 15G(2), other than the heading, is replaced by the following:
2: The person must use the fair value method, modified so that the following are not required to be allocated to an income year:
a: an amount allocated by the person to equity reserves under IFRSs for the financial arrangement:
b: an amount not allocated by the person to equity reserves under IFRSs for the financial arrangement, if—
i: the person and another person (the other person
ii: the person and the other person are members of the same group consolidated under IFRSs; and
iii: the financial arrangement is related to an arrangement (the other arrangement
iv: the other person does not use the fair value method for the other arrangement; and
v: the group consolidated under IFRSs makes an allocation, to equity reserves under IFRSs, corresponding to the amount.
5: After section EW 15G(2) Some financial arrangements with amounts allocated to equity reserves
3: A person who is a member of a wholly-owned group and of a group consolidated under IFRSs (the consolidated group
a: the person or the consolidated group allocates an amount to equity reserves under IFRSs for the financial arrangement; and
b: a member of the consolidated group, under subsection (2)(b)
6: In section EW 15G wholly-owned group
139: Mandatory use of some determinations
1: In section EW 15H(1)(d) expenditure: expenditure Determination G29 Determination G9C Determination G9A
2: Subsection (1) applies for the 2009–10 and later income years.
140: Mandatory use of yield to maturity method for some arrangements
1: After section EW 15I(1)(b)(ii)
iib: is, under NZIAS 17 and in the person's financial statements, classified as an operating lease; or .
2: In section EW 15I NZIAS 17
141: New section EW 21 inserted
After section EW 20
EW 21: Financial reporting method
A person who is a party to a financial arrangement may use a financial reporting method if––
a: the person cannot use the yield to maturity method or an alternative; and
b: the person––
i: may not use the straight-line method or a market valuation method; or
ii: may use the straight-line method or a market valuation method but chooses not to do so; and
c: the person is not required to use a method under section EW 15B; and
d: the Commissioner has not made a determination for the financial arrangement under section 90AC(1)(d) of the Tax Administration Act 1994; and
e: the method conforms with commercially acceptable practice; and
f: the method is also used by the person for financial reporting purposes for financial arrangements that are the same as, or similar to, the arrangement (although section EW 23 may apply if the method is not used in this way); and
g: the method allocates a reasonable amount to each income year over the financial arrangement's term. Defined in this Act: amount, Commissioner, financial arrangement, income year .
142: Default method
In section EW 22(c) alternative alternative, or a financial reporting method
143: Failure to use method for financial reporting purposes
1: In section EW 23(1) and EW 20(2)(f) EW 20(2)(f), and EW 21(f)
2: In section EW 23(2) and EW 20(2)(f) EW 20(2)(f), and EW 21(f)
144: Consistency of use of IFRS method
1: In section EW 25B(3) “However, those sections do not apply if the change is—
a: from the fair value method; and
b: in respect of a financial arrangement that is not subject to a creditor workout.
2: After section EW 25B(3) Modification
4: Section EZ 52B Determination G3
3: In section EW 25B,
145: Change of spreading method
1: Section EW 26(1) Requirements for change from straight-line and market value method
1: A person may change from the straight-line method or the market value method if they change to a method that is not a method for IFRS under section EW 15B, and the Commissioner has given written authorisation for the change.
2: In section EW 26(2) A person may change from any spreading method to any other method if the Commissioner's written authorisation under subsection (1) is not required for the change, and they have a sound commercial reason for the change
3: Section EW 26(6)
6: Section EW 29(13)
a: from the fair value method and the financial arrangement is not subject to a creditor workout:
b: from the market value method to a method for IFRS under section EW 15B.
4: Section EW 26(7)(a)
a: starting or stopping the use of IFRSs to prepare financial statements at the same time as starting or stopping the use of a method for IFRS under section EW 15B: .
5: In section EW 26
146: When calculation of base price adjustment required
1: Section EW 29(13)
13: A party to a financial arrangement must calculate a base price adjustment, at the date of a change for the financial arrangement, where that change involves a change—
a: from the fair value method and the financial arrangement is not subject to a creditor workout:
b: from the market value method to a method for IFRS under section EW 15B.
2: In section EW 29
147: Base price adjustment formula
1: In section EW 31(7)
a: ignoring non-contingent fees,
b: , ignoring–– . For the purposes of this subsection, the following are ignored:
2: In section EW 31(9)(a) , under section CC 3,
3: Subsections (1) and (2) apply for the 2008–09 and later income years.
148: Consideration when debtor released as condition of new start grant
1: Section EW 46(1)
1: This section applies when in an income year of a person—
a: the person carries on a business of—
i: animal husbandry:
ii: poultry-keeping:
iii: beekeeping:
iv: breeding horses other than bloodstock:
v: horticulture:
vi: cropping; and
b: the person is paid a new start grant for the business for an event that is declared to be an emergency event; and
c: the person incurs a liability to make a payment under a financial arrangement—
i: in carrying on the business; and
ii: before the declaration of the emergency event; and
d: the liability is forgiven or otherwise remitted—
i: as a prerequisite for the payment of the new start grant; and
ii: before the date that is 18 months after the end of the period for which the declaration applies; and
e: in the absence of this section, the amount of the remitted liability would be income of the person.
2: In section EW 46
a: qualifying event
b: emergency event
149: Meaning of controlled foreign company
1: In section EX 1(2)(a) foreign investment vehicle foreign PIE equivalent
2: Section EX 1(2)(b)(ii)
ii: an entity that qualifies for PIE status: .
3: Subsections (1) and (2) apply for the 2010–11 and later income years.
150: Direct control interests
In section EX 5(5)(c) debentures) debentures), FA 2B (Stapled debt securities),
151: Direct income interests
In section EX 9(6)(c) debentures) debentures), FA 2B (Stapled debt securities),
152: Associates and 10% threshold
1: In section EX 15(1) section EX 14 sections CD 45, CQ 2, EX 14, EX 21, EX 34, EX 58, and LL 9.
2: In section EX 15(1) EX 34, EX 58, and LL 9. EX 34, and EX 58.
3: Subsection (2) applies for all income years beginning on or after 1 July 2009.
153: New section EX 18A inserted
1: After the heading before section EX 18
EX 18A: Scheme for finding person's attributed CFC income or loss
Formula and rules for calculation
1: The attributed CFC income or loss of a person (an interest holder
a: the formula in section EX 18, which uses the interest holder's income interest and the CFC's net attributable CFC income or loss determined as described in subsection (2):
b: the interest holder's additional CFC attributed income under section EX 19:
c: the reduction in the interest holder's attributed CFC loss under section EX 20. Determination of attributed CFC income or loss from attributable CFC amount
2: An interest holder with an income interest of a fraction (the fraction
a: attributed CFC income or loss equal to the fraction of the CFC's net attributable CFC income or loss under sections EX 20C to EX 20E and the rules in sections EX 21 and EX 24 to EX 27, if paragraph (b) does not apply:
b: no attributed CFC income or attributed CFC loss, if the CFC is—
i: a non-attributing active CFC under section EX 21B, determined as described in subsection (3):
ii: a non-attributing Australian CFC under section EX 22. Non-attributing active CFCs
3: Whether a CFC is a non-attributing active CFC is determined under section EX 21B using—
a: a test in—
i: section EX 21D, if the interest holder does not use a test referred to in subparagraph (ii); or
ii: section EX 21E, if the CFC has accounts prepared to a standard meeting the requirements of section EX 21C and the interest holder chooses to use a test in that section based on those accounts; and
b: the rules in sections EX 21 and EX 24 to EX 27. Defined in this Act: accounting period, attributable CFC amount, attributed CFC income, attributed CFC loss, CFC, non-attributing active CFC, non-attributing Australian CFC .
2: Subsection (1) applies for all income years beginning on or after 1 July 2009.
154: Formula for calculating attributed CFC income or loss
1: In the formula in section EX 18 branch equivalent income net attributable CFC income
2: In section EX 18
a: branch equivalent income
b: net attributable CFC income
3: Subsection (1) applies for all income years beginning on or after 1 July 2009.
155: Taxable distribution from non-complying trust
1: In section EX 19(1)(b) branch equivalent income net attributable CFC income
2: In section EX 19(2) branch equivalent income net attributable CFC income
3: Section EX 19(5)
4: In section EX 19
a: branch equivalent income
b: net attributable CFC income
5: Subsections (1) to (3) apply for all income years beginning on or after 1 July 2009.
156: New heading and sections EX 20B to EX 20E inserted
1: After section EX 20 Attributable CFC amount and net attributable CFC income or loss
EX 20B: Attributable CFC amount
Attributable CFC amount
1: Attributable CFC amount gross + arrangement. Definition of items in formula
2: The items in the formula in subsection (1) are defined in subsections (3) and (4). Gross
3: Gross
a: a dividend that is paid in relation to rights that are a direct income interest of less than 10% in a foreign company and are described in—
i: section EX 31:
ii: section EX 32:
iii: section EX 36:
iv: section EX 37:
v: section EX 37B:
vi: section EX 39:
b: a dividend that is paid by a company resident in New Zealand to the extent to which the dividend is not fully imputed:
c: an amount that is a deductible foreign equity distribution or a distribution for fixed-rate foreign equity:
d: a royalty of a type referred to in subsection (5):
e: rent of a type referred to in subsection (6):
f: income from a business of general insurance or life insurance that is a premium under an insurance contract or reinsurance contract:
g: income from a life insurance policy of a type referred to in subsection (8):
h: income from the supply of personal services of a type referred to in subsection (9):
i: income from the disposal of revenue account property that is a share, other than a share referred to in subsection (10):
j: income from the disposal of revenue account property that is an option to acquire or dispose of a share:
k: income from the disposal of revenue account property that is—
i: not a share, financial arrangement, or life insurance policy; and
ii: used by the CFC with a purpose or effect of giving rise to income of the CFC referred to in another paragraph of this subsection:
l: income from a service, other than a telecommunications service, to the extent to which the service is physically performed in New Zealand:
m: income from a service relating to the use of equipment to provide a telecommunications service, to the extent to which the equipment is at the time—
i: physically located outside any country or territory; and
ii: owned by the CFC or by another CFC that is associated with the CFC; and
iii: not a mobile telephone handset or a radio receiver and transmitter for a ship or aircraft:
n: income from a telecommunications service to the extent to which the service is physically performed in New Zealand and is not described in subsection (11). Arrangement income
4: Arrangement
a: an arrangement that—
i: is a financial arrangement, or a short-term agreement for sale and purchase for which the CFC has made an election under section EW 8 (Election to treat certain excepted financial arrangements as financial arrangements); and
ii: is not a derivative instrument; and
iii: is not referred to in subsection (12):
b: a derivative instrument—
i: that is held in the course of a business of the CFC for the purpose of dealing with the derivative instrument:
ii: that is not entered in the ordinary course of a business of the CFC:
iii: to the extent that the income is from a hedging relationship, of a type referred to in NZIAS 39, with income of the CFC referred to in subsection (3) or paragraph (a) or with a transaction producing such income of the CFC. Attributable CFC amount: royalties
5: A royalty derived by a CFC is included in an attributable CFC amount under subsection (3)(d) if none of the following are satisfied:
a: the CFC is regularly engaged in creating, developing, or adding value to property that produces royalties and the royalty is—
i: paid by a person who is not associated with the CFC under section YB 2 (Two companies with common control); and
ii: from property that is not linked to New Zealand under subsection (13); and
iii: from property that the CFC has created or developed or to which the CFC has added substantial value:
b: the CFC is regularly engaged in creating, developing, or adding value to property that produces royalties and the royalty is—
i: paid by a person who is associated with the CFC under section YB 2; and
ii: from property that is not linked to New Zealand under subsection (13); and
iii: from property that the CFC has created or developed, or to which the CFC has added substantial value; and
iv: an arm's length amount determined under section GC 13 (Calculation of arm's length amounts) for the arrangement between the CFC and the associated person:
c: the royalty is—
i: paid by a person who would be an associated non-attributing active CFC in the absence of this paragraph and subsections (7)(c) and (12)(a); and
ii: from property that is not linked to New Zealand under subsection (13):
d: the royalty is—
i: paid to the CFC by a person who is not associated with the CFC under section YB 2, or by a CFC associated with the CFC under section YB 2 that has received a corresponding royalty payment from such a person; and
ii: from property owned by a New Zealand resident who is not treated as a non-resident under a double tax agreement; and
iii: from property licensed to the CFC by the New Zealand resident for an arm's length amount determined under section GC 13 for the arrangement between the CFC and the New Zealand resident. Attributable CFC amount: rent
6: Rent derived by a CFC is included in an attributable CFC amount under subsection (3)(e) if the rent is not of a type referred to in subsection (7) and is from—
a: a lease or sublease of land:
b: a lease or sublease of personal property:
c: a licence to use intangible property:
d: a hire or bailment. Attributable CFC amount: exclusions from rent
7: Rent derived by a CFC from a source referred to in subsection (6) is not included in an attributable CFC amount under subsection (3)(e) if the rent is—
a: from land in a country or territory under the laws of which the CFC is liable to income tax on the CFC's income because of its domicile, residence, place of incorporation, or centre of management:
b: from property other than land, to the extent to which the rent relates to the use of the property in a country or territory referred to in paragraph (a):
c: paid by a person who would be an associated non-attributing active CFC in the absence of this paragraph and subsections (5)(c) and (12)(a):
d: a payment under a hire purchase agreement:
e: a payment under a finance lease:
f: a royalty:
g: a payment under a licence to use intangible property that—
i: is not a royalty; and
ii: would not be included in an attributable CFC amount under subsection (5) if treated as a royalty for the purposes of that subsection. Attributable CFC amount: income from life insurance contract
8: Income from a life insurance policy is included in an attributable CFC amount under subsection (3)(g) if the income is not included in a calculation of FIF income or loss and is—
a: a distribution, if the life insurance policy is not intended to compensate the CFC for financial losses arising from the death or extended incapacity of a specified employee or member involved in the CFC's business:
b: a distribution that is not intended to compensate the CFC for financial losses arising from the death or extended incapacity of a specified employee or member involved in the CFC's business, if the life insurance policy is intended to compensate the CFC for such losses:
c: income from a disposal of the life insurance policy, if the policy is revenue account property. Attributable CFC amount: income from personal services
9: Income derived by a CFC from the supply of personal services is included in an attributable CFC amount under subsection (3)(h) if the personal services are performed by another person (the working person
a: the working person is a New Zealand resident; and
b: the personal services are not essential support for a product supplied by the CFC; and
c: the working person is associated with the CFC under section YB 5 (Company and non-corporate 25% interest holder) at the time the services are performed or is a relative, at the beginning of the accounting period, of a person associated with the CFC under section YB 5; and
d: 80% or more of the CFC's total income in the accounting period from supplying personal services is derived through personal services meeting the requirements of paragraph (a) performed by working persons meeting the requirements of paragraph (b); and
e: to derive the income, the CFC uses a business structure that requires depreciable property having, at the end of the accounting period, a total cost under section GB 28(7) (Interpretation of terms used in section GB 27) less than or equal to the greater of $75,000 and 25% of the CFC's total income from personal services performed in the accounting period. Exclusions from attributable CFC amount: shares
10: Income derived by a CFC from the disposal of a share that is revenue account property is not included in an attributable CFC amount under subsection (3)(i) if the CFC's FIF income or loss from the share in the period ending with the disposal is calculated using—
a: the comparative value method:
b: the deemed rate of return method:
c: the fair dividend rate method:
d: the cost method. Exclusions from attributable CFC amount: telecommunications services in New Zealand
11: Income of a CFC from a telecommunications service physically performed in New Zealand is not included in an attributable CFC amount under subsection (3)(n) if—
a: the service is the transmission, emission, or reception of information between New Zealand and the country or territory in which the CFC is liable to income tax on its income because of its domicile, residence, place of incorporation, or centre of management; and
b: the CFC is a network operator under the Telecommunications (Interception Capability) Act 2004 or—
i: a person who is such a network operator holds an income interest of 50% or more in the CFC:
ii: a person who holds a voting interest of 50% or more in such a network operator holds an income interest of 50% or more in the CFC; and
c: the service is not performed using equipment that at the time is physically located in New Zealand and is in the possession of the CFC or of another CFC that is associated with the CFC; and
d: the service is not performed by a person who at the time is physically located in New Zealand and is an employee or contractor of the CFC or of another CFC that is associated with the CFC. Exclusions from attributable CFC amount: income from financial arrangements other than derivative instruments
12: Income of a CFC from a financial arrangement or excepted financial arrangement that is referred to in subsection (4)(a)(i) is not included in an attributable CFC amount under subsection (4)(a) if the financial arrangement or agreement is—
a: an agreement by the CFC to lend money to a person who would be an associated non-attributing active CFC in the absence of this paragraph and subsections (5)(c) and (7)(c):
b: an agreement for the sale or purchase of property or services or a hire purchase agreement—
i: entered in the ordinary course of business by the CFC:
ii: for property or services produced or used by the CFC in business. Royalties: property linked to New Zealand
13: Property giving rise to a royalty is linked to New Zealand at a time in an accounting period for the purposes of subsection (5) if the property meets the requirements of subsection (14) at a time in the period—
a: beginning—
i: at the time the property was created, if the property has not since met the requirements of subsection (15); or
ii: from the time the property most recently met the requirements of subsection (15); and
b: ending at the time in the accounting period. Situations creating link with New Zealand
14: Property owned by a CFC has a link with New Zealand if the property—
a: has been owned by a New Zealand resident:
b: has been owned by a non-resident for the purposes of a business carried on in New Zealand through a fixed establishment in New Zealand:
c: was created or developed in New Zealand:
d: has had substantial value added in New Zealand:
e: has been acquired by a person who had a deduction for expenditure or loss incurred in the acquisition:
f: is based on knowledge acquired by a person who—
i: acquired the knowledge with a purpose or intention of creating the property; and
ii: had a deduction for expenditure or loss incurred in the acquisition:
g: is created or developed from activities, or from the extension, continuation, development, or completion of activities, if the activities produced knowledge acquired by a person who had a deduction for expenditure or loss incurred in the acquisition. Situations breaking link with New Zealand
15: There is no link between property and New Zealand for a CFC when the property is owned by a non-resident who—
a: is not a CFC and is not associated with the CFC; and
b: is not associated with a person who has owned the property while it had a link with New Zealand. Defined in this Act: accounting period, agreement for the sale or purchase of property or services, associated, associated non-attributing active CFC, attributable CFC amount, business, CFC, comparative value method, deductible foreign equity distribution, deduction, deemed rate of return method, depreciable property, derivative instrument, dividend, exempt income, fair dividend rate method, finance lease, financial arrangement, fixed-rate foreign equity, fully imputed, general insurance, hire purchase agreement, income, insurance contract, interest, land, life insurance, life insurance policy, loan, loss, money lent, New Zealand, New Zealand resident, non-attributing active CFC, non-resident, reinsurance contract, relative, resident in New Zealand, revenue account property, royalty, share, short-term agreement for sale and purchase, telecommunications service
EX 20C: Net attributable CFC income or loss
CFC's net attributable CFC income or loss
1: For the purpose of calculating the attributed CFC income or loss for an accounting period of a person (the interest holder
a: the CFC's net attributable CFC income
b: the CFC's net attributable CFC loss
i: the absolute value of the amount calculated using the formula in subsection (2), if that amount is less than zero:
ii: zero, if subparagraph (i) does not apply. Formula for net attributable CFC income or loss
2: The amount of a CFC's net attributable CFC income or loss for an accounting period is calculated using the rules in section EX 21 and the formula— attributable CFC – (limited funding costs × fraction) – other deductions. Definition of items in formula
3: The items in the formula in subsection (2) are defined in subsections (4) to (6), (8), and (9). Attributable CFC
4: Attributable CFC Limited funding costs
5: Limited funding costs
a: if paragraph (b) does not apply, the amount of the item funding costs
b: if the item funding funding costs × funding – group funding funding. Definition of items in formula
6: In the formula in subsection (5)(b),—
a: funding costs
i: for which the CFC would have a deduction relating to a financial arrangement referred to in subsection (7)(a):
ii: that are distributions relating to fixed-rate foreign equity or deductible foreign equity distributions of the CFC and paid by the CFC to companies resident in New Zealand or to CFCs:
b: funding
c: group funding funding
i: under which the CFC provides funds to another CFC associated with the CFC under section YB 2 (Two companies with common control); and
ii: which produce for the CFC an amount included in the item arrangement income Financial arrangements and shares contributing to funding costs
7: A financial arrangement to which a CFC is a party, or a share issued by the CFC, contributes to the item funding costs
a: a financial arrangement that provides funds for the CFC:
b: a share that is—
i: held by a company that is a New Zealand resident or a CFC; and
ii: a fixed-rate foreign equity or a share giving a right to a deductible foreign equity distribution. Fraction
8: Fraction
a: if the CFC is not excessively debt funded under section EX 20D, the amount calculated under subsection (10); or
b: if the CFC is excessively debt funded under section EX 20D, the lesser of—
i: the amount calculated under subsection (10):
ii: the amount calculated under section EX 20D. Other deductions
9: Other deductions
a: if not consisting of deductions relating to financial arrangements and shares, is—
i: incurred for the purpose of deriving an attributable CFC amount; and
ii: not incurred for the purpose of deriving an amount that is not an attributable CFC amount; and
iii: a deduction of the CFC:
b: if consisting of deductions relating to financial arrangements and shares referred to in subsection (7)(a) and (b), exceeds the amount of the item limited funding costs
c: if consisting of deductions relating to financial arrangements not referred to in subsection (7)(a), relates to a financial arrangement referred to in section EX 20B(4). Proportion by value of assets producing attributable CFC amount
10: The amount referred to in subsection (8)(a) and (b)(i) is calculated using the formula— attributable CFC's assets – group funding total CFC's assets – group funding. Definition of items in formula
11: In the formula in subsection (10),—
a: attributable CFC's assets
b: group funding group funding
c: total CFC's assets Determining debts and assets of CFC
12: For the items referred to in subsection (11), the debts and assets of the CFC are determined under sections FE 8 to FE 11 (which contain rules for determining the apportionment of interest) as if the CFC were—
a: an excess debt outbound company; and
b: the only member of the CFC's New Zealand group. Defined in this Act: accounting period, attributable CFC amount, CFC, deductible foreign equity distribution, deduction, financial arrangement, fixed-rate foreign equity, generally accepted accounting practice, income interest, interest, loss, net attributable CFC income, net attributable CFC loss, share
EX 20D: Adjustment of fraction for excessively debt funded CFC
When this section applies
1: This section applies for the purposes of section EX 20C(8) to a CFC that is excessively debt funded under subsection (2) in relation to a person (the interest holder Excessive debt funding
2: A CFC is excessively debt funded under this section if—
a: the amount (the CFC's debt-asset ratio
b: the amount (the CFC's relative debt-asset ratio Calculations for CFC
3: For the purposes of subsections (4) to (8), the debts and assets of the CFC are determined under sections FE 8 to FE 11 (which contain rules for determining the apportionment of interest) as if the CFC were—
a: an excess debt outbound company; and
b: the only member of the CFC's New Zealand group. Formula for debt-asset ratio of CFC
4: The formula for the CFC's debt-asset ratio referred to in subsection (2)(a) is— total CFC's debts – group funding total CFC's assets – group funding. Definition of items in formula
5: The items in the formula in subsection (4) are defined in subsections (6) to (8). Total CFC's debts
6: Total CFC's debts
a: financial arrangements entered by the CFC, each of which—
i: provides funds to the CFC; and
ii: gives rise to an amount for which the CFC would have a deduction:
b: fixed-rate foreign equity issued by the CFC and held by a company that is a New Zealand resident or another CFC:
c: shares issued by the CFC in relation to which the CFC makes deductible foreign equity distributions to a company that is a New Zealand resident or another CFC. Group funding
7: Group funding
a: if paragraph (b) does not apply, zero; or
b: if the interest holder chooses to rely on this paragraph and the item total CFC's assets total CFC's debts total CFC's debts
i: under which the CFC provides funds to another CFC associated with the CFC under section YB 2 (Two companies with common control); and
ii: which produce for the CFC an amount included in the item arrangement income Total CFC's assets
8: Total CFC's assets Fraction for excessively debt funded CFC
9: For a CFC that is excessively debt funded, the item fraction
a: an excess debt outbound company; and
b: the only member of the CFC's New Zealand group. Formula for fraction
10: The formula for the CFC's fraction is— attributable CFC assets total CFC assets. Definition of items in formula
11: The items in the formula in subsection (10) are defined in subsections (12) and (13). Attributable CFC assets
12: Attributable CFC assets
a: used for the purpose of deriving an attributable CFC amount; and
b: not used for the purpose of deriving an amount that is not an attributable CFC amount. Total CFC assets
13: Total CFC assets Defined in this Act: accounting period, CFC, deductible foreign equity distribution, deduction, excess debt outbound company, financial arrangement, fixed-rate foreign equity, New Zealand resident
EX 20E: Relative debt-asset ratio for CFC
What this section does
1: This section determines the relative debt-asset ratio of a CFC for the purposes of section EX 20D(2)(b) by determining an amount (the group debt-asset ratio Members of CFC's group and calculations for group
2: For the purposes of subsections (3) to (8),—
a: the members of a CFC's group are—
i: the CFC:
ii: if the interest holder is a company, the members of the worldwide group that the interest holder would have under sections FE 31B, FE 31C, and FE 32 (which relate to the determination of groups) if the interest holder were an excess debt outbound company:
iii: if the interest holder is a trustee, the members of the trustee's worldwide group under section FE 3(1)(b) (Interest apportionment for individuals):
iv: if the interest holder is a natural person, the person's worldwide group referred to in section FE 5(1C)(a) to (c)
b: the debts and assets of the CFC's group are determined under sections FE 8 to FE 11 and FE 18 (Measurement of debts and assets of worldwide group) as if the interest holder, if a company, were an excess debt outbound company. Formula for CFC's group debt-asset ratio
3: The formula for the CFC's group debt-asset ratio is— total group debts total group assets. Definition of items in formula
4: The items in the formula in subsection (3) are defined in subsections (5) and (6). Total group debts
5: Total group debts
a: financial arrangements entered by the group's members, each of which—
i: provides funds to a group member; and
ii: gives rise to an amount for which a group member would have a deduction:
b: fixed-rate foreign equity issued by a member of the group and held by a company that is a New Zealand resident or a CFC:
c: equity interests issued by a member of the group in relation to which the member makes deductible foreign equity distributions to a company that is a New Zealand resident or a CFC. Total group assets
6: Total group assets Formula for CFC's relative debt-asset ratio
7: The formula for the CFC's relative debt-asset ratio is— CFC's debt-asset ratio group debt-asset ratio. Definition of items in formula
8: In the formula in subsection (7),—
a: CFC's debt-asset ratio
b: group debt-asset ratio Defined in this Act: accounting period, CFC, deductible foreign equity distribution, deduction, excess debt outbound company, financial arrangement, fixed-rate foreign equity, New Zealand resident .
2: Subsection (1) applies for all income years beginning on or after 1 July 2009.
157: Attributable CFC amount
1: Section EX 20B(5)(a)(i) is replaced by the following:
i: paid by a person who is not associated with the CFC under section YB 2 (Two companies); and .
2: Section EX 20B(9)(c) is replaced by the following:
c: the working person is associated with the CFC under section YB 3 (Company and person other than company) at the time the services are performed or is a relative, at the beginning of the accounting period, of a person associated with the CFC under section YB 3; and .
3: Subsections (2) and (3) apply for the 2010–11 and later income years.
158: Net attributable CFC income or loss
1: In section EX 20C(6)(c)(i) with common control
2: Subsection (1)
159: Adjustment of fraction for excessively debt funded CFC
1: In section EX 20D(7)(b)(i) with common control
2: Subsection (1)
160: Heading repealed
The heading before section EX 21
161: Branch equivalent income or loss: calculation rules
1: In the heading to section EX 21 Branch equivalent income or loss Attributable CFC amount and net attributable CFC income or loss
2: Section EX 21(1) Calculation rules for CFC
1: The rules in this section apply for the purposes of—
a: calculating the attributable CFC amount for a CFC under section EX 20B:
b: calculating the net attributable CFC income or loss for a CFC under section EX 20C:
c: determining under section EX 21D whether a CFC is a non-attributing active CFC. Calculation rules for test group of CFCs
1B: For the purpose of determining under section EX 21D whether a member of a group of CFCs is a non-attributing active CFC,—
a: the consolidated annual gross income of the group is calculated under the rules in this section; and
b: the consolidated attributable CFC amount of the group is calculated under the rules in this section.
3: Section EX 21(2)
2: The rules in this Act are applied as if the CFC were always a New Zealand resident.
4: In section EX 21(5) branch equivalent income or loss for attributable CFC amount and net attributable CFC income or loss attributable to
5: In section EX 21(7) branch equivalent income or loss attributable to attributable CFC amount and net attributable CFC income or loss arising from
6: After section EX 21(13)(d)
db: section CW 9 (Dividend derived from foreign company):
dc: section CW 10 (Dividend within New Zealand wholly-owned group: .
7: In section EX 21(15) Also, when sections GC 6 to GC 14 are applied, the associated persons include persons associated under the parts of subpart YB (Associated persons and nominees) that apply for the purposes of the whole Act (excluding the 1973, 1988, and 1990 version provisions) or the 1988 version provisions.
8: In section EX 21(15)
9: Section EX 21(16) and (17) Dividends
16: Dividends that are not part of the CFC's attributable CFC amount are exempt income of the CFC.
10: Section EX 21(24)(b)
b: it is a deduction if—
i: paid by the CFC to a person who is resident in the same country as the CFC and not a non-attributing active CFC; and
ii: deductible under the taxation law of that country.
11: In section EX 21(26)
a: branch equivalent income or loss net attributable CFC income or loss
b: net income or loss net attributable CFC income or loss
12: In section EX 21(32)(b) branch equivalent income or loss net attributable CFC income or loss
13: In section EX 21(33)(b) branch equivalent income net attributable CFC income
14: Section EX 21(35)
15: In section EX 21 1973 version provisions 1988 version provisions 1990 version provisions
16: In section EX 21
a: branch equivalent income
b: annual gross income attributable CFC amount net attributable CFC income net attributable CFC loss non-attributing active CFC
17: Subsections (1) to (6) and (9) to (14)
18: Subsection (8) applies for the 2010–11 and later income years.
162: New heading and sections EX 21B to EX 21E inserted
1: After section EX 21 Non-attributing active CFCs
EX 21B: Non-attributing active CFCs
Non-attributing active CFC
1: Non-attributing active CFC interest holder CFC meeting test in section EX 21D or EX 21E
2: A CFC is a non-attributing active CFC—
a: under section EX 21D, if the CFC meets the requirements of that section and paragraph (b) does not apply:
b: under section EX 21E, if—
i: the CFC meets the requirements of section EX 21C for the use of an applicable accounting standard in the application of section EX 21E; and
ii: the person chooses to use the applicable accounting standard in applying section EX 21E; and
iii: the CFC meets the requirements of section EX 21E. Insurer meeting requirements of determination
3: A CFC that is an insurer meeting the requirements of a determination made by the Commissioner under section 91AAQ of the Tax Administration Act 1994 is a non-attributing active CFC. Defined in this Act: accounting period, CFC, non-attributing active CFC Tests for non-attributing active CFCs
EX 21C: Applicable accounting standards for section EX 21E
Applicable accounting standards
1: In applying section EX 21E to determine whether a CFC is a non-attributing active CFC for a person (the interest holder applicable accounting standard Generally accepted accounting practice with IFRS for CFC
2: The interest holder may use generally accepted accounting practice in New Zealand including IFRSs and the framework for differential reporting for entities applying the New Zealand equivalents to the international financial standards reporting regime (the generally accepted accounting practice with IFRS
a: include the accounts of the CFC; and
b: comply with generally accepted accounting practice with IFRS; and
c: meet the audit requirements of subsection (8). Generally accepted accounting practice with IFRS for test group
3: The interest holder may use generally accepted accounting practice with IFRS for the CFC's test group under section EX 21E(2), if the interest holder or another person has accounts that—
a: include the accounts of the members of the test group; and
b: comply with generally accepted accounting practice with IFRS; and
c: meet the audit requirements of subsection (8). IFRSEs for CFC
4: The interest holder may use IFRSEs for the CFC, if the interest holder or another person has accounts that—
a: include the accounts of the CFC; and
b: comply with the relevant IFRSEs; and
c: meet the audit requirements of subsection (8). IFRSEs for test group
5: The interest holder may use IFRSEs for the CFC's test group under section EX 21E(2), if the interest holder or another person has accounts that—
a: include the accounts of the members of the test group; and
b: comply with the relevant IFRSEs; and
c: meet the audit requirements of subsection (8). Generally accepted accounting practice without IFRS for CFC
6: The interest holder may use generally accepted accounting practice in New Zealand for persons not required to use IFRS but required to comply with standards, other than IFRSs, approved by the Accounting Standards Review Board under the Financial Reporting Act 1993 (the generally accepted accounting practice without IFRS
a: has no revenue under Financial Reporting Standard 34 and Financial Reporting Standard 35; and
b: is an issuer under section 4 of the Financial Reporting Act 1993 in neither of the current and preceding accounting periods; and
c: is not required by section 19 of the Financial Reporting Act 1993 to file its accounts with the Registrar of Companies; and
d: is not a large company under section 19A(1)(b) of the Financial Reporting Act 1993; and
e: does not have accounts that are prepared and audited under generally accepted accounting practice with IFRS; and
f: is not a subsidiary of a company having accounts that—
i: include the accounts of the subsidiary; and
ii: are prepared and audited, or required to be prepared, under generally accepted accounting practice with IFRS; and
g: has accounts that—
i: include the accounts of the CFC; and
ii: comply with generally accepted accounting practice without IFRS; and
iii: meet the audit requirements of subsection (8). Generally accepted accounting practice without IFRS for CFC's test group
7: The interest holder may use generally accepted accounting practice without IFRS for the CFC's test group under section EX 21D(1), if the interest holder or another person is a company resident in New Zealand that—
a: has no revenue under Financial Reporting Standard 34 and Financial Reporting Standard 35; and
b: is an issuer under section 4 of the Financial Reporting Act 1993 in neither of the current and preceding accounting periods; and
c: is not required by section 19 of the Financial Reporting Act 1993 to file its accounts with the Registrar of Companies; and
d: is not a large company under section 19A(1)(b) of the Financial Reporting Act 1993; and
e: does not have accounts that are prepared and audited under generally accepted accounting practice with IFRS; and
f: is not a subsidiary of a company having accounts that—
i: include the accounts of the subsidiary; and
ii: are prepared and audited, or required to be prepared, under generally accepted accounting practice with IFRS; and
g: has accounts that—
i: include the accounts of the members of the CFC's test group; and
ii: comply with generally accepted accounting practice without IFRS; and
iii: meet the audit requirements of subsection (8). Audit requirements
8: Accounts meet the audit requirements of this subsection if they—
a: are audited by an accountant who is—
i: a chartered accountant or an accountant of equivalent professional standard in the country in which the accounts are prepared; and
ii: independent of the CFC and the person; and
b: are given an unqualified opinion or an opinion of equivalent standard in the country in which the accounts are prepared. Compliance with accounting standards
9: For the purposes of subsections (2) to (7), accounts are treated as complying with the accounting standard relevant to the subsection if—
a: the accounts state that they comply with the accounting standard; and
b: the accounts meet the audit requirements of subsection (8); and
c: the Commissioner does not have reasonable grounds to suspect—
i: fraudulent activity by the interest holder, the CFC, a CFC in the CFC's test group, or the auditor:
ii: preparation of the accounts with an intent to mislead:
iii: incompetence of the auditor. Defined in this Act: accounting period, annual gross income, associated, attributable CFC amount, CFC, generally accepted accounting practice, IFRS, IFRSE, insurer, New Zealand resident, non-attributing active CFC, rent, royalty
EX 21D: Non-attributing active CFC: default test
CFC as part of test group
1: A person (the interest holder test group
a: each subject to the laws of the same country or territory under which the company is liable to income tax on its income because of its domicile, residence, place of incorporation, or centre of management; and
b: in each of which the interest holder holds an income interest of more than 50%; and
c: each of which is required to use the same currency under section EX 21(4); and
d: that are consolidated for the purposes of this section—
i: using like tax treatments for like transactions and for other events in similar circumstances; and
ii: eliminating in full all balances, transactions, income, and expenses arising between members of the test group. Threshold ratio
2: A CFC is a non-attributing active CFC under section EX 21B(2)(a) for an accounting period and a person if the amount calculated under subsection (3) using the formula in subsection (4)—
a: is less than 0.05; and
b: is not zero under subsection (3)(f). Application of formula
3: In using the formula in subsection (4)—
a: each item in the formula is determined—
i: for the CFC's consolidated test group, if the interest holder chooses to apply the formula to the test group; or
ii: for the CFC, if subparagraph (i) does not apply; and
b: each item in the formula is determined for a test group after amounts included in the item are adjusted to remove amounts corresponding to income interests not held by the interest holder; and
c: a reference to a company that is associated is treated as being a reference to a company that is—
i: associated with a member of the CFC's test group, although not a member of the CFC's test group, if the interest holder chooses to apply the formula to the test group; or
ii: associated with the CFC, if subparagraph (i) does not apply; and
d: a reference to a company that is in the same group of companies is treated as being a reference to a company that is—
i: in the same group of companies as a member of the CFC's test group, although not a member of the CFC's test group, if the interest holder chooses to apply the formula to the test group; or
ii: in the same group of companies as the CFC, if subparagraph (i) does not apply; and
e: a numerator or denominator that is a negative number is treated as being zero; and
f: the amount calculated using the formula is zero if the denominator is zero. Formula
4: The amount that determines whether the CFC is a non-attributing active CFC is calculated using the formula— attributable − attributable adjustments gross – gross adjustments. Definition of items in formula
5: The items in the formula are defined in subsections (6) to (9). Attributable
6: Attributable Attributable adjustments
7: Attributable adjustments
a: if the interest holder chooses that this paragraph apply, income derived from the supply of personal services—
i: included in an attributable CFC amount under section EX 20B(3)(h); and
ii: not included in an attributable CFC amount under another paragraph of section EX 20B(3) and (4):
b: if the interest holder chooses that this paragraph apply, the cost of revenue account property producing an amount (the included amount
i: the cost is treated as a deduction of the CFC in the accounting period; and
ii: the deduction exceeds the amount of any income under subpart CH (Adjustments) relating to the deduction. Gross
8: Gross Gross adjustments
9: Gross adjustments
a: the amount of the item attributable adjustments
b: expenditure or loss that is included in the calculation of the attributable CFC amount under section EX 20B:
c: income derived from a company that would meet the requirements of subsection (1)(a) to (c) for a member of a test group with the CFC:
d: income from a supply that meets the requirements of section GB 15B (Supplies affecting default test for non-attributing active CFC). Defined in this Act: accounting period, annual gross income, associated non-attributing active CFC, attributable CFC amount, CFC, company, group of companies, income, interest, non-attributing active CFC, resident in New Zealand, royalty
EX 21E: Non-attributing active CFC: test based on accounting standard
Applicable accounting standard
1: A person (the interest holder applicable accounting standard CFC as part of test group
2: The interest holder may choose to apply this section for the CFC as a member of a group (a test group
a: the group consists of companies required under the applicable accounting standard to consolidate, whether or not with companies that are not in the group; and
b: each company is subject to the laws of the same country or territory under which the company is liable to income tax on its income because of its domicile, residence, place of incorporation, or centre of management; and
c: the interest holder holds an income interest of more than 50% in each company; and
d: each company has the same functional currency; and
e: there are audited and consolidated financial statements that—
i: include the accounts of the companies in the group, whether or not with accounts of companies that are not in the group; and
ii: comply with the applicable accounting standard. Threshold ratio
3: A CFC is a non-attributing active CFC under section EX 21B(2)(b) for an accounting period and an interest holder if, under subsection (4),—
a: the amount calculated using the formula in subsection (5) is less than 0.05; and
b: the amount calculated using the numerator in the formula in subsection (5) is equal to or more than zero; and
c: the amount calculated using the denominator in the formula in subsection (5) is more than zero. Application of formula
4: In using the formula in subsection (5),—
a: each item in the formula is—
i: determined under the applicable accounting standard; and
ii: adjusted so that no amount is included in the item more than once; and
b: each item in the formula is determined—
i: from amounts consolidated for the CFC's test group under the applicable accounting standard, if the interest holder chooses to apply the formula to the test group; or
ii: from amounts for the CFC, if subparagraph (i) does not apply; and
c: each item in the formula is determined after adjustment of amounts included in the item by removing amounts corresponding to minority interests not held by the interest holder; and
d: a reference to a company that is associated is treated as being a reference to a company that is—
i: associated with a member of the CFC's test group, although not a member of the CFC's test group, if the interest holder chooses to apply the formula to the test group; or
ii: associated with the CFC, if subparagraph (i) does not apply; and
e: a reference to a company that is in the same group of companies is treated as being a reference to a company that is—
i: in the same group of companies as a member of the CFC's test group, although not a member of the CFC's test group, if the person chooses to apply the formula to the test group; or
ii: in the same group of companies as the CFC, if subparagraph (i) does not apply; and
f: amounts determined for a CFC other than as part of a test group are—
i: determined in the functional currency of the CFC; and
ii: converted between currencies under the applicable accounting standard, but ignoring exchange differences arising on a monetary item that forms part of a net investment of the CFC in a foreign operation; and
g: amounts determined for a test group are—
i: converted from the functional currency of the CFC to the presentation currency of the consolidated accounts for the test group using the average conversion rate for the accounting period; and
ii: otherwise converted between currencies under the applicable accounting standard. Formula
5: The amount that determines whether the CFC is a non-attributing active CFC is calculated using the formula— reported passive + added passive – removed passive reported revenue + added revenue – removed revenue. Definition of items in formula
6: The items in the formula are defined in subsections (7) to (12). Reported passive
7: Reported passive
a: income from a dividend:
b: income from interest:
c: income from a royalty:
d: income from rent:
e: income, other than rent or interest, from a finance lease or operating lease:
f: income or loss from a financial asset, other than a derivative as defined in NZIAS 39 or a share that is not revenue account property, in the form of—
i: a change in the reported fair value of the asset:
ii: a gain or loss on the derecognition, as defined in NZIAS 39, of the asset:
iii: a foreign exchange gain or loss on the asset:
g: income or loss from a derivative instrument, as defined in NZIAS 39, and included in the CFC's statement of income—
i: if the instrument is held in the course of a business of the CFC for the purpose of dealing with the derivative instrument:
ii: if the instrument is not entered in the ordinary course of a business of the CFC:
iii: to the extent that the income or loss is from a hedging relationship, of a type referred to in NZIAS 39, with an amount that would change the numerator of the formula in subsection (5) or with a transaction producing such an amount of income or gain:
h: income or gains from a business of insurance, including income or gains from property used to back insurance assets. Added passive
8: Added passive reported passive
a: income from a life insurance policy that is included in the attributable CFC amount for the accounting period under section EX 20B(3)(g):
b: income from the disposal of revenue account property that is included in the attributable CFC amount for the accounting period under section EX 20B(3)(k), if the property is—
i: not a share, financial arrangement, or life insurance policy; and
ii: used by the CFC in a way giving rise to income or gains that increase the numerator of the formula in subsection (5):
c: income from a supply of services performed in New Zealand that is included in the attributable CFC amount for the accounting period under section EX 20B(3)(l):
d: income from a supply of telecommunications services that is included in the attributable CFC amount for the accounting period under section EX 20B(3)(m) or (n). Removed passive
9: Removed passive reported passive added passive
a: a dividend that is not included in the attributable CFC amount for the accounting period under section EX 20B(3)(a) to (c):
b: a royalty that would be included in the attributable CFC amount for the accounting period but for section EX 20B(5)(a) to (d):
c: rent that would be included in the attributable CFC amount for the accounting period but for section EX 20B(7)(a) to (c):
d: the cost of revenue account property producing an amount (the included amount
i: the cost would be a deduction of the CFC in the accounting period if the CFC were a resident of New Zealand; and
ii: the deduction would exceed the amount of any income arising under subpart CH (Adjustments) relating to the deduction. Reported revenue
10: Reported revenue
a: included under the applicable accounting standard in—
i: operating revenue, if the applicable accounting standard is generally accepted accounting practice without IFRS; or
ii: revenue, if subparagraph (i) does not apply:
b: income, other than rent, from a finance lease or operating lease:
c: a gain or loss on a financial asset, other than a derivative as defined in NZIAS 39 or a share not on revenue account, in the form of—
i: a change in the reported fair value of the asset:
ii: a gain or loss on the derecognition, as defined in NZIAS 39, of the asset:
iii: a foreign exchange gain or loss on the asset:
d: a gain or loss from a derivative instrument, as defined in NZIAS 39, and included in the CFC's statement of income—
i: if the derivative instrument is held in the course of a business of the CFC for the purpose of dealing with the derivative instrument:
ii: if the derivative instrument is not entered in the ordinary course of a business of the CFC:
iii: to the extent that the gain or loss is from a hedging relationship, of a type referred to in NZIAS 39, with an amount that would change the denominator of the formula in subsection (5) or with a transaction producing such an amount of income or gain:
e: income or a gain from a business of insurance, including from property used to back insurance assets, if the applicable accounting standard is not generally accepted accounting practice without IFRS. Added revenue
11: Added revenue reported revenue
a: income from a life insurance policy that is included in the attributable CFC amount for the accounting period under section EX 20B(3)(g):
b: income from the disposal of revenue account property that is included in the attributable CFC amount for the accounting period under section EX 20B(3)(k), if the property is—
i: not a share, financial arrangement, or life insurance policy; and
ii: used by the CFC in a way giving rise to income or gains that increase the numerator of the formula in subsection (5). Removed revenue
12: Removed revenue
a: an amount included in the item removed passive under subsection (9)(d):
b: a dividend to the extent to which it is included in the item removed passive, under subsection (9)(a):
c: income from a supply of personal services that is included in the item reported revenue, and in the attributable CFC amount for the accounting period under section EX 20B(3)(h):
d: income or loss from a share that is not revenue account property under this Act in the form of—
i: a change in the reported fair value of the share:
ii: income or loss on the derecognition, as defined in NZIAS 39, of the share:
iii: a foreign exchange gain or loss on the share:
e: income derived from another CFC that—
i: is subject to the laws of the country or territory under which the CFC is liable to income tax on the CFC's income because of the CFC's domicile, residence, place of incorporation, or centre of management; and
ii: is liable to tax on its income in that country or territory because of its domicile, residence, place of incorporation, or centre of management; and
iii: could be consolidated with the CFC for the purposes of this section if appropriate audited accounts were prepared:
f: if the applicable standard is generally accepted accounting practice without IFRS, income from a liability, other than income derived in the normal course of business from a sale or supply of services, in the form of—
i: a reduction in the liability:
ii: a gain on the disposal or other derecognition of the liability:
iii: a foreign exchange gain on the liability:
g: if the applicable standard is generally accepted accounting practice without IFRS, income from an asset that is not a financial asset under NZIAS 32 and not revenue account property as defined in section YA 1 (Definitions) in the form of—
i: an increase in the fair value of the asset:
ii: a gain on the disposal of the asset:
iii: a foreign exchange gain on the asset. Compliance with accounting standards
13: If accounts meet the requirements of section EX 21C for the relevant accounting standard—
a: the accounts are treated as complying with the relevant accounting standard for the purposes of subsection (2):
b: amounts drawn from the accounts, or from information that is used to prepare the accounts and is consistent with them, are treated as complying with the relevant accounting standard for the purposes of subsection (4) if the Commissioner does not have reasonable grounds to suspect—
i: fraudulent activity by the interest holder, the CFC, a CFC in the CFC's test group, or the auditor:
ii: preparation of the accounts with an intent to mislead:
iii: incompetence of the auditor. Defined in this Act: accounting period, associated non-attributing active CFC, attributable CFC amount, CFC, company, dividend, financial arrangement, finance lease, group of companies, IFRS, income, life insurance policy, non-attributing active CFC, operating lease, premium, revenue account property, royalty .
2: Subsection (1)
163: Heading and section EX 22 replaced
1: The heading before section EX 22 Non-attributing Australian CFCs
EX 22: Non-attributing Australian CFCs
Criteria
1: A CFC is a non-attributing Australian CFC
a: at all times in the accounting period the CFC is—
i: resident in Australia; and
ii: under Australian law, subject to income tax on its income or treated as part of the head company of a consolidated group subject to income tax on its income; and
iii: treated as being resident in Australia under all agreements between the government of Australia and the governments of other countries or territories that would be a double tax agreement if between the government of New Zealand and the government of the other country or territory; and
b: the CFC's liability for income tax has not been reduced by—
i: an exemption from income tax for income derived from business activities carried on outside Australia:
ii: a special allowance, relief, or exemption with respect to offshore banking units. No attributed CFC income or loss
2: Sections CQ 2(1)(i) (When attributed CFC income arises) and DN 2(1)(i) (When attributed CFC loss arises) provide that no attributed CFC income or attributed CFC loss arises from a non-attributing Australian CFC. CFCs with interest in FIF: look-through approach
3: This section does not prevent FIF income or FIF loss arising under section EX 58 from an interest of a non-attributing Australian CFC in a FIF. Defined in this Act: accounting period, attributed CFC income, attributed CFC loss, CFC, double tax agreement, FIF, FIF income, FIF loss, income tax, non-attributing Australian CFC, resident in Australia .
2: Subsection (1)
164: Section EX 23 repealed
1: Section EX 23
2: Subsection (1)
165: Change of CFC's balance date
1: Section EX 25(3)(d)
d: whether the change would postpone liability to income tax on attributed CFC income or on attributed repatriation.
2: In section EX 25 FDP
3: Subsection (1)
166: Attributing interests in FIFs
In section EX 29(1)(b) EX 32 to EX 37 EX 31 to EX 43
167: Direct income interests in FIFs
In section EX 30(6)(c) debentures) debentures) or FA 2B (Stapled debt securities)
168: Exemption for ASX-listed Australian companies
1: In section EX 31(2)(c)(i), if subparagraph (ii) does not apply if subparagraphs (ii) and (iii) do not apply
2: In section EX 31(2)(c)(ii) earlier in the year; and earlier in the year; or
iii: at the beginning of the final month of the preceding income year if, in the first month of an income year, the shares are cancelled or transferred under a scheme of arrangement entered into under Part 5.1 of the Corporations Act 2001 (Aust); and .
3: In section EX 31 cancellation
169: Exemption for Australian unit trusts with adequate turnover or distributions
1: In section EX 32(9)(d) contributions by investors by the unit trust contributions by investors to the unit trust
2: Subsection (1) applies for the 2008–09 and later income years.
170: CFC rules exemption
In section EX 34(b) the person has the person has, under sections EX 14 to EX 17,
171: Grey list company owning New Zealand venture capital company: 10-year exemption
1: In section EX 37(e)
e: at all times in the year, the grey list company holds more than 50% of the voting interests in a company resident in New Zealand (the resident company .
2: Section EX 37(f)
f: the year begins less than 10 years after the grey list company first held more than 50% of the voting interests in the resident company; and .
3: In section EX 37 voting interest
172: Exemption for employee share purchase scheme of grey list company
Section EX 38(g)
g: the share purchase agreement includes a restriction on the disposal of the shares; and .
173: Limits on choice of calculation methods
1: In section EX 46(6)(b)(iii) charities): charities); and
iv: is not a superannuation scheme: .
2: Section EX 46(6)(d)
d: the share is a non-ordinary share described in subsection (10).
3: Section EX 46(7)(b)
b: the FIF is a foreign investment vehicle and the person is—
i: a portfolio investment entity or an entity eligible to be a portfolio investment entity:
ii: a life insurance company.
4: Section EX 46(7)(b)
b: the FIF is a foreign PIE equivalent and the person is—
i: a portfolio investment entity or an entity that qualifies for PIE status:
ii: a life insurance company.
5: Section EX 46(8)(a)
a: the share is a non-ordinary share described in subsection (10): .
6: The heading to section EX 46(10) Certain non-ordinary shares
7: In section EX 46(10)
10: For the purposes of subsections (6)(d) and (8)(a), a non-ordinary share in a foreign company is— .
8: Section EX 46(10)(a)
a: a fixed-rate foreign equity: .
9: After section EX 46(10)(c)
cb: an interest in a non-resident if––
i: the non-resident holds directly or indirectly assets of which 80% or more by value at a time in the income year consist of fixed-rate shares or financial arrangements providing funds to a person ignoring financial arrangements between the non-resident and other members of a group of companies that it is a member of; and
ii: the non-resident is not listed on a recognised exchange or is listed on a recognised exchange but is a foreign investment vehicle, ignoring section HL 10(4) (Further eligibility requirements relating to investments) for the purposes of this subparagraph; and
iii: the interest is, under NZIAS 39, a hedged item having a value in New Zealand dollars governed by a hedging instrument that is highly effective: .
10: In section EX 46(10)(cb)(ii) foreign investment vehicle foreign PIE equivalent
11: In section EX 46
a: foreign PIE
b: foreign investment vehicle
12: In section EX 46
a: foreign investment vehicle
b: foreign PIE equivalent PIE
13: In section EX 46 fixed-rate foreign equity
14: Subsections (4) and (10)
15: Subsection (8)
174: Section EX 47 replaced
Section EX 47
EX 47: Method required for certain non-ordinary shares
A person must calculate FIF income or loss for an income year from an attributing interest that is a non-ordinary share described in section EX 46(10) using—
a: the comparative value method; or
b: the deemed rate of return method, if use of the comparative value method is not practical because the person cannot determine the market value of the attributing interest at the end of the income year. Defined in this Act: attributing interest, comparative value method, deemed rate of return method, fair dividend rate method, FIF income, FIF loss, income year, market value, share .
175: Branch equivalent method
1: In section EX 50(3) section EX 21 of the CFC rules section EX 21 of the CFC rules as that provision reads ignoring section 161(1) to (6), (9) to (14), (16), and (17) 2009
2: Subsection (1)
176: Comparative value method
1: Section EX 51(5)
5: Opening value
2: Section EX 51(7) and (8) Losses from some attributing interests not subject to rule
7: Subsection (8) applies to a person who calculates under subsection (1) an amount of FIF loss for an attributing interest in a FIF (the affected interest
a: a direct income interest in a foreign company equal to or more than 10% at all times in the relevant income year:
b: a non-ordinary share described in section EX 46(10). No total FIF loss from other attributing interests
8: If, in the absence of this subsection, the person would have under subsection (1) a total FIF loss for the income year from all the person's affected interests, the FIF loss for the income year for the person from each affected interest is reduced to the extent necessary for the total FIF loss from the affected interests to be zero.
3: Subsection (2) applies for the 2009–10 and later income years.
177: Fair dividend rate method: usual method
1: In section EX 52(1)(a)
2: Section EX 52(2)
2: The person's total FIF income for the income year from the attributing interests in FIFs (the FDR interests
3: In section EX 52(5)
5: Opening value .
4: After section EX 52(5) Exclusion for certain managed funds
5B: Subsection (5)(b) does not apply if—
a: the person is a portfolio investment entity, an entity eligible to be a portfolio investment entity, or a life insurance company; and
b: the FIF is a foreign investment vehicle.
5: Section EX 52(5B)(b)
b: the FIF is a foreign PIE equivalent.
6: Section EX 52(6)
6: The quick sale adjustment is required, and is not zero, only if the person, in the income year,—
a: acquires or increases an FDR interest to which this section applies; and
b: later disposes of or reduces the FDR interest.
7: Section EX 52(7)(a) and (b)
a: the total of the amounts (the peak holding method amount
b: the total of the amounts (the quick sale gain amount
8: In section EX 52(13)
a: in paragraph (a), during the income year
b: in paragraph (c), during the year
9: After section EX 52(14B) Treatment of attributing interests subject to returning share transfer
14C: If an attributing interest in a FIF is an original share subject to a returning share transfer, for the purposes of a person using the fair dividend rate method to calculate FIF income, the attributing interest is treated as held by the share supplier.
10: In section EX 52 foreign investment vehicle life insurance original share portfolio investment entity returning share transfer share share supplier
11: In section EX 52
a: foreign investment vehicle
b: foreign PIE equivalent
12: Subsection (5) applies for the 2010–11 and later income years.
178: Fair dividend rate method for unit-valuing funds and others by choice
1: In section EX 53(1)(a)
2: In section EX 53(1B)(a) or loss
3: Section EX 53(2)
2: The total FIF income for the income year of the fund or person (the interest holder FDR interests
4: In section EX 53(5)
5: Opening value .
5: After section EX 53(5) Exclusion for certain managed funds
5B: Subsection (5)(b) does not apply if—
a: the interest holder is a portfolio investment entity, an entity eligible to be a portfolio investment entity, or a life insurance company; and
b: the FIF is a foreign investment vehicle.
6: In section EX 53(5B)(b) foreign investment vehicle foreign PIE equivalent
7: Section EX 53(8)
8: The quick sale adjustment is required, and is not zero, only if the interest holder has a unit valuation period of more than 1 day and, in the unit valuation period,—
a: acquires or increases an FDR interest to which this section applies; and
b: later disposes of or reduces the FDR interest.
8: Section EX 53(9)(a) and (b)
a: the total of the amounts (the peak holding method amount
b: the total of the amounts (the quick sale gain amount
9: In section EX 53(15)
a: in paragraph (a), during the unit valuation period
b: in paragraph (c), during the period
10: After section EX 53(16B) Treatment of attributing interests subject to returning share transfer
16C: If an attributing interest in a FIF is an original share subject to a returning share transfer, for the purposes of a person using the fair dividend rate method to calculate FIF income, the attributing interest is treated as held by the share supplier.
11: In section EX 53 foreign investment vehicle life insurance original share portfolio investment entity returning share transfer share share supplier
12: In section EX 53
a: foreign investment vehicle
b: foreign PIE equivalent
13: Subsection (6) applies for the 2010–11 and later income years.
179: Cost method
1: In section EX 56(3)(ac)(ii) income year; or income year; and
iii: the interest was not an attributing interest for the income year before the relevant income year; or”.
2: In section EX 56(4) 1.05 × preceding opening.
3: In section EX 56(5) 1.05 × preceding opening + (increase × average cost).
4: In section EX 56(6) opening shareholding × 1.05 × preceding opening. preceding shareholding
5: Section EX 56(9)
6: In section EX 56(15) 0.05 × peak holding differential × average cost.
7: In section EX 56 close of trading spot exchange rate
180: Additional FIF income or loss if CFC owns FIF
1: In section EX 58(1)(a) EX 8 EX 14
2: Section EX 58(6) Non-attributing Australian CFCs
6: This section applies whether or not the CFC is a non-attributing Australian CFC under section EX 22 for the period.
3: Section EX 58(7)
4: Subsections (2) and (3)
181: Codes: comparative value method, deemed rate of return method, fair dividend rate method, and cost method
1: Section EX 59(1)(c)
c: the fair dividend rate method: .
2: After section EX 59(1) Exclusion for interests in grey list companies
1B: Subsection (1)(c) does not apply if—
a: the FIF is a grey list company; and
b: the person holds a direct income interest of 10% or more in the FIF at the beginning of the income year in which the period falls. Application of rule for certain managed funds
1C: Subsection (1B) does not apply if—
a: the person is a portfolio investment entity, an entity eligible to be a portfolio investment entity, or a life insurance company; and
b: the FIF is a foreign investment vehicle.
3: Section EX 59(1C)(b)
b: the FIF is a foreign PIE equivalent.
4: After section EX 59(2) Exception to subsection (2): fees rebate
2B: An amount derived by the person from the interest is not disregarded under subsection (2) if—
a: the amount is a rebate of fees; and
b: the person was allowed a deduction for the payment of the fees.
5: In section EX 59 company direct income interest foreign investment vehicle grey list company life insurance portfolio investment entity
6: In section EX 59
a: foreign investment vehicle
b: foreign PIE equivalent
7: Subsection (3) applies for the 2010–11 and later income years.
8: Subsection (4)
182: Limits on changes of method
1: In section EX 62(1) subsections (2) to (8) subsections (2) to (9)
2: After section EX 62(8) Change to fair dividend rate method in return for 2008–09, 2009–10 tax year
9: A person may change to the fair dividend rate method from the branch equivalent method or the accounting profits method in the person's return of income for—
a: the 2008–09 tax year, if the person has not furnished a return for that tax year before the date on which the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 receives the Royal assent; or
b: the 2009–10 tax year, if the person has furnished a return for the 2008–09 tax year before the date on which that Act receives the Royal assent.
3: In section EX 62 return return of income tax year
183: Changes in application of FIF exemptions
1: In section EX 65(1)(b)(i) sections EX 34 to EX 43 sections EX 31 to EX 43
2: In section EX 65(5)(b)(i) sections EX 34 to EX 43 sections EX 31 to EX 43
3: Subsections (1) and (2) apply for the 2008–09 and later income years.
184: New section EX 66B inserted
1: After section EX 66
EX 66B: Entities ceasing to be FIFs
When this section applies
1: This section applies when a person holds rights that cease to be an attributing interest in a FIF because an entity ceases to be a FIF. Treatment as sale and repurchase
2: The person is treated as having,—
a: immediately before the change, disposed of the interest to an unrelated person; and
b: immediately after the change, repurchased the interest; and
c: received for the sale and paid for the repurchase an amount equal to the market value of the interest at the end of the business day on which the change occurred. Calculation of reduction in FIF income or loss
3: If the change occurs during an accounting period of the FIF and the person uses the accounting profits method or branch equivalent method to calculate FIF income or FIF loss from the rights for that period, section EX 24 does not apply and the FIF income or FIF loss is reduced by subtracting the amount calculated using the formula— FIF income or loss × days after change days in period. Definition of items in formula
4: In the formula,—
a: FIF income or loss
b: days after change
c: days in period Defined in this Act: accounting period, accounting profits method, amount, attributing interest, branch equivalent method, FIF, FIF income, FIF loss, market value, pay .
2: Subsection (1) applies for the 2009–10 and later income years.
185: Sections EY 1 to EY 5 replaced
1: Sections EY 1 to EY 5
EY 1: What this subpart does
Two bases
1: This subpart provides for the taxation of life insurers on 2 separate bases, the policyholder base and the shareholder base. Sections EY 2 and EY 3 describe the general apportionment of income and deductions between the 2 bases under this Part. Section LA 8B (General rules particular to life insurers) provides some general rules for tax credits relating to the 2 bases. Parts L and O include tax credit rules and memorandum account rules specific to the 2 bases. Schedular policyholder base income and PIE schedular income
2: Section EY 2 uses the assessable income in a life insurer's policyholder base income, and the life insurer's policyholder base allowable deductions, to calculate their schedular policyholder base income. A life insurer's schedular income derived by their life fund PIE that is a multi-rate PIE is excluded from their schedular policyholder base income, along with deductions for that income. Counting once
3: Income and deductions must be apportioned to either the policyholder base or the shareholder base. There is no double-counting. Defined in this Act: assessable income, deduction, income, life fund PIE, life insurance, life insurer, life reinsurance, memorandum account, multi-rate PIE, policyholder base, policyholder base income, schedular policyholder base income, shareholder base, tax credit
EY 2: Policyholder base
Policyholder base income
1: A life insurer has policyholder base income,—
a: for savings product policies that are not profit participation policies, under section EY 15:
b: for profit participation policies, under section EY 17:
c: under section EY 27(4). Policyholder base allowable deductions
2: A life insurer has policyholder base allowable deductions,—
a: for savings product policies that are not profit participation policies, under section EY 16:
b: for profit participation policies, under section EY 18:
c: under section EY 27(4):
d: under section EZ 61 (Allowance for cancelled amount: spreading):
e: under section LE 2B (Use of remaining credits by life insurer on policyholder base). Schedular policyholder base income
3: A life insurer's schedular policyholder base income Cap on subtracting: ring-fencing policyholder base allowable deductions
4: Despite subsection (3), the total amount that is subtracted under subsection (3), including an amount carried forward to the current year under subsection (5), is no more than the amount of the assessable income in the life insurer’s policyholder base income for the income year. Excess allocations: carrying forward and re-instating next year
5: Any excess not able to be subtracted in the current year because of subsection (4) is carried forward to the next income year. Exception
6: Despite subsections (3) to (5) a life insurer's schedular income derived by their life fund PIE that is a multi-rate PIE is excluded from their schedular policyholder base income, along with deductions for that income. Defined in this Act: amount, assessable income, income year, life fund PIE, life insurance, life insurer, multi-rate PIE, policyholder base allowable deduction, policyholder base income, profit participation policy, savings product policy, schedular income, schedular policyholder base income
EY 3: Shareholder base
Shareholder base income
1: A life insurer has shareholder base income,—
a: for policies that are not profit participation policies, under section EY 19: see also
b: for profit participation policies, under sections EY 21, EY 28, and EY 29:
c: for annuities, under section EY 31. Shareholder base allowable deductions
2: A life insurer has shareholder base allowable deductions,—
a: for policies that are not profit participation policies, under section EY 20: see also
b: for profit participation policies, under sections EY 22 and EY 28:
c: for the period and policies described in section EY 30, under that section:
d: for annuities, under section EY 31. Reserves
3: Under sections EY 23 to EY 27, a life insurer calculates reserving amounts for life insurance policies, other than annuities, that have a life risk component and are not profit participation policies. A reserving amount may be income included in their shareholder base income, or a deduction that is included in their shareholder base allowable deduction, as provided by the relevant sections. Defined in this Act: deduction, life insurance, life insurance policy, life insurer, life risk, profit participation policy, shareholder base allowable deduction, shareholder base income
EY 4: Apportionment of income of particular source or nature, and of tax credits
Default basis
1: For a class of policies, income of a particular source or nature, and tax credits received, are apportioned between the policyholder base and shareholder base––
a: in the same proportion as the policyholder base income relating to the particular source, nature, or credits bears to the life insurer's total gross gains relating to the particular source, nature, or credits, in the case of the policyholder base:
b: in the same proportion as the shareholder base income relating to the particular source, nature, or credits bears to the life insurer's total gross gains relating to the particular source, nature, or credits, in the case of the shareholder base. More equitable or reasonable basis
2: For a class of policies, the life insurer may use a basis of apportionment that is different from the basis described in subsection (1), if that basis results in an amount, actuarially determined, that is more equitable and reasonable than an amount determined using the basis described in subsection (1). Defined in this Act: actuarially determined, amount, class of policies, income, life insurer, policyholder base, policyholder base income, shareholder base, shareholder base income, tax credit
EY 5: Part-year tax calculations
Part-year tax calculations
1: For their life insurance and for their general insurance contracts outstanding claims reserve, a life insurer does part-year tax calculations, described in subsection (2), if they do not have an early life regime application day and 1 July 2010 is not the first day of their income year. First year part-year calculations: description
2: For calculating their income tax liability for the tax year that corresponds to the income year that includes 1 July 2010, where 1 July 2010 is not the first day of the income year, the life insurer treats references, in the new life insurance rules and in the rules they replace, to an income year or a tax year as if they are references to 2 separate tax years and corresponding income years (the part-years First year part-year calculations: effect
3: The part-year calculations may give rise to income and deductions for the income year, but they do not create any part-year tax return obligations. The 2 part-year calculations compose 1 income tax liability for 1 income year. Part-year calculations for transfers
4: Where a life insurer (the transferor transferee Part-year calculations for transfers: effect
5: Transferor's and transferee's part-year calculations may give rise to income and deductions for the income year, but they do not create any part-year tax return obligations. Part-year calculations for transfers: adjustments
6: If life reinsurance, associated with a class of policies transferred, is assigned by the transferor to the transferee, then the transferor's relevant closing part-year reserve amounts and the transferee's relevant opening part-year reserve amounts are adjusted, by adding the life reinsurance's value to the transferee's opening, and subtracting it from the transferor's closing. Part-year calculations: end of transitional adjustments
7: Where, for relevant life insurance policies, the life insurer has a relevant period under section EY 30(5) that ends on 30 June 2015, and 1 July 2015 is not the first day of their income year, the life insurer does part-year tax calculations for the income year that includes 1 July 2015, as described in subsection (2), for the policies, but the income year is divided by 1 July 2015. The effect of the part-year calculations is described in subsection (3). Defined in this Act: amount, class of policies, deduction, early life regime application day, income, income tax liability, income year, life insurance, life insurance policies, life insurer, life reinsurance, outstanding claims reserve .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
186: Section EY 6 replaced
1: Section EY 6
EY 6: Actuarial advice and guidance
The Commissioner may seek the advice of the Government Actuary or any other actuary on anything that is required to be actuarially determined, or any related matter. Defined in this Act: actuarially determined, actuary, Commissioner .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
187: Meaning of claim
1: In section EY 7(1)(b) includes excludes
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
188: Superannuation schemes providing life insurance
1: In section EY 11(7) contributions superannuation contributions
2: In section EY 11(11) contributions superannuation contributions
3: In section EY 11 superannuation contribution
4: Subsections (1) and (2) apply for the 2008–09 and later income years.
189: Meaning of life reinsurance
1: Section EY 12(1) Meaning
1: Life reinsurance
a: means a contract of insurance between a life insurer and another person ( person C
b: does not include a contract that—
i: secures against financial risk unless, in the contract, it is incidental to securing against life risk:
ii: is, or is part of, a tax avoidance arrangement. Fully partially
1B: The words fully partially
2: Section EY 12(4) Exclusion: financial arrangements and general insurance
4: To the extent to which a contract is a financial arrangement or is insurance that secures a life insurer against liability that arises from insurable events other than death or survival of a human being, that contract is not life reinsurance. Other definitions
5: In this Act,— life financial reinsurance financial risk
a: means risk, whether or not specific to a party to the relevant arrangement relating to risk, that is contingent on a valuation or disposal of financial arrangements, or contingent on profitability or creditworthiness, or contingent on a variable such as future expenditure:
b: does not include life risk life reinsurer Relationship with subject matter
6: Section EZ 62 (Reinsurance transition: life financial reinsurance may be life reinsurance) overrides this section.
3: In section EY 12 financial arrangement financial risk life financial reinsurance
4: Subsections (1) and (2) apply––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
190: Sections EY 15 to EY 47 replaced
1: Sections EY 15 to EY 47 Policyholder base Non-participation policies
EY 15: Policyholder base income: non-participation policies
What is included
1: For an income year, a life insurer's income is included as their policyholder base income if it relates to life insurance policies that are not profit participation policies, and it––
a: does not relate to life risk components of premiums and claims:
b: is investment income that––
i: is included in investment income gains or losses in the financial statements of the life insurer; and
ii: is not a premium; and
iii: is fairly attributable to savings product policies. Certain income: basis of apportionment
2: Despite subsection (1), if an amount of investment income is included in a life insurer's policyholder base income under subsection (1), but may also be shareholder base income under section EY 19, ignoring section EY 19(1)(d), then the investment income is included in policyholder base income to the extent provided by the formula— income × average surrender value average savings assets. Definition of items in formula
3: In the formula,—
a: income
b: average surrender value
c: average savings assets More equitable or reasonable basis of apportionment
4: Despite subsections (2) and (3), for investment income described in subsection (2), the life insurer may use a basis of apportionment that is different from the one described in subsections (2) and (3), if that basis results in an amount, actuarially determined, that is more equitable and reasonable than an amount determined using the basis described in subsections (2) and (3). Treatment of de minimis life risk component amounts
5: An amount of income in respect of a policy that, but for this subsection, is an amount related to the life risk of a premium or life reinsurance claim, is treated as not relating to the relevant life risk component for the purposes of subsection (1), if––
a: the life insurer has actuarially determined that the life risk is 1% or less of the premium or life reinsurance claim; and
b: chooses to apply this subsection for the policy. Defined in this Act: actuarially determined, amount, claim, income, income year, life insurance policy, life insurer, life reinsurance, life risk, life risk component, market value, premium, policyholder base income, profit participation policy, savings product policy, shareholder base income, surrender value
EY 16: Policyholder base allowable deductions: non-participation policies
What is included
1: For an income year, a life insurer's deduction that relates to life insurance policies that are not profit participation policies is included as their policyholder allowable deduction to the extent to which it is incurred in relation to their policyholder base income under section EY 15. Basis of apportionment
2: Despite subsection (1), if a deduction is included in a life insurer's policyholder base allowable deduction under subsection (1), but may also be a shareholder base allowable deduction under section EY 20, ignoring section EY 20(1)(d), the life insurer must use a basis of apportionment for the deduction which is––
a: the same as in section EY 15(2) and (3) with necessary modifications; or
b: is the same as in section EY 15(4) with necessary modifications. Defined in this Act: deduction, income year, life insurance policy, life insurer, policyholder base allowable deduction, policyholder base income, profit participation policy, shareholder base allowable deduction Profit participation policies
EY 17: Policyholder base income: profit participation policies
What is included
1: For an income year, a life insurer has policyholder base income to the extent to which they have an amount for profit participation policies calculated using the formula— asset base gross income × (1 − retained earnings average − future shareholder transfers average) + net transfers. Definition of items in formula
2: In the formula,—
a: asset base gross income
i: the life insurer is treated as having no assets other than the asset base; and
ii: amounts under sections EY 28 and EY 29 are ignored:
b: retained earnings average
i: the proportion of the value of the policies' asset base that is attributable to the life insurer's shareholders at the end of the year before the income year:
ii: the proportion of the value of the policies' asset base that is attributable to the life insurer's shareholders at the end of the income year:
c: future shareholder transfers average
i: the proportion of the value of the policies' asset base that is attributable to the present value (net) of future transfers to the life insurer's shareholders for future bonus declarations that are able to be supported by the supporting asset base at the beginning of the income year:
ii: the proportion of the value of the policies' asset base that is attributable to the present value (net) of future transfers to the life insurer's shareholders for future bonus declarations that are able to be supported by the supporting asset base at the end of the income year:
d: net transfers Meaning of supporting asset base
3: Supporting asset base
a: policyholder unvested liabilities:
b: the value of assets attributable to the life insurer's shareholders. Defined in this Act: actuarially determined, amount, annual gross income, asset base, income year, life insurer, policyholder base income, present value (net), profit participation policy, supporting asset base
EY 18: Policyholder base allowable deductions: profit participation policies
For an income year, a life insurer has policyholder base allowable deductions equal to the amount they would have, for profit participation policies, under the formula in section EY 17(1), if––
a: the life insurer is treated as having no assets other than the asset base; and
b: the item asset base gross income Defined in this Act: amount, annual total deduction, asset base, income year, life insurer, policyholder base allowable deduction, profit participation policy Shareholder base Non-participation policies
EY 19: Shareholder base income: non-participation policies
What is included
1: For an income year, a life insurer's income is included as their shareholder base income if it relates to life insurance policies that are not profit participation policies, and it––
a: relates to life risk components of premiums and claims, other than for annuities, and is not described in paragraphs (b) to (d):
b: relates to fees and commissions:
c: relates to the life risk component of life reinsurance claims:
d: is investment income that is not included as their policyholder base income under section EY 15:
e: is not otherwise accounted for in this subpart, for the income year. Treatment of de minimis life risk component amounts
2: An amount of income in respect of a policy that, but for this subsection, is an amount related to the life risk of a premium or life reinsurance claim, is treated as not relating to the life risk component for the purposes of subsection (1), if––
a: the life insurer has actuarially determined that the life risk is 1% or less of the premium or life reinsurance claim; and
b: chooses to apply section EY 15(5) for the policy. No double-counting
3: If an amount is included as shareholder base income under sections EY 23 to EY 29, it is not included under this section. Defined in this Act: amount, actuarially determined, claim, income year, life insurer, life insurance policy, life reinsurance, life risk, life risk component, policyholder base income, premium, profit participation policy, shareholder base income
EY 20: Shareholder base allowable deductions: non-participation policies
What is included
1: For an income year, a life insurer's deduction is included as their shareholder base allowable deduction if it relates to life insurance policies that are not profit participation policies, and it––
a: relates to life risk components of premiums and claims, other than for annuities, and is not described in paragraphs (b) to (e):
b: relates to fees and commissions:
c: relates to the life risk component of life reinsurance premiums:
d: is a deduction in relation to investment income that is not included as their policyholder base allowable deduction under section EY 16:
e: is a premium payback amount, and––
i: section EY 19 applies or has applied to include the original premium as shareholder base income; and
ii: section EY 30(7) does not apply or has not applied to calculate a transitional amount for the original premium:
f: is not otherwise accounted for in this subpart, for the income year. No double-counting
2: If an amount is included as shareholder base allowable deduction under sections EY 23 to EY 29, it is not included under this section. Defined in this Act: amount, claim, deduction, income year, life insurer, life insurance policy, life reinsurance, life risk component, policyholder base allowable deduction, premium, premium payback amount, profit participation policy, shareholder base allowable deduction, shareholder base income Profit participation policies
EY 21: Shareholder base income: profit participation policies
What is included
1: For an income year, a life insurer has shareholder base income to the extent to which they have an amount for profit participation policies calculated using the formula— asset base gross income × (retained earnings average + future shareholder transfers average) − net transfers. Definition of items in formula
2: In the formula,—
a: asset base gross income
i: the life insurer is treated as having no assets other than the asset base; and
ii: amounts under sections EY 28 and EY 29 are ignored:
b: retained earnings average
i: the proportion of the value of the policies' asset base that is attributable to the life insurer's shareholders at the end of the year before the income year:
ii: the proportion of the value of the policies' asset base that is attributable to the life insurer's shareholders at the end of the income year:
c: future shareholder transfers average
i: the proportion of the value of the policies' asset base that is attributable to the present value (net) of future transfers to the life insurer's shareholders for future bonus declarations that are able to be supported by the supporting asset base at the beginning of the income year:
ii: the proportion of the value of the policies' asset base that is attributable to the present value (net) of future transfers to the life insurer's shareholders for future bonus declarations that are able to be supported by the supporting asset base at the end of the income year:
d: net transfers Defined in this Act: actuarially determined, amount, annual gross income, asset base, income, income year, life insurer, present value (net), profit participation policy, shareholder base income, supporting asset base
EY 22: Shareholder base allowable deductions: profit participation policies
For an income year, a life insurer has shareholder base allowable deductions equal to the amount they would have, for profit participation policies, under the formula in section EY 21(1) if––
a: the life insurer is treated as having no assets other than the asset base; and
b: the item asset base gross income Defined in this Act: amount, annual total deduction, asset base, income year, life insurer, profit participation policy, shareholder base allowable deduction Non-participation policies: reserves
EY 23: Reserving amounts for life insurers: non-participation policies
Reserves
1: Sections EY 24 to EY 27 apply to calculate a life insurer's reserving amounts for life insurance policies, other than annuities, that have a life risk component and that are not profit participation policies. Actuarial determination
2: All reserving amounts must be actuarially determined, for each class of policies. Positive and negative amounts: shareholder base income or shareholder base allowable deduction
3: If a reserving amount calculated under sections EY 24 to EY 27 is a positive amount, the life insurer has that amount as income included in their shareholder base income. If a reserving amount calculated under sections EY 24 to EY 27 is a negative amount, the life insurer has that amount as a deduction included in their shareholder base allowable deductions. Which reserve can be used when?
4: For an income year, for a relevant class of policies, a life insurer has a reserving amount described in—
a: section EY 24, for outstanding claims reserves (the outstanding claims reserving amount
b: section EY 25, for premium smoothing reserves (the premium smoothing reserving amount
c: section EY 26, for unearned premium reserves (the unearned premium reserving amount
d: section EY 27, for capital guarantee reserves (the capital guarantee reserving amount Choice
5: Despite subsection (4)(b) and (c), a life insurer may not change between calculating a premium smoothing reserving amount and an unearned premium reserving amount for a class of policies once the premium smoothing reserving amount is used for the class of policies. If a policy in a class of policies does not meet the relevant requirements described in subsection (6), then a life insurer has an unearned premium reserving amount for that class of policy. Meaning of PSR period
6: PSR period
a: premiums payable are level or substantially level, and the period is 1 or more years; or
b: there is a material mismatch between the incidence of life risk components and the timing of premiums payable, and the period is 1 or more years. Defined in this Act: actuarially determined, amount, class of policies, deduction, income year, life insurance policy, life insurer, life risk, life risk component, premium, profit participation policy, PSR period, shareholder base allowable deduction, shareholder base income
EY 24: Outstanding claims reserving amount: non-participation policies not annuities
Calculation of reserving amount
1: For an income year (the current year opening outstanding claims reserve Definition of items in formula
2: In the formula in subsection (1),—
a: opening outstanding claims reserve
i: the amount of the life insurer’s closing outstanding claims reserve for the class of policies, for the income year before the current year (the prior year
ii: if the life insurer has no closing outstanding claims reserve for the prior year, the amount of the life insurer's outstanding claims reserve under subsections (3) and (4) for the class of policies, calculated at the beginning of the current year, but excluding amounts that were included in the closing sum insured for the calculation of mortality profit for the prior year or an earlier income year:
b: closing outstanding claims reserve Outstanding claims reserve calculation
3: A life insurer’s outstanding claims reserve is calculated for the relevant policies using the formula— life risk claims incurred + life risk claims reported + risk margin. Definition of items in formula
4: In the formula in subsection (3),—
a: life risk claims incurred
b: life risk claims reported
c: risk margin Defined in this Act: amount, best estimate assumptions, claim, class of policies, income year, life insurer, life reinsurance, life risk, life risk component, mortality profit, present value (gross)
EY 25: Premium smoothing reserving amount: non-participation policies not annuities
Calculation of reserving amount
1: For an income year (the current year opening premium smoothing reserve Definition of items in formula
2: In the formula,—
a: opening premium smoothing reserve
i: the amount of the life insurer’s closing premium smoothing reserve for the class of policies, for the income year (the prior year
ii: the amount of the life insurer’s premium smoothing reserve calculated under the principles in subsection (3) for the class of policies, calculated at the beginning of the current year, if the life insurer has no closing premium smoothing reserve for the prior year:
b: closing premium smoothing reserve Premium smoothing reserve calculation: principles
3: A premium smoothing reserve for policies in a class of policies, during their PSR periods, is calculated using the following principles:
a: the premium smoothing reserve must allow the calculation of a reserving amount for an income year, such that the reserving amount plus the life risk component of premiums for the policies for the income year must equal the expected life risk proportion:
b: the life risk component of premiums plus reserving amount recognised for tax purposes during the policies' PSR periods must equal the total life risk component of premiums recognised for financial reporting purposes during the PSR periods. Best estimate assumptions for PSR
4: Closing and opening premium smoothing reserve amounts must be actuarially determined, using best estimate assumptions. Special grouping rule for the purposes of best estimate assumptions
5: For the purposes of determining premium smoothing reserve amounts, life insurance policies may be grouped together if the policies have in common,––
a: substantially the same contractual terms and conditions, other than their PSR periods; and
b: substantially the same assumptions for pricing their life risk. Meaning of expected life risk proportion
6: In this section, expected life risk proportion
a: the end of the income year:
b: immediately before the end of the policies' PSR period. Defined in this Act: amount, actuarially determined, best estimate assumptions, class of policies, expected life risk proportion, income year, life insurance policy, life insurer, life risk, life risk component, premium, PSR period
EY 26: Unearned premium reserving amount: non-participation policies not annuities
Calculation of reserving amount
1: For an income year (the current year opening unearned premium reserve Definition of items in formula
2: In the formula,—
a: opening unearned premium reserve
i: the amount of the life insurer’s closing unearned premium reserve for the class of policies, for the income year before the current year; or
ii: the amount of the life insurer’s unearned premium reserve under subsection (3) for the class of policies, calculated at the beginning of the current year, if the life insurer has no closing unearned premium reserve for the income year before the current year:
b: closing unearned premium reserve Unearned premium reserve
3: A life insurer's unearned premium reserve is the amount of the premium in the current year or a prior year, for the relevant policies, that relates to life risk components and relevant costs, in income years after the current year, but subtracting relevant life reinsurance premiums. Defined in this Act: amount, class of policies, income year, life insurer, life reinsurance, life risk component
EY 27: Capital guarantee reserving amount: non-participation policies not annuities
Calculation of reserving amount
1: For an income year (the current year opening capital guarantee reserve − closing capital guarantee reserve. Definition of items in formula
2: In the formula,—
a: opening capital guarantee reserve
i: the amount of the life insurer’s closing capital guarantee reserve for the class of policies, for the income year before the current year; or
ii: the amount of the life insurer’s capital guarantee reserve under subsection (3) for the class of policies, calculated at the beginning of the current year, if the life insurer has no closing capital guarantee reserve for the income year before the current year:
b: closing capital guarantee reserve Capital guarantee reserve
3: A life insurer’s capital guarantee reserve is the net amount of credits and debits on account of a risk-linked provision for future obligations in relation to a guarantee, for the class of policies, by the life insurer that capital invested will be returned or that a minimum return on capital will be paid. Reflex in policyholder base
4: For the current year, if the reserving amount under this section is positive, the life insurer has that amount as a deduction included in their policyholder base allowable deductions. For the current year, if the reserving amount under this section is negative, the life insurer has that amount as income included in their policyholder base income. Reflex in policyholder base: exception
5: Despite subsection (4), for the current year, the life insurer does not have that amount as income included in their policyholder base income to the extent to which the amount represents payment on account of lost capital in the policyholder base. Defined in this Act: amount, class of policies, income year, life insurer, pay, policyholder base, policyholder base allowable deduction, policyholder base income Shareholder base other profit: profit participation policies
EY 28: Shareholder base other profit: profit participation policies that are existing business
Calculation of income
1: For an income year, a life insurer has an amount, for profit participation policies that are existing business, that is calculated using the formula–– other profit × gate (1 + gate). Definition of items in formula
2: In the formula in subsection (1),—
a: other profit
b: gate profit participation policy Formula: negative amounts and positive amounts
3: If, for an income year, the formula in subsection (1) calculates a positive amount, that amount is included as income in the life insurer’s shareholder base income. If it is a negative amount, then that amount is included as a deduction in the life insurer’s shareholder base allowable deductions. Other profit
4: For the purposes of the item other profit current year (premiums − premiums estimate) − (claims − claims estimate) Definition of items in formula
5: In the formula in subsection (4),—
a: premiums
b: premiums estimate
c: claims
d: claims estimate
e: closing policy liabilities
f: estimated closing policy liabilities Meaning of policy liabilities
6: For the purposes of subsection (5), policy liabilities Basis of best estimate assumptions in actuarially determining items
7: The same best estimate assumptions must be used for actuarially determining the items premiums estimate claims estimate policy liabilities Meaning of existing business
8: For the purposes of this section and section EY 29, existing business
a: issued on or before 30 June 2009; or
b: issued after 30 June 2009, if––
i: issued on the same substantial and material terms, conditions, and bonus entitlements as profit participation policies that the life insurer issued on or before 30 June 2009, ignoring any annual increase in life insurance cover that is less than 10% or less than annual percentage change in the consumer price index:
ii: issued as the result of conversion rights in a policy issued on or before 30 June 2009. Defined in this Act: actuarially determined, amount, best estimate assumptions, claim, existing business, income year, life insurance, life insurance policy, life insurer, life reinsurance, premium, present value (net), profit participation policy
EY 29: Shareholder base other profit: profit participation policies that are new business
Calculation of income
1: For an income year, a life insurer has an amount, for profit participation policies that are new business, that is calculated using the formula— other profit × gate – previous negative amount. (1 + gate) Definition of items in formula
2: In the formula in subsection (1),—
a: other profit
b: gate profit participation policy
c: previous negative amount Formula: negative amounts and positive amounts
3: If, for an income year, the formula in subsection (1) calculates a positive amount, that amount is included as income in the life insurer’s shareholder base income. If it is a negative amount, then that amount is not included as a deduction in the life insurer’s shareholder base allowable deductions, but see Negative amounts: carry forward
4: The amount by which the amount calculated using the formula in subsection (1) is less than zero is carried forward to the next income year, to be used under this section in the formula as the item previous negative amount Other profit
5: For the purposes of the item other profit current year (premiums − premiums estimate) − (claims − claims estimate) Definition of items in formula
6: In the formula in subsection (5),—
a: premiums
b: premiums estimate
c: claims
d: claims estimate
e: closing policy liabilities
f: estimated closing policy liabilities Meaning of valuation premiums
7: In this section, valuation premiums Meaning of policy liabilities
8: In this section, policy liabilities Basis of best estimate assumptions in actuarially determining items
9: The same best estimate assumptions must be used for actuarially determining the items premiums estimate claims estimate, policy liabilities Meaning of new business
10: For the purposes of this section, new business Defined in this Act: actuarially determined, amount, best estimate assumptions, claim, existing business, income year, life insurance policy, life insurer, life reinsurance, new business, premium, present value (net), profit participation policy, valuation premiums Transitional adjustments and annuities
EY 30: Transitional adjustments: life risk
When this section applies: treatment of old and new policies
1: This section applies to life insurance policies described in subsections (2) to (4). For the purposes of this section, a policy (the new policy old policy
a: reinstating the old policy due to a lapse by the insured in premium payments, if the new policy comes into force within 90 days of the lapse, and the life insurer treats the new policy and old policy the same; or
b: the life insurer being sold, or the life insurer selling its rights and obligations under the old policy. Life insurance policies
2: This section applies to a life insurance policy, excluding an annuity, a group life master policy, credit card repayment insurance, and an employer sponsored group policy, if the policy is issued by the life insurer before the grandparenting start day or if the life insurer receives an application and a deposit in money before the grandparenting start day for the policy which is issued after that day, and––
a: the life insurer has no policyholder base income or policyholder base allowable deduction for the policy; and
b: the policy meets the relevant requirements for the relevant period described in subsection (5)(a) to (c); and
c: the amount of life insurance cover does not increase for a cover review period that is wholly or partly in the relevant income year by more than the greater of––
i: 10% of the insurance cover at the beginning of the cover review period; and
ii: the percentage change in consumer price index for the cover review period. Group life master policies
3: This section applies to a group life master policy, if the policy is issued by the life insurer before the grandparenting start day or if the life insurer receives an application and a deposit in money before the grandparenting start day for the policy which is issued after that day, and––
a: the life insurer has no policyholder base income or policyholder base allowable deduction for the policy; and
b: the policy meets the requirements for the period described in subsection (5)(c), or, looking through to the individual lives covered, to the extent to which the policy meets the requirements of subsection (5)(a); and
c: to the extent to which, looking through to the individual lives covered, the cover was first in place before the grandparenting start day; and
d: the substantial and material terms and conditions of the policy do not change on or after the grandparenting start day; and
e: the amount of life insurance cover, looking through to the individual lives covered, does not increase for a cover review period that is wholly or partly in the relevant income year by more than the greater of––
i: 10% of the life insurance cover at the beginning of the cover review period; and
ii: the percentage change in consumer price index for the cover review period. Credit card repayment insurance and employer sponsored group policies
4: This section applies to a credit card repayment insurance and to an employer sponsored group policy, if the policy is issued by the life insurer before the grandparenting start day or if the life insurer receives an application and a deposit in money before the grandparenting start day, and––
a: the life insurer has no policyholder base income or policyholder base allowable deduction for the policy; and
b: the policy meets the requirements for the period described in subsection (5)(c); and
c: to the extent to which, looking through to the individual lives covered, the cover was first in place before the grandparenting start day, if the policy is an employer sponsored group policy; and
d: the substantial and material terms and conditions of the policy do not change on or after the grandparenting start day. Requirements and periods for which this section applies
5: For the purposes of subsections (2)(b), (3)(b), and (4)(b), this section applies to a policy to the extent to which, for the following relevant period, it is described by the following relevant requirements:
a: for a life insurance policy for which only 1 premium is ever payable, or for which the amount of each premium is the same, the period that––
i: starts on the grandparenting start day; and
ii: finishes on the day that the policy ceases to be in force:
b: for a life insurance policy for which the premium is set for a continuous period beginning before the grandparenting start day and the premium does not go up in the period (the continuous rate period
i: the day that is the last day of the continuous rate period:
ii: whichever day described in paragraph (c)(i) and (ii) is earlier:
c: for a life insurance policy for which the premium may vary each year, the period that starts on the grandparenting start day and ends on the earlier of the following:
i: the day that the policy expires:
ii: the day that is before the 5 years anniversary of the grandparenting start day. When this section does not apply: once-only opt out
6: This section does not apply to a class of policies after the life insurer irrevocably chooses in a notice received by the Commissioner that this section does not apply for the class. Adjustment
7: For the income year, a life insurer has an amount of shareholder base allowable deduction calculated for a class of policies using the formula–– premiums − total net reserving amounts Definition of items in formula
8: In the formula,—
a: premiums
b: total net reserving amounts sections EY 24 to EY 27
c: expected death strain Negative amounts
9: If subsection (7) gives a negative amount for a policy, it is ignored for that policy. Meaning of cover review period
10: Cover review period
a: the relevant income year, if the life insurer has not chosen a different period under paragraph (b):
b: a period of a year that has a starting and anniversary date that the life insurer irrevocably chooses, for a class of policies, in a return of income for the tax year corresponding to the income year in which the grandparenting start day is included. Meaning of credit card repayment insurance
11: Credit card repayment insurance
a: the group of individuals is identified in the policy and the general public are excluded; and
b: the benefits of the cover are for the repayment of an outstanding debt balance of a credit card. Meaning of employer sponsored group policies
12: Employer sponsored group policy
a: the group of individuals is identified in the policy as employees and the general public are excluded; and
b: the benefits of the cover are determined by a calculation that is based on age, salary or wages, or employee seniority. Meaning of grandparenting start day
13: Grandparenting start day
a: 1 July 2010, if paragraph (b) does not apply:
b: a life insurer's early life regime application day, if the life insurer irrevocably chooses that day as their grandparenting start day. Meaning of group life master policies
14: Group life master policy Defined in this Act: amount, Commissioner, cover review period, credit card repayment insurance, class of policies, early life regime application day, employer sponsored group policy, grandparenting start day, group life master policy, income year, life insurance, life insurer, life reinsurance, policyholder base allowable deduction, policyholder base income, shareholder base allowable deduction, shareholder base income
EY 31: Annuities
When this section applies
1: This section applies when a life insurance policy is an annuity. Adjustment
2: For the income year, a life insurer has an amount calculated for the relevant annuities using the formula— closing actuarial reserves − (0.99 × expected death strain). Definition of items in formula
3: In the formula,—
a: closing actuarial reserves
b: expected death strain Positive and negative amounts
4: If the formula in subsection (2) gives a positive amount, the life insurer has that amount as income included in their shareholder base income. If the formula in subsection (2) gives a negative amount, the life insurer has that amount as a deduction included in their shareholder base allowable deductions. Defined in this Act: amount, income year, life insurer, life insurance policy, shareholder base allowable deduction, shareholder base income .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
191: Policyholder income formula: FDR adjustment
1: Section EY 43B
a: property is an attributing interest in a FIF held by a life insurer or by a multi-rate PIE that the life insurer has invested in, directly or indirectly; and
b: the life insurer or the multi-rate PIE uses the fair dividend rate method for the property; and .
2: Section EY 43B When has life insurer indirectly invested in multi-rate PIE?
2: For the purposes of subsection (1), a life insurer is treated as investing indirectly in a multi-rate PIE ( PIE A
3: In section EY 43B
a: portfolio investment-linked life fund
b: multi-rate PIE PIE
4: Subsections (1) and (2) apply for the 2010–11 income year.
192: Policyholder income formula: PILF adjustment
1: In section EY 43C(1)
1: This section applies for the purposes of section EY 42(5C) to property that supports only actuarial reserves for a life fund PIE to the extent to which the property is—
a: an attributing interest in a FIF—
i: held by a life insurer or a multi-rate PIE that the life insurer has invested in directly or indirectly; and
ii: for which the life insurer or multi-rate PIE uses the fair dividend rate method: .
2: Section EY 43C(2) When has life insurer invested directly in multi-rate PIE?
2: For the purposes of subsection (1), a life insurer is treated as investing directly in a multi-rate PIE ( PIE A
3: Section EY 43C(3)(b)(ii)
ii: dividends or distributions for shares described in subsection (1)(b) other than a distribution from a multi-rate PIE to which section CX 56B
4: Section EY 43C(9)(c)(ii)
ii: dividends and distributions for the shares, other than distributions from a multi-rate PIE to which section CX 56B
5: In section EY 43C
a: portfolio investment-linked life fund
b: life fund PIE multi-rate PIE PIE
6: Subsections (1) to (4) apply for the 2010–11 income year.
193: Non-resident life insurers with life insurance policies in New Zealand
1: Section EY 48(3) Shareholder base and policyholder base
3: The life insurer's income and deductions are apportioned between their policyholder base or shareholder base under the provisions of this subpart to the extent to which the income or deductions relate to—
a: life insurance policies that the life insurer, as insurer, offered or was offered or entered into in New Zealand:
b: life reinsurance policies held by the life insurer that relate exclusively to life insurance policies described in paragraph (a).
2: In section EY 48(4) other than under a formula referred to in subsection (3) other than under the provisions of this subpart
3: Subsections (1) and (2) apply––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
194: Deductions for disposal of property: 1982–83 and 1989–90 income years
1: In the heading to section EZ 2(1) Section EY 47(2)(b) Deduction
2: In section EZ 2(1) section EY 47(2)(b) (Deductions for disposal of property) this Act
3: In the heading to section EZ 2(2) Section EY 47(2)(c) Deduction
4: In section EZ 2(2) section EY 47(2)(c) this Act
5: Subsections (1) to (4)
a: on and after 1 July 2010, unless paragraph (b)
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
195: Section EZ 31 repealed
1: Section EZ 31
2: Subsection (1)
196: Section EZ 32B repealed
Section EZ 32B
197: Income and expenditure where financial arrangement redeemed or disposed of
1: In section EZ 38(6)(a)(iii) section EZ 41(8)(c)(ii) subsection (8)(c)(ii)
2: Subsection (1) applies for the 2008–09 and later income years.
198: New section EZ 52B added
After section EZ 52
EZ 52B: Consistency of use of IFRS method:
Determination G3 When this section applies
1: This section applies to a financial arrangement of a person—
a: for the 2009–10 income year, unless paragraph (b) or (c)
b: for the 2008–09 or the 2009–10 income year (a retrospective year
i: the financial arrangement is subject to a creditor workout in a retrospective year; and
ii: the person notifies the Commissioner in writing of their election to apply this section to the financial arrangement for a retrospective year:
c: for an income year after the 2009–10 income year, if—
i: the financial arrangement is subject to a creditor workout in the relevant income year; and
ii: the person notifies the Commissioner in writing of their election to apply this section to the financial arrangement for the relevant income year before the last day for filing a return of income for that income year. Exception modified
2: For the purposes of the exception in section EW 25B(2) (Consistency of use of IFRS method), the person may change a method for IFRS for the financial arrangement if—
a: the method they change to or from is Determination G3 section EW 15E(2)(aa)
b: that method is available to them to use. Defined in this Act: creditor workout, financial arrangement, IFRS, income year .
199: New headings and sections EZ 53 to EZ 62 added
1: After section EZ 52B, the following is added: Life insurance transitional adjustment: expected death strain Expected death strain formulas
EZ 53: How expected death strain is calculated
Calculation of expected death strain: steps
1: For an income year, the life insurer calculates their expected death strain by following these steps:
a: first, use the relevant expected death strain formula to calculate an amount for each life insured under each life insurance policy existing at the start of the income year ( see:
b: second, for each such life insurance policy, add together the amounts for the lives insured under it:
c: third, add together the totals reached under paragraph (b). Expected death strain formula (life)
2: Section EZ 54(1) sets out the expected death strain formula (life). This is the formula a life insurer uses for an income year, to calculate an amount for a life insured under a life insurance policy, except to the extent to which an annuity is being paid under the policy at some time in the income year. Expected death strain formula (active annuities)
3: Section EZ 54(2) sets out the expected death strain formula (active annuities). This is the formula a life insurer uses for an income year, to calculate an amount for a life insured under a life insurance policy, to the extent to which an annuity is being paid under the policy at some time in the income year. Defined in this Act: business, income year, life insurance, life insurance policy, life insured, life insurer, pay
EZ 54: Expected death strain formulas
Expected death strain formula (life)
1: The expected death strain formula (life) is— claim probability × (opening sum assured Expected death strain formula (active annuities)
2: The expected death strain formula (active annuities) is— claim probability × opening actuarial reserves. Definition of items in formulas
3: The items in the formulas are defined in subsections (4) to (6). Claim probability
4: Claim probability claim probability Opening sum assured
5: Opening sum assured opening sum assured Opening actuarial reserves
6: Opening actuarial reserves Defined in this Act: actuarial reserves, amount, claim, income year, life insured, life insurer, pay
EZ 55: Expected death strain formulas: option when more than 1 life insured
When this section applies
1: This section applies when a life insurance policy covers more than 1 life insured. Claim probability
2: In using the relevant expected death strain formula, the life insurer may use as claim probability Features of common factor
3: The common factor must be a reasonable approximation of the average probability of a claim arising under the policy for each life insured’s death in the income year. It must be weighted as necessary to take account of—
a: differing claims for individual lives insured under the policy; and
b: differing amounts in the life insurer’s actuarial reserves for individual lives insured under the policy. Defined in this Act: actuarial reserves, amount, claim, income year, life insurance policy, life insured, life insurer
EZ 56: Expected death strain formula (life): when annuity payable on death
When this section applies
1: This section applies when, and to the extent to which, a life insurance policy provides for the payment of an annuity the start of which is contingent on the life insured’s death. Opening sum assured
2: In using the expected death strain formula (life), the life insurer uses as opening sum assured
a: at the start of the income year; and
b: on the assumption that the life insured died at the start of the income year; and
c: using the same assumptions and bases of calculation as are used to calculate the life insurer’s actuarial reserves for the income year. Defined in this Act: actuarial reserves, income year, life insurance policy, life insured, life insurer, payment, present value (net)
EZ 57: Expected death strain formulas: when annuity payable on survival to date or age specified in policy
When this section applies
1: This section applies when, and to the extent to which, a life insurance policy provides for the payment of an annuity the start of which is contingent on the life insured’s survival to the relevant date or age specified in the policy. Claim probability
2: In using the relevant expected death strain formula, the life insurer must use claim probability Opening sum assured
3: In using the expected death strain formula (life), the life insurer must use as opening sum assured
a: at the relevant date or age specified in the policy; and
b: on the assumption that the life insured survived to the date or age; and
c: using the same assumptions and bases of calculation as are used to calculate the life insurer’s actuarial reserves for the income year. Defined in this Act: actuarial reserves, income year, life insurance policy, life insured, life insurer, pay, payment, present value (net)
EZ 58: Expected death strain formula (life): when partial reinsurance exists
When this section applies
1: This section applies when a life insurer has partial life reinsurance. Opening sum assured
2: In using the expected death strain formula (life), the life insurer must reduce opening sum assured Defined in this Act: claim, life insurance policy, life insured, life insurer, life reinsurance policy, partial reinsurance Actuarial reserves
EZ 59: Meaning of actuarial reserves
Actuarial reserves generally
1: For the purposes of sections EZ 53 to EZ 58, actuarial reserves Closing actuarial reserves for annuities
2: For the purposes of the item closing actuarial reserves section EY 31(3) closing actuarial reserves (active annuities) section EY 31 closing actuarial reserves (active annuities) Link between actuarial reserves and life insurer
3: Actuarial reserves, for a life insurer at any time, means the life insurer’s actuarial reserves at that time. Defined in this Act: actuarial reserves, life insurance policy, life insurer
EZ 60: Actuarial reserves: calculation
Calculation by actuary
1: The life insurer’s actuarial reserves must be actuarially determined. All reserves or 1 or more amounts
2: The actuary may calculate—
a: the actuarial reserves for all the life insurance policies for which the life insurer is the insurer; or
b: the amount in the life insurer’s actuarial reserves for 1 or more life insurance policies for which the life insurer is the insurer. Interest, mortality, and other assumptions and bases of calculation
3: The actuary must do the calculation using interest, mortality, and other assumptions and bases of calculation that—
a: are based on the same principles as those used in the actuarial advice on which the following are calculated:
i: the level of surplus funds available to the life insurer for allotment or payment to shareholders or policyholders; or
ii: the level of surplus funds available to the life insurer, if a superannuation scheme, for allotment to objects of the scheme other than the object of providing for members’ benefits; and
b: are likely to produce a reasonable estimation of the future experience of the life insurer in relation to life insurance policies of which the life insurer is the insurer, having regard to the past experience of the life insurer in relation to life insurance policies of which the life insurer was the insurer; and
c: conform with commercially acceptable practice. Reserves for policy never negative
4: The amount in the actuarial reserves for a life insurance policy must never be negative. Reserves for all policies never less than total of surrender values
5: The actuarial reserves at any time must not be less than the total of the surrender values of all the life insurance policies they cover at that time. Reserves for policies same at end of one, and start of next, income year
6: The amount in the actuarial reserves for life insurance policies at the start of an income year is the same as the amount in the actuarial reserves for the life insurance policies at the end of the previous income year. Effect of partial reinsurance
7: The actuarial reserves of a life insurer who has partial life reinsurance must be reduced by an amount that the actuary responsible for actuarial control of the life insurer considers appropriate having regard to the nature of the life reinsurance policies. Defined in this Act: actuarial reserves, actuary, amount, income year, life insurance policy, life insurer, life reinsurance policy, partial reinsurance, payment, shareholder, superannuation scheme Entry to new life insurance regime: transitional and miscellaneous provisions
EZ 61: Allowance for cancelled amount: spreading
Policyholder base allowable deduction
1: For an income year that includes 1 July 2010 and later income years, a life insurer may choose, by a notice received by the Commissioner on or before the last day for furnishing a return of income for the relevant income year or within such further time as the Commissioner may allow, that an amount (the deduction amount
a: the life insurer has no taxable income, other than in relation to its policyholder base, for the tax year corresponding to the income year, and no taxable income, other than in relation to its policyholder base, for every earlier tax year going back to, and including, the tax year that corresponds with the income year that includes 1 July 2010; and
b: the deduction amount is stated in the notice and it is equal to or less than the least of the following:
i: the available tax loss for the tax year that corresponds with the income year, before applying this section; and
ii: the available concession amount for the income year, described in subsection (2); and
iii: the amount that would be the life insurer's schedular policyholder base income for the income year, before applying this section for the year. Available concession amount
2: For the purposes of subsection (1), the available concession amount for the income year is a positive amount calculated using the formula— base concession amount − used. Definition of items in formula
3: In the formula,—
a: base concession amount
i: the cancelled amount described in section IT 1 (Cancellation of life insurer's policyholder net losses); and
ii: the amount of available tax loss for the tax year that corresponds with the income year that includes 1 July 2010, before applying this section for the year:
b: used Defined in this Act: amount, Commissioner, income year, life insurer, net loss, policyholder base, policyholder base allowable deduction, return of income, schedular policyholder base income, tax loss, tax year, taxable income
EZ 62: Reinsurance transition: life financial reinsurance may be life reinsurance
1: If a life contract that is entered into before a life insurer's reinsurance grandparenting start day would be a contract for life financial reinsurance but for this section, then it is treated as life reinsurance, instead of life financial reinsurance, for the period starting on the reinsurance grandparenting start day, and ending on the earlier of,––
a: the last day of the term of the contract, as that term is stated in the contract before the reinsurance grandparenting start day; and
b: the day 5 years after the reinsurance grandparenting start day. Meaning of reinsurance grandparenting start day
2: Reinsurance grandparenting start day
a: 1 July 2010, if the life insurer does not have an early life regime application day; or
b: a life insurer's early life regime application day, if the life insurer has an early life regime application day. Defined in this Act: early life regime application day, income year, life financial reinsurance, life insurer, life reinsurance, reinsurance grandparenting start day .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
200: New section EZ 63 inserted
Before the heading to Part F
EZ 63: Disposal and acquisition upon entry
When this section applies
1: This section applies for a life insurer immediately before a day (the application day
a: 1 July 2010, if the life insurer does not have an early life regime application day; or
b: their early life regime application day, if the life insurer does have an early life regime application day. Disposal and acquisition upon entry
2: Immediately before the application day, all of the property of a life insurer that supports actuarial reserves for the purposes of the policyholder income formula in section EY 43 (Policyholder income formula) is treated as disposed of, for market value  consideration,  to  a  third  person,  and  immediately re-acquired from that person for the same consideration. Exclusion
3: Property that is an interest in a PIE that is not a listed PIE is excluded from the disposal and re-acquisition described in subsection (2). Defined in this Act: actuarial reserves, amount, dispose, early life regime application day, income year, life insurer, listed PIE, market value, PIE, portfolio-listed company .
201: Recharacterisation of certain debentures
1: Section FA 2(3)
2: Section FA 2(4)
4: A profit-related debenture
a: means a debenture with a rate of interest that is set from time to time by reference to—
i: the dividend payable by the company issuing the debenture; or
ii: the profits of the company issuing the debenture, however measured:
b: does not include a debenture under which the interest payable is determined by a fixed relationship to—
i: banking rates; or
ii: general commercial rates; or
iii: economic, commodity, industrial, or financial indices, but the application of this subparagraph is subject to section FZ 1(3) (Treatment of interest payable under debentures issued before certain date).
3: In section FA 2(4)(b)(iii) date). date):
c: does not include a debenture treated as a share under section FA 2B (Stapled debt securities).
4: Section FA 2(5)
5: Substituting debenture
a: means a debenture issued by a company to a shareholder or class of shareholders of the company when the amount of the debenture is determined by reference to 1 or more of the following aspects of the shares in the company or another company held by the shareholder or class of shareholder at the time the debenture is issued or at an earlier time:
i: the number of shares:
ii: the available subscribed capital of the relevant company calculated under the slice rule set out in section CD 23 (Ordering rule and slice rule):
iii: some other reference to the shares:
b: includes a debenture issued to a shareholder or a class of shareholder when the amount of the debenture is determined by reference to 1 or more aspects of the shares as described in paragraph (a) held by the shareholder in a company other than that issuing the debenture, whether or not the company is being, or has been, liquidated:
c: does not include a debenture that is a convertible note.
5: In section FA 2(5)(c) note. note:
d: does not include a debenture treated as a share under section FA 2B.
6: Section FA 2(6)
7: Section FA 2(7)
7: For the purposes of subsection (5), the amount of the debenture means the principal sum secured by or owing under the debenture.
202: New section FA 2B inserted
1: After section FA 2
FA 2B: Stapled debt securities
When subsection (2) applies
1: Subsection (2) applies when—
a: a company has issued a debt security; and
b: the debt security is stapled to a share in the company or to a share in another company; and
c: the share is not a fixed-rate share. Stapled debt treated as equity
2: The stapled debt security is treated as a share issued by the company and—
a: interest payable under the stapled debt security is treated as a dividend; and
b: section DB 10B (Interest or expenditure connected to stapled debt security) may deny deductions for expenditure or loss related to the security. Stapled securities aggregated
3: A stapled debt security and a share to which it is stapled are treated as a single share for the purposes of applying—
a: the definition of non-participating redeemable share
b: the definition of fixed-rate share
c: the definitions, in section YA 1 (Definitions), of—
i: fixed-rate foreign equity
ii: fixed-rate share Meaning of debt security
4: In this section, debt security
a: the financial arrangement provides funds to the company; and
b: the financial arrangement gives rise to an amount for which the company would have a deduction but for this section; and
c: the amount does not arise only from either a movement in a currency exchange rate or a non-contingent fee. Meaning of stapled
5: In this section, a debt security is stapled
a: the debt security can, or ordinarily can, be disposed of only together with the share; and
b: the arrangement that requires the debt security and the share to be disposed of together is an arrangement to which the company that issued the debt security or the company that issued the share is a party. Exclusion: small company shareholder agreements
6: This section does not apply if the debt security is stapled to the share using a shareholder agreement for a company that is not a widely-held company. Exclusion: stapling before 25 February 2008
7: This section does not apply if the debt security was stapled to the share before 25 February 2008. Defined in this Act: amount, associated person, company, debt security, deduction, dividend, financial arrangement, fixed-rate share, interest, non-contingent fee, share, shareholder agreement, stapled, widely-held company .
2: Section FA 2B(3)(b) is repealed.
3: Subsection (1) applies if a debt security is stapled to a share on or after 25 February 2008.
4: Subsection (2) applies for all income years beginning on or after 1 July 2009.
203: Financial arrangements rules
1: Section FB 9 “The financial arrangements rules do not apply to a financial arrangement transferred on a settlement of relationship property if the financial arrangement meets the criteria set out in section EW 10(6) (Financial arrangements to which financial arrangements rules apply). For the application of the old financial arrangements rules, see
2: Subsection (1) applies for the 2008–09 and later income years.
204: Transfer at market value
Section FC 2(2)
2: For property referred to in section FC 1(1)(a), the disposal and acquisition is treated as occurring immediately before the death of the person.
205: Property transferred to charities or to close relatives and others
1: Section FC 4(1)
1: This section applies in the circumstances described in section FC 1(1)(a) or (b) when tax-base property is transferred on a person's death when the only beneficiaries of the deceased person are—
a: a close relative of the deceased person:
b: a person exempt under section CW 43 (Charitable bequests).
2: Section FC 4(1)
1: This section applies in the circumstances described in section FC 1(1)(b) when tax-base property is transferred on a person's death when the only beneficiaries of the deceased person are—
a: a close relative of the deceased person:
b: a person exempt under section CW 43 (Charitable bequests).
3: In section FC 4(2) The transfer, including any intervening transfer to an executor or administrator, is treated The transfer is treated
4: In section FC 4 tax base property tax-base property
5: Subsection (1) applies for the 2008–09 and later income years.
206: What this subpart does
1: Section FE 1(1)(a)(i)
i: is controlled by a single non-resident, or is a New Zealand resident (an outbound entity .
2: In section FE 1 CFC income interest
3: Subsection (1)
207: When this subpart applies
1: In section FE 2(1)(d) trust. trust:
e: a company that is resident in New Zealand and has an income interest in a CFC:
f: a company that is resident in New Zealand and has—
i: an ownership interest in a company described in paragraph (e) of 50% or more:
ii: control of a company described in paragraph (e) by any other means:
g: a natural person, or a trustee of a trust settled by a New Zealand resident, if the natural person or trustee is resident in New Zealand and has––
i: an income interest in a CFC:
ii: an ownership interest in a company described in paragraph (e) or (f) of 50% or more:
iii: control of a company described in paragraph (e) or (f) by any other means.
2: In section FE 2 CFC income interest
3: Subsection (1)
208: Section FE 3 replaced
1: Section FE 3
FE 3: Interest apportionment for individuals
Natural persons and trustees: inbound, not described in section FE 2(1)(g)
1: This subpart applies to a natural person or trustee not described in section FE 2(1)(g) with the following modifications:
a: the New Zealand group of the natural person or trustee is made up of the natural person or trustee and all associated persons who––
i: are resident in New Zealand; or
ii: are carrying on business in New Zealand through a fixed establishment in New Zealand; or
iii: derive income that has a source in New Zealand and for which relief from New Zealand tax under a double tax agreement is unavailable:
b: the worldwide group of the trustee is made up of the trustee and––
i: the trustee's New Zealand group; and
ii: all non-residents who are associated with the trustee or a member of the trustee's New Zealand group:
c: in the calculation of the amount of the natural person's total assets, private and domestic assets are excluded. Natural persons and trustees: outbound, described in section FE 2(1)(g)
2: This subpart applies to a natural person or trustee described in section FE 2(1)(g) with the following modifications:
a: the New Zealand group of the natural person or trustee is made up of the natural person or trustee and all associated persons who are not excess debt outbound companies and are not included in a New Zealand group of an excess debt outbound company, and who––
i: are resident in New Zealand; or
ii: are carrying on business in New Zealand through a fixed establishment in New Zealand; or
iii: derive income that has a source in New Zealand and for which relief from New Zealand tax under a double tax agreement is unavailable:
b: the worldwide group of the trustee is made up of the trustee and––
i: the trustee's New Zealand group; and
ii: all CFCs in which the trustee or a member of the trustee's New Zealand group has an income interest:
c: in the calculation of the amount of the natural person's total assets, private and domestic assets are excluded. Defined in this Act: amount, associated person, business, CFC, double tax agreement, fixed establishment, generally accepted accounting practice, group of companies, income interest, natural person, New Zealand, resident in New Zealand, source in New Zealand, total group assets, total group debt, trustee .
2: Subsection (1)
209: Some definitions
1: In section FE 4 excess debt entity excess debt outbound company .
2: In section FE 4 reporting bank reporting bank
a: meets the requirements of section FE 2; and
b: is the person determined under section FE 37.
3: In section FE 4 registered bank
4: Subsection (1)
5: Subsection (2) applies for the 2008–09 and later income years.
210: Thresholds for application of interest apportionment rules
1: After section FE 5(1) Exceptions for excess debt outbound companies
1B: Despite subsection (1), an excess debt outbound company and a natural person or trustee who is described in section FE 2(1)(g) do not have to apportion interest expenditure for an income year under section FE 6 if, for the income year,—
a: the ratio of the total group assets measured under section FE 16 for its New Zealand group to the total group assets measured under section FE 18 for its worldwide group is 90% or greater:
b: its New Zealand group—
i: has a total amount of deductions for interest allowed under sections DB 6 to DB 8 (which relate to deductions for interest) to the group, less the total deductions allowed in relation to interest payable intra-group, that is not greater than $250,000; and
ii: does not include an entity with an income interest in a CFC, and the CFC derives rent from land in the country or territory in which the CFC is resident. Natural persons' worldwide group total assets
1C: For the purposes of subsection (1B)(a), the total group assets of a natural person's worldwide group under section FE 18 are measured on the basis that the natural person is an excess debt entity that has a worldwide group made up of––
a: the natural person; and
b: the natural person's New Zealand group; and
c: all CFCs in which the natural person or a member of the natural person's New Zealand group has an income interest.
2: In section FE 5 CFC excess debt outbound company income interest total group assets
3: Subsection (1)
211: Apportionment of interest by excess debt entity
1: Section FE 6(1) Who this section applies to
1: This section applies to an excess debt entity or a natural person if section FE 5 requires the entity or person to apportion their interest expenditure for an income year under this section. A natural person is treated as an excess debt entity for the purposes of this section other than in the item threshold amount
2: In section FE 6(2) total deduction (total deduction + FRD – adjust)
3: In section FE 6(3)(a) sections DB 6 to DB 8 sections DB 6 to DB 8 (which relate to deductions for interest expenditure)
4: After section FE 6(3)(a)
ab: FRD
i: issued by the entity; and
ii: held by a person resident in New Zealand who is not a company that is a member of the entity's New Zealand group:
ac: adjust
i: zero, if the excess debt entity is not an excess debt outbound company or a natural person or trustee described in section FE 2(1)(g); or
ii: the total amount of the items total deduction FRD finance cost
iii: the amount by which $2,000,000 exceeds the finance cost, if the finance cost is more than $1,000,000 and less than $2,000,000 and subparagraph (i) does not apply; or
iv: zero, if the finance cost is $2,000,000 or more and subparagraph (i) does not apply: .
5: In section FE 6 fixed-rate foreign equity fixed-rate share
6: Subsection (3) applies for the 2008–09 and later income years.
7: Subsections (1), (2), and (4)
212: Calculation of debt percentages
1: In section FE 12(1) A natural person must calculate their debt percentage under the rules set out in sections FE 13 to FE 16 and FE 18.
2: In section FE 12(2) or natural person
3: Section FE 12(5) Membership of company’s worldwide group
5: For an excess debt entity that is a company, the worldwide group is made up of all companies included as members of the worldwide group under––
a: sections FE 31 and FE 32, for an excess debt entity that is not an excess debt outbound company:
b: sections FE 31B to FE 32, for an excess debt outbound company.
4: Section FE 12(6) Natural persons: membership of New Zealand groups
6: For a natural person, the membership of the New Zealand group is determined as described in section FE 3(1) and (2), as applicable. Trustees: membership of New Zealand and worldwide groups
7: For a trustee, the memberships of the New Zealand group and the worldwide group are determined as described in section FE 3(1) and (2), as applicable.
5: In section FE 12, in the list of defined terms, excess debt outbound company
6: Subsections (1) to (4)
213: Financial arrangements entered into with persons outside group
1: Section FE 13(1)
1: This section applies when a natural person, a member of a natural person's New Zealand group, an excess debt entity, or a member of an entity's New Zealand group or worldwide group, enters into a financial arrangement with another person ( person A
a: provides funds to person A; and
b: would otherwise be included in the calculation of the debt percentage of the natural person, excess debt entity, New Zealand group, or worldwide group.
2: In section FE 13(2) and a worldwide group New Zealand group
3: Section FE 13(3)(a)
a: a non-resident who is not carrying on business through a fixed establishment in New Zealand and who—
i: does not derive income that has a source in New Zealand:
ii: does derive income that has a source in New Zealand and, for all of that income, relief from New Zealand tax under a double tax agreement is available; or .
4: In section FE 13 double tax agreement source in New Zealand
5: Subsection (3)
214: Consolidation of debts and assets
1: Section FE 14(2) and (3) Natural persons' and trustees' calculation
2: For a natural person and an excess debt entity that is a trustee, the debt percentage of a New Zealand group is calculated under generally accepted accounting practice for the consolidation of companies for the purposes of eliminating intra-group balances by consolidating the debts and assets for the group. When member not resident
3: If a member of a New Zealand group is not resident in New Zealand, the assets and debts of the member are included in a consolidation only to the extent to which the assets and debts are for the group member to—
a: carry on business in New Zealand through a fixed establishment in New Zealand:
b: derive income that has a source in New Zealand and for which relief from New Zealand tax under a double tax agreement is unavailable.
2: In section FE 14 double tax agreement source in New Zealand
3: Subsection (1)
215: Total group debt
1: Section FE 15(1)(b)
b: the financial arrangement—
i: gives rise to an amount for which the natural person, the entity, or another member of the group, would have a deduction:
ii: is a stapled debt security that is held by a person resident in New Zealand and is stapled to shares other than shares of a company that is a proportional-stapling company.
2: Section FE 15(1) and (2) Meaning
1: In this subpart, for a New Zealand group, total group debt
a: financial arrangements entered into by a natural person, or an excess debt entity, or another member of the New Zealand group, if the financial arrangement—
i: provides funds to the natural person, the entity, or another member of the group; and
ii: gives rise to an amount for which the natural person, the entity, or another member of the group, would have a deduction:
b: fixed-rate foreign equity or fixed-rate shares that are—
i: issued by the entity or another member of the New Zealand group; and
ii: held by a person resident in New Zealand:
c: stapled debt securities—
i: issued by the entity or another member of the New Zealand group; and
ii: held by a person resident in New Zealand; and
iii: stapled to shares other than shares of a company that is a proportional-stapling company. Exchange rate fluctuations
2: Subsection (1)(a)(ii) does not include a deduction for an amount that arises only from movement in currency exchange rates.
3: In section FE 15 proportional-stapling company resident in New Zealand stapled stapled debt security
4: In section FE 15 fixed-rate foreign equity
5: Subsection (2)
216: Total group assets
1: After section FE 16(1) CFC investments excluded
1B: If the excess debt entity or another member of the New Zealand group has an investment in a CFC in which the entity or member has an income interest, the value of the total group assets calculated and measured under this section does not include the value of the investment, except––
a: to the extent to which—
i: the value of the investment represents the outstanding balances of financial arrangements to which section FE 13 applies:
ii: the CFC derives income with a source in New Zealand and for which relief from New Zealand tax under a double tax agreement is unavailable:
b: that the value of the total group assets is treated as being $1 if the value would otherwise be zero as a result of this subsection. When member not resident
1C: If the excess debt entity or another member of a New Zealand group is not resident in New Zealand, the assets of the entity or member are included in the calculation and measurement of total group assets under this section only to the extent to which the assets are for the entity or member to—
a: carry on business in New Zealand through a fixed establishment in New Zealand:
b: derive income that has a source in New Zealand and for which relief from New Zealand tax under a double tax agreement is unavailable.
2: In section FE 16 CFC double tax agreement income interest source in New Zealand
3: Subsection (1)
217: Measurement of debts and assets of worldwide group
1: In section FE 18(1)
1: The amount of total group debt and the amount of total group assets of the worldwide group of an excess debt entity is calculated— .
2: Section FE 18(2) and (3) Date of measurement
2: The amount of total group debt and the amount of total group assets of the worldwide group of an excess debt entity for an income year are measured using—
a: the average amount at the end of each day of the income year; or
b: the average amount at the end of each 3-month period in the income year; or
c: the amount as at the worldwide group’s balance date that immediately precedes the income year. Measurement of amounts
3: Despite subsection (1), an excess debt entity must measure the amount of total group debt by applying section FE 15 as if it referred to a deduction that would be allowed if the entity, or another group member, were resident in New Zealand.
3: In section FE 18(4) If an excess debt entity is unable to calculate the debt percentage of their worldwide group for an income year, they may ask the Commissioner to estimate the percentage under this subpart.
4: In section FE 18(5)
5: The debt percentage of the worldwide group of an excess debt entity is treated as 68.1818% in the following cases:
a: the entity is unable to calculate the percentage and does not ask the Commissioner to make an estimate under subsection (4): .
5: In section FE 18 natural person
6: Subsections (1) to (4)
218: Banking group's New Zealand net equity
1: Section FE 21(3)(d)(ii)
ii: that is made by a non-resident who is not a member of the New Zealand banking group or associated with a member of the group under the parts of subpart YB (Associated persons and nominees) that apply for the purposes of the whole Act (excluding the 1973, 1988, and 1990 version provisions) or the 1988 version provisions; and .
2: Section FE 21(3)(d)(ii)
ii: that is made by a non-resident who is not a member of the New Zealand banking group or associated with a member of the group; and .
3: In section FE 21(4)
4: Adjustment 1 .
4: After section FE 21(4) Stapled debt securities
4B: Adjustment 1A
a: owned by a person resident in New Zealand; and
b: included in equity value under subsection (3); and
c: stapled to shares other than shares of a company that is a proportional-stapling company.
5: Section FE 21(7)(a)(i) and (ii)
i: acquired from a person who, at the time of acquisition, is not associated with a member of the group under the parts of subpart YB that apply for the purposes of the whole Act (excluding the 1973, 1988, and 1990 version provisions) or the 1988 version provisions; or
ii: relating to an entity that is acquired from a person who is not associated with a member of the group under the parts of subpart YB that apply for the purposes of the whole Act (excluding the 1973, 1988, and 1990 version provisions) or the 1988 version provisions: .
6: Section FE 21(7)(a)(i) and (ii)
i: acquired from a person who, at the time of acquisition, is not associated with a member of the group; or
ii: relating to an entity that is acquired from a person who is not associated with a member of the group: .
7: Section FE 21(8)
8: Adjustment 5
8: Section FE 21(8)
8: Adjustment 5
9: In section FE 21 proportional-stapling company stapled stapled debt security
10: Subsection (3)
11: Subsections (2), (6), and (8) apply for the 2010–11 and later income years.
219: New Zealand group for excess debt entity that is a company
1: In section FE 25(2) company company. However, section FE 30 does not apply to an excess debt outbound company
2: In section FE 25 excess debt outbound company
3: Subsection (1)
220: Identifying New Zealand parent
1: Section FE 26(2)(b)(ii)
ii: no single non-resident who is carrying on business in New Zealand through a fixed establishment in New Zealand or who derives income that has a source in New Zealand and for which relief from New Zealand tax under a double tax agreement is unavailable has an ownership interest in the entity of 50% or more.
2: In section FE 26(2)(b) more. more; or
c: the entity is an excess debt outbound company and no single company resident in New Zealand has an ownership interest in the entity of 50% or more.
3: The heading to section FE 26(3) Top tier New Zealand resident company if not excess debt outbound company
4: In section FE 26(3)
3: If subsection (2) does not apply, and the excess debt entity is not an excess debt outbound company, the entity’s New Zealand parent is the company ( company A .
5: In section FE 26(3)(a)(ii) New Zealand; and New Zealand; or
iii: not resident in New Zealand but deriving income that has a source in New Zealand and for which relief from New Zealand tax under a double tax agreement is unavailable; and .
6: In section FE 26(4)(a)(ii) New Zealand; and New Zealand; or
iii: not resident in New Zealand but deriving income that has a source in New Zealand and for which relief from New Zealand tax under a double tax agreement is unavailable; and .
7: After section FE 26(4) Top tier New Zealand resident company for excess debt outbound company
4B: If subsection (2) does not apply, and the excess debt entity is an excess debt outbound company, the entity’s New Zealand parent is the company ( company C
a: company C—
i: is resident in New Zealand; and
ii: has an ownership interest of 50% or more in the entity; and
b: no company that meets the requirements of paragraph (a)(i) and (ii) has a direct ownership interest in company C.
8: Section FE 26(6)
6: If subsection (2) does not apply, and no company meets the requirements of subsection (3), (4), or (4B), the excess debt entity is treated as the New Zealand parent.
9: Section FE 26(7)
7: In subsections (3) to (4B), ownership interests are determined under sections FE 38 to FE 41, but for the purpose of identifying a New Zealand parent, the ownership interests of an associated person are ignored.
10: In section FE 26 double tax agreement excess debt outbound company source in New Zealand
11: Subsections (1) to (9)
221: Section FE 28 replaced
1: Section FE 28
FE 28: Identifying members of New Zealand group
New Zealand parent's group
1: A New Zealand group is made up of an excess debt entity, the entity's New Zealand parent, and a company—
a: that is—
i: resident in New Zealand:
ii: carrying on a business in New Zealand through a fixed establishment in New Zealand:
iii: deriving income that has a source in New Zealand and for which relief from New Zealand tax under a double tax agreement is unavailable; and
b: that is identified under section FE 27 as being under the control of the New Zealand parent; and
c: that is not a member of the New Zealand banking group of a registered bank. Special rule for some entity's group
2: Despite subsection (1), if the excess debt entity is not an excess debt outbound company and is not a company identified under section FE 27 as being under the control of the New Zealand parent because the threshold is not met, the New Zealand group is made up of the entity and a company—
a: that is—
i: resident in New Zealand:
ii: carrying on a business in New Zealand through a fixed establishment in New Zealand:
iii: deriving income that has a source in New Zealand and for which relief from New Zealand tax under a double tax agreement is unavailable; and
b: that is a company that—
i: would be identified under section FE 27 as being under the control of the entity if the entity were treated as the New Zealand parent; or
ii: if the entity is identified under section FE 27 as being under the control of another company ( company A
iii: would be identified under section FE 27 as under the control of a company ( company B
iv: is not a member of the New Zealand banking group of a registered bank. Another special rule for some other entity’s group
3: Despite subsection (1), if the excess debt entity is an excess debt outbound company and is not a company identified under section FE 27 as being under the control of the New Zealand parent because the threshold is not met, the entity is included in the New Zealand group for the New Zealand parent if—
a: the entity is a company that meets the requirements of subsection (1)(a) and (c); and
b: a member of the New Zealand group has a 50% or more ownership interest in the entity. Defined in this Act: business, company, control, double tax agreement, excess debt entity, excess debt outbound company, fixed establishment, New Zealand, New Zealand banking group, registered bank, resident in New Zealand, source in New Zealand .
2: Subsection (1)
222: Section FE 29 replaced
1: Section FE 29
FE 29: Combining New Zealand groups owned by natural persons and trustees
When this section applies
1: This section applies when a natural person or trustee described in section FE 2(1)(g) has––
a: a 50% or more ownership interest in a member of a New Zealand group ( group 1
b: a 50% or more ownership interest in a member of a different New Zealand group ( group 2 Groups combine
2: Group 1 and group 2 combine into 1 New Zealand group. Defined in this Act: excess debt outbound company, New Zealand .
2: Subsection (1)
223: Ownership interests in companies outside New Zealand group
1: Section FE 30(1)(b) and (c)
b: a particular excess debt entity ( company A
c: company A is—
i: resident in New Zealand:
ii: carrying on business in New Zealand through a fixed establishment in New Zealand:
iii: deriving income that has a source in New Zealand and for which relief from New Zealand tax under a double tax agreement is unavailable; and .
2: Section FE 30(3)(b)
b: company B is—
i: resident in New Zealand:
ii: carrying on business in New Zealand through a fixed establishment in New Zealand:
iii: deriving income that has a source in New Zealand and for which relief from New Zealand tax under a double tax agreement is unavailable; and .
3: In section FE 30 double tax agreement excess debt outbound company source in New Zealand
4: Subsections (1) and (2)
224: Worldwide group for corporate excess debt entity
1: The heading to section FE 31 Worldwide group for corporate excess debt entity if not excess debt outbound company
2: In section FE 31(1)
1: For an income year, for an excess debt entity that is a company and is not an excess debt outbound company, a worldwide group is made up of—
a: the entity; and .
3: In section FE 31 excess debt outbound company
4: Subsections (1) and (2)
225: New sections FE 31B and FE 31C inserted
1: After section FE 31
FE 31B: Worldwide group for excess debt outbound companies
Members of worldwide group
1: For an income year, a worldwide group for an excess debt outbound company is made up of—
a: the company; and
b: the company’s New Zealand group for the income year; and
c: the company’s worldwide GAAP group, as described in subsection (2). Worldwide GAAP group
2: An excess debt outbound company’s worldwide GAAP group is made up of all non-residents who are required to be included with the company in consolidated financial statements under generally accepted accounting practice. Defined in this Act: excess debt outbound company, generally accepted accounting practice, income year, non-resident
FE 31C: CFCs in worldwide group for natural persons or trustees described in section FE 2(1)(g)
When this section applies
1: This section applies when a natural person or trustee described in section FE 2(1)(g) has—
a: a 50% or more ownership interest in an excess debt outbound company that is a member of a worldwide group ( worldwide group A
b: an income interest in a CFC that is not part of the worldwide group A. Transfer
2: The CFC is part of the worldwide group A. Ownership interests
3: For the purposes of this section, ownership interests are determined under sections FE 38 to FE 41. Defined in this Act: CFC, excess debt outbound company, income interest, New Zealand, non-resident .
2: Subsection (1)
226: Section FE 32 replaced
1: Section FE 32
FE 32: Joint venture parties
What this section applies to
1: This section applies to a company (the joint venture company FE 31B
a: a person (the excluded joint venturer
b: 1 other person (the included joint venturer
c: but for the application of this section, the worldwide group includes every person who holds both an ownership interest equal to 50% in the joint venture company and––
i: who has an ownership interest in the included joint venturer; or
ii: in whom the included joint venture company has an ownership interest. Exclusion of excluded joint venturer
2: The joint venture company may choose to exclude the excluded joint venturer from its worldwide group for an income year, despite sections FE 31 and FE 31B Ownership interests
3: For the purposes of this section, ownership interests are determined under sections FE 38 to FE 41. Defined in this Act: company, excess debt entity, income year .
2: Subsection (1)
227: Identifying members of New Zealand banking group
1: Section FE 36(3)
3: A resident person is included in the banking group if—
a: the person is part of the same group of companies as the registered bank:
b: the following conditions under generally accepted accounting practice are met:
i: for a resident registered bank with no non-resident ultimate parent, the consolidated group accounts include both the person and the registered bank, or would include both but for relevant materiality thresholds; or
ii: for a non-resident registered bank with no non-resident ultimate parent, the consolidated group accounts would include the person and the registered bank if the bank were resident in New Zealand and the relevant materiality thresholds were met.
2: In section FE 36(4)(a) ultimate parent; and ultimate parent:
3: In section FE 36(5)(a) ultimate parent; and ultimate parent:
4: In section FE 36(6)(a) ultimate parent; and ultimate parent:
5: Subsections (1) to (4) apply for the 2008–09 and later income years.
228: Subpart FF repealed
1: Subpart FF
2: Subsection (1)
229: Consolidation rules
1: Section FM 2(2)(g)
g: section 74 of the Tax Administration Act 1994.
2: Subsection (1)
230: Some general rules for treatment of consolidated groups
1: Section FM 6(3)(b)
2: Section FM 6(3)(c)
c: sections FM 8(3)(c), FM 27 to FM 30, GB 38, GB 40, and OP 3 to OP 50 (which relate to dividends and consolidated groups): .
3: Section FM 6(3)(e)
e: section 74 of the Tax Administration Act 1994.
4: In section FM 6(5) YA 2(2)(e) YA 2(7)
5: Section FM 6(5) Balance of imputation credit account
5: Sections OA 3 (General rules for maintaining memorandum accounts) and YA 2(7) (Meaning of income tax varied) apply for the purposes of section GB 38, subpart OP, and section 74 of the Tax Administration Act 1994 as if the references to the imputation rules were references to sections OP 3 to OP 50.
6: In section FM 6 FDP account FDP rules
7: Subsections (1) to (3) and (5)
231: Heading and sections FM 24 to FM 26 repealed
1: Sections FM 24 to FM 26
2: Subsection (1)
232: Eligibility rules
1: Section FM 31(1)
1: A company is eligible to form, join, and continue as part of a consolidated group at a particular time if, at the time,—
a: it is resident in New Zealand; and
b: it is not a foreign company; and
c: it is not a company that derives only exempt income, except exempt income under sections CW 9 to CW 11 (which relate to income from equity); and
d: it is incorporated in New Zealand or carrying on a business in New Zealand through a fixed establishment; and
e: it is not, by the law of another country or territory, liable to income tax in that country or territory through domicile, residence, or place of incorporation; and
f: when subsection (2) or (4) applies, it meets the relevant conditions; and
g: subsections (5) and (6) do not apply to it.
2: Section FM 31(3)
3: The requirements of subsection (1)(d) and (e) do not apply to determine whether a grandparented consolidated company—
a: is eligible to form or join a consolidated group:
b: continues as part of the consolidated group.
3: In section FM 31 income tax
4: Subsections (1) and (2) apply for the 2008–09 and later income years.
233: Imputation rules
In section FN 2(i) YA 2(2)(d) YA 2(7)(b)
234: Trans-Tasman imputation groups and resident imputation subgroups
1: Section FN 8(2)
2: A company in a trans-Tasman imputation group that is not an Australian ICA company is treated as a resident imputation subgroup of the trans-Tasman imputation group and is associated with that group.
2: Section FN 8(3) Single company
3: A resident imputation subgroup continues while a company in the trans-Tasman imputation group that is not an Australian ICA company remains in existence.
3: Subsections (1) and (2) apply for the 2008–09 and later income years.
235: Amortising property
1: After section FO 16(1) Treatment of amalgamating company
1B: The amalgamating company is treated as neither deriving income nor having a deduction under sections EE 24 to EE 53 (which relate to disposals of depreciable property) as a result of the deemed disposal.
2: Subsection (1) applies for the 2008–09 and later income years.
236: Treatment of interest payable under debentures issued before certain date
In section FZ 1(3) Despite section FA 2(3)(c), section Section
237: New sections GB 15B and GB 15C inserted
1: After section GB 15
GB 15B: Supplies affecting default test for non-attributing active CFC
When this section applies
1: This section applies when a CFC makes a supply—
a: to a person who would not meet the requirements of section EX 21D(1)(a) to (c) (Non-attributing active CFC: default test) for the person to be a member of a test group, under that section, with the CFC; and
b: with the purpose of increasing the amount given by the denominator in the formula in section EX 21D(4) for the CFC. Income from supply included in gross adjustment
2: The income from the supply is included in the item gross adjustments Defined in this Act: CFC
GB 15C: Arrangements related to accounting test for non-attributing active CFC
When this section applies
1: This section applies when a person (the party CFC not non-attributing active CFC
2: The CFC is not a non-attributing active CFC. Person not non-attributing active CFC if type of financial arrangement involved
3: A party who is a CFC associated with the CFC is not a non-attributing active CFC if—
a: the arrangement involves a financial arrangement producing a foreign exchange loss for the CFC; and
b: the foreign exchange loss decreases for the CFC the amount of the numerator in the formula in section EX 21E(5). Defined in this Act: arrangement, associated, CFC, financial arrangement, loss, non-attributing active CFC .
2: Subsection (1)
238: Attribution rule for income from personal services
1: In section GB 27(2)(c) $60,000 $70,000
2: In section GB 27(3)(d) entity. entity:
e: if the associated entity is a CFC and the amount—
i: is an attributable CFC amount for the CFC under section EX 20B(3)(h) (Attributable CFC amount):
ii: gives rise to attributed CFC income under section CQ 2(2B) (When attributed CFC income arises) or attributed CFC loss under section DN 2(2) (When attributed CFC loss arises).
3: In section GB 27 attributable CFC amount attributed CFC income attributed CFC loss CFC
4: Subsection (1) applies for the 2008–09 and later income years.
5: Subsection (2)
239: Interpretation of terms used in section GB 27
1: Section GB 28(2)
2: A person is treated as being associated with another person if the person would be treated as associated under the parts of subpart YB (Associated persons and nominees) that apply for the purposes of the whole Act (excluding the 1973, 1988, and 1990 version provisions) or the 1988 provisions, at the time the services are personally performed by the working person.
2: Section GB 28(2)
2: A person is treated as being associated with another person if they are associated at the time the services are personally performed by the working person.
3: Subsection (2) applies for the 2010–11 and later income years.
240: Section GB 39 repealed
1: Section GB 39
2: Subsection (1)
241: Arrangements involving money not at risk
In section GB 45(3) acceptable property CE 1(d) CE 1(1)(d)
242: Defined terms for sections GB 45 and GB 46
1: Section GB 48(1)(b)
b: the persons are associated under the parts of subpart YB (Associated persons and nominees) that apply for the purposes of the whole Act (excluding the 1973, 1988, and 1990 version provisions) or the 1988 version provisions.
2: Section GB 48(1)(b)
b: the persons are associated persons.
3: In section GB 48(3)(d) and (e) under subpart YB
4: Subsections (2) and (3) apply for the 2010–11 and later income years.
243: Disposals of trading stock at below market value
1: In section GC 1(4)(c) share user. share user:
d: in the surrender of an emissions unit under the Climate Change Response Act 2002.
2: In section GC 1
a: qualifying event
b: emissions unit surrender
244: Section GC 4B repealed
Section GC 4B
245: Leases for inadequate rent
1: In section GC 5(5) related company related company .
2: Subsection (1) applies for the 2010–11 and later income years.
246: Insufficient amount receivable by person
1: Section GC 8(1)(b)
2: Subsection (1)
247: Compensating arrangement: person receiving more than arm's length amount
1: Section GC 10(2)(b)
2: Subsection (1)
248: Requests for matching treatment
1: Section GC 11(2)(b)
b: including, when the other party is a CFC, the calculation of net attributable CFC income or net attributable CFC loss in relation to the other party, and the resultant calculation of the attributed CFC income or an attributed CFC loss or attributed CFC net loss of a person.
2: In section GC 11
a: branch equivalent income branch equivalent loss
b: net attributable CFC income net attributable CFC loss
3: Subsection (1)
249: Section GC 12 replaced
1: Section GC 12
GC 12: Effect on person's withholding obligations
An adjustment under any of sections GC 7 to GC 10 has no effect on an obligation of the taxpayer to withhold under Part R (General collection rules) in relation to the amount other than to the extent to which section GC 11(2) applies. Defined in this Act: amount .
2: Subsection (1)
250: New section GZ 2 inserted
1: After section GZ 1
GZ 2: Arrangements involving cancellation of conduit tax relief credits
What this section applies to
1: This section applies to a company with a CTRA that enters an arrangement if—
a: the arrangement involves transactions—
i: undertaken between 4 December 2007 and the beginning of the first affected income year; and
ii: giving rise to CTR credits in the CTRA; and
b: a purpose of the arrangement is to produce for a New Zealand resident, other than the company with the CTRA or a CTR holding company for that company, a benefit—
i: under a taxation law; and
ii: relating to the CTR credits. Income tax liability
2: The company's income tax liability for the income year of the arrangement is increased by the amount of CTR credits referred to in subsection (1)(a)(ii). Defined in this Act: amount, arrangement, company, CTR credit, CTR holding company, CTRA, income year, New Zealand resident, taxation law .
2: Subsection (1)
251: Shareholding requirements
1: After section HA 7(3) Shareholder continuity requirements
4: For the application of shareholder continuity requirements to the memorandum accounts of qualifying companies, see
2: In section HA 7 memorandum account
3: Subsection (1) applies for the 2008–09 and later income years.
252: New section HA 8B inserted
1: After section HA 8
HA 8B: No CFC income interests or FIF direct income interests of 10% or more
A qualifying company must not have—
a: income interests in a CFC:
b: attributing interests in a FIF that are a direct income interest of 10% or more. Defined in this Act: attributing interest, CFC, direct income interest, FIF, income interest, qualifying company .
2: Subsection (1)
253: Limit on foreign non-dividend income
1: In section HA 9(2) order in Council Order in Council
2: Subsection (1) applies for the 2008–09 and later income years.
254: When requirements no longer met
1: Section HA 11(5)
5: Despite subsection (1), a company's status as a qualifying company is not ended merely because it does not comply with section HA 7(2) when—
a: all dividends that can, under general law, be distributed by the trustee are beneficiary income of a beneficiary other than—
i: a trustee beneficiary; or
ii: a beneficiary that is a company other than a qualifying company; and
b: some of the dividends derived by the trustee from the qualifying company have vested or have been distributed as beneficiary income of a beneficiary other than—
i: a trustee beneficiary; or
ii: a beneficiary that is a company other than a qualifying company.
2: Subsection (1) applies for the 2008–09 and later income years.
255: Dividends paid by qualifying companies
1: In section HA 14(2) under section HA 15
2: In section HA 14 fully imputed
256: Fully imputed distributions
1: In section HA 15(1) This section applies when a qualifying company with an imputation credit account or foreign dividend payment (FDP) account pays a dividend.
2: Section HA 15(9) Relationship with sections HA 14 and HA 16
9: If part of the dividend is exempt income under sections HA 14 and HA 16, an imputation credit or FDP credit is treated as attached to the part that is not exempt income.
3: Subsection (1) applies for the 2008–09 and later income years.
257: Section HA 16 replaced
1: Section HA 16
HA 16: Dividends paid by qualifying companies to trustee shareholders
When this section applies
1: This section applies when a dividend referred to in section HA 14(2) is derived by a trustee to the extent to which the dividend is exempt income of the trustee under section CW 15(1) (Dividends paid by qualifying companies). Exempt income
2: To the extent to which the dividend is also beneficiary income of a beneficiary resident in New Zealand, the dividend is exempt income of the beneficiary under section CW 15(2). Defined in this Act: dividend, exempt income, resident in New Zealand, trustee .
2: Subsection (1) applies for the 2008–09 and later income years.
258: Credit accounts and dividend statements
1: Section HA 19(1)
1: This section applies when a qualifying company pays a dividend that is treated either as a fully imputed distribution under section HA 15 or as exempt income under sections HA 14 and HA 16.
2: In section HA 19 fully imputed
259: Calculating qualifying company election tax
1: In section HA 41(4)(c) relevant date: relevant date.
2: Section HA 41(8)(c)
c: if the company pays income tax with a purpose or intention of reducing the amount of election tax, the amount of credit in the imputation credit account is reduced by the amount of the credit arising from the company's action, unless that purpose is merely incidental.
3: In section HA 41 FDP
4: Subsections (1) and (2)
260: Corpus of trust
1: Section HC 4(5)(b)
2: Section HC 4(5)(c)
c: it would fall under paragraph (a) if the settlor were resident in New Zealand at the time of the settlement.
3: In section HC 4 FDP
4: Subsections (1) and (2)
261: Trustee income
1: In section HC 7(2) section HC 33 section HC 35
2: Subsection (1) applies for the 2008–09 and later income years.
262: Taxable distributions from non-complying and foreign trusts
1: Section HC 15(5)(a)(ii)
ii: a capital gain derived by the trustee through a transaction or series of transactions between the trustee and a person associated with them under the parts of subpart YB (Associated persons and nominees) that apply for the purposes of the whole Act (excluding the 1973, 1988, and 1990 version provisions) or the 1988 version provisions: .
2: Section HC 15(5)(a)(ii)
ii: a capital gain derived by the trustee through a transaction or series of transactions between the trustee and a person associated with them: .
3: Subsection (2) applies for the 2010–11 and later income years.
263: Distributions from community trusts
1: In section HC 21(3) if the person receives the amount as beneficiary of the trust
2: Subsection (1) applies for the 2008–09 and later income years.
264: Who is a settlor?
1: Section HC 27(1)(e)
e: subpart YB (Associated persons and nominees) as modified by section YB 10 (Who is a settlor?).
2: Section HC 27(3)
3: Despite subsection (2), a person resident in New Zealand who makes a settlement on a trust as an employer for the benefit of 1 or more employees is not a settlor of the trust if the following circumstances apply:
a: the trust is established or created mainly to provide retirement benefits to natural persons; and
b: the trust is neither a foreign superannuation scheme nor a superannuation fund.
3: Subsection (1) applies, for the purposes of—
a: provisions other than the land provisions, for the 2010–11 and later income years:
b: the land provisions other than section CB 11, for land acquired on or after the date on which this Act receives the Royal assent:
c: section CB 11, for land on which improvements are begun on or after the date on which this Act receives the Royal assent.
4: Subsection (2) applies for the 2008–09 and later income years.
265: Liability of trustee as agent
1: In section HC 32(2) a beneficiary of a community trust a person who derives an amount from a community trust
2: Subsection (1) applies for the 2008–09 and later income years.
266: Beneficiary income of minors
1: In section HC 35(4)(a) less than $1,000 $1,000 or less
2: Subsection (1) applies for the 2008–09 and later income years.
267: Trusts and minor beneficiary rule
1: In section HC 36(5) associated person person associated associated person person associated .
2: In section HC 36(5) relative paragraph (c) paragraph (a)
3: Subsections (1) and (2) apply for the 2010–11 and later income years.
268: Companies issuing debentures
1: Section HD 14(2)(a)
a: it is a profit-related debenture or substituting debenture to which section FA 2 (Recharacterisation of certain debentures) applies or a stapled debt security to which section FA 2B (Stapled debt securities) applies; or .
2: In section HD 14 stapled debt security
269: General provisions relating to disposals
1: In section HG 3(2) if they choose that those sections do not apply by the small partnership furnishing a joint return of income that ignores the sections if the entering partner, the exiting partner, and the partnership, furnish returns of income that ignore the sections
2: Section HG 3(3) Election in for specified livestock disposed of to entering partner
3: Section HG 10 applies for an entering partner if the entering partner furnishes a return of income that applies the section.
3: For a person who is not a limited partner of a limited partnership registered under the Limited Partnerships Act 2008
270: Section HG 4 replaced
1: Section HG 4
HG 4: Disposal upon final dissolution
When this section applies
1: This section applies when a partnership is finally dissolved by agreement of the partners, court order, or otherwise, and the partnership's business ignoring section HG 2 will not continue to be carried on in partnership. Disposal and re-acquisition
2: A partner of the partnership is treated as disposing of all of their partner's interests in the partnership, immediately before the dissolution, to a single third party for a payment equal to the interests' market value. The partner is treated as re-acquiring all of their partner's interests immediately after the dissolution, from the third party for a payment equal to the interests' market value. Receipt upon dissolution
3: Anything received by a partner in relation to the final dissolution of the partnership is ignored. Exclusion: actual disposal to third party
4: This section does not apply to the extent to which a partner of the partnership disposes of their partner's interests in the partnership to persons who are not associated with them. For the purposes of testing association, the partners' partnership capacity is ignored. Exclusion: partnerships of persons in marriage, civil union, or de facto relationships
5: This section does not apply if––
a: immediately before the dissolution, there are only 2 partners of the partnership and they are married to each other, in a civil union together, or in a de facto relationship together; and
b: the dissolution is caused by death of a partner, or the dissolution relates to the settlement of relationship property; and
c: on dissolution, all partner's interests of 1 person are transferred, ignoring any intervening transfer to an executor or administrator, to the other person; and
d: the transfers of those partner's interests are subject to provisions in subpart FB or FC (which relate to transfers of relationship property and gifts), and those provisions treat the transfers as disposals for amounts that are not the interests' market values. Relationship with subject matter
6: This section overrides sections HG 5 to HG 10. Defined in this Act: amount, associated person, dispose, partner, partner's interests, partnership, settlement of relationship property .
2: For a person who is not a limited partner of a limited partnership registered under the Limited Partnerships Act 2008
271: Disposal of partner's interests
1: Section HG 5(2)(c)
c: gross tax value
i: the value under this Act of the current interests and other interests at the time the relevant interest is disposed of, to the extent to which the interests are revenue account property or depreciable property, or financial arrangments:
ii: the market value of the current interests and other interests at the time the relevant interest is disposed of, to the extent to which the interests are not revenue account property or depreciable property or financial arrangements: .
2: In section HG 5(7) if they choose that it does not apply, by the small partnership furnishing a joint return of income that ignores sections HG 5 to HG 9 if section HG 3(2) applies
3: In section HG 5 depreciable property financial arrangement revenue account property
4: For a person who is not a limited partner of a limited partnership registered under the Limited Partnerships Act 2008
272: Disposal of trading stock
1: In section HG 6(6) if they choose that it does not apply, by the small partnership furnishing a joint return of income that ignores sections HG 5 to HG 9 if section HG 3(2) applies
2: For a person who is not a limited partner of a limited partnership registered under the Limited Partnerships Act 2008
273: Disposal of depreciable property
1: In section HG 7(6) if they choose that it does not apply, by the small partnership furnishing a joint return of income that ignores sections HG 5 to HG 9 if section HG 3(2) applies
2: For a person who is not a limited partner of a limited partnership registered under the Limited Partnerships Act 2008
274: Disposal of financial arrangements and certain excepted financial arrangements
1: In section HG 8(6) if they choose that it does not apply, by the small partnership furnishing a joint return of income that ignores sections HG 5 to HG 9 if section HG 3(2) applies
2: For a person who is not a limited partner of a limited partnership registered under the Limited Partnerships Act 2008
275: Disposal of short-term agreements for the sale and purchase of property or services
1: In section HG 9
a: in the heading to section HG 9, short-term agreements for the sale and purchase of property or services short-term agreements for sale and purchase
b: in subsection (1), short-term agreement for the sale and purchase of property or services short-term agreement for sale and purchase
c: in subsection (2), short-term agreement for the sale and purchase of property or services short-term agreement for sale and purchase
d: in subsection (3), short-term agreement for the sale and purchase of property or services short-term agreement for sale and purchase
e: in subsection (4), short-term agreement for the sale and purchase of property or services short-term agreement for sale and purchase
f: in subsection (5), short-term agreement for the sale and purchase of property or services short-term agreement for sale and purchase
2: In section HG 9(6) if they choose that it does not apply, by the small partnership furnishing a joint return of income that ignores sections HG 5 to HG 9 if section HG 3(2) applies
3: In section HG 9 short-term agreement for the sale and purchase of property or services short-term agreement for sale and purchase
4: For a person who is not a limited partner of a limited partnership registered under the Limited Partnerships Act 2008
276: Section HG 10 replaced
1: Section HG 10
HG 10: Disposal of livestock
When this section applies
1: This section applies when a person disposes of some or all of their partner's interests to an entering partner and section HG 3(3)
a: the national standard cost scheme for specified livestock, described in section EC 22 (National standard cost scheme); or
b: the cost price method for specified livestock, described in EC 25 (Cost price, replacement price, or market value). Entering partner's cost base
2: Section EC 26B (Entering partners' cost base) may apply to the entering partner for the purposes of determining the value of the specified livestock at the end of an income year for the purposes of section EC 2 (Valuation of livestock). Defined in this Act: amount, cost price, dispose, income year, national standard cost scheme, partner, partner's interest, specified livestock .
2: Subsection (1) applies for the 2009–10 and later income years.
277: Limitation on deductions by partners in limited partnerships
In section HG 11(8)(b) under section HG 2
278: Scheme of subpart
1: Section HL 2(2)(b)(i)
i: a company listed on a recognised exchange in New Zealand or an unlisted company choosing to become a portfolio listed company under section HL 12; and .
2: After section HL 2(2) Portfolio listed company choosing to be portfolio tax rate entity
2B: An entity that chooses to become a portfolio listed company as described in subsection (2)(b) may choose to become a portfolio tax rate entity as described in subsection (2)(a).
279: Eligibility requirements for entities
1: Section HL 3(9)
9: The business requirement is that the entity must not carry on a business of life insurance. This requirement does not apply to a portfolio investment-linked life fund.
2: In section HL 3 HL 14(1) HL 15(1)
280: Effect of failure to meet eligibility requirements for entities
1: Section HL 4(1)(a)
a: referred to in sections HL 2(2) and HL 3; and .
2: Section HL 4(2)(a)
a: the portfolio investor class of the entity fails to meet a requirement under section HL 6 or HL 9 on the last day of a quarter—
i: beginning 6 months or more after the date on which the portfolio investor class is formed; and
ii: ending more than 3 months before an announcement by the entity to its investors that the portfolio investor class is winding up within 12 months of the announcement; and
ab: the entity fails to meet a requirement under section HL 10 on the last day of a quarter—
i: beginning 6 months or more after the date on which the entity becomes a portfolio investment entity; and
ii: ending more than 3 months before an announcement by the entity to its investors that the entity is winding up within 12 months of the announcement; and .
3: In section HL 4(2)(b)(ii) paragraph (a)(ii) paragraphs (a)(ii) and (ab)(ii)
281: Meaning of investor and portfolio investor class
1: In section HL 5B(1)(a) and paragraph (d) does not apply
2: In section HL 5B(1)(b) paragraphs (c) and (d) do not apply paragraph (c) does not apply
3: In section HL 5B(1)(c) and paragraph (d) does not apply
4: Section HL 5B(1)(d)
282: Investor membership requirement
1: Section HL 6(1)(a)
a: 20 persons, treating all interests held by associated persons and included by subsection (4) as being held by 1 person: .
2: After section HL 6(1)(i)
ib: Auckland Regional Holdings:
ic: a community trust: .
3: In section HL 6(1)(j)(iii) entity: entity.
4: Section HL 6(3) No investor membership requirement for public unit trusts
3: There is no investor membership requirement for a portfolio investor class that, if treated as a unit trust, would meet the requirements of 1 or more of paragraphs (a) and (c) to (e) of the definition of public unit trust No investor membership requirement for certain superannuation funds and others
3B: There is no investor membership requirement for a portfolio investor class that is, or includes an investor that is—
a: a superannuation fund established under the proposal for the restructuring of the National Provident Fund required by the National Provident Fund Restructuring Act 1990:
b: the fund established by the Government Superannuation Fund Act 1956:
c: a superannuation fund that—
i: existed before 17 May 2006; and
ii: on or after 17 May 2006, if treated as a unit trust, would have met the requirements of 1 or more of paragraphs (a) and (c) to (e) of the definition of public unit trust
iii: has no investor, other than the fund's manager or trustee, that can control the investment decisions relating to that class:
d: a public unit trust.
5: Section HL 6(4)(a) and (b)
a: the investor is not listed in subsection (1)(b) to (ib); and
b: the associated person is not listed in subsection (1)(b) to (ib); and .
6: Subsection (2)
283: Investor return adjustment requirement: portfolio tax rate entity
After section HL 7(4) Extending time limits
5: On application by a portfolio tax rate entity, the Commissioner may extend a time limit imposed under subsection (3)(a) if it is reasonable in the circumstances.
284: Investor interest size requirement
1: Section HL 9(2) No investor interest size requirement for public unit trusts
2: There is no investor membership requirement for a portfolio investor class that, if treated as a unit trust, would meet the requirements of 1 or more of paragraphs (a) and (c) to (e) of the definition of public unit trust
2: Section HL 9(4)
4: An investor may hold a portfolio investor interest in a portfolio investor class that would otherwise breach the investor interest size requirement for the entity if the investor or the class is—
a: a portfolio investment entity:
b: a foreign investment vehicle:
c: an entity that—
i: meets the requirements of section HL 3 that would be relevant if the entity were choosing to become a portfolio investment entity; and
ii: has not chosen to become a portfolio investment entity:
d: a life insurer:
e: the New Zealand Superannuation Fund:
f: a superannuation fund established under the proposal for the restructuring of the National Provident Fund required by the National Provident Fund Restructuring Act 1990:
g: the fund established by the Government Superannuation Fund Act 1956:
h: a superannuation fund that—
i: existed before 17 May 2006; and
ii: on or after 17 May 2006, if treated as a unit trust, would have met the requirements of 1 or more of paragraphs (a) and (c) to (e) of the definition of public unit trust
iii: has no investor, other than the fund's manager or trustee, that can control the investment decisions relating to that class:
i: a public unit trust:
j: the Accident Compensation Corporation:
k: a Crown entity subsidiary of the Accident Compensation Corporation:
l: the Earthquake Commission:
m: Auckland Regional Holdings:
n: a portfolio investor class of less than 20 persons, treating all interests held by associated persons and included by subsection (6) as being held by 1 person, if—
i: the entity has 1 or more other portfolio investor classes that meet the requirements of section HL 6(1)(a); and
ii: no investor in the class, other than the entity's manager or trustee, can control the investment decisions relating to that class; and
iii: investors for which the entity would not meet the investor membership requirement in the absence of this paragraph have portfolio investor interests with a total value of less than 10% of the total value of portfolio investor interests in the entity:
o: a person who meets the requirements of subsection (5).
3: Section HL 9(4)(o)
o: a community trust:
p: a person who meets the requirements of subsection (5).
4: In section HL 9(5) subsection (4)(a) to (h) subsection (4)(a) to (n)
5: In section HL 9(5) subsection (4)(a) to (n) subsection (4)(a) to (o)
6: Section HL 9(6)(a) and (b)
a: the investor is not listed in subsection (4)(a) to (n); and
b: the associated person is not listed in subsection (4)(a) to (n); and .
7: Section HL 9(6)(a) and (b)
a: the investor is not listed in subsection (4)(a) to (o); and
b: the associated person is not listed in subsection (4)(a) to (o); and .
8: Subsections (3), (5), and (7) apply for the 2009–10 and later income years.
285: Further eligibility requirements relating to investments
Section HL 10(2)(b)(iii)
iii: an amount of income from a lease of land, but this subparagraph does not apply if the lessee under the lease is associated with the entity deriving the amount: .
286: Unlisted company choosing to become portfolio listed company
In section HL 12(1)(a) 100 shareholders at least 100 shareholders
287: Becoming portfolio investment entity
Section HL 13(1)(b)
b: the entity, if treated as becoming a portfolio investment entity when the election would be effective, would cease under section HL 4 to be eligible through a failure to meet 1 or more of the requirements in section HL 6, HL 9, or HL 10 in each quarter of the 12-month period.
288: Treatment of income from interest when entitlement conditional or lacking
1: After section HL 17(2) Relationship with section CS 1
3: For the purposes of subsection (1), if a superannuation fund that has chosen to become a portfolio tax rate entity derives income under section CS 1 (Withdrawals), the income is treated as income in which no investor has a portfolio investor interest.
2: Subsection (1) applies for the 2008–09 and later income years.
289: Portfolio class taxable income and portfolio class taxable loss for portfolio allocation period
In section HL 20(3) class net income – class net loss – other loss used.
290: Credits received by portfolio tax rate entity or portfolio investor proxy
1: In section HL 29(6)(a)(ii) HL 21 HL 22
2: In section HL 29(7)
7: The investor is treated as receiving for the allocated credits, for the tax year corresponding to the investor's income year or, in the case of an investor having a portfolio investor exit period, for the quarter to which the portfolio investor exit period relates,— .
3: In section HL 29(11)(a)(i) late later
4: Subsections (1) and (3) apply for the 2008–09 and later income years.
291: Portfolio entity formation loss
In section HL 30(7)(c) schedule 1, part A, clause 5 schedule 1, part A, clause 2
292: Subpart HL replaced by subpart HM
1: Subpart HL Subpart HM—Portfolio investment entities
Introductory provisions
HM 1: Outline of subpart and relationship with other Parts
Subpart HM
1: This subpart sets out—
a: the entry and exit rules for portfolio investment entities, see
b: who an investor is, and what an investor class is, see
c: what a multi-rate PIE must do in relation to its investors and its investments, see
d: the treatment of losses by PIEs, see
e: how an entity makes an election to become a PIE, and the consequences of making the election, see Relationship with Parts C and D
2: The following sections apply to portfolio investment entities:
a: section CB 26
b: section CP 1
c: section CX 55 (Proceeds from disposal of investment shares):
d: section CX 56 (Attributed income of certain investors in multi-rate PIEs):
e: section CX 56B (Distributions to investors in multi-rate PIEs):
f: section CX 56C (Distributions to investors by listed PIEs):
g: section CX 57 (Credits for investment fees):
h: section DB 53 (Attributed PIE losses of certain investors):
i: section DB 54 (Treatment of credits for investment fees):
j: sections DV 2, DV 4, and DV 5 (which relate to transfers of expenditure to a master superannuation fund that is a PIE). Relationship with subpart LS
3: Subpart LS (Tax credits for multi-rate PIEs and investors) contains the rules relating to the amount and use of a tax credit arising under this subpart. Defined in this Act: amount, investor, investor class, multi-rate PIE, PIE, portfolio investment entity, tax credit 2007 No 97 ss HL 1, HL 2
HM 2: What is a portfolio investment entity?
Meaning
1: A portfolio investment entity (a PIE
a: makes investments on behalf of 1 or more investors in the entity or in an investor class of the entity; and
b: meets and maintains the requirements for PIE status; and
c: chooses to become a PIE by notifying the Commissioner. PIE types
2: An entity that chooses to become a PIE must be 1 of the following types of entity:
a: a multi-rate PIE:
b: a listed PIE:
c: a benefit fund PIE:
d: a life fund PIE. Listed PIEs becoming multi-rate PIEs
3: Despite subsection (2), an entity that chooses to become a listed PIE may choose to become a multi-rate PIE if it meets the requirements of the entry rules set out in sections HM 7 to HM 30. Defined in this Act: benefit fund PIE, Commissioner, company, investor, investor class, life fund PIE, listed PIE, multi-rate PIE, notify, PIE, portfolio investment entity 2007 No 97 s YA 1 portfolio investment entity
HM 3: Foreign PIE equivalents
A foreign PIE equivalent
a: is not resident in New Zealand; and
b: is—
i: a company:
ii: a superannuation scheme:
iii: the trustee of a trust that would be a unit trust if it had more than 1 subscriber, purchaser, or contributor participating as beneficiaries under the trust; and
c: meets the requirements relating to investment types, income sources, and maximum shareholding in investments in sections HM 11 to HM 13; and
d: has investors that would qualify as an investor class under section HM 14 taking into account the limitations under sections HM 21(1) and HM 22; and
e: meets the requirements relating to investors' interests in section HM 15 applying the exceptions set out in sections HM 21(2) to (4) and HM 22. Defined in this Act: company, investor, investor class, investor interest, resident in New Zealand, superannuation scheme, trustee, unit trust 2007 No 97 s HL 5(1)
HM 4: Who is an investor?
An investor
a: for an entity that is a company, a shareholder in a company:
b: for a life fund PIE, a person whose benefits under the relevant life insurance policy are directly linked to the value of investments held in the PIE:
c: for an entity that is not a company or a life fund PIE, a person who is entitled to a proportion of the funds available for distribution by the entity—
i: under the rules of the entity or terms of the trust under which the entity is established; and
ii: as if the entity were a company and the person were a shareholder in the company. Defined in this Act: company, foreign PIE equivalent, investor, life fund PIE, life insurance policy, PIE, share, shareholder 2007 No 97 s HL 5B(1)
HM 5: What is an investor class?
Meaning of investor class
1: An investor class Entitlement to distributions
2: Each investor in the group must have an entitlement to a distribution by the entity of proceeds from the entity's investments that means the requirements of subsections (3) and (4) are met. Same investments
3: The investments must be the same for all investors in the group. Similar proportionate entitlement
4: Each investor’s interest in the investment as a proportion of the value of their entitlement must not differ from the average value for the group and the investment by 2.5% or more unless—
a: the investment is an arrangement under which the PIE is assured of receiving sufficient proceeds from the investments to repay each investor in the group an amount contributed to it:
b: the excess in any difference between the proportion for the investor and the average value for the group arises from differences between the notified tax rates of those investors in the group. Defined in this Act: arrangement, investor, investor class, investor interest, notified tax rate, pay 2007 No 97 s HL 5B(2), (3)
HM 6: Intended effects for multi-rate PIEs and investors
Intended effects for entity
1: The intended effects for an entity that is using funds supplied by investors to make investments of certain types and that meets the requirements for multi-rate PIE status are that—
a: in relation to proceeds of the investments that are attributed to investors who are natural persons or certain trustees or other persons, the PIE has a tax liability—
i: calculated using a tax rate for each investor; and
ii: resembling the total tax liability the group of investors would have if the investors were to make the investments separately:
b: the PIE has no tax liability on proceeds of the investments that are attributed to other investors:
c: the PIE allocates to each investor amounts resembling the amounts that the investor would receive, after allowing for the tax paid by the PIE if making the investment separately. Intended effects for investors
2: The intended effects for an investor in the multi-rate PIE are that—
a: the investor has no tax liability on income arising from proceeds for which the PIE has a tax liability, unless the investor has given the PIE a rate that is lower than the correct rate:
b: the investor is liable for tax on any assessable income arising from proceeds for which the PIE has a tax liability:
c: the investor receives on the investment in the PIE an economic return that the investor would receive after payment of tax liabilities if personally making investments similar to those made by the PIE in which they have an investor interest. Defined in this Act: amount, assessable income, investor, investor interest, multi-rate PIE, pay, PIE, tax, trustee 2007 No 97 s HL 1(2)(a) Entry rules
HM 7: Requirements
For an entity to be a PIE, it must—
a: meet the requirements of the entry rules in sections HM 8 to HM 10, HM 17, HM 18, and HM 20, as applicable; and
b: be 1 of the types of entity referred to in section HM 2(2); and
c: choose under section HM 71 to become a PIE; and
d: maintain the requirements of the rules in sections HM 8 to HM 20, as applicable; and
e: not lose PIE status under the exit rules in sections HM 24 to HM 30. Defined in this Act: PIE 2007 No 97 ss HL 2(2), HL 15(1), (2) Requirements
HM 8: Residence in New Zealand
The entity must be—
a: resident in New Zealand; and
b: not treated under a double tax agreement as not resident in New Zealand. Defined in this Act: double tax agreement, resident in New Zealand 2007 No 97 s HL 3(10)
HM 9: Collective schemes
The entity must be—
a: a company:
b: a superannuation scheme:
c: the trustee of a trust that would be a unit trust if there were more than 1 subscriber, purchaser, or contributor participating as beneficiaries under the trust:
d: a separate identifiable fund forming part of a life insurer that holds investments subject to life insurance policies under which benefits are directly linked to the value of the investments held in the fund. Defined in this Act: company, life insurance policy, life insurer, superannuation scheme, trustee, unit trust
HM 10: Exclusion: life insurance business
The entity must not carry on a business of life insurance unless it is a life fund PIE. Defined in this Act: life fund PIE, life insurance 2007 No 97 s HL 3(9)
HM 11: Investment types
The entity’s investments, to the extent of 90% or more by value of its assets, must be—
a: an interest in land:
b: a financial arrangement:
c: an excepted financial arrangement:
d: a right or option in relation to property listed in paragraphs (a) to (c). Defined in this Act: excepted financial arrangement, financial arrangement, land 2007 No 97 s HL 10(1)
HM 12: Income sources
Income derived by the entity, to the extent of 90% or more, must—
a: be derived from property referred to in section HM 11; and
b: consist of the following:
i: a dividend:
ii: a replacement payment:
iii: an amount of income treated under subpart EW (Financial arrangements rules) as derived by the entity:
iv: an amount of income derived from a lease of land, but this subparagraph does not apply if the lessee under the lease is associated with the entity receiving the amount:
v: an amount derived from the disposal of property referred to in section HM 11:
vi: FIF income:
vii: attributed PIE income:
viii: a distribution from a superannuation fund. Defined in this Act: amount, associated person, attributed PIE income, dividend, FIF income, income, land, lessee, replacement payment, superannuation fund 2007 No 97 s HL 10(2)
HM 13: Maximum shareholdings in investments
When this section applies
1: This section applies when an entity has an investment consisting of shares in a company other than shares in—
a: a PIE, or an entity that qualifies for PIE status:
b: a foreign PIE equivalent:
c: a land investment company. Voting interests: companies other than unit trusts
2: The investment must carry voting interests in the company of no more than 20%. This subsection does not apply to a unit trust. Subsection (5) overrides this subsection. Investments in unit trusts
3: For an investment in a unit trust, the investment must have a market value no more than 20% of the market value of all interests in the unit trust. Subsection (5) overrides this subsection. Class requirements
4: For each investment and each investor class of the entity, the percentage thresholds set out in subsections (2) and (3) apply to the investment by the class in the same way as they apply to the investment by the entity. Subsection (5) overrides this subsection. Exception for limited non-complying investments
5: Despite subsections (2) to (4), the 20% cap in those subsections can be exceeded if the total market value of all investments where the cap is exceeded is not more than 10% of the market value of the total investments of the entity or investor class. Defined in this Act: company, foreign PIE equivalent, investor class, land investment company, market value, PIE, share, unit trust, voting interest 2007 No 97 s HL 10(3)–(5)
HM 14: Minimum number of investors
Requirement for entities other than listed companies
1: If the entity is not a company listed on a recognised exchange in New Zealand, each investor class must include 20 or more persons. Requirements for listed companies
2: If the entity is a company listed on a recognised exchange in New Zealand, it must have only 1 investor class of which each investor is a member. Each investor interest must be a share traded on the exchange. This subsection applies equally to an unlisted PIE that meets the requirements of section HM 18. Exceptions
3: Subsection (4) and sections HM 21(1) and HM 22 override subsection (1). Defined in this Act: company, investor, investor class, investor interest, listed company, listed PIE, New Zealand, recognised exchange, share 2007 No 97 s HL 6(1A), (1), (2), (4)
HM 15: Maximum investors’ interests
Requirement for investors' interests
1: An investor in an investor class must not hold more than 20% of the total interests of investors in the class. Exceptions
2: Sections HM 21(2) to (4), HM 22, and HM 22B override this section. Defined in this Act: investor, investor class 2007 No 97 s HL 9(1), (6)
HM 16: Associates combined
For the purposes of sections HM 14 and HM 15, if a person is associated with an investor, the person and the investor are treated as 1 person, but only if both the person and the investor hold an investor interest of 5% or more. Section HM 21(5) overrides this section. Defined in this Act: associated person, investor, investor interest 2007 No 97 s HL 9(6)
HM 17: Same rights to all investment proceeds
What this section does
1: This section is an additional entry rule for a PIE that is not a life fund PIE. Same rights in relation to proceeds of investments
2: All investor interests in the entity that give rights in relation to proceeds from a portfolio investment must give the same rights in relation to all types of proceeds from the investment. Category B income excluded
3: This section does not apply if the proceeds are category B income. Defined in this Act: category B income, investor interest, life fund PIE, PIE, portfolio investment 2007 No 97 s HL 5C
HM 18: Requirements for listed PIEs: unlisted companies
Choosing to become listed PIE
1: A company that is not listed on a recognised exchange in New Zealand may choose under section HM 71 to become a listed PIE if it—
a: has 100 shareholders or more; and
b: has resolved to become a company listed on a recognised exchange in New Zealand if it were to obtain the required consents; and
c: has applied to the Securities Commission for an exemption to disclose in a prospectus its intention to become a listed company; and
d: satisfies the Commissioner that the company would apply to become a listed company if it were to obtain the required consents. Two-year period
2: If the company is not listed within 2 years of the election, it loses PIE status from the last day of that period. Defined in this Act: Commissioner, company, listed company, listed PIE, New Zealand, PIE, recognised exchange, shareholder 2007 No 97 s HL 12
HM 19: Requirements for listed PIEs: fully crediting distributions
What this section does
1: This section is an additional rule for an entity that is a listed PIE other than a life fund PIE. Fully crediting distributions
2: When a listed PIE distributes an amount to an investor in an investor class, the distribution must be fully credited as described in section CD 43(26) (Available subscribed capital (ASC) amount) to the extent permitted by the imputation credits or FDP credits that the directors of the company determine are available. Relationship with section CX 56C
3: For the treatment of imputation credits when a shareholder chooses to include the distribution as income in their return of income, see Defined in this Act: amount, company, director, FDP credit, imputation credit, income, investor, investor class, life fund PIE, listed PIE, return of income, shareholder 2007 No 97 s HL 8
HM 20: Re-entering as PIE: 5-year rule
If an entity loses PIE status through the application of sections HM 24 to HM 29, it cannot choose to become a PIE again until 5 years have passed from the date of loss of status to the date on which a new election takes effect. Defined in this Act: PIE 2007 No 97 s HL 3(11) Exceptions
HM 21: Exceptions for certain investors
Investor classes
1: Section HM 14(1) does not apply to an investor class of an entity if the class includes at least 1 investor listed in schedule 29, part A (Portfolio investment entities: listed investors). Certain investors in non-listed PIEs
2: Section HM 15 does not apply in relation to an entity other than a listed PIE in the case of an investor listed in schedule 29, parts A and B. Certain investors in listed PIEs
3: Section HM 15 does not apply in relation to a listed PIE in the case of an investor listed in schedule 29, parts A and B that holds more than 20% but less than 40% of the total interests in the investor class. Transitional provision for investors in listed PIEs
4: Section HM 15 does not apply in the case of an investor in a listed PIE, other than an investor listed in schedule 29, parts A and B, that holds more than 20% but less than 40% of the total interests in the investor class and held more than 20% and less than 40% of the total interests at all times from 17 May 2006 to the relevant time. Not combined associates
5: Section HM 16 does not apply if either the associated person or the investor is an investor listed in schedule 29, parts A and B. Defined in this Act: associated person, investor, investor class, listed PIE, PIE 2007 No 97 ss HL 6(4), HL 9
HM 22: Exceptions for certain funds
Public unit trust
1: Sections HM 14(1) and HM 15 do not apply to an investor class of a PIE if, treating the class as a unit trust, it would meet the requirements of 1 or more of paragraphs (a) and (c) to (e) of the definition of public unit trust Certain superannuation funds
2: Sections HM 14(1) and HM 15 do not apply in the case of an investor class of an entity that is a fund, trust, or class listed in schedule 29, part B (Portfolio investment entities: listed investors). Defined in this Act: investor class, PIE, public unit trust, unit trust 2007 No 97 ss HL 6(3), HL 9(2)
HM 23: Exceptions for foreign PIE equivalents
Investor classes and investors' interests
1: If an investor in a PIE is a foreign PIE equivalent,—
a: the requirement for investor classes under section HM 14(1) is treated as met:
b: no limitation on investors' interests under section HM 15 applies in the case of that investor. Shareholding in investments
2: If a PIE holds an investment in a foreign PIE equivalent, no maximum limit on shareholding in investments under section HM 13 applies to that investment. Defined in this Act: foreign PIE equivalent, investor, investor class, investor interest, PIE 2004 No 35 ss HL 9(4), HL 10(4) Exit rules
HM 24: Ending of New Zealand residence
An entity loses PIE status immediately if it is no longer resident in New Zealand. Defined in this Act: PIE, resident in New Zealand 2007 No 97 s HL 4(1)
HM 25: When entity no longer meets investment or investor requirements
Effect
1: An entity loses PIE status if,—
a: on the last day of a quarter (the first quarter
i: the entity no longer meets a requirement of sections HM 11 to HM 13; or
ii: an investor class of the entity no longer meets a requirement of sections HM 13 to HM 15; and
b: the failure to meet the requirements—
i: is significant and is within the control of the entity:
ii: is not remedied by the last day of the next quarter (the second quarter Date of loss of status
2: The date of loss of PIE status is—
a: when subsection (1)(b)(i) applies, the last day of the first quarter:
b: when subsection (1)(b)(i) does not apply, the last day of the second quarter. Transitional quarters disregarded
3: Subsection (1) does not apply if—
a: the start of the first quarter would be within 6 months plus 1 day of the date on which the entity becomes a PIE, or the investor class is formed; or
b: the first quarter ends more than 3 months before an announcement by the entity to its investors that it, or the relevant investor class, is winding up within 12 months of the announcement. Defined in this Act: investor class, PIE, quarter 2007 No 97 s HL 4(2)
HM 26: Starting life insurance business
An entity that is not a life fund PIE loses PIE status immediately if it starts to carry on the business of life insurance. Defined in this Act: business, life fund PIE, life insurance, PIE 2004 No 35 s HL 4(1)
HM 27: When multi-rate PIE no longer meets investor interest adjustment requirements
A multi-rate PIE loses PIE status immediately if it fails to meet a requirement of section HM 48. Defined in this Act: investor interest, multi-rate PIE, PIE 2004 No 35 s HL 4(1)
HM 28: When listed PIE no longer meets crediting requirement
A listed PIE loses PIE status immediately if it fails to meet the requirements of section HM 19. Defined in this Act: listed PIE, PIE 2004 No 35 s HL 4(1)
HM 29: Choosing to cancel status
An entity loses PIE status if it chooses to cancel PIE status by notifying the Commissioner under section 31B of the Tax Administration Act 1994. Section HM 72(3) applies to determine the date the election takes effect. Defined in this Act: Commissioner, notify, PIE
HM 30: When foreign PIE equivalent no longer meets requirements
Commencing New Zealand residence
1: A foreign PIE equivalent loses its status immediately if it becomes resident in New Zealand. Continued failure
2: A foreign PIE equivalent loses its status if it no longer meets the requirements set out in section HM 3(b) to (e) at the end of 2 consecutive quarters. The loss of status takes effect from the first day of the third quarter. Defined in this Act: foreign PIE equivalent, quarter, resident in New Zealand 2007 No 97 s HL 5(2) Rules for multi-rate PIEs Introductory provisions
HM 31: Rules for multi-rate PIEs
Rules
1: A multi-rate PIE must—
a: attribute income arising from the proceeds of an investment to an investor, and pay tax on the income based on the investor’s tax rate, see
b: calculate and pay its tax liability, choosing certain periods to do this, see
c: adjust investors’ interests in the entity or distributions from the entity to reflect an amount of tax paid, see
d: use tax credits received to satisfy the entity’s tax liability, in some cases providing any surplus credits to certain investors by making an adjustment described in paragraph (c), see Further provisions related to payment options, tax rates, and exit periods
2: For the provisions relating to the options available to a multi-rate PIE for calculating and paying its tax liability, prescribed and notified investor rates for investors, and exit levels and periods, see Further provisions relating to use of losses
3: For the provisions relating to the use of losses by multi-rate PIEs, see Defined in this Act: exit level, exit period, investor, investor interest, multi-rate PIE, notified investor rate, pay, prescribed investor rate, tax, tax credit
HM 32: Rules for and treatment of investors in multi-rate PIEs
Tax rates
1: An investor in a multi-rate PIE must notify the PIE of a tax rate applying to their investment income or have a default rate apply, see Attributed income
2: An amount of income attributed by a multi-rate PIE to an investor in the PIE is—
a: income of the investor under section CP 1 (Attributed income of investors in multi-rate PIEs):
b: for certain investors, excluded income of the investor under section CX 56 (Attributed income of certain investors in multi-rate PIEs). Defined in this Act: amount, excluded income, income, investor, multi-rate PIE, notify
HM 33: Proxies for PIE investors
Proxies
1: An entity may become a proxy for an investor in a multi-rate PIE for an attribution period if the entity—
a: holds an investor interest for the investor; and
b: notifies the PIE that it holds the interest as proxy. Role
2: The proxy must perform the duties set out in subsection (3) in relation to amounts attributed to them for the period as holder of the interest as if—
a: the proxy were a multi-rate PIE; and
b: the investor interest were an interest of the investor in the income of the proxy; and
c: the amounts attributed and distributions received by the proxy were amounts of the proxy to which the investor is entitled as holder of the interest. Duties
3: The proxy’s duties are to—
a: attribute amounts to the investor for the period; and
b: distribute amounts and credits to the investor for the period; and
c: pay income tax on the investment income for the period; and
d: adjust the investor interest of the investor or distributions to the investor under section HM 48; and
e: provide returns as required under section 57B of the Tax Administration Act 1994 to the Commissioner and any other information required by the Commissioner; and
f: provide the investor with a notice under section 31C of that Act; and
g: provide the PIE with information about the investor and investor interest that may be relevant to any eligibility requirements of the PIE. Defined in this Act: amount, attribution period, Commissioner, income, income tax, investor, investor interest, multi-rate PIE, notify, PIE Attributing income to investors
HM 34: Attribution periods
A multi-rate PIE must use 1 of the following periods for attributing an amount for a tax year to an investor and an investor class:
a: for an entity that uses the quarterly calculation option under section HM 43, but chooses the attribution period by notifying the Commissioner before the start of the tax year or on choosing to become a PIE, a day, a month, or a quarter; or
b: for an entity that chooses under section HM 44 to pay provisional tax and chooses the attribution period by notifying the Commissioner before the start of the tax year or on choosing to become a PIE, a day, a month, a quarter, or an income year; or
c: for an entity that does not make a choice under paragraphs (a) and (b), a day. Defined in this Act: amount, attribution period, Commissioner, investor, investor class, multi-rate PIE, PIE, provisional tax, tax year 2007 No 97 s HL 16(2)
HM 35: Determining net amounts and taxable amounts
What this section applies to
1: This section applies for the purposes of a calculation under section HM 36(2). Net amounts
2: The net amount for an investor class of a multi-rate PIE for an attribution period is calculated using the formula— assessable income – deductions. Definition of items in formula
3: In the formula in subsection (2),—
a: assessable income
b: deductions
i: incurred by the PIE in deriving the assessable income referred to in paragraph (a); and
ii: attributed to the class for the attribution period. Net income or net loss
4: If the result of the formula is positive, the amount is net income of the class for the period. If the result of the formula is negative, the amount is a net loss of the class for the period. Taxable amounts
5: The taxable amount for an investor class of a multi-rate PIE for an attribution period is calculated using the formula— net income – net loss – other loss used. Definition of items in formula
6: In the formula in subsection (5),—
a: net income
b: net loss
c: other loss used
i: the total amount for the class of formation loss that is attributable for the attribution period under sections HM 66 to HM 70 and any amount of land loss under section HM 65 that has not been used for an earlier period:
ii: the total amount of net income referred to in paragraph (a). Taxable income or tax loss
7: If the result of the formula is positive, the amount is taxable income of the class for the period. If the result of the formula is negative, the amount is a tax loss of the class for the period. Use of valuations or financial statements
8: Income and deductions of the multi-rate PIE are allocated to investors and investor classes for attribution periods as—
a: reflected in the PIE's valuation of investors' interests, if the PIE makes these valuations:
b: shown in the PIE's financial statements, if the PIE does not makes the valuations referred to in paragraph (a). Defined in this Act: amount, assessable income, attribution period, deduction, formation loss, income, investor class, investor interest, land loss, multi-rate PIE, net income, net loss, PIE, tax loss, taxable income 2007 No 97 ss EG 3, HL 19, HL 20
HM 36: Calculating amounts attributed to investors
Calculating amount
1: The amount of attributed PIE income or attributed PIE loss for an income year for an investor and an investor class in a multi-rate PIE is the total of the amounts calculated using the formula in subsection (2) for—
a: each attribution period in the income year; and
b: each day in the attribution period; and
c: each investor class to which the investor belongs on the day. Formula
2: The formula is— percentage × (income – loss) – (expenses – credits for fees). days in period Definition of items in formula
3: In the formula,—
a: percentage
b: income
c: loss
d: days in period
e: expenses
i: fees for ongoing management and administration services paid from or charged to the account of the investor as a member of the investor class:
ii: expenditure of the investor as a member of the investor class and transferred under subpart DV (Expenditure specific to certain entities) to the PIE:
f: credits for fees Treatment of attributed loss for PIEs paying provisional tax
4: Despite subsection (3), an investor in a multi-rate PIE that chooses under section HM 44 to pay provisional tax has no attributed PIE loss. When derived or incurred
5: The investor is treated as deriving the attributed PIE income or incurring the attributed PIE loss in the income year of the investor in which the end of the PIE's income year falls. Defined in this Act: amount, attributed PIE income, attributed PIE loss, attribution period, income, income year, investor, investor class, multi-rate PIE, PIE, provisional tax, tax loss, taxable income 2007 No 97 s HL 26
HM 37: When income cannot be attributed
When this section applies
1: This section applies when a multi-rate PIE has income or property in which no investor has an interest, or income or property in which no person has a conditional entitlement under section HM 38. Sole investor
2: The PIE is treated as the sole investor in an investor class having an interest in the income or property. Relationship with section CS 1
3: For the purposes of subsection (1), income derived under section CS 1 (Withdrawals) by a multi-rate PIE that is a superannuation fund is treated as income to which no investor has an investor interest. Defined in this Act: income, investor, investor class, investor interest, multi-rate PIE 2007 No 97 s HL 17(1)
HM 38: When superannuation fund investor has conditional entitlement
When this section applies
1: This section applies for the purposes of section HM 37 in relation to an attribution period when a person has a conditional entitlement to an investor interest in a multi-rate PIE that is a superannuation fund that meets the requirements of subsection (4) in income or property of the PIE. Attribution
2: The investor interest is treated as held by the person for the attribution period. When conditional entitlement exists
3: A person is treated as having a conditional entitlement to an investor interest if—
a: the investor interest is bought by or for the person’s employer; and
b: the person and the employer have agreed that the person will have an unconditional entitlement to the interest before the end of a vesting period that is no longer than 5 years; and
c: the agreement exists before the attribution period; and
d: the vesting period ends after the attribution period. Modifications to certain vesting periods
4: For the purposes of subsection (3)(b),—
a: for a PIE that exists on 17 May 2006, a vesting period longer than 5 years is allowed but the vesting period must not be longer than the longest vesting period allowed by the PIE at that date for an interest created on that date:
b: for a PIE that does not exist on 17 May 2006, but the investor interest has been transferred to it by a superannuation scheme in existence on that date without significant change to the interest, a vesting period of any length is allowed. Defined in this Act: attribution period, employer, income, investor interest, multi-rate PIE, PIE, superannuation fund, superannuation scheme 2007 No 97 s HL 17(2)
HM 39: New investors in existing investor classes
When this section applies
1: This section applies when a person is a new investor in an existing investor class of a multi-rate PIE but, at the time of investing, the PIE holds insufficient investments for the person to qualify as an investor in the class. Person treated as investor
2: The PIE may treat the person as an investor in the class if the PIE acquires sufficient investments as described in section HM 11 as soon after the investor’s acquisition of the interests as is practicable. Defined in this Act: investor, investor class, multi-rate PIE, PIE 2007 No 97 s HL 18
HM 40: Deductions for attributed PIE losses for zero-rated and exiting investors
When this section applies
1: This section applies to an investor in a multi-rate PIE when—
a: an amount of attributed PIE loss is attributed under section HM 36 to the investor for an attribution period in a tax year; and
b: either—
i: the investor is a zero-rated investor; or
ii: the PIE calculates its tax liability using the quarterly calculation option under section HM 43 and the amount is attributed to an exiting investor to whom section HM 61 applies. Deduction
2: In the investor's income year in which the end of the PIE's income year falls, the investor is allowed a deduction under section DB 53 (Attributed PIE losses of certain investors). The amount of the deduction is equal to the amount attributed for the income year or exit period. Defined in this Act: amount, attributed PIE loss, attribution period, deduction, exit period, income year, investor, multi-rate PIE, PIE, tax year, zero-rated investor 2007 No 97 s HL 27 Calculating and paying tax liability
HM 41: Options for calculation and payment of tax
Available options
1: The options available to a multi-rate PIE for calculating and paying its income tax liability are—
a: the payment of tax calculated under the exit calculation option, see
b: the payment of tax calculated under the quarterly calculation option, see
c: the payment of provisional tax and terminal tax calculated on an income-year basis, see Default option
2: The PIE must use the default option under subsection (1)(b) unless it chooses an option under subsection (1)(a) or (c) by notifying the Commissioner. Income tax liability
3: The income tax liability of the PIE for the tax year is equal to the total amount calculated under the relevant method for periods in the tax year or, in the case of the provisional tax calculation option under section HM 44, for the PIE's income year corresponding to the tax year. Defined in this Act: amount, Commissioner, income tax liability, income year, multi-rate PIE, notify, pay, PIE, provisional tax, tax year, terminal tax 2007 No 97 ss HL 16(3), HL 22–HL 24
HM 42: Exit calculation option
When this section applies
1: This section applies when a multi-rate PIE chooses for a tax year to calculate its income tax liability for exiting investors and remaining investors. The PIE must notify the Commissioner under section 31B of the Tax Administration Act 1994 of this election. Calculation for exiting investors
2: For an investor whose interest has reached the exit level during the tax year, the PIE must calculate its income tax liability under section HM 47 for the investor and the relevant exit period. The exit level and exit periods are determined under sections HM 62 and HM 63. Calculations for investors for non-exit periods
3: For investors and periods in the income year other than exit periods, the PIE must calculate its income tax liability under section HM 47 for the relevant period. Payment to Commissioner
4: The PIE must pay to the Commissioner—
a: the amount of income tax liability for an exiting investor for the exit period—
i: within 1 month after the end of the month of withdrawal; or
ii: if the month of withdrawal is November, by the following 15 January; and
b: the rest of the PIE's income tax liability for the tax year within 1 month after the end of the tax year for remaining investors in the PIE at the end of the tax year, after allowing for any payment under paragraph (a) or any voluntary payment under section HM 45. Provisional tax rules
5: The PIE is not required to pay provisional tax under subpart RC (Provisional tax) for the tax year. Defined in this Act: amount, Commissioner, exit level, exit period, income tax liability, income year, investor, multi-rate PIE, pay, PIE, provisional tax, tax year 2007 No 97 s HL 24(1)–(4)
HM 43: Quarterly calculation option
Quarterly calculation
1: A multi-rate PIE that does not choose to calculate and pay its income tax liability under the exit calculation or provisional tax calculation options, must calculate its tax liability for each quarter of the tax year using the formula set out in section HM 47. The notice requirements are set out in section 31B of the Tax Administration Act 1994. Quarterly payment
2: The PIE must pay to the Commissioner the amount of its income tax liability for the quarter within 1 month of the end of the quarter. Exiting investors: zero-rated
3: If an investor’s interest in the PIE has reached the exit level, they are treated under section HM 61 as a zero-rated investor for the exit period which includes a grace period of 5 working days after the end of the quarter. This subsection does not apply if the PIE voluntarily chooses to pay an amount under section HM 45. Exiting investors: remaining value to Commissioner
4: If an investor's interest at the end of an exit period is more than zero, the PIE must pay an amount equal to the value of the interest to the Commissioner at the same time as the payment referred to in subsection (2). Provisional tax rules
5: The PIE is not required to pay provisional tax under subpart RC (Provisional tax) for the tax year. Defined in this Act: amount, Commissioner, exit level, exit period, income tax liability, investor interest, multi-rate PIE, notice, pay, PIE, provisional tax, quarter, tax year, working day, zero-rated investor 2007 No 97 s HL 22
HM 44: Provisional tax calculation option
When this section applies
1: This section applies when a multi-rate PIE chooses to calculate its income tax liability on an income year basis and pay provisional tax by notifying the Commissioner before the start of the income year or when choosing to become a PIE. Notification regarding the type of PIE and attribution period is made under section 31B of the Tax Administration Act 1994. Application of subparts RB and RC
2: The PIE must calculate its tax liability for the income year corresponding to the tax year under section HM 47 and pay provisional tax for the tax year as required by subpart RC (Provisional tax) and terminal tax for the tax year as required by subpart RB (Terminal tax). Treatment of losses
3: If the calculation of the liability results in a negative amount, the loss must be carried forward to a later tax year, and section HM 64 does not apply. Defined in this Act: income tax liability, income year, multi-rate PIE, notify, pay, PIE, provisional tax, tax year 2007 No 97 s HL 23(1), (2)
HM 45: Voluntary payments
When this section applies
1: This section applies when a multi-rate PIE pays an amount of tax under section HM 42 or HM 43 and an investor reduces their investor interest in an investor class of the PIE. Voluntary payment
2: The PIE may pay an amount of income tax to the Commissioner that represents an amount of its tax liability for the investor as a member of an investor class for the tax year. Time of payment
3: The payment must be made—
a: within 1 month after, as applicable,—
i: for calculation and payment of tax under the quarterly calculation option, the end of the quarter; or
ii: for the calculation and payment of tax under the exit calculation option, the month of the reduction; or
b: if the month is November, by the following 15 January. Defined in this Act: amount, Commissioner, income tax, investor, investor class, investor interest, multi-rate PIE, pay, PIE, quarter 2007 No 97 s HL 25
HM 46: Calculation process
To calculate its tax liability, a multi-rate PIE must—
a: determine the net amount for each investor class of the PIE:
b: determine the taxable amount for each investor class of the PIE:
c: calculate its tax liability for each investor in an investor class for each day of an attribution period. Defined in this Act: amount, attribution period, investor, investor class, multi-rate PIE, PIE 2007 No 97 ss HL 19, HL 20
HM 47: Calculation of tax liability or tax credit of multi-rate PIEs
What this section does
1: This section quantifies the amount of the tax liability or tax credit of a multi-rate PIE for a calculation period. Calculating amount
2: The amount of the PIE’s tax liability or tax credit is the sum of the amounts calculated using the formula in subsection (3) for—
a: each investor class in which the investor has an interest:
b: each investor in an investor class:
c: each attribution period in the calculation period:
d: each day in an attribution period. Formula
3: The formula is— rate × amount. Definition of items in formula
4: In the formula,—
a: rate
i: the tax rate under section HM 60 relating to the investor for the period; or
ii: 30%, if the PIE is treated as the sole investor under section HM 37:
b: amount Result of formula: tax liability or tax credit
5: If the result of the formula in subsection (3) is positive, the amount is the PIE’s tax liability for the calculation period. If the result is negative, the amount is a tax credit of the PIE under section LS 1 (Tax credits for multi-rate PIEs), see Defined in this Act: amount, attribution period, calculation period, investor, investor class, investor interest, multi-rate PIE, PIE, tax credit 2007 No 97 ss EG 3, HL 21 Adjusting investors’ interests
HM 48: Adjustments to investors’ interests or to distributions
Adjustment
1: When a multi-rate PIE pays a tax liability or receives a tax credit under section LS 1 (Tax credits for multi-rate PIEs) in relation to an investor, it must make an adjustment to an investor's interest to reflect the rate applying under section HM 60 or HM 61. The PIE may choose to adjust—
a: the investor’s interest in an investor class; or
b: the amount of a distribution paid to the investor; or
c: the amount of a payment required from the investor to satisfy the PIE's tax liability. Investor's choice
2: The PIE may offer the choice made under subsection (1) to the investor. Date of adjustment
3: An adjustment under subsection (1)(a) must be made—
a: for the quarterly calculation option, within 2 months of the end of the quarter; or
b: for the exit calculation option, within 2 months of the end of the tax year; or
c: for the provisional tax calculation option, within 3 months of the end of the income year. Extending time limits
4: On application by a multi-rate PIE, the Commissioner may extend a time limit imposed under subsection (3) if it is reasonable in the circumstances. Defined in this Act: amount, income year, investor, investor interest, multi-rate PIE, pay, PIE, prescribed investor rate, provisional tax, quarter, tax year 2007 No 97 s HL 7 Using tax credits
HM 49: Tax credits: when sections HM 50 to HM 55 apply
When sections apply
1: Sections HM 50 to HM 55 apply in relation to the tax credits of a multi-rate PIE or proxy for an investor in a multi-rate PIE that has not chosen to calculate its income tax liability under section HM 44 using the provisional tax calculation option. Limitation
2: The entity must not, other than under sections HM 51 to HM 55,—
a: use the tax credit to reduce the liability of the entity for income tax or to obtain a refund of income tax:
b: attach the tax credit to a distribution or transfer the tax credit to another person. Relationship with Part L
3: Sections HM 51 to HM 55 override Part L (Tax credits and other credits) other than subpart LS (Tax credits for multi-rate PIEs and investors). Defined in this Act: income tax, income tax liability, investor, multi-rate PIE, provisional tax, tax credit 2007 No 97 s HL 29(1), (2)
HM 50: Attributing credits to investors
When this section applies
1: This section applies when a multi-rate PIE has—
a: a credit for tax paid or withheld under subpart LB (Tax credits for payments, deductions, and family income):
b: an imputation credit under subpart LE (Tax credits for imputation credits):
c: a credit for tax paid in a foreign country or territory under subpart LJ (Tax credits for foreign income tax). Attributing amount to investor
2: The amount of the credit attributable to an investor in an investor class of the PIE for an attribution period is calculated using the formula in subsection (3). The amount attributed to the investor is the total of the amounts calculated for each investment of the PIE and each day in the attribution period. Calculation of amount
3: The formula is— credit × class's percentage × investor's percentage days in period. Definition of items in formula
4: In the formula,—
a: credit
b: class's percentage
c: investor's percentage
d: days in period Defined in this Act: amount, attribution period, imputation credit, investor, investor class, multi-rate PIE, pay, PIE, tax credit 2007 No 97 ss HL 29(3)–(5), YA 1 portfolio class fraction portfolio investor interest fraction
HM 51: Use of foreign tax credits by PIEs
When this section applies
1: This section applies when a multi-rate PIE has a tax credit under subpart LJ (Tax credits for foreign income tax) that is attributable in a tax year to an investor other than—
a: a zero-rated investor:
b: an exiting investor who is treated under section HM 61 as zero-rated. Using tax credit to satisfy income tax liability
2: The multi-rate PIE may use the tax credit under section LS 1 (Tax credits for multi-rate PIEs) to satisfy its income tax liability for the tax year in relation to the investor. The amount of the credit is determined under subsection (3). Amount
3: The total amount of the credits able to be used is the lesser of—
a: the total amount of credits attributed to the investor as a member of any investor class for the calculation period together with any amount attributed to the investor in an earlier calculation period that remains unused:
b: the amount of the PIE’s tax liability in relation to the investor as a member of any investor class for the calculation period or an earlier calculation period, and not met by any credit allocated to the earlier period. Use under exit calculation option
4: For a multi-rate PIE that calculates its tax liability for a tax year using the exit calculation option under section HM 42, the amount may be used for calculation periods earlier or later in the tax year, and in relation to different classes for the same investor. Use under quarterly option
5: For a multi-rate PIE that calculates its tax liability for a tax year using the quarterly calculation option under section HM 43, the amount may be used only for the relevant calculation period and later periods in the tax year, and in relation to different classes for the same investor. Defined in this section: amount, calculation period, income tax liability, investor, investor class, multi-rate PIE, PIE, quarter, tax credit, tax year, zero-rated investor 2007 No 97 s HL 29(10)–(12)
HM 52: Use of foreign tax credits by zero-rated and certain exiting investors
When this section applies
1: This section applies when a multi-rate PIE has a tax credit under subpart LJ (Tax credits for foreign income tax) that is attributable in a tax year to an investor who is—
a: a zero-rated investor:
b: an exiting investor who is treated under section HM 61 as zero-rated. Using tax credit to satisfy income tax liability
2: The investor may use the tax credit under section LS 3 or LS 4 (which relate to the use of tax credits) to satisfy their income tax liability for the tax year. The amount of the credit is determined under subsection (3) or (4). Amount
3: The total amount of the credits able to be used is the lesser of—
a: the total amount of the attributed foreign tax credits for the tax year or exit period, as applicable:
b: the amount calculated by multiplying the attributed PIE income of the investor from the PIE for the tax year by,—
i: for an exiting investor described in subsection (1)(b), the notified investor rate in relation to the investor for the attribution period before their exit period; or
ii: for a zero-rated investor, their basic tax rate set out in schedule 1 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits) for the tax year. Amount for PIEs or proxies
4: Despite subsection (3), the amount of the credit is the attributed amount if the investor is—
a: a multi-rate PIE; or
b: a proxy for an investor in a multi-rate PIE. Defined in this Act: amount, attributed PIE income, attribution period, exit period, foreign tax, income tax liability, investor, multi-rate PIE, notified investor rate, notify, PIE, tax credit, tax year, zero-rated investor 2007 No 97 s HL 29(7), (8)
HM 53: Use of tax credits other than foreign tax credits by PIEs
When this section applies
1: This section applies when a multi-rate PIE has—
a: a tax credit under Part L (Tax credits and other credits) other than a tax credit under subpart LJ (Tax credits for foreign income tax); and
b: the credit is attributable in a tax year to an investor in an investor class other than—
i: a zero-rated investor:
ii: an exiting investor who is treated under section HM 61 as zero-rated. Using tax credit to satisfy income tax liability
2: The PIE may use the tax credit under section LS 1 (Tax credits for multi-rate PIEs) to satisfy its income tax liability for the tax year in relation to the investor as a member of the class or of another investor class. A tax credit under this section is used only after the use of any credit under section HM 52. Amount
3: The amount of the tax credit is the amount attributed. Defined in this Act: amount, income tax liability, investor, investor class, multi-rate PIE, tax credit, tax year, zero-rated investor 2007 No 97 s HL 29(13)
HM 54: Use of tax credits other than foreign tax credits by investors
When this section applies
1: This section applies when a multi-rate PIE has a tax credit under Part L (Tax credits and other credits) other than a tax credit under subpart LJ (Tax credits for foreign income tax), that is attributable in a tax year to an investor who is—
a: a zero-rated investor:
b: an exiting investor who is treated under section HM 61 as zero-rated. Using tax credit to satisfy income tax liability
2: The investor may use the tax credit under section LS 3 or LS 4 (which relate to the use of tax credits) to satisfy their income tax liability for the tax year. Amount
3: The amount of the tax credit is the amount attributed. Defined in this Act: amount, income tax liability, investor, multi-rate PIE, tax credit, tax year, zero-rated investor 2007 No 97 s HL 29(7)(b)
HM 55: Tax credits for losses
A multi-rate PIE that has a negative amount arising under section HM 47(5) and has not chosen to calculate its tax liability using the provisional tax calculation option under section HM 44 has a tax credit for a tax year under section LS 1 (Tax credits for multi-rate PIEs). Defined in this Act: amount, multi-rate PIE, provisional tax, tax credit, tax year 2007 No 97 s HL 28 Prescribed and notified rates for investors in multi-rate PIEs
HM 56: Prescribed investor rates for investors generally
An investor in a multi-rate PIE has a prescribed investor rate of 30% unless sections HM 56 to HM 61 apply. Defined in this Act: investor, multi-rate PIE, prescribed investor rate
HM 57: Prescribed investor rates for certain natural person investors: 19.5%
An investor in a multi-rate PIE who is a natural person (other than a trustee) has a prescribed investor rate of 19.5% if—
a: they are resident in New Zealand; and
b: they have, in either of the 2 income years immediately before the tax year,—
i: $38,000 or less in taxable income; and
ii: a total amount of $60,000 or less of taxable income and attributed PIE income less any attributed PIE loss. Defined in this Act: amount, attributed PIE income, income year, investor, multi-rate PIE, prescribed investor rate, resident in New Zealand, tax year, taxable income, trustee 2007 No 97 s YA 1 portfolio investor rate prescribed investor rate
HM 58: Optional investor rates for trustees: 30%, 19.5%
An investor in a multi-rate PIE who is a trustee of a trust other than a trust referred to in section HM 59(b) may choose to have an investor rate of either 30% or 19.5%. Defined in this Act: investor, multi-rate PIE, trustee
HM 59: Prescribed investor rates for certain investors: 0%
An investor (a zero-rated investor
a: a company:
b: an organisation or trust deriving exempt income under section CW 41 or CW 42 (which relate to charities):
c: a person who derives income as a trustee, other than a trustee who chooses the 30% rate under section HM 58:
d: a PIE when an amount is attributed, other than a trustee who chooses the 30% rate under section HM 58:
e: a proxy acting under section HM 33:
f: a superannuation fund, unless the trustee chooses the 30% or 19.5% rate under section HM 58. Defined in this Act: amount, company, exempt income, investor, multi-rate PIE, PIE, prescribed investor rate, resident in New Zealand, superannuation fund, trustee 2007 No 97 s YA 1 prescribed investor rate
HM 60: Notified rates
Notifying PIE
1: Despite sections HM 56 to HM 59, an investor who has provided their tax file number to a multi-rate PIE may notify the PIE of the investor rate to be applied for a period. Section 28B of the Tax Administration Act 1994 sets out the requirements for the notice. Time of notification
2: The investor must give notice before the end of the relevant period. Application of rate
3: A multi-rate PIE must apply the investor rate last notified by an investor in relation to every day of the period. However, this subsection does not apply if the PIE has made a voluntary payment of tax under section HM 45 that is intended to satisfy its income tax liability for the period in relation to the investor unless the rate last notified applies to the voluntary payment. When chosen rate lower than rate in sections HM 56 to HM 59
4: If an investor notifies an investor rate that is lower than their prescribed investor rate that would apply under sections HM 56 to HM 59, income attributed to them by the PIE is not excluded income of the investor under sections CX 56 and CX 56B (which relate to attributed income of and distributions to certain investors in multi-rate PIEs). When rate disregarded
5: The Commissioner may notify a PIE to disregard an investor rate notified by an investor if the Commissioner considers the rate is incorrect. The 30% default rate under section HM 56 then applies. When no rate notified
6: If an investor does not notify a multi-rate PIE of their investor rate, the rate applying for a period is 30%. Defined in this Act: Commissioner, excluded income, income, investor, multi-rate PIE, notify, notified investor rate, pay, PIE, prescribed investor rate, tax file number 2007 No 97 s YA 1 portfolio investor rate prescribed investor rate
HM 61: Certain exiting investors zero-rated
Despite section HM 60, the tax rate applying to an investor is 0% if—
a: the interest of the investor in a multi-rate PIE reaches the exit level or the investor has an exit period in a quarter in which they are attributed income from the PIE; and
b: the PIE calculates and pays tax using the quarterly calculation option under section HM 43; and
c: the PIE does not choose to make voluntary payments under section HM 45. Defined in this Act: income, investor, multi-rate PIE, pay, PIE, quarter 2007 No 97 s YA 1 portfolio investor rate prescribed investor rate Exit levels and periods
HM 62: Exit levels for investors
An investor in a multi-rate PIE is treated as reaching the exit level when the PIE’s tax liability for the investor is equal to, or more than, the value of the investor’s interest in the PIE at the end of the exit period (the exit level Defined in this Act: exit level, investor, investor interest, multi-rate PIE, PIE
HM 63: Exit periods
When this section applies
1: This section applies when an investor in a multi-rate PIE reaches the exit level during a tax year. Exit period: exit calculation
2: For a PIE that calculates its tax liability using the exit calculation option under section HM 42, the investor’s exit period—
a: begins with the day that is the later of the start of the tax year and the day on which the investor last became an investor; and
b: ends on the day in the tax year when the exit level is reached. Exit period: quarterly calculation
3: For a PIE that calculates its tax liability using the quarterly calculation option under section HM 43, the investor’s exit period is the quarter in which the exit level is reached plus a grace period of 5 working days after the end of the quarter. Voluntary payments of tax
4: Subsection (3) does not apply if the PIE voluntarily pays tax under section HM 45. Defined in this Act: exit level, investor, multi-rate PIE, pay, PIE, quarter, tax year, working day 2007 No 97 s YA 1 portfolio investor exit period Treatment of losses by PIEs Losses of certain multi-rate PIEs
HM 64: Use of investor classes’ losses
When this section applies
1: This section applies when an investor class of a PIE that calculates and pays tax using the exit calculation or quarterly calculation options under section HM 42 and HM 43 has a tax loss under section HM 35(7) for a calculation period. But this section does not apply to a land loss as defined in section HM 65(3). Amount not carried forward
2: The amount is not included in a loss balance carried forward under Part I (Losses) to a later calculation period. Tax credits
3: To the extent to which the amount relates to an investor other than a zero-rated investor, the PIE has a tax credit under section LS 1 (Tax credits for multi-rate PIEs). The amount of the credit is calculated under section HM 47(5). Defined in this Act: amount, calculation period, investor class, land loss, loss balance, pay, PIE, tax credit, zero-rated investor 2007 No 97 s HL 32(1)
HM 65: Use of land losses of investor classes
When this section applies
1: This section applies when an investor class of a multi-rate PIE that calculates and pays tax using the exit calculation option or the quarterly calculation option under section HM 42 or HM 43 has a land loss for a calculation period. Amount carried forward
2: The amount of land loss may be included in a loss balance carried forward under Part I (Losses) to a later calculation period and used under section HM 35(5) to reduce an amount of taxable income from the class. Meaning of land loss
3: For the purposes of this section, a land loss
a: are investments in land or shares in a land investment company; and
b: have a value that is more than 50% of the market value of all the PIE's investments in which the class has the entitlement. Defined in this Act: amount, calculation period, investor class, investor interest, land, land investment company, land loss, loss balance, market value, multi-rate PIE, pay, PIE, quarter, share, tax loss, taxable income 2007 No 97 s HL 32(2), (3) Formation losses
HM 66: Formation losses carried forward to tax year
What this section applies to
1: This section applies to an entity that becomes a PIE, other than a multi-rate PIE that calculates and pays tax using the exit calculation or quarterly calculation option under section HM 42 or HM 43, when the entity has a formation loss. Amount carried forward
2: The amount of formation loss may be included in a loss balance carried forward under Part I (Losses) to a tax year in which the entity is a PIE. Defined in this Act: amount, formation loss, loss balance, multi-rate PIE, pay, PIE, quarter, tax, tax year 2007 No 97 s HL 30(1), (2)
HM 67: Formation losses carried forward to first quarter
When this section applies
1: This section applies when an entity becomes a multi-rate PIE that—
a: calculates and pays tax using the exit calculation or quarterly calculation option under section HM 42 or HM 43; and
b: has a formation loss. Amount carried forward
2: The amount of formation loss may be carried forward under Part I (Losses) to the quarter in which the entity becomes a PIE. Defined in this Act: amount, formation loss, multi-rate PIE, pay, PIE, quarter 2007 No 97 s HL 30(1)
HM 68: When formation losses carried forward are less than 5% of formation investment value
If the total amount of formation loss carried forward under section HM 67 is less than 5% of the total market value of the PIE’s investments at the time it becomes a PIE, it may allocate to an attribution period the amount not already allocated, when calculating under section HM 35(5) the taxable amount of an investor class for the attribution period. Defined in this Act: amount, attribution period, formation loss, investor class, market value, PIE, taxable amount 2007 No 97 s HL 30(3)
HM 69: When formation losses carried forward are 5% or more of formation investment value: 3-year spread
What this section applies to
1: This section applies to spread the formation loss over the period of 3 years from the date the entity becomes a PIE when the amount of formation loss carried forward under section HM 67 is 5% or more of the total market value of the PIE’s investments at the time it becomes a PIE. Amount
2: The maximum amount of formation loss that the PIE may allocate to an attribution period, when calculating under section HM 35(5) the taxable amount of an investor class for the attribution period, is the amount calculated using the formula— initial loss × days 1095. Definition of items in formula
3: In the formula,—
a: initial loss
b: days Unused formation losses
4: For the purposes of the calculation of the amount in subsection (2), the formation loss includes any unused formation loss that was allocated to an earlier attribution period. Treatment after 3-year period
5: After the end of the period of 3 years referred to in subsection (1), any residual formation loss may be carried forward to a tax year in which the entity is a PIE under section HM 66. Defined in this Act: amount, attribution period, formation loss, investor class, market value, PIE, tax year, taxable amount 2007 No 97 s HL 30(4), (5)
HM 70: Maximum amount of formation losses allocated by multi-rate PIEs to investor classes
Maximum amount for allocation
1: Despite sections HM 68 and HM 69, the maximum amount of formation loss that may be allocated, when calculating under section HM 35(5) the taxable amount of an investor class for an attribution period, is calculated using the formula— class net income – credits rate. Definition of items in formula
2: In the formula,—
a: class net income
b: credits
i: imputation credits:
ii: Maori authority credits:
iii: RWT credits:
iv: FDP credits:
c: rate Defined in this Act: amount, attribution period, company, FDP credit, formation loss, imputation credit, investor class, Maori authority credit, net income, RWT 2007 No 97 s HL 30(6), (7) Elections and consequences
HM 71: Choosing to become PIE
An entity that, at the time of election, meets the requirements of the entry rules in sections HM 8 to HM 10, HM 17, HM 18, and HM 20, except to the extent to which the relevant requirement is said not to be applicable to the entity, may choose to become a PIE by notifying the Commissioner under section 31B of the Tax Administration Act 1994. Defined in this Act: Commissioner, notify, PIE 2007 No 97 s HL 11(1), (3)
HM 72: When elections take effect
Notice of election
1: An election under section HM 71 to become a PIE takes effect on the latest of the following dates:
a: the date the entity is formed:
b: the date set out in the notice:
c: 30 days before the Commissioner receives the notice. When entity does not meet basic requirements
2: Despite subsection (1), an entity's election to become a PIE does not take effect if, in the period ending 12 months after the date on which the election would be effective,—
a: the entity cancels the election:
b: an event or situation arises that means the entity would lose PIE status under any of sections HM 24 to HM 28. Notice of cancellation
3: An election under section HM 29 to cancel PIE status takes effect on the latest of the following dates:
a: the date the entity became a PIE:
b: the date set out in the notice:
c: the date on which the Commissioner receives the notice. Defined in this Act: Commissioner, notice, PIE 2007 No 97 ss HL 11(2), (2B), (4), HL 13(1), (4), HL 15(2)
HM 73: Transition: provisional tax
When this section applies
1: This section applies when an entity chooses to become a PIE in an income year and has an increased liability for provisional tax for the income year because of the election. Penalties and interest
2: The entity is not liable to pay any penalty or interest for which it would otherwise be liable for an inaccuracy arising from the increased liability in—
a: an estimate of provisional tax made before the election:
b: a payment of provisional tax due before the end of the 2-month period that starts when the election takes effect. Tax liability
3: An entity that becomes a PIE in a tax year and is liable to pay an amount of income tax because of the disposal and reacquisition referred to in section HM 75 may satisfy the tax liability by paying the Commissioner at least—
a: one third of the liability in the tax year; and
b: one half of the balance remaining after a payment under paragraph (a) in the tax year after that in which the entity became a PIE; and
c: the balance owing after the payments under paragraphs (a) and (b) in the second tax year after that in which the entity became a PIE. Defined in this Act: amount, Commissioner, income tax, income year, pay, PIE, provisional tax, tax year 2007 No 97 s HL 14
HM 74: Transition: entities with non-standard income years
When this section applies
1: This section applies when—
a: an entity with a non-standard income year chooses to become a PIE; and
b: the entity calculates and pays its tax liability using the exit calculation or quarterly calculation option under section HM 42 or HM 43. Consequential changes in balance date
2: Section 39 of the Tax Administration Act 1994 applies as if—
a: the day before that on which the election takes effect were the original balance date of the entity; and
b: the next 31 March after the election takes effect were a new balance date approved by the Commissioner for the entity. Defined in this Act: Commissioner, non-standard income year, pay, PIE, quarter 2007 No 97 s HL 13(2)
HM 75: Transition: treatment of shares held in certain companies
When subsection (2) applies
1: Subsection (2) applies when—
a: an entity chooses to become a PIE; and
b: before the election takes effect—
i: the entity holds a share in relation to which the proceeds of disposal would be excluded income under section CX 55(3)(a) and (b) (Proceeds from disposal of investment shares) once the entity becomes a PIE:
ii: the entity is a share supplier in a returning share transfer in relation to that type of share; and
c: the share is in a company that is not a PIE and does not become a PIE within 6 months from the date on which the entity became a PIE. Disposal and reacquisition
2: The entity is treated as—
a: disposing of the share to another person; and
b: receiving consideration of an amount that equals the market value of the share at the time; and
c: reacquiring the share from the other person for the same consideration. Timing
3: The disposal and reacquisition is treated as occurring on the day before that on which the election takes effect. When subsection (5) applies
4: Subsection (5) applies when an entity—
a: loses PIE status under any of sections HM 24 to HM 28 or chooses to cancel PIE status under section HM 29; and
b: holds a share in relation to which the proceeds of disposal would be excluded income under section CX 55(3)(a) and (b) while the entity is a PIE. Disposal and reacquisition
5: The entity is treated as—
a: disposing of the share to another person; and
b: receiving consideration of an amount that equals the market value of the share at the time; and
c: reacquiring the share from the other person for the same consideration. Timing
6: The disposal and reacquisition is treated as occurring on the day before PIE status is lost. Defined in this Act: amount, company, exempt income, market value, PIE, returning share transfer, share, shareholder 2007 No 97 ss HL 13(3), HL 15(3)
HM 76: Transition: FDPA companies
When an FDPA company becomes a PIE during a tax year, the balance of the company’s FDP account at the end of the tax year for the purposes of section RM 21(2)(c) (Refunds when loss balances used to reduce net income) is equal to the balance of the FDP account immediately before the company becomes a PIE. Defined in this Act: FDP account, FDPA company, PIE, tax year 2007 No 97 s HL 13(3B) .
2: Subsection (1) applies for the 2010–11 and later income years.
293: Transitional residents
1: Section HR 8(1) Provisions under which transitional resident treated as non-resident
1: When a foreign-sourced amount is derived by a transitional resident, the following provisions apply to produce a result for income tax purposes that is the same as if the transitional resident were non-resident:
a: sections CD 45, CE 2, CQ 2, CQ 5, and CW 27 (which relate to income):
b: sections DN 2 and DN 6 (which relate to deductions):
c: sections EW 5, EW 37, EW 41, EX 16, EX 41, and EX 64 (which relate to the financial arrangements rules and to the CFC and FIF rules):
d: sections HC 25, HC 26, and HC 30 (which relate to the trust rules):
e: sections MC 5, MC 10, MD 7, and MF 5 (which relate to tax credits):
f: sections RE 2, RE 5 and RF 12 (which relate to the RWT and NRWT rules):
g: section YD 1 (Residence of natural persons):
h: section 41 of the Tax Administration Act 1994.
2: In section HR 8(2)
a: paragraph (a) is replaced by the following:
a: they are resident in New Zealand through acquiring a permanent place of abode as described in section YD 1(2) or through the 183-day rule set out in section YD 1(3); and :
b: in paragraph (b), section YD 1(2) to (4) section YD 1(2) and (3), ignoring the rule in section YD 1(4),
3: In section HR 8(3)
a: in paragraph (a), subsection (2)(b) subsection (2)(a)
b: in paragraph (b)(ii), section YD 1(2) to (4) section YD 1(2) and (3), ignoring the rule in section YD 1(4),
4: In section HR 8(4) may choose by notice under subsection (5) may choose by notice to the Commissioner or by notice under subsection (5)
5: After section HR 8(6) Notice of election
7: A notice under subsection (4) to stop being a transitional resident must be received by the Commissioner by—
a: the time within which the person's return of income must be filed under section 37 of the Tax Administration Act 1994; or
b: if the person or their tax agent applies for it, a further time allowed by the Commissioner.
6: Subsections (1) to (5) apply for the 2008–09 and later income years.
294: New heading and sections HR 9 and HR 10 added
1: After section HR 8 RMBS special purpose vehicles
HR 9: RMBS special purpose vehicles are transparent
For the purposes of the liabilities and obligations under an Inland Revenue Act of a registered bank described in the definition of RMBS special purpose vehicle
a: the registered bank is treated as carrying on an activity carried on by the RMBS special purpose vehicle, and having a status, intention, and purpose of the RMBS special purpose vehicle, and the RMBS special purpose vehicle is treated as not carrying on that activity or having that status, intention, or purpose:
b: the registered bank is treated as holding property that the RMBS special purpose vehicle holds, and the RMBS special purpose vehicle is treated as not holding that property:
c: the registered bank is treated as being party to any arrangement to which the RMBS special purpose vehicle is a party, and the RMBS special purpose vehicle is treated as not being that party to that arrangement:
d: the registered bank is treated as doing a thing and being entitled to a thing that the RMBS special purpose vehicle does or is entitled to, and the RMBS special purpose vehicle is treated as not doing that thing or being entitled to that thing. Defined in this Act: arrangement, Inland Revenue Acts, registered bank, RMBS special purpose vehicle
HR 10: What happens when vehicle stops being RMBS special purpose vehicle?
Property transferred and parties reconstituted
1: When a company or a trustee of a trust (the vehicle
a: the relevant registered bank is treated as disposing of its property (the property section HR 9(b)
b: the vehicle is treated as acquiring the property immediately after the vehicle stops being an RMBS special purpose vehicle:
c: the relevant registered bank is treated as not being a party to an arrangement (the arrangement section HR 9(c)
d: the vehicle is treated as being a party to the arrangement immediately after the vehicle stops being an RMBS special purpose vehicle. Property transferred: market value
2: The disposition of property in subsection (1)(a) subsection (1)(b) Parties reconstituted: consideration
3: At the time the registered bank or the vehicle becomes a party to an arrangement under subsection (1)(c) or (d) section HR 9(c) Definition
4: In this section, unwind section HR 9
a: residential mortgage backed securities held by the relevant registered bank or the Reserve Bank of New Zealand are cancelled; and
b: interests described in the definition of RMBS special purpose vehicle
c: the vehicle is terminated, by liquidation or otherwise. Defined in this Act: arrangement, company, consideration, dispose, liquidation, registered bank, residential mortgage backed securities, RMBS special purpose vehicle, trustee, unwind .
2: Subsection (1)
295: New sections HZ 5 and HZ 6 added
1: After section HZ 4
HZ 5: Transitional provisions for PIE rules
Intention of new law
1: The PIE rules are the provisions of the Income Tax Act 2007 relating to portfolio investment entities in rewritten form, and are intended to have the same effect as the relevant corresponding provisions of the Income Tax Act 2007. Subsection (3) overrides this subsection. Using old law as interpretation guide
2: Unless subsection (3) applies, in circumstances where the meaning of a PIE rule (the new law
a: the wording of the provisions of the Income Tax Act 2007 relating to portfolio investment entities that correspond to and are replaced by the PIE rules (the old law
b: it can be assumed that a corresponding old law provision exists for each new law provision. Limits to subsections (1) and (2)
3: Subsections (1) and (2) do not apply in the case of—
a: a PIE rule that repeals an old law and replaces it with a new law:
b: a PIE rule that is amended after the commencement of section 292(2) of this Act, with effect from the date on which the amendment comes into force. Defined in this Act: PIE rules, portfolio investment entity
HZ 6: Saving of binding rules relating to portfolio investment entities
When, and extent to which, this section applies
1: This section applies when, and to the extent to which,—
a: before the commencement of this Act,—
i: an applicant has applied for a private ruling, a product ruling, or a status ruling, on an arrangement that is entered into, or that the applicant seriously contemplates will be entered into, before the commencement of this Act:
ii: a public ruling is issued; and
b: the binding ruling is about a provision of the Income Tax Act 2007 relating to portfolio investment entities (the old law
c: the PIE rules corresponding to the old law (the new law
d: the binding ruling—
i: continues to exist at the commencement of this Act:
ii: is made after the commencement of this Act in relation to an old law before 1 April 2010:
iii: is made in relation to an old law provision of the Income Tax Act 2004 to which section ZA 4 (Saving of binding rulings) of the Income Tax Act 2007 applies, that continues to exist at the commencement of this Act; and
e: in the absence of this section, the commencement of this Act would mean that the binding ruling would cease to apply because of section 91G of the Tax Administration Act 1994. Ruling about new law
2: The binding ruling is treated as if it were made about the new law, so that the effect of the ruling at the commencement of this Act is the same as its effect before the commencement. No confirmation rulings
3: To the extent to which a binding ruling continued by subsection (2) exists and applies to an arrangement, or to a person and an arrangement, the Commissioner must not make a binding ruling on how—
a: the new law applies to the arrangement or to the person and the arrangement; or
b: this subsection applies to the arrangement or to the person and the arrangement. Defined in this Act: arrangement, binding ruling, Commissioner, PIE rules, portfolio investment entity .
2: Subsection (1) applies for the 2010–11 and later income years.
296: Restrictions relating to ring-fenced tax losses
1: Section IA 7(3)
2: In section IA 7(5) provisions that deal with this net loss provisions that deal with this net loss, other than the surplus amount,
3: In section IA 7(6) IQ 3 IQ 3(3)
4: Section IA 7(10) Net losses of multi-rate PIEs
10: The general rules do not apply to a multi-rate PIE's net loss when the PIE does not calculate and pay tax using the provisional tax calculation option under section HM 44 (Provisional tax calculation option).
5: In section IA 7 life insurer policyholder net loss
6: In section IA 7
a: portfolio tax rate entity
b: multi-rate PIE PIE provisional tax
7: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
8: Subsections (2) and (3) apply for the 2008–09 and later income years.
9: Subsection (4) applies for the 2010–11 and later income years.
297: Restrictions relating to schedular income
1: After the opening words in section IA 8(1)
(aa): paragraph (a), which relates to life insurers' schedular policyholder base income; or .
2: Section IA 8(1)(a)
3: In section IA 8 schedular policyholder base income
4: Subsections (1) and (3) apply––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
5: Subsection (2) applies for the 2008–09 and later income years.
298: Common ownership: group of companies
1: Section IC 3(2B)(b)
b: the other companies in the group are either portfolio tax rate entities or portfolio land companies.
2: Section IC 3(2B) When multi-rate PIEs included in group
2B: In relation to 2 or more companies of which 1 is a multi-rate PIE, the companies are treated as a group of companies at a particular time or for a particular period if—
a: the PIE owns 100% of the voting interests in the other companies; and
b: the other companies in the group are either multi-rate PIEs or land investment companies.
3: In section IC 3
a: portfolio land company portfolio tax rate entity
b: land investment company multi-rate PIE voting interest
4: Subsection (1) applies for the 2008–09 and 2009–10 income years.
5: Subsection (2) applies for the 2010–11 and later income years.
299: New section IC 13 added
After section IC 12
IC 13: Variation of requirements for development companies in Niue
When this section applies
1: This section applies in relation to the required common ownership of group companies set out in sections IC 2(2), IC 3, and IC 5(1)(a) for the purposes of providing relief to company A for losses incurred in connection with development work in Niue. Order in Council
2: The Governor-General may make an Order in Council varying the threshold in section IC 3(1)(a) and (b) applying to company A if satisfied that the company—
a: is carrying on a business or enterprise that—
i: has been or is carried on wholly or mainly for the development of Niue:
ii: has been or is important to the development of Niue; and
b: has incurred expenditure wholly or mainly in deriving income from Niue or in the course of carrying on a business or enterprise in Niue for the purpose of deriving income. Named company
3: For the purposes of subsection (2), company A must be a company named in the order. Application of order
4: The order may specify a period or periods to which it applies. If no period is specified, the order applies to the whole commonality period. Defined in this Act: business, commonality period, company, group of companies, income .
300: Pre-consolidation losses: use by group companies
1: Section ID 3(1)
1: This section applies in a tax year when—
a: a company ( company A
b: company A, in the continuity period relating to a tax loss component included in the loss balance, does not have the required common ownership under section IC 3 (Common ownership: group of companies) with 1 or more companies in the consolidated group.
2: In section ID 3 tax loss component
3: Subsection (1) applies for the 2008–09 and later income years.
301: When this subpart applies
1: Section IP 1(1)(a) and (b)
a: when commonality of ownership required by section IC 5(1)(a) (Company B using company A's tax loss) is not met during a tax year (a commonality breach
b: when continuity of ownership required by section IA 5(1) (Restrictions on companies' loss balances carried forward) is broken during a tax year, or when a new or existing company joins a group of companies during a tax year (a continuity breach
2: Subsection (1) applies for the 2008–09 and later income years.
302: Ring-fencing cap on attributed CFC net losses
1: After section IQ 2(1) Attributed CFC net losses from year after transition
1B: If a person's attributed CFC net loss relates to an income year for which section IQ 2B applies to the person and is carried forward to the tax year, the amount used for the tax year in reducing the person's net income is equal to the amount subtracted under subsection (1). Attributed CFC net losses from income year before transition
1C: If a person's attributed CFC net loss relates to an income year before section IQ 2B applies to the person and is carried forward to a tax year in which section IQ 2B applies to the person,—
a: the amount available in the tax year for reducing the person's net income is equal to the equivalent CFC loss under section IQ 2B:
b: the amount of that attributed CFC net loss that is not available to the person after the tax year is equal to the converted BE loss under section IQ 2B.
2: Section IQ 2(3)
3: If the person cannot use all of the maximum amount referred to in subsection (1) because there is insufficient net income, the surplus is no longer available to them as a CFC net loss, but becomes a tax loss component under section IA 2(4) (Tax losses).
3: Subsection (1)
4: Subsection (2) applies for the 2008–09 and later income years.
303: New section IQ 2B inserted
1: After section IQ 2
IQ 2B: Attributed CFC net loss from tax year before first affected year
When this section applies
1: This section applies when a person has an amount (the available BE loss
a: relates to a tax year before the first tax year for which this section applies to the person; and
b: relates to a CFC or FIF that is resident in a country (the jurisdiction
c: is carried forward to a tax year (the conversion year What this section does
2: In this section, subsection (3) gives the person an option that available BE loss for a jurisdiction not be carried forward and subsections (4) to (7) give, for whichever of the 4 possible alternative situations is relevant for the person,—
a: the amount of the available BE loss (the converted BE loss
i: treated as being converted into an amount referred to in paragraph (b) in the conversion year; and
ii: is not available to the person to be carried forward as available BE loss for a later tax year:
b: the amount (the equivalent CFC loss Option: loss not carried forward
3: A person may choose by giving a notice in a form and at a time acceptable to the Commissioner that the available BE loss for a jurisdiction not be carried forward under this section. Person not resident group member: more jurisdictional BE income
4: For a person who is not a resident group member and has jurisdictional BE income for the conversion year that is greater than zero and greater than the person's jurisdictional attributed income for the conversion year,—
a: the person's converted BE loss in the conversion year is the lesser of—
i: the person's jurisdictional BE income for the conversion year:
ii: the person's available BE loss for the conversion year:
b: the person's equivalent CFC loss is the lesser of—
i: the person's jurisdictional attributed income for the conversion year:
ii: the amount calculated by dividing the person's available BE loss for the conversion year by the person's jurisdictional income ratio for the conversion year. Person not resident group member: more jurisdictional attributed income
5: For a person who is not a resident group member and has jurisdictional attributed income for the conversion year that is greater than or equal to zero and greater than or equal to the person's jurisdictional BE income for the conversion year,—
a: the person's converted BE loss for the conversion year is the lesser of—
i: the person's available BE loss for the conversion year:
ii: the person's jurisdictional attributed income for the conversion year:
b: the person's equivalent CFC loss is equal to the person's converted BE loss for the conversion year. Resident group member: more jurisdictional BE income
6: For a person who is a resident group member for a wholly-owned group of companies and has jurisdictional BE income for the conversion year that is greater than zero and greater than the person's jurisdictional attributed income for the conversion year,—
a: the person's converted BE loss for the conversion year is the lesser of—
i: the person's available BE loss for the conversion year:
ii: the greater of the person's jurisdictional BE income for the conversion year and the amount calculated by multiplying the group's jurisdictional income ratio for the conversion year by the person's jurisdictional attributed income for the conversion year:
b: the person's equivalent CFC loss is the amount calculated by dividing the person's converted BE loss for the conversion year by the group's jurisdictional income ratio for the conversion year. Resident group member: more jurisdictional attributed income
7: For a person who is a resident group member and has jurisdictional attributed income for the conversion year that is greater than or equal to zero and greater than or equal to the person's jurisdictional BE income for the conversion year,—
a: the person's converted BE loss for the conversion year is the lesser of—
i: the person's available BE loss for the conversion year:
ii: the person's jurisdictional attributed income for the conversion year multiplied by the group's jurisdictional income ratio for the conversion year:
b: the person's equivalent CFC loss is equal to the amount calculated by dividing the person's converted BE loss for the conversion year by the group's jurisdictional income ratio for the conversion year. Election by person or group to fix jurisdictional income ratio
8: A person or wholly-owned group may choose under this subsection by notice, in a form and at a time acceptable to the Commissioner, that the person or members of the group use a jurisdictional income ratio—
a: equal to the average of the jurisdictional income ratios for the person or group, under paragraph (b) of the definition in subsection (9), for 2 consecutive tax years—
i: beginning at or after the beginning of the 2010–11 tax year; and
ii: in each of which the person or group has jurisdictional BE income; and
b: for all tax years after the 2 tax years referred to in paragraph (a). Some definitions
9: For a person or wholly-owned group and a tax year for which the person or members of the wholly-owned group have an income interest in a CFC that is resident in a country or territory (the jurisdiction jurisdictional attributed income
a: for a person and the tax year, the amount that is the greater of zero and the amount calculated by—
i: finding, for each CFC resident in the jurisdiction, the attributed CFC income or loss of the person from the CFC for the tax year:
ii: finding, for each FIF resident in the jurisdiction for which the person uses the branch equivalent method, the FIF income or loss of the person from the FIF for the tax year:
iii: subtracting the total of loss amounts under subparagraphs (i) and (ii) from the total of income amounts under subparagraphs (i) and (ii):
b: for a wholly-owned group and the tax year, the amount that is the greater of zero and the attributed CFC income or loss and FIF income or loss, treating losses as negative, of members of the group who are New Zealand residents from CFCs and FIFs that are resident in the jurisdiction for the tax year, consolidated for the purposes of the financial statements of the group jurisdictional BE income
a: for a person and the tax year, the amount that is the greater of zero and the amount calculated by—
i: multiplying, for each CFC resident in the jurisdiction, the person's income interest in the CFC for the tax year by the branch equivalent income or loss of the CFC for the tax year or, if the person chooses, by the amount given by subsection (10) for the CFC for the tax year:
ii: finding, for each FIF resident in the jurisdiction for which the person uses the branch equivalent method, the FIF income or loss of the person from the FIF for the tax year:
iii: subtracting the total of loss amounts under subparagraphs (i) and (ii) from the total of income amounts under subparagraphs (i) and (ii):
b: for a wholly-owned group and the tax year, the amount that is the greater of zero and the amount calculated, treating losses as negative, by—
i: multiplying, for each CFC resident in the jurisdiction, the income interest in the CFC of members of the group who are New Zealand residents for the tax year by the branch equivalent income or loss of the CFC for the tax year or, if the group chooses, by the amount given by subsection (10) for the CFC for the tax year:
ii: consolidating the results for the purposes of the financial statements of the group jurisdictional income ratio
a: for a person that has not made an election under subsection (8), means the greater of 1 and the amount calculated by dividing the person's jurisdictional BE income for the tax year by the person's jurisdictional attributed income for the tax year:
b: for a wholly-owned group that has not made an election under subsection (8) for the tax year, means the greater of 1 and the amount calculated by dividing the group's jurisdictional BE income for the tax year by the group's jurisdictional attributed income for the tax year:
c: for a person or wholly-owned group that has made an election under subsection (8) for the tax year, means the amount given by subsection (8) for the person or group and the tax year resident group member Option to determine jurisdictional BE income from accounts
10: In determining the jurisdictional BE income of a person or wholly-owned group, the person or group may choose to use, instead of the branch equivalent income or loss of a CFC, the profit or loss of the CFC before taxation given by accounts—
a: complying with generally accepted accounting practice in New Zealand or an equivalent standard for the consistent and undistorted reporting of net profits in the country in which the accounts are prepared; and
b: audited by an accountant who is—
i: a chartered accountant or an accountant of equivalent professional standard in the country in which the accounts are prepared; and
ii: independent of the CFC and the person or wholly-owned group; and
c: are given an unqualified opinion or an opinion of equivalent standard in the country in which the accounts are prepared. Defined in this Act: attributed CFC income, attributed CFC loss, branch equivalent income, branch equivalent loss, CFC, group of companies, income interest, jurisdictional attributed income, jurisdictional BE income, jurisdictional income ratio, New Zealand resident, resident group member, tax year, wholly-owned group, wholly-owned group of companies .
2: Subsection (1)
304: Ring-fencing cap on FIF net losses
1: Section IQ 3(1)
1: If a person's FIF net loss is carried forward to a tax year, and they have calculated the amount of FIF net loss under the branch equivalent method, the maximum amount that they may subtract from their net income for the tax year must be no more than—
a: all attributed CFC income that they derive in the tax year in relation to a CFC resident in the country in which the loss arose; and
b: all FIF income calculated under the branch equivalent method that they derive in the tax year in relation to a FIF resident in the country in which the loss arose.
2: After section IQ 3(2) Treatment of excess
3: If the person cannot use all of the maximum amount referred to in subsection (1) because there is insufficient net income, the surplus is no longer available to them as a FIF net loss, but becomes a tax loss component under section IA 2(4) (Tax losses).
3: In section IQ 3 attributed CFC income CFC
4: Subsections (1) and (2) apply for the 2008–09 and later income years.
305: Group companies using attributed CFC net losses
1: In section IQ 4(3)(a)
a: the amount of the tax loss that company A may make available to another group company ( company B .
2: Subsection (1)
306: Group companies using FIF net losses
1: Section IQ 5(3)(a)
a: if the FIF net loss is calculated under the branch equivalent method, the maximum amount that may be made available in the tax year must be no more than—
i: all attributed CFC income that another group company derives in the tax year in relation to a CFC resident in the country in which the loss arose; and
ii: all FIF income calculated under the branch equivalent method that another group company derives in the tax year in relation to a FIF resident in the country in which the loss arose.
2: In section IQ 5 attributed CFC income CFC
3: Subsection (1) applies for the 2008–09 and later income years.
307: Subpart IT replaced
1: Subpart IT
IT: Cancellation of life insurer's losses
IT 1: Cancellation of life insurer's policyholder net losses
What this section applies to
1: This section applies to the amount of a life insurer's tax loss to be carried forward to the tax year corresponding to the income year that includes 1 July 2010 (the tax year cancelled amount Cancellation of life insurer's policyholder net losses
2: The cancelled amount—
a: is removed from the life insurer's available tax loss for the tax year, except as provided by section EY 5(2)
b: must not be subtracted from the life insurer's net income under section BC 5 (Taxable income) for the tax year, except as provided by section EY 5(2)
c: is not a tax loss component on and after 1 July 2010; and
d: is cancelled on and after 1 July 2010. Defined in this Act: available tax loss, income year, life insurer, net income, policyholder net loss, ring-fenced tax loss, tax loss, tax loss component, tax year
IT 2: Cancellation of life insurer's tax loss when allowed into policyholder base
What this section applies to
1: This section applies to the amount of a life insurer's tax loss to be carried forward to a tax year corresponding to an income year that includes 1 July 2010 and later tax years. Cancellation of life insurer's tax loss
2: When the life insurer has for an income year a policyholder base allowable deduction as provided by section EZ 61 (Allowance for cancelled amount: spreading), an equal amount—
a: is removed from the life insurer's available tax loss for the tax year corresponding to the income year; and
b: must not be subtracted from the life insurer's net income under section BC 5 for the tax year; and
c: is not a tax loss component; and
d: is cancelled. Defined in this Act: available tax loss, income year, life insurer, net income, policyholder base allowable deduction, tax loss, tax loss component, tax year .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
308: Remaining refundable credits: PAYE, RWT, and certain other items
1: In section LA 6(1)(e) authority credits). authority credits):
f: section LS 1 (Tax credits for portfolio tax rate entities and investors).
2: In section LA 6(1)(f) (Tax credits for portfolio tax rate entities and investors) (Tax credits for multi-rate PIEs)
3: Subsection (2) applies for the 2010–11 and later income years.
309: Remaining refundable credits: tax credits for families
1: In section LA 7 Remaining refundable credits: tax credits under social policy schemes
2: Section LA 7(1) What this section applies to
1: This section applies to a person's tax credit remaining for a tax year under section LA 5(5), if it is a tax credit under—
a: section LB 4 (Tax credits for families):
b: section LD 1(5) (Tax credits for charitable and other public benefit gifts).
310: New section LA 8B inserted
1: After section LA 8
LA 8B: General rules particular to life insurers
Apportionment
1: For the purposes of this subpart, a life insurer’s total tax credit is apportioned between their policyholder base and shareholder base, to the extent to which section EY 4 (Apportionment of income of particular source or nature, and of tax credits) applies and apportions the credit. Unsatisfied income tax liability
2: Despite section LA 3,—
a: a life insurer has an unsatisfied income tax liability to the extent to which—
i: the tax credit apportioned to their policyholder base is less than their schedular income tax liability for schedular policyholder base income (the policyholder base income tax liability
ii: the tax credit apportioned to their shareholder base is less than their income tax liability for the tax year, calculating their income tax liability (the shareholder base income tax liability
b: the amount of unsatisfied income tax liability is the total of the difference, if any, described in paragraph (a)(i) and the difference, if any, described in paragraph (a)(ii):
c: the amount of unsatisfied income tax liability under paragraph (b) is satisfied when the life insurer pays their terminal tax for the tax year. Use of credits
3: Despite section LA 4,—
a: if the tax credit apportioned to the policyholder base or the shareholder base is greater than the relevant base income tax liability described in subsection (2)(a)(i) or (ii), the tax credit is used, in the order prescribed in section LA 4(1), to satisfy the relevant base income tax liability. There is no cross-crediting:
b: tax credits not used under paragraph (a) are treated as remaining tax credits referred to in section LA 4(2) and the life insurer must deal with the credits under section LA 5. Defined in this Act: income tax liability, life insurer, policyholder base, schedular policyholder base income, shareholder base, shareholder base allowable deduction, shareholder base income, tax credit, tax year .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
311: Use of tax credits
1: In section LA 9 Section OZ 11 (Tax credits for imputation credits and FDP credits) may apply to modify this section.
2: Subsection (1) applies for the 2008–09 and later income years.
312: Section LB 1 replaced
Section LB 1
LB 1: Tax credits for PAYE income payments
When this section applies
1: This section applies in a tax year when an employer provides the Commissioner with an employer monthly schedule that shows an amount of tax withheld from a PAYE income payment of a person who is an employee. Amount of credit
2: The person has a tax credit for the tax year equal to the amount of tax shown as withheld. Application to close companies
3: Despite subsection (2), the amount of the tax credit must be no more than the amount of tax paid to the Commissioner if—
a: the employer is a close company; and
b: the employer and the person are associated persons, or the employer and the spouse, civil union partner, or de facto partner of the person are associated persons; and
c: the employer withheld the amount of tax for the PAYE income payment shown in the employer monthly schedule. Exclusions
4: The person's credit is extinguished if the Commissioner does not receive an employer monthly schedule for the relevant amount of tax, or when the relevant particulars of the schedule are incorrect. However, the credit is restored to the person if the relevant matter is corrected and, for the purposes of this section, it is as if the error had not been made. Defined in this Act: amount, amount of tax, associated person, close company, Commissioner, employee, employer, employer monthly schedule, pay, PAYE income payment, tax credit .
313: Tax credits for resident withholding tax
1: Section LB 3(3) Multi-rate PIEs and their investors
3: For a multi-rate PIE and an investor in a multi-rate PIE, the amount of a tax credit is limited to the extent allowed under subpart HM (Portfolio investment entities).
2: In section LB 3 portfolio tax rate entity multi-rate PIE
3: Subsection (1) applies for the 2010–11 and later income years.
314: Tax credits for families
1: In section LB 4 Tax credits under subparts MD and ME .
2: In section LB 4 Adjustments for credits used
2: The person's tax credit is adjusted if an instalment of the credit under subpart MF (Payment of credits) is used to satisfy an amount of tax for an earlier income year. The adjustment to the tax credit is equal to the total amount of instalments payable under section MF 1 (Application for payment of tax credit by instalment) that are recovered by the Commissioner under section MF 6
3: In section LB 4 amount of tax corresponding income year pay
4: In section LB 4 , MD 1(3A)
5: Subsections (1) and (2) apply for the 2008–09 and later income years.
315: Tax credits related to personal service rehabilitation payments: providers
1: Section LB 7(4)(b)
b: tax rate
i: for a payment to which section RD 18 (Schedular payments without notification) applies, the rate under schedule 4, part I, clause 1 together with any additional amount required to be withheld under section RD 18, determined using the rates set out in that section:
ii: for a payment to which a special tax rate certificate applies, the rate applying to the payment as determined by the Commissioner under section 24N of the Tax Administration Act 1994.
2: Subsection (1) applies for the 2008–09 and later income years.
316: Tax credits related to personal service rehabilitation payments: payers
1: Section LB 8(3)(c)
c: tax rate
i: for a payment to which section RD 18 (Schedular payments without notification) applies, the rate under schedule 4, part I, clause 1 together with any additional amount required to be withheld under section RD 18, determined using the rates set out in that section:
ii: for a payment to which a special code applies, the rate applying to the payment as determined by the Commissioner under section 24N of the Tax Administration Act 1994.
2: Subsection (1) applies for the 2008–09 and later income years.
317: Tax credits for transitional circumstances
1: In section LC 4(4) 0.020 0.20
2: Subsection (1) applies for the 2008–09 and later income years.
318: Tax credits for housekeeping
In section LC 6(4) section LA 7 (Remaining refundable credits: tax credits for families) section LA 7
319: Subpart LD heading replaced
The heading to subpart LD Tax credits for gifts and donations
320: New heading inserted
Before section LD 1 Charitable and other public benefit gifts
321: Tax credits for charitable or other public benefit gifts
In section LD 1(5) section LA 7 (Remaining refundable credits: tax credits for families) section LA 7
322: Exclusions
1: In section LD 2 Section LD 1 does not apply to—
2: In section LD 2(f) trusts). trusts):
g: in relation to the credit, a person who has a tax credit for a payroll donation.
323: New heading and sections LD 4 to LD 8 added
After section LD 3 Payroll donations
LD 4: Tax credits for payroll donations
Who this section applies to
1: This section applies to a person who—
a: is an employee whose employer—
i: files by electronic means an employer monthly schedule and a PAYE income payment form with particulars relating to the person's PAYE income payments for a pay period; and
ii: agrees to offer payroll giving to their employees; and
b: chooses to make a payroll donation in the pay period from an amount derived as pay. Amount of credit
2: The person has a tax credit for the pay period equal to an amount calculated using the formula— total donations × 33 1 3 Definition of item in formula
3: In the formula, total donations Maximum credit
4: Despite subsection (2), the amount of the tax credit must not be more than the amount of tax for the person's pay for the period. Non-refundable credits
5: A credit under this section is a non-refundable tax credit to which section LA 4(1) (When total tax credit more than income tax liability) applies for the tax year in which the period falls. No refunds for donations
6: A person who has a tax credit under this section may not make an application under section 41A of the Tax Administration Act 1994 for any refund relating to the amount of a payroll donation. Meaning of pay for payroll donation purposes
7: For the purposes of this section, and sections LD 8(1) and 24Q of the Tax Administration Act 1994, pay
a: means an amount referred to in section RD 5(1)(a) or (b)(i) (Salary or wages); and
b: includes any similar amount earned by an employee in the normal course of their employment; and
c: excludes a benefit or grant, a payment of fees, a payment of compensation for accident or loss of employment or services, an amount paid for attendant care, or any other similar benefit in money. Defined in this Act: amount, amount of tax, employee, employer, employer monthly schedule, employment, non-refundable tax credit, pay, pay period, PAYE income payment, PAYE income payment form, payroll donation, salary or wages, tax credit
LD 5: Calculating amount of tax credit and filing particulars
Employer's responsibility
1: The employer of a person who makes a payroll donation in a pay period must calculate the amount of the person's tax credit for the pay period under section LD 4, and include the amount in the particulars described in section LD 4(1)(a). Credit extinguished
2: The tax credit is extinguished if—
a: the Commissioner does not receive an employer monthly schedule and PAYE income payment form for the relevant payroll donation:
b: the relevant particulars filed are incorrect. When matters corrected
3: Despite subsection (2), the credit is restored to the person if the relevant matter is corrected and, for the purposes of this section, it is as if the error had never been made. Defined in this Act: amount, Commissioner, employer, employer monthly schedule, pay period, PAYE income payment form, payroll donation, tax credit
LD 6: When donation is paid to ineligible recipient
When this section applies
1: This section applies for the purposes of section LD 4 when the employer or PAYE intermediary transfers the person's payroll donation to an entity that is not a donee organisation. Credit extinguished
2: The tax credit is extinguished. Consequences when credit extinguished
3: The consequences that arise when a tax credit is extinguished under subsection (2) are—
a: the amount of the credit is included in the person's tax credits for PAYE income payments under section LB 1
b: when the extinguishing of the credit results in a shortfall in an amount of tax for a PAYE income payment, section RD 4 (Payment of amounts of tax to Commissioner) applies to the shortfall. Defined in this Act: amount, amount of tax, donee organisation, employer, pay period, PAYE income payment, payroll donation, tax credit, tax year
LD 7: When donation returned to person
When this section applies
1: This section applies for the purposes of section LD 4 when the amount of a payroll donation is, for whatever reason, returned to the person. Treatment of credit
2: The tax credit is extinguished. Consequences when credit extinguished
3: The consequences that arise when a tax credit is extinguished under subsection (2) are—
a: the amount of the credit is included in the person's tax credits for PAYE income payments under section LB 1
b: when the extinguishing of the credit results in a shortfall in an amount of tax for a PAYE income payment, section RD 4 (Payment of amounts of tax to Commissioner) applies to the shortfall. Defined in this Act: amount, amount of tax, pay period, PAYE income payment, payroll donation, tax credit, tax year
LD 8: Meaning and ranking of payroll donation
Meaning
1: A payroll donation Priorities of amounts withheld and other deductions
2: A person may make a payroll donation for a pay period only after satisfying—
a: any tax obligation they may have:
b: any statutory or legal requirement they may be obliged to meet from their PAYE income payment. Defined in this Act: amount, donee organisation, pay, pay period, PAYE income payment, payroll donation .
324: Tax credits for imputation credits
1: In section LE 1(1) Section OZ 11 (Tax credits for imputation credits and FDP credits) may apply to modify this section. tax year.
2: After section LE 1(1) Portfolio tax rate entities and their investors
1B: An investor in a portfolio tax rate entity who is allocated an imputation credit under section HL 29(7)(b) (Credits received by portfolio tax rate entity or portfolio investor proxy) has a tax credit for the tax year of an amount equal to the amount of the imputation credit.
3: Section LE 1(1B) Multi-rate PIEs and their investors
1B: An investor in a multi-rate PIE who has an imputation credit attributed for use under section HM 54 (Use of tax credits other than foreign tax credits by investors) has a tax credit for the tax year of an amount equal to the amount of the imputation credit.
4: Section LE 1(4)
5: In section LE 1 portfolio tax rate entity multi-rate PIE
6: Subsection (1) applies for the 2008–09 and later income years.
7: Subsection (3) applies for the 2010–11 and later income years.
325: Use of remaining credits by companies and trustees
1: Section LE 2(1) When this section applies
1: This section applies when––
a: a person described in subsection (2) has an amount of tax credit remaining for a tax year under section LA 5(4) (Treatment of remaining credits):
b: a life insurer has an amount of tax credit remaining for a tax year under section LA 5(4), but only to the extent to which the amount is for their shareholder base.
2: In section LE 2(2)
a: in the words before the paragraphs, subsection (1) subsection (1)(a)
b: in paragraph (a), company company that is not a life insurer
3: In section LE 2(3) The person The person or the life insurer, as applicable,
4: In section LE 2(4)(a) section LA 5(4) section LA 5(4), but, for a life insurer, only to the extent to which the amount is for their shareholder base
5: In section LE 2 life insurer shareholder base
6: Subsections (1) to (4) apply––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
326: New section LE 2B inserted
1: After section LE 2
LE 2B: Use of remaining credits by life insurer on policyholder base
When this section applies
1: This section applies to a life insurer who has an amount of tax credit remaining for a tax year (the surplus credit year Policyholder base allowable deduction
2: The life insurer has a deduction included as their policyholder base allowable deduction, for the income year corresponding to the tax year after the surplus credit year equal to an amount calculated using the formula–– policyholder remaining credit policyholder rate. Definition of items in formula
3: In the formula,––
a: policyholder remaining credit
b: policyholder rate Defined in this Act: amount, deduction, income tax, income year, life insurer, policyholder base, policyholder base allowable deduction, tax credit, tax year .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
327: Use of remaining credits by others
1: In section LE 3(1) section LE 2(2) section LE 2(2) or a life insurer
2: In section LE 3 life insurer
3: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
328: Tax credits for FDP credits
1: Section LF 1(4) Multi-rate PIEs and their investors
4: For a multi-rate PIE and an investor in a multi-rate PIE, the amount of a tax credit is limited to the extent allowed under subpart HM (Portfolio investment entities).
2: In section LF 1
a: portfolio tax rate entity
b: multi-rate PIE
3: Subsection (1) applies for the 2010–11 and later income years.
329: Subpart LH—Tax credits for expenditure on research and development
In sections LH 1 to LH 17
330: Who this subpart applies to
1: After section LH 1(1)(a)
ab: is a New Zealand resident member of a group of companies, and another New Zealand resident member would meet the requirements described in paragraph (a): .
2: After section LH 1(2)(a)
ab: a Crown entity, as that term is defined in the Crown Entities Act 2004: .
3: In section LH 1(2)
a: in paragraph (b), paragraph (a) paragraph (a) or (ab)
b: in paragraph (c), paragraph (a) or (b) paragraph (a), (ab), or (b)
4: After section LH 1(2) Excluded income
3: A tax credit that a person has under this subpart is excluded income of the person.
5: In section LH 1 excluded income group of companies New Zealand resident
6: Subsections (1) to (4) apply for the 2008–09 and later income years.
331: Tax credits relating to expenditure on research and development
1: After section LH 2(6) Treatment when tax credit used under subsection (6)
7: The amount of a tax credit used under subsection (6) is treated as excess tax for the purposes of Part 10B of the Tax Administration Act 1994.
2: Subsection (1) applies for the 2008–09 and later income years.
332: Requirements
1: After section LH 3(1)(a)(i)
ib: the business, or an intended business, of the relevant member of the group of companies that meets the requirements described in section LH 1(1)(a) for the purposes of section LH 1(1)(ab): .
2: After section LH 3(5) Groups of companies
6: A person is treated as meeting the requirements of—
a: subsection (1)(b), if, for the relevant income year or period in the income year, the person is a New Zealand resident member of a group of companies and the requirements of subsection (1)(b) would be met by another New Zealand resident member:
b: subsection (1)(d), if, for the relevant income year or period in the income year, the person is a New Zealand resident member of a group of companies and the requirements of subsection (1)(d) would be met by another New Zealand resident member, or by another member that is controlled by a New Zealand resident member.
3: In section LH 3 control group of companies New Zealand resident
4: Subsections (1) and (2) apply for the 2008–09 and later income years.
333: Adjustments to eligible expenditure
1: In section LH 5(4)
c: the expenditure is incurred by the person, and—
i: the expenditure is incurred in the intended development of depreciable property that is intangible property or is tangible property intended only for use in the research and development activities:
ii: the expenditure is described in schedule 21, part A, clause 1, 3, or 9, and is incurred solely in activities described in section LH 7(1)(a), and is not incurred directly in the construction of tangible property; and
d: in the case of expenditure that is an amount of employment income, the amount has been paid at the end of––
i: the 63rd day after the end of the person's income year, for an employee's employment income; or
ii: the last date by which the person could file a return of income for the income year if the time for filing were extended to its maximum under section 37(5) of the Tax Administration Act 1994, for a shareholder-employee's employment income.
2: In section LH 5 employee employment income shareholder-employee
3: Subsection (1) applies for the 2008–09 and later income years.
334: New section LH 14B inserted
1: After section LH 14
LH 14B: Recovery of overpaid tax credit
When this section applies
1: This section applies when the Commissioner considers the amount of a tax credit under this subpart that is used under sections LA 2, LA 6(2), or LH 2(6) (which relate to tax credits) for a tax year is more than the proper amount. Recovery of overpayment
2: The Commissioner may recover the excess as if it were income tax payable by the person. Defined in this Act: amount, Commissioner, income tax, pay, tax credit, tax year .
2: Subsection (1) applies for the 2008–09 and later income years.
335: What this subpart does
1: Section LJ 1(3)
2: After section LJ 1(5) Relationship with section YD 5
6: Section YD 5 (Apportionment of income derived partly in New Zealand) applies to determine how an amount is apportioned to sources outside New Zealand.
3: Subsection (1) applies for the 2008–09 and later income years.
336: Tax credits for foreign income tax
1: Section LJ 2(2)
2: The amount of the person's credit in subsection (1) must not be more than the amount of New Zealand tax payable by the person in relation to the segment calculated under section LJ 5(2), modified as necessary under section LJ 5(4).
2: Section LJ 2(5) Multi-rate PIEs and their investors
5: For a multi-rate PIE and an investor in a multi-rate PIE, the amount of a tax credit is limited to the extent allowed under subpart HM (Portfolio investment entities).
3: After section LJ 2(5) When subsection (7) applies
6: Subsection (7) applies to a person who derives an amount from an attributing interest in a FIF when the amount is treated as not being income under section EX 59(2) (Codes: comparative value method, deemed rate of return method, fair dividend rate method, and cost method). Tax credit
7: The person has a tax credit under this subpart for foreign income tax paid on or withheld in relation to the amount. The calculation of the maximum amount of the tax credit is made under section LJ 5(2), modified so that the item segment
4: In section LJ 2
a: portfolio tax rate entity
b: multi-rate PIE
5: In section LJ 2 attributing interest FIF FIF income income tax credit
6: Subsections (1) and (3) apply for the 2008–09 and later income years.
7: Subsection (2) applies for the 2010–11 and later income years.
337: Section LJ 3 replaced
Section LJ 3
LJ 3: Meaning of foreign income tax
For the purposes of this Part, foreign income tax Defined in this Act: amount, income tax 2004 No 35 s LC 1(1) .
338: Calculation of New Zealand tax
1: In section LJ 5(4) NZ tax under subsection (2) for all segments NZ tax
2: After section LJ 5(4) Definition of item in formula
4B: In the formula in subsection (4), NZ tax
3: Section LJ 5(6)(b)
b: losses
i: is the amount of the loss balance carried forward to the tax year that the person must subtract from their net income under section IA 4(1)(a) (Using loss balances carried forward to tax year):
ii: must be no more than the amount of the person's net income: .
4: In section LJ 5 New Zealand
5: Subsections (1) to (3) apply for the 2008–09 and later income years.
339: Section LJ 7 replaced by new sections LJ 7 and LJ 8
1: Section LJ 7
LJ 7: Repaid foreign tax: effect on income tax liability
Who this section applies to
1: This section applies to a person who has—
a: paid an amount of foreign income tax, or in relation to whom an amount of foreign income tax has been paid, on a segment of foreign-sourced income in relation to which they are entitled to a tax credit under section LJ 2; and
b: received a refund, amount, or benefit (the refund When refund received before assessment
2: If the person receives the refund before they assess their income tax liability for a tax year, the amount of the tax credit for the foreign income tax paid is reduced by the lesser of—
a: the amount of the refund:
b: the amount of New Zealand tax payable on the foreign-sourced income calculated under section LJ 5. When refund received after assessment
3: If the person receives the refund after they have assessed their income tax liability for a tax year, have used an amount of foreign tax credit in satisfying that liability, and have not taken the refund into account in that assessment, the person is liable to pay the Commissioner the lesser of—
a: the amount of the refund:
b: the amount of New Zealand tax payable on the foreign income calculated under section LJ 5. Date for payment
4: In subsection (3), the date for payment is the later of—
a: the date on which the person receives the refund:
b: 30 days after the date on which the person's return of income for the tax year is filed. Associated persons
5: For the purposes of this section, the refund is treated as received by the person, whether it is received by the person, a person who paid the foreign income tax, or a person associated with either of them. Defined in this Act: amount, associated person, Commissioner, foreign income tax, income tax liability, New Zealand, New Zealand tax, pay, return of income, segment of foreign-sourced income, tax credit, tax year 2004 No 35 ss LC 1(3A), (3B), LC 3
LJ 8: Repaid foreign tax: effect on FDP liability
Who this section applies to
1: This section applies to a person who receives a foreign dividend from a foreign dividend company, and the person or the company has—
a: paid an amount of foreign income tax, or in relation to whom an amount of foreign income tax has been paid or withheld; and
b: received a refund, amount, or benefit (the refund When refund received before calculation of FDP
2: If the person or company receives the refund before the person calculates the amount of FDP payable under section RG 4 (Calculating amount of FDP) for a tax year, the formula is modified as follows:
a: if the refund relates to foreign withholding tax on the dividend, the item foreign tax
b: if the refund relates to foreign income tax taken into account in the item total tax paid tax withheld
i: the item foreign tax paid
ii: the item tax withheld When subsection (4) applies
3: Subsection (4) applies if—
a: the person or company receives the refund after the person has calculated the amount of FDP payable for a tax year under section RG 4; and
b: the person has taken the amount of foreign income tax paid or withheld into account in that calculation in the items foreign tax underlying credit
c: the person has not taken the refund into account in that calculation. When refund received after calculation of FDP
4: The person must recalculate the FDP liability for the tax year and pay the difference to the Commissioner as FDP. Date for payment
5: For the purposes of subsection (4), the date for payment is the later of—
a: the date the person or company receives the refund:
b: the date for payment of FDP to the Commissioner in relation to the foreign dividend received for which the recalculation is required. Associated persons
6: For the purposes of this section, the refund is treated as received by the person or company, whether it is received by the person or company, a person who paid or withheld the foreign income tax, or a person associated with any of them. Defined in this Act: amount, associated person, Commissioner, FDP, foreign dividend, foreign dividend company, foreign income tax, income tax, pay, tax year 2004 No 35 ss LC 1(3A), (3B), LC 3 .
2: Subsection (1) applies for the 2008–09 and later income years.
340: Tax credits relating to attributed CFC income
1: Section LK 1(1)
1: A person who has an amount of attributed CFC income for an income year has a tax credit for the tax year corresponding to the income year equal to the following amounts paid or payable in relation to the attributed CFC income:
a: an amount of income tax paid by the CFC from which the income is derived:
b: an amount of tax withheld and paid on behalf of the CFC from which the income is derived:
c: the amount of foreign income tax paid by the CFC from which the income is derived:
d: the amount of foreign income tax paid by the person under legislation of another country or territory that is the equivalent of the international tax rules.
2: In section LK 1(3)
a: foreign country foreign country or territory
b: the second sentence is omitted.
3: After section LK 1(4) When subsection (7) applies
5: Subsection (7) applies when—
a: a person has a credit under subsection (1) in relation to an amount of income tax or foreign income tax; and
b: the credit has been used under section LA 2 (Satisfaction of income tax liability) or is carried forward under section LK 4; and
c: the person has received a refund, amount, or benefit (the refund When refund received before assessment
6: If the person receives the refund before they assess their income tax liability for a tax year, the amount of tax credit for the tax paid is reduced by the lesser of—
a: the amount of the refund:
b: the amount of New Zealand tax payable on the foreign-sourced income calculated under section LJ 5 (Calculation of New Zealand tax). Credit repayable or extinguished
7: The amount of the credit—
a: must be paid to the Commissioner if it has been used under section LA 2:
b: is extinguished, if it is carried forward under section LK 4. When liability payable
8: The liability under subsection (7)(a) is treated as income tax payable 30 days after the later of the following dates:
a: the date of the notice of assessment in relation to which the person has used the credit:
b: the date on which the person who paid the tax, or a person associated with them, receives the refund. Associated persons
9: For the purposes of subsections (5) to (8), the refund is treated as received by the person, whether it is received by the person, a person who paid the foreign income tax, or a person associated with either of them.
4: In section LK 1 assessment associated person Commissioner international tax rules New Zealand tax notice NRWT segment of foreign-sourced income
5: In section LK 1 conduit tax relief CTR company
6: Subsection (2)
7: Subsections (1) and (3) apply for the 2008–09 and later income years.
341: Calculation of amount of credit
1: Section LK 2(2)(b)
b: tax paid .
2: Subsection (1) applies for the 2008–09 and later income years.
342: New section LK 5B inserted
1: After section LK 5
LK 5B: Credits from tax year before first affected year
When this section applies
1: This section applies when a person has a tax credit (the available BE credit
a: relates to a tax year before the first tax year for which this section applies to the person; and
b: relates to a CFC or FIF that is resident in a country (the jurisdiction
c: is carried forward to a tax year (the conversion year What this section does
2: In this section, subsection (3) gives the person an option that an available BE credit for a jurisdiction not be carried forward and subsections (4) to (7) give, for whichever of the 4 alternative situations is otherwise relevant for the person,—
a: the amount of the available BE credit (the converted BE credit
i: treated as being converted into an amount referred to in paragraph (b) in the conversion year; and
ii: not available to the person to be carried forward as available BE credit for a later tax year:
b: the amount (the equivalent tax credit Option: tax credit not carried forward
3: A person may choose by giving a notice in a form and at a time acceptable to the Commissioner that the available BE credit for a jurisdiction not be carried forward under this section. Person not resident group member: more jurisdictional BE income
4: For a person who is not a resident group member and has jurisdictional BE income for the conversion year that is greater than zero and greater than the person's jurisdictional attributed income for the conversion year,—
a: the person's converted BE credit in the conversion year is the lesser of—
i: the amount that would be the person's income tax liability if the person's only assessable income were the person's jurisdictional BE income for the conversion year:
ii: the person's available BE credit for the conversion year:
b: the person's equivalent tax credit in the conversion year is the lesser of—
i: the amount that would be the person's income tax liability if the person's only assessable income were the person's jurisdictional attributed income for the conversion year:
ii: the amount calculated by dividing the person's available BE credit for the conversion year by the person's jurisdictional income ratio for the conversion year. Person not resident group member: more jurisdictional attributed income
5: For a person who is not a resident group member and has jurisdictional attributed income for the conversion year that is greater than or equal to zero and greater than or equal to the person's jurisdictional BE income for the conversion year,—
a: the person's converted BE credit for the conversion year is the lesser of—
i: the person's available BE credit for the conversion year:
ii: the amount that would be the person's income tax liability if the person's only assessable income were the person's jurisdictional attributed income for the conversion year:
b: the person's equivalent tax credit is equal to the person's converted BE credit for the conversion year. Resident group member: more jurisdictional BE income
6: For a person who is a resident group member for a wholly-owned group of companies and has jurisdictional BE income for the conversion year that is greater than zero and greater than the person's jurisdictional attributed income for the conversion year,—
a: the person's converted BE credit for the conversion year is the lesser of—
i: the person's available BE credit for the conversion year:
ii: the amount that would be the person's income tax liability if the person's only assessable income were the greater of the person's jurisdictional BE income for the conversion year and the amount calculated by multiplying the group's jurisdictional income ratio for the conversion year by the person's jurisdictional attributed income for the conversion year:
b: the person's equivalent tax credit is the amount calculated by dividing the person's converted BE credit for the conversion year by the group's jurisdictional income ratio for the conversion year. Resident group member: more jurisdictional attributed income
7: For a person who is a resident group member and has jurisdictional attributed income for the conversion year that is greater than or equal to zero and greater than or equal to the person's jurisdictional BE income for the conversion year,—
a: the person's converted BE credit for the conversion year is the lesser of—
i: the person's available BE credit for the conversion year:
ii: the amount that would be the person's income tax liability if the person's only assessable income were the person's jurisdictional attributed income for the conversion year multiplied by the group's jurisdictional income ratio for the conversion year:
b: the person's equivalent tax credit is equal to the amount calculated by dividing the person's converted tax credit for the conversion year by the group's jurisdictional income ratio for the conversion year. Option to determine jurisdictional BE income from accounts
8: In determining the jurisdictional BE income of a person or wholly-owned group, the person or group may choose to use, instead of the branch equivalent income or loss of a CFC, the profit or loss of the CFC before taxation given by accounts—
a: complying with generally accepted accounting practice in New Zealand or an equivalent standard for the consistent and undistorted reporting of net profits in the country in which the accounts are prepared; and
b: audited by an accountant who is—
i: a chartered accountant or an accountant of equivalent professional standard in the country in which the accounts are prepared; and
ii: independent of the CFC and the person or wholly-owned group; and
c: are given an unqualified opinion or an opinion of equivalent standard in the country in which the accounts are prepared. Defined in this Act: attributed CFC income, attributed CFC loss, branch equivalent income, branch equivalent loss, CFC, group of companies, income interest, jurisdictional attributed income, jurisdictional BE income, jurisdictional income ratio, New Zealand resident, resident group member, tax year, wholly-owned group, wholly-owned group of companies .
2: Subsection (1)
343: Subpart LL repealed
1: Subpart LL
2: Subsection (1)
344: Use of remaining credits
1: In section LP 3(5) subsection (3) subsection (2) or (3)
2: Subsection (1) applies for the 2008–09 and later income years.
345: Continuity rules for carrying credits forward
1: Section LP 4(2)
2: The amount is available for use under section LP 3(4) if a group of persons exists that has, for the continuity period,—
a: minimum voting interests in the company that add up to 49% or more; and
b: when a market value circumstance exists for the company in the continuity period, minimum market value interests in the company that add up to 49% or more.
2: In section LP 4 market value circumstance
3: Subsection (1) applies for the 2008–09 and later income years.
346: Sections LQ 1 to LQ 4 repealed
1: Sections LQ 1 to LQ 4
2: Subsection (1)
347: Tax credits for certain investors in portfolio tax rate entities
1: Section LS 2(1)
1: This section applies when a person has portfolio investor allocated income in a tax year from a portfolio tax rate entity if—
a: the income would be excluded income of the person in the absence of section CX 56(1)(b) (Portfolio investor allocated income and distributions of income by portfolio investment entities):
b: the income is not excluded income because section CX 56(4) applies.
2: In section LS 2(1)(a) section CX 56(1)(b) (Portfolio investor allocated income and distributions of income by portfolio investment entities) section CX 56(1)(b)
348: Subpart LS replaced
1: Subpart LS
LS: Tax credits for multi-rate PIEs and investors
LS 1: Tax credits for multi-rate PIEs
Tax credit
1: A multi-rate PIE has a tax credit for a tax year for the amount determined—
a: under sections HM 51 and HM 53 (which relate to certain tax credits) for an imputation credit or a credit for tax paid or withheld:
b: under section HM 55 (Tax credits for losses) arising from a tax loss attributed to an investor. When this section does not apply
2: This section does not apply—
a: in relation to—
i: a zero-rated investor:
ii: an exiting investor who is treated under section HM 61 (Certain exiting investors zero-rated) as zero-rated:
b: if the PIE pays tax using the provisional tax calculation option under section HM 44 (Provisional tax calculation option). Amount of credit
3: The amount of the tax credit equals the amount determined under the relevant section. Timing
4: The PIE has the tax credit for the tax year in which the relevant calculation period falls. Exception: timing under exit calculation option
5: If the PIE calculates its income tax liability using the exit calculation option under section HM 42 (Exit calculation option), the amount of a credit attributable to an investor is able to be used to satisfy a tax obligation relating to the investor. Defined in this Act: amount, calculation period, imputation credit, income tax liability, investor, multi-rate PIE, pay, PIE, provisional tax, tax credit, tax loss, tax year, zero-rated investor 2007 No 97 s LS 1
LS 2: Tax credits for investors in multi-rate PIEs
When this section applies
1: This section applies when—
a: an investor has attributed PIE income from a multi-rate PIE for a tax year; and
b: the investor's prescribed investor rate is—
i: more than zero:
ii: for an investor who is a trustee, 19.5%; and
c: the income is not excluded income of the investor because the test in section CX 56(1)(b) (Attributed income of certain investors in multi-rate PIEs) is not met. Amount of credit
2: The investor has a tax credit for the income year in which the PIE's tax year ends. The amount of the credit is equal to the amount of income tax paid by the PIE in relation to the attributed PIE income, and may be used to satisfy the investor's income tax liability for the tax year. Defined in this Act: amount, attributed PIE income, excluded income, income, income year, investor, multi-rate PIE, pay, PIE, prescribed investor rate, tax credit, tax year 2007 No 97 s LS 2
LS 3: Tax credits for zero-rated investors
When this section applies
1: This section applies when a zero-rated investor has attributed PIE income from a multi-rate PIE for a tax year. Amount of credit
2: The investor has a tax credit that may be used to satisfy their income tax liability for the tax year equal to the amount of income tax paid by the PIE for the attributed income for the tax year. Credit for PIE's foreign tax
3: A zero-rated investor also has a tax credit for the tax year for the amount determined under section HM 52 (Use of foreign tax credits by zero-rated and certain exiting investors) for foreign income tax paid by the PIE. Credit for PIE's other tax credits
4: A zero-rated investor also has a tax credit for the tax year for the amount determined under section HM 54 (Use of tax credits other than foreign tax credits by investors) for tax paid or withheld. Timing
5: The investor has the tax credit for the tax year corresponding to the income year in which the PIE's tax year ends. Defined in this Act: amount, attributed PIE income, income tax, income tax liability, income year, multi-rate PIE, pay, PIE, tax credit, tax year, zero-rated investor 2007 No 97 s LS 3
LS 4: Tax credits for certain exiting investors
When this section applies
1: This section applies when an exiting investor in a multi-rate PIE who is treated under section HM 61 (Certain exiting investors zero-rated) as zero-rated has attributed PIE income from the PIE for a tax year in which the exit period falls. Amount of credit
2: The investor has a tax credit that may be used to satisfy their income tax liability for the tax year equal to any amount paid by the PIE under section HM 43(4) (Quarterly calculation option) to the Commissioner after the investor exits from the PIE for the residual value of the investor's interest. Credit for PIE's foreign tax
3: An exiting investor also has a tax credit for the tax year for the amount determined under section HM 52 (Use of foreign tax credits by zero-rated and certain exiting investors) for foreign income tax paid by the PIE. Credit for PIE's other tax credits
4: An exiting investor also has a tax credit for the tax year for the amount determined under section HM 54 (Use of tax credits other than foreign tax credits by investors) for tax paid or withheld. Timing
5: The investor has the tax credit for the tax year corresponding to the income year in which the PIE's tax year ends. Defined in this Act: attributed PIE income, exit period, foreign income tax, income tax liability, income year, investor, investor interest, multi-rate PIE, pay, PIE, tax credit, tax year 2007 No 97 s LS 4 .
2: Subsection (1) applies for the 2010–11 and later income years.
349: Meaning of full-time earner for family scheme
1: In section MA 7(2) the purposes of subsection (1)(a) the purposes of subsection (1)
2: In section MA 7(2)(b) subsection (1)(a) to (c) or to the extent described in subsection (1)(d) subsection (1)(a) and (b)
3: In section MA 7 employment
4: Subsections (1) and (2) apply for the 2008–09 and later income years.
350: Some definitions for family scheme
In section MA 8 full-time earner
351: Adjustments for calculation of family scheme income
1: Section MB 1(5) Investment income
5: For the purposes of subsection (1), an amount of income attributed by a portfolio investment entity that is not excluded income of the person is not included in family scheme income.
2: In section MB 1
a: portfolio investor allocated income
b: portfolio investment entity
3: Subsection (1) applies for the 2010–11 and later income years.
352: Family scheme income of major shareholders in close companies
1: Section MB 4(1)
1: This section applies for the purposes of determining the amount that represents the family scheme income of a person for an income year when the person is a major shareholder in a close company on the last day of the company's balance date for financial purposes. If the company has paid the major shareholder a dividend in the income year, the amount of family scheme income calculated under subsection (2) is reduced by the total dividends paid for the income year.
2: Subsection (1) applies for the 2008–09 and later income years.
353: What this subpart does
In section MC 1 ss KD A1, KD 1A s KD 1A
354: Third requirement: residence
1: Section MC 5(1)
1: The third requirement is that either the person referred to in section MC 2 or the child referred to in section MC 4 meets the residence requirements of subsections (2) and (3), as applicable.
2: Subsection (1) applies for the 2008–09 and later income years.
355: When person does not qualify
1: Section MC 6(b)(ii)
2: In section MC 6 s KD 3(1) s KD 3(1), qualifying person
3: Subsection (1) applies for the 2008–09 and later income years.
356: Continuing requirements
1: In section MC 8 Requirements for entitlement period .
2: After section MC 8(f) Relationship with section MD 6(2)
2: Section MD 6(2) (Second requirement: principal care) overrides this section in relation to the in-work tax credit.
3: In section MC 8 in-work tax credit
4: Subsections (1) and (2) apply for the 2008–09 and later income years.
357: Principal caregiver
1: In section MC 10(4) subsection (2) subsection (3)
2: Subsection (1) applies for the 2008–09 and later income years.
358: Second requirement: principal care
1: After section MD 6(2) Relationship with section MC 8
3: Subsection (2) overrides section MC 8 (Continuing requirements).
2: Subsection (1) applies for the 2008–09 and later income years.
359: Third requirement: residence
1: Section MD 7(1)
1: The third requirement for an entitlement to an in-work tax credit is that the person or child referred to in section MD 4 meet the residence requirements of subsections (2) and (3), as applicable.
2: Subsection (1) applies for the 2008–09 and later income years.
360: Fifth requirement: full-time earner
1: Section MD 9(2)
2: The income referred to in subsection (1)(a) is—
a: a PAYE income payment that is—
i: not excluded under subsection (3), although it does not matter if the person also derives income of the type described in subsection (3); and
ii: not a benefit or allowance described in section MD 8; or
b: income to which section RD 3(2) to (4) (PAYE income payments) applies; or
c: income from a business carried on for profit.
2: In section MD 9(2)(c) profit. profit; or
d: an amount paid or benefit provided—
i: by a person (the claimant
ii: to another person for providing to the claimant a key aspect of social rehabilitation referred to in paragraph (c) of the definition of personal service rehabilitation payment
3: Section MD 9(3)
3: The following PAYE income payments are excluded from income under subsection (2):
a: a payment referred to in paragraphs (a) to (c) of the definition of accident compensation earnings-related payment
b: a PAYE income payment referred to in section RD 5(6)(a) (Salary or wages), other than a parental leave payment referred to in section CF 1 (Benefits, pensions, compensation, and government grants):
c: a PAYE income payment referred to in section RD 5(6)(b)(ii), (iii), or (iv):
d: a schedular payment that is a contract payment for a contract activity or service of a non-resident contractor:
e: an amount paid as a result of incapacity, suffered before 1 January 2006, due to personal injury by accident within the meaning of section 26 of the Injury Prevention, Rehabilitation, and Compensation Act 2001.
4: Subsections (1) and (3) apply for the 2008–09 and later income years.
361: Calculation of in-work tax credit
1: In section MD 10(3)(d)(ii) paragraph (a) paragraph (i)
2: Subsection (1) applies for the 2008–09 and later income years.
362: Meaning of employment for this subpart
In section ME 2 full-time earner
363: Meaning of net family scheme income
1: In section ME 3(2) adjusted income – adjusted liability + amount received – amount paid.
2: Section ME 3(3)(a)(i)
i: the amount of the person's net income under section MB 1 (Adjustments for calculation of family scheme income) for the tax year in which the relationship period falls that is attributable to the number of weeks in which the person is a full-time earner, adjusted to an annualised amount that is found by multiplying the amount by the fraction that is 52 divided by the number of weeks in the relationship period for which the person is a full-time earner; and .
3: Section ME 3(3)(b)
4: Subsections (1) to (3) apply for the 2008–09 and later income years.
364: Recovery of overpaid tax credit
1: Section MF 5(2)
2: The Commissioner may recover the excess as if it were income tax payable by the person. However, if, throughout the tax year, the person is in a relationship with a spouse, civil union partner, or de facto partner, the person and that spouse or partner are jointly and severally liable for the payment of the excess.
2: Subsection (1) applies for the 2008–09 and later income years.
365: Section MF 6 replaced
1: Section MF 6
MF 6: Overpayment or underpayment of tax credit
When this section applies
1: This section applies for the purposes of sections LA 3 and LA 4 (which relate to the treatment of a person's total tax credits) when—
a: a person has an entitlement to a tax credit under section MD 1 (Abating WFF tax credit) or ME 1 (Minimum family tax credit); and
b: the person applies under section MF 1 to have the tax credit paid by instalment; and
c: the instalments of the estimated tax credit, or the total of those instalments, differs from the tax credit, or total tax credit, to which the person is entitled under the family scheme because the instalment has, or the total instalments have, either been overpaid resulting in an excess or underpaid resulting in a shortfall; and
d: the Commissioner—
i: gives the person a notice of entitlement for the tax year because an instalment of the estimated tax credit has been paid to the person during the tax year; or
ii: finds out, otherwise than by way of a notice of entitlement, that an instalment of the estimated tax credit has been paid to the person for the tax year. Overpayment
2: For an overpayment of the person's entitlement, an amount equal to the excess is—
a: added to the tax payable by the person for the tax year; and
b: recoverable by the Commissioner under section 80KLB of the Tax Administration Act 1994 as if it were tax payable by the person for the tax year. Underpayment
3: For an underpayment of the entitlement, an amount equal to the shortfall is used to satisfy the person's income tax liability, and any balance remaining is treated as tax paid in excess and available for use under section LA 7(2) (Remaining refundable credits: tax credits under social policy schemes). Defined in this Act: amount, Commissioner, family scheme, income tax liability, notice of entitlement, pay, tax, tax credit, tax year .
2: Subsection (1) applies for the 2008–09 and later income years.
366: Tax credits for superannuation contributions
In section MK 1(1) Section MK 2 imposes some eligibility requirements for the year described in subsection (3) in relation to the person.
367: Eligibility requirements
In section MK 2(1)
1: For the purposes of section MK 1(1), the requirements for the person for the year described in section MK 1(3) are the following: .
368: When short payment and unpaid compulsory employer contributions found after tax credit used
1: In section MK 13(1)(a) section MK 12(1)(b) and (c) section MK 12(1)(c) and (d)
2: Subsection (1) applies for the 2008–09 and later income years.
369: What this subpart does
Section ML 1(2)(b)(i) to (iii)
i: to a director of a company by the company or a person associated with the company:
ii: to a person by a person associated with them:
iii: by a person to an employee who has been paid a redundancy payment by a person associated with the person.
370: Section ML 2 replaced
Section ML 2
ML 2: Tax credit for redundancy payments
Tax credit
1: A person who derives a redundancy payment has a tax credit of an amount equal to 6 cents for every complete dollar of total redundancy payments derived by them. It does not matter whether—
a: a redundancy payment is paid in a lump sum or by instalment:
b: the total redundancy payments relate to 1 or more occasions of redundancy of the person. Maximum amount
2: Despite subsection (1), the maximum credit that the person has for each occasion of redundancy is $3,600. Defined in this Act: amount, redundancy payment, tax credit .
371: New section MZ 3 added
1: After section MZ 2
MZ 3: Exclusions from determination of family scheme income
When this section applies
1: This section applies for the purposes of determining under section MB 1 (Adjustments for calculation of family scheme income) the entitlement and tax credit of a person under the family scheme. Refunds of main deposit
2: An amount of main deposit made in relation to the 2002–03 or earlier income year that is refunded to the person in the 2003–04 or later income year under any of sections EH 10, EH 13, EH 15, EH 17, and EH 23 (which relate to income equalisation accounts) is not included in family scheme income. Refunds of adverse event deposit
3: An amount of adverse event deposit made under section EH 39 (Adverse event income equalisation account) in relation to the 2002–03 or earlier income year that is refunded to the person in the 2003–04 or later income year under any of sections EH 45, EH 47, and EH 53 (which relate to refunds on application) is not included in family scheme income. Treatment of interest
4: The amount of a refund under subsections (2) and (3) does not include an amount of interest payable under section EH 6 or EH 40 (which relate to interest on deposits), as applicable. Defined in this Act: adverse event deposit, amount, family scheme, family scheme income, income year, interest, main deposit, tax credit 2004 No 35 s KD 1(1)(e)(i), (vi) .
2: Subsection (1) applies for the 2008–09 and later income years.
372: Memorandum accounts
1: Section OA 2(1)(f)
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
373: Credits
1: In section OA 5(2)(b) groups. groups:
c: credited under section OZ 18
2: Section OA 5(7)
3: In section OA 5 policyholder credit
4: Subsections (1) and (2) apply––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
374: Debits
1: Section OA 6(7)
2: In section OA 6 policyholder debit
3: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
375: Opening balances of memorandum accounts
1: Section OA 7(2)(f)
2: In section OA 7 policyholder credit account
3: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
376: Shareholder continuity requirements for memorandum accounts
1: In section OA 8(2) Subsections (4) and (5) Subsections (3B) to (5)
2: After section OA 8(3) Exclusions: qualifying companies
3B: Subsection (2) does not apply to a qualifying company. But, if section HA 11(1) (When requirements no longer met) applies to the company,—
a: an adjustment must be made under section HA 18 (Treatment of dividends when qualifying company status ends) to the company's imputation credit account and FDP account, as applicable; and
b: the shareholder continuity requirements apply to the company from the day on which the status as a qualifying company ends.
3: Section OA 8(4) Exclusion: ASC accounts
4: Subsection (2) does not apply to a person who maintains an ASC account.
4: In section OA 8 policyholder credit account
377: Section OA 12 repealed
1: Section OA 12
2: Subsection (1)
378: General rules for companies with imputation credit accounts
1: In section OB 1(1) Subsections (2) and (3) override Subsection (2) overrides
2: Section OB 1(2)(a)(i)
3: Section OB 1(2)(f)
f: a multi-rate PIE.
4: Section OB 1(3)
5: In section OB 1 Australian ICA company resident in Australia
6: In section OB 1
a: portfolio tax rate entity
b: multi-rate PIE
7: Subsections (1), (2), and (4) apply for the 2008–09 and later income years.
8: Subsection (3) applies for the 2010–11 and later income years.
379: Australian companies with imputation credit accounts
1: Section OB 2(1) Company resident in Australia
1: A company that is resident in Australia may choose to establish and maintain an imputation credit account.
2: In section OB 2 resident in New Zealand
3: Subsection (1) applies for the 2008–09 and later income years.
380: New section OB 3B inserted
1: After section OB 3
OB 3B: General rule for life insurer's policyholder base
An imputation credit does not arise in relation to a life insurer's policyholder base. Similarly, an imputation debit does not arise in relation to a life insurer's policyholder base. Defined in this Act: imputation credit, imputation debit, life insurer, policyholder base .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
381: ICA payment of tax
1: Section OB 4(3)(c)
c: income tax paid by a life insurer to satisfy its schedular income tax liability for schedular policyholder base income; or .
2: Section OB 4(3)(e) and (eb)
e: income tax paid under subpart LA and section LF 1 (which relate to tax credits for FDP credits and their use) by crediting a foreign dividend payment (FDP) credit; or
eb: income tax paid by a tax credit under subpart LA and section LH 2 (which relate to tax credits for research development and their use); or .
3: In section OB 4
a: policyholder base income tax liability
b: schedular income tax liability schedular policyholder base income
4: Subsection (2) applies for the 2008–09 and later income years.
5: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
382: ICA resident withholding tax withheld
1: In section OB 8(1) by the company by the company other than as policyholder base income
2: In section OB 8 policyholder base income
3: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
383: New section OB 9B inserted
After section OB 9
OB 9B: ICA company allocated imputation credit with income from PTRE
Credit
1: An ICA company that is an investor in a portfolio tax rate entity has an imputation credit for the amount of an imputation credit allocated to it under section HL 29(7)(b). Table reference
2: The imputation credit in subsection (1) is referred to in table O1: imputation credits, row 7B (imputation credit allocated with income from PTRE). Credit date
3: The credit date is the day the amount is allocated. Defined in this Act: amount, ICA company, imputation credit, portfolio tax rate entity .
384: Section OB 9B replaced
1: Section OB 9B is replaced by the following:
OB 9B: ICA attributed PIE income with imputation credit
Credit
1: An ICA company that is an investor in a multi-rate PIE has an imputation credit for the amount of an imputation credit attributed to it under section HM 54 (Use of tax credits other than foreign tax credits by investors). Table reference
2: The imputation credit in subsection (1) is referred to in table O1: imputation credits, row 7B (attributed PIE income with imputation credit). Credit date
3: The credit date is the day the amount is attributed. Defined in this Act: amount, attributed PIE income, ICA company, imputation credit, multi-rate PIE .
2: Subsection (1) applies for the 2010–11 and later income years.
385: Section OB 11 repealed
1: Section OB 11
2: Subsection (1)
386: Section OB 17 repealed
1: Section OB 17
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
387: ICA transfer to master fund
1: In section OB 19(1) An ICA company that is a master fund has an imputation credit for the transfer of an amount of expenditure under sections DV 5 to DV 7 (which relate to the transfer of expenditure to master funds).
2: Subsection (1) applies for the 2008–09 and later income years.
388: ICA refund of income tax
1: After section OB 32(2)(a)
ab: a refund of income tax paid by a life insurer to satisfy its schedular income tax liability for schedular policyholder base income; or .
2: After section OB 32(6) Relationship with section OB 37
7: This section does not apply to an amount that gives rise to a debit under section OB 37.
3: In section OB 32 life insurer schedular income tax liability schedular policyholder base income
4: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
5: Subsection (2) applies for the 2008–09 and later income years.
389: ICA amount applied to pay other taxes
1: Section OB 33(1)
1: An ICA company has an imputation debit for—
a: an amount of overpaid income tax applied to pay an amount due under the Inland Revenue Acts:
b: an increased amount of tax as described in section RP 17B(3) (Tax pooling accounts and their use) applied to pay an amount due under the Inland Revenue Acts other than income tax.
2: After section OB 33(4) Relationship with section OB 37
5: This section does not apply to an amount that gives rise to a debit under section OB 37.
3: Subsection (2) applies for the 2008–09 and later income years.
390: ICA refund from tax pooling account
1: Section OB 34(4) Debit date for companies other than qualifying companies
4: The debit date for a company that is not a qualifying company is the date found by applying the following paragraphs in order:
a: the last day of the previous tax year to the extent of the amount of the debit that is no more than the credit balance in the imputation credit account on that date:
b: the day the refund or transfer is made to the extent of the remaining amount of the debit that is no more than the credit balance in the imputation credit account on the day of refund or transfer:
c: the last day of the previous tax year for the remainder of the debit. Debit date for qualifying companies
5: The debit date for a qualifying company is the day the refund or transfer is made.
2: In section OB 34 company imputation credit account qualifying company tax year
3: Subsection (1) applies for a tax position taken on or after 1 April 2008 except for a tax position taken by a company when—
a: the company has received a refund of the type referred to in section OB 34(1); and
b: the refund is received in the company's 2008–09 income year but before 2 July 2008; and
c: the company has relied on section OB 34(4)
391: ICA transfer within tax pooling account
Section OB 35(4)(b)
b: the day the transfer is made to the extent of the remaining amount of the debit that is no more than the credit balance in the imputation credit account on the day of the transfer; or .
392: New section OB 35B inserted
1: After section OB 35
OB 35B: ICA debit for transfer from tax pooling account for policyholder base liability
Debit
1: An ICA company has an imputation debit for the amount transferred from a tax pooling account to their tax account with the Commissioner, to the extent to which the company is a life insurer, and the amount satisfies its schedular income tax liability for schedular policyholder base income or its income tax liability for a life fund PIE that is a multi-rate PIE. Table reference
2: The imputation debit in subsection (1) is referred to in table O2: imputation debits, row 7B (debit for transfer from tax pooling account for policyholder base liability). Debit date
3: The debit date is the last day of the tax year. Defined in this Act: ICA company, imputation credit, imputation debit, life insurer, schedular income tax liability, schedular policyholder base income, tax year .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
393: ICA refund of tax credit
1: Section OB 37(1) Debit
1: An ICA company has an imputation debit for—
a: the amount of a transfer under section LA 6(2)(d) (Remaining refundable credits: PAYE, RWT, and certain other items) to the extent to which the transfer does not lead to a refund of income tax:
b: the amount of a refund to the company under section LA 6(2)(e):
c: an amount used by the company under section LH 2(6) (Tax credits relating to expenditure on research and development) to pay an amount payable under an Inland Revenue Act to the extent to which the use does not lead to a refund of income tax. Exclusion: FDPA companies
1B: Despite subsection (1), an FDPA company does not have an imputation debit to the extent to which the amount transferred, refunded, or used is a tax credit under subpart LF (Tax credits for FDP credits).
2: Section OB 37(3)
3: The debit date is—
a: for a debit referred to in subsection (1)(a), the day the amount is transferred:
b: for a debit referred to in subsection (1)(b), the day the amount is refunded:
c: for a debit referred to in subsection (1)(c), the day the amount is applied.
3: Subsections (1) and (2) apply for the 2008–09 and later income years.
394: ICA transfer for net foreign attributed income
1: In section OB 39(1) and a CTR company
2: Subsection (1) applies for the 2008–09 and later income years.
395: Section OB 39 repealed
1: Section OB 39
2: Subsection (1)
396: Section OB 47 replaced
1: Section OB 47
OB 47: Debit for policyholder base imputation credits
Debit
1: An ICA company has an imputation debit for the amount of an imputation credit attached to a dividend derived by the company, to the extent to which it is derived by it as a life insurer and apportioned to their policyholder base. Table reference
2: The imputation debit in subsection (1) is referred to in table O2: imputation debits, row 20 (debit for policyholder base imputation credits). Debit date
3: The debit date is the last day of the tax year. Defined in this Act: ICA company, imputation credit, imputation debit, life insurer, policyholder base, tax year .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
397: ICA benchmark dividend rules
1: Section OB 61(7)
2: Subsection (1) applies for the 2008–09 and later income years.
398: Imputation additional tax on leaving wholly-owned group
1: Section OB 71(1)(b)
2: In section OB 71(4)(a) the amount is no more than the excess entitlement the amount is no more than the excess tax payment for company A when company A has an excess entitlement
3: Section OB 71(5)(c)
c: the excess of the total of the amounts referred to in paragraph (a)(i) and (ii) over the credit balance, if paragraph (b) does not apply.
4: In section OB 71(9) section OB 13(5) section OB 13(5). However, if subsections (3) or (4) apply to transfer a debit or treat an amount of tax as having been paid, company A must also provide a notice of agreement from company B in relation to the amount of excess tax payment.
5: Subsections (1) to (4) apply for the 2008–09 and later income years.
399: Table O1: imputation credits
1: In table O1, after row 7, the following is inserted: 7B Imputation credit allocated with income from PTRE day of allocation section OB 9B
2: Table O1, row 7B is replaced by the following: 7B Attributed PIE income with imputation credit day of attribution section OB 9B
3: Table O1, row 9 is repealed.
4: In table O1, row 14, attributing company qualifying company
5: Table O1, row 15 is repealed.
6: Subsection (2) applies for the 2009–10 and later income years.
7: Subsection (3)
8: Subsection (4) applies for the 2008–09 and later income years.
9: Subsection (5) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
400: Table O2: imputation debits
1: In table O2, after row 7, the following is inserted: 7B Debit for transfer from tax pooling account for policyholder base liability 31 March section OB 35B
2: Table O2, row 9 is replaced by the following: 9 Transfer, refund, or use of tax credit day of transfer, refund, or use section OB 37
3: Table O2, row 12 is repealed.
4: In table O2, row 20 is replaced by the following: 20 Debit for policyholder base imputation credits 31 March section OB 47
5: Subsections (1) and (4) apply––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
6: Subsection (2) applies for the 2008–09 and later income years.
7: Subsection (3)
401: General rules for companies with FDP accounts
1: In section OC 1(1) portfolio tax rate entity multi-rate PIE
2: Section OC 1(3)
3: In section OC 1
a: portfolio tax rate entity
b: multi-rate PIE
4: Subsection (1) applies for the 2010–11 and later income years.
5: Subsection (2)
402: New section OC 2B inserted
1: After section OC 2
OC 2B: General rule for life insurer's policyholder base
An FDP credit does not arise in relation to a life insurer's policyholder base. Similarly, an FDP debit does not arise in relation to a life insurer's policyholder base. Defined in this Act: FDP credit, FDP debit, life insurer, policyholder base .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
403: When company chooses to stop being FDPA company
1: Section OC 4(3)(b)
b: pays any further income tax payable under section OC 30 or OC 31 for the year of election.
2: Subsection (1)
404: When company emigrates
1: Section OC 5(2)(b)
b: pays any further income tax payable under sections OC 30 to OC 34 for the tax year.
2: Subsection (1)
405: Section OC 6 repealed
1: Section OC 6
2: Subsection (1)
406: Section OC 8 repealed
1: Section OC 8
2: Subsection (1)
407: Section OC 9 repealed
1: Section OC 9
2: Subsection (1)
408: Section OC 10 repealed
1: Section OC 10
2: Subsection (1)
409: FDPA refund of tax credit
1: Section OC 16(1)
1: An FDPA company has an FDP debit for the amount of a transfer or refund to the company under section LA 6(2)(d) or (e) (Remaining refundable credits: PAYE, RWT, and certain other items) to the extent to which the amount transferred or refunded is a tax credit under subpart LF (Tax credits for FDP credits).
2: Section OC 16(3)
3: The debit date is the day the transfer or refund is made.
3: Subsections (1) and (2) apply for the 2008–09 and later income years.
410: Section OC 20 replaced
1: Section OC 20
OC 20: Debit for policyholder base FDP credits
Debit
1: An FDP company has an FDP debit for the amount of an FDP credit attached to a dividend derived by the company, to the extent to which it is derived by it as a life insurer and apportioned to their policyholder base. Table reference
2: The FDP debit in section (1) is referred to in table O4: FDP debits, row 9 (debit for policyholder base FDP credits). Debit date
3: The debit date is the last day of the tax year. Defined in this Act: FDP company, FDP credit, FDP debit, life insurer, policyholder base, tax year .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
411: Section OC 23 repealed
1: Section OC 23
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
412: Heading before section OC 30 replaced
The heading before section OC 30 Further income tax
413: Payment of further FDP for closing debit balance
1: In the heading to section OC 30 further FDP further income tax
2: Section OC 30(1) and (2) Liability
1: An FDPA company or consolidated FDP group is liable to pay further income tax for a closing debit balance in the FDP account of the company or the group. Due date
2: The company or group must pay the further income tax to the Commissioner no later than the 20 June following the end of the tax year.
3: Section OC 30(3)
4: In section OC 30
a: FDP rules further FDP income tax
b: further income tax
5: Subsections (1) to (3)
414: Payment of further FDP when company no longer New Zealand resident
1: In the heading to section OC 31 further FDP further income tax
2: Section OC 31(1) to (3) Liability
1: An FDPA company is liable to pay further income tax for a debit balance in the company's FDP account when the company stops being resident in New Zealand. Due date
2: The company must pay the further income tax to the Commissioner by the day the company stops being resident in New Zealand. Paramount section
3: A company to which this section applies that stops being an FDPA company on the last day of a tax year is liable for further income tax under this section and not under section OC 30.
3: Section OC 31(4)
4: In section OC 31
a: FDP rules further FDP
b: further income tax
5: Subsections (1) to (3)
415: Reduction of further FDP
1: In the heading to section OC 32 further FDP further income tax
2: In section OC 32(1)
1: An FDPA company's liability for further income tax under section OC 30 or OC 31 may be reduced under subsection (2) if— .
3: In section OC 32
a: further FDP
b: further income tax
4: Subsections (1) and (2)
416: Section OC 33 replaced
1: Section OC 33
OC 33: Income tax paid satisfying liability for further income tax
Election
1: On meeting the requirements of subsection (2), an FDPA company that is liable for further income tax may choose to satisfy the liability through a payment of income tax. Requirements
2: The company must pay the income tax—
a: after the end of the tax year in which the relevant debit balance arises; and
b: for an income year corresponding to a tax year in which the company is an FDPA company. Payment credited
3: The payment of income tax satisfies the company's liability to pay further income tax. When treated as paid
4: The further income tax is treated as paid on the day the Commissioner receives the payment of income tax. Defined in this Act: Commissioner, company, FDPA company, further income tax, income tax, income year, pay, tax year .
2: Subsection (1)
417: Section OC 34 replaced
1: Section OC 34
OC 34: Further income tax paid satisfying liability for income tax
Election
1: A company that pays further income tax may choose to treat the payment as satisfying a liability of the company to pay income tax. FDPA company status
2: The liability referred to in subsection (1) must be for an income year that corresponds with a tax year in which the company is an FDPA company. Alternative for consolidated group
3: A company that is part of a consolidated FDP group may choose that the payment under subsection (1) satisfies a group liability for income tax owed by another group company when or after the payment is made. Defined in this Act: company, consolidated FDP group, FDPA company, further income tax, income tax, income year, pay, tax year .
2: Subsection (1)
418: Heading and sections OC 35 to OC 39 repealed
1: The heading before section OC 35 and sections OC 35 to OC 39
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
419: Table O3: FDP credits
1: Table O3, rows 2, 3, 5, 6, and 7 are repealed.
2: Subsection (1)
420: Table O4: FDP debits
1: In table O4, row 5 is replaced by the following: 5 Transfer or refund of tax credit day of transfer or refund section OC 16
2: In table O4, row 9 is replaced by the following: 9 Debit for policyholder base FDP credits 31 March section OC 20
3: Subsection (1) applies for the 2008–09 and later income years.
4: Subsection (2) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
421: General rules for companies with CTR accounts
1: In section OD 1(2) a tax year a tax year as set out in section OD 3(2)
2: Section OD 1(3)
3: Subsection (1) applies for the 2008–09 and later tax years.
4: Subsection (2)
422: Choosing to become CTR company
1: Section OD 3(1)
1: An FDPA company that chooses to become a CTR company must notify the Commissioner of its election and state the tax year for which the election is first to apply. The notification must be made no later than the day on which the company is required to file a return of income for the income year that corresponds to the first tax year for which the election is made.
2: Section OD 3(2) Maintaining CTR account
2: A CTR company must maintain the CTR account referred to in section OD 1(2) from the first day of the tax year referred to in subsection (1), whether or not the company is treated as a CTR company for the purposes of sections LQ 5, OD 20, or RG 7 (which relate to credits attached to dividends). The company must continue to maintain the account until it chooses to stop being a CTR company under section OD 4. Treatment of company for certain provisions
3: Despite subsection (1), the company is not treated as a CTR company for the purposes of applying sections LQ 5, OD 20, or RG 7 until the date on which the company notifies the Commissioner of its election.
3: Subsections (1) and (2) apply for the 2008–09 and later tax years.
423: When company stops being CTR company
1: In section OD 4(3)
3: The company stops being a CTR company on the day after the day on which the election referred to in subsection (1)(a) is made but only if the company— .
2: Subsection (1)
424: Section OD 5 repealed
1: Section OD 5
2: Subsection (1)
425: Section OD 8 repealed
1: Section OD 8
2: Subsection (1)
426: Section OD 11 repealed
1: Section OD 11
2: Subsection (1)
427: CTRA increase in resident shareholding
1: In section OD 16(3)(b) 34% or more 34 percentage points or more
2: Subsection (1) applies for the 2008–09 and later tax years.
428: Section OD 23 repealed
1: Section OD 23
2: Subsection (1)
429: Section OD 24 repealed
1: Section OD 24
2: Subsection (1)
430: Table O5: conduit tax relief credits
1: Table O5, rows 2 and 5 are repealed.
2: Subsection (1)
431: Table O6: conduit tax relief debits
1: In table O6: conduit tax relief credits, row 2, FDP credit attached CTR credit attached
2: Table O6, row 3 is repealed.
3: Subsection (1) applies for the 2008–09 and later tax years.
4: Subsection (2)
432: Branch equivalent tax accounts of companies
1: Section OE 2(2) and (3)
2: Subsection (1)
433: Heading and sections OE 12 and OE 13 repealed
1: The heading before section OE 12 sections OE 12 and OE 13
2: Subsection (1)
434: Sections OE 14 to OE 16 repealed
1: Sections OE 14 to OE 16
2: Subsection (1)
435: New heading and section OE 16B inserted
1: Before the headings before section OE 17 Debit if credit balance at beginning of first affected income year
OE 16B: Company with credit balance at beginning of first affected income year
If a BETA company has a credit balance in its branch equivalent tax account at the beginning of the first income year for which this section applies to the company, a branch equivalent tax debit of an amount equal to the credit balance arises in the branch equivalent tax account at that time. Defined in this Act: BETA company, branch equivalent tax account, branch equivalent tax debit, company, income year .
2: Subsection (1)
436: Table O7: branch equivalent tax credits
1: Table O7, row 2 is repealed.
2: Subsection (1)
437: Table O8 repealed
1: Table O8 is repealed.
2: Subsection (1)
438: General rules for companies with ASC accounts
1: In section OF 1(1) This section does not apply to a multi-rate PIE.
2: In section OF 1
a: portfolio tax rate entity
b: multi-rate PIE
3: Subsection (1) applies for the 2010–11 and later income years.
439: Subpart OJ repealed
1: Subpart OJ
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
440: MACA payment of tax
1: Section OK 2(3)(cb)
cb: income tax paid by a tax credit under subpart LA (Tax credits and other credits) and section LH 2 (Tax credits relating to expenditure on research and development); or .
2: Subsection (1) applies for the 2008–09 and later income years.
441: MACA refund of income tax
1: After section OK 12(6) Relationship with section OK 14B
7: This section does not apply to an amount that gives rise to a debit under section OK 14B.
2: Subsection (1) applies for the 2008–09 and later income years.
442: MACA payment of other taxes
1: After section OK 13(4) Relationship with section OK 14B
5: This section does not apply to an amount that gives rise to a debit under section OK 14B.
2: Subsection (1) applies for the 2008–09 and later income years.
443: New section OK 14B inserted
1: After section OK 14
OK 14B: MACA refund of tax credit
Debit
1: A Maori authority has a Maori authority debit for—
a: the amount of a transfer under section LA 6(2)(d) (Remaining refundable credits: PAYE, RWT, and certain other items) to the extent to which the transfer does not lead to a refund of income tax:
b: the amount of a refund to the authority under section LA 6(2)(e):
c: an amount used under section LH 2(6) (Tax credits relating to expenditure on research and development) to pay an amount payable under an Inland Revenue Act to the extent to which the use does not lead to a refund of income tax. Exclusion
2: Despite subsection (1), a Maori authority that is an FDPA company does not have a Maori authority debit to the extent to which the amount transferred, refunded, or used is a tax credit under subpart LF (Tax credits for FDP credits). Table reference
3: The Maori authority debit in subsection (1) is referred to in table O18: Maori authority debits, row 6B (refund of tax credit). Debit date
4: The debit date is—
a: for a debit referred to in subsection (1)(a), the day the amount is transferred:
b: for a debit referred to in subsection (1)(b), the day the amount is refunded:
c: for a debit referred to in subsection (1)(c), the day the amount is applied. Defined in this Act: amount, FDPA company, Inland Revenue Acts, Maori authority, Maori authority debit, pay .
2: Subsection (1) applies for the 2008–09 and later income years.
444: Table O18: Maori authority debits
1: In table O18, after row 6, the following row is inserted: 6B Transfer, refund, or use of tax credit day of transfer, refund, or use section OK 14B
2: Subsection (1) applies for the 2008–09 and later income years.
445: When credits and debits arise only in consolidated imputation group accounts
1: In section OP 5(2)(d) credit): credit).
2: After section OP 5(4)(d)
db: section OP 33B, row 7B (debit for transfer from tax pooling account for policyholder base liability): .
3: In section OP 5(4)(k) ratio). ratio):
l: section OP 44, row 18 (debit for policyholder base imputation credits).
4: Subsection (1)
5: Subsections (2) and (3) apply––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
446: Provisions applying to consolidated imputation groups
1: Section OP 6(2)(a)
a: section OB 61 (ICA benchmark dividend rules); and
ab: sections OB 65 and OB 66 (which relate to further income tax); and
ac: sections OB 71 and OB 72 (which relate to imputation additional tax); and .
2: After section OP 6(3) Tax advantage arrangements and determinations
4: Sections GB 35 and GB 36 (which relate to tax advantage arrangements), LE 1(5) (Tax credits for imputation credits), OA 2(5) (Memorandum accounts), and sections 90AF and 104B of the Tax Administration Act 1994 apply, modified as necessary, in a case that involves accounts of a consolidated imputation group as if—
a: the group were a single company; and
b: references to the provisions of this Act or the Tax Administration Act 1994 were references to the equivalent provisions applicable to the equivalent accounts. Refunds for overpaid amounts
5: Sections RM 13 to RM 17, RM 32, and RZ 6 (which relate to limits on refunds) apply, modified as necessary, in relation to income tax paid by a consolidated imputation group as if—
a: the group were a single company; and
b: a reference to that company when it stops being an ICA company were a reference to the consolidated group when it stops being a consolidated imputation group; and
c: references to the provisions of this Act or the Tax Administration Act 1994 were references to the equivalent provisions applicable to the equivalent accounts. Limits on refunds
6: Despite subsection (5), sections RM 13 to RM 17, RM 32, and RZ 6 do not apply to limit a refund payable to a company that is part of a consolidated imputation group in relation to income tax paid individually by the company to the extent to which those sections would not have limited the refund if it had been a refund payable to the group in relation to income tax paid by the group. However, if an amount is refunded and would not have been payable but for this subsection, section RM 15(1) (Changes in credit balances) applies as if the refund were made in relation to income tax paid by the group. Applying for refunds
7: If a company that is part of an imputation group is entitled to a refund under sections RM 2 or RM 4 to RM 6 (which relate to refunds for overpaid income tax), the company must apply for a refund by notifying the Commissioner. Sections RM 13 to RM 17, RM 32, and RZ 6 apply to the entitlement as if—
a: the imputation credit account of the group were the imputation credit account of the company:
b: a credit in the imputation credit account for the purposes of those sections were reduced by the amount of a refund to a company that is part of the group.
3: In section OP 6 Commissioner consolidated group ICA company imputation additional tax imputation group income tax notify tax
4: Subsections (1) and (2) apply for the 2008–09 and later income years.
447: Consolidated ICA payment of tax
1: Section OP 7(3)(d)
d: income tax paid by a life insurer to satisfy its schedular income tax liability for schedular policyholder base income; or .
2: Section OP 7(3)(fb)
fb: income tax paid by a tax credit under subpart LA (Tax credits and other credits) and section LH 2 (Tax credits relating to expenditure on research and development); or .
3: In section OP 7
a: policyholder base income tax liability
b: schedular income tax liability schedular policyholder base income
4: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
5: Subsection (2) applies for the 2008–09 and later income years.
448: Section OP 14 repealed
1: Section OP 14
2: Subsection (1)
449: Consolidated ICA resident withholding tax withheld
1: In section OP 17(1) by a group company by a group company other than as policyholder base income
2: In section OP 17 policyholder base income
3: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
450: Section OP 20 repealed
1: Section OP 20
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
451: Section OP 21 repealed
1: Section OP 21
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
452: Consolidated ICA refund of income tax
1: Section OP 30(2) No debit
2: The debit in subsection (1) does not include––
a: a refund of income tax paid by a life insurer to satisfy its schedular income tax liability for schedular policyholder base income; or
b: a refund of income tax paid before a debit arises under section OP 42 to the extent to which the amount of the refund is less than the amount of the debit.
2: In section OP 30(3) subsection (2) subsection (2)(b)
3: After section OP 30(4) Relationship with section OP 35
5: This section does not apply to an amount that gives rise to a debit under section OP 35.
4: In section OP 30 life insurer schedular income tax liability schedular policyholder base income
5: Subsections (1) and (2) apply––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
6: Subsection (3) applies for the 2008–09 and later income years.
453: Consolidated ICA amount applied to pay other taxes
1: After section OP 31(4) Relationship with section OP 35
5: This section does not apply to an amount that gives rise to a debit under section OP 35.
2: Subsection (1) applies for the 2008–09 and later income years.
454: New section OP 33B inserted
1: After section OP 33
OP 33B: Consolidated ICA debit for transfer from tax pooling account for policyholder base liability
Debit
1: A consolidated imputation group has an imputation debit for the amount transferred from a tax pooling account to their tax account with the Commissioner, to the extent to which the amount satisfies its schedular income tax liability for schedular policyholder base income or its income tax liability for a life fund PIE that is a multi-rate PIE. Table reference
2: The imputation debit in subsection (1) is referred to in table O20: imputation debits of consolidated imputation groups, row 7B (debit for transfer from tax pooling account for policyholder base liability). Debit date
3: The debit date is the last day of the tax year. Defined in this Act: ICA company, imputation credit, imputation debit, life insurer, schedular income tax liability, schedular policyholder base income, tax year .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
455: Consolidated ICA refund of tax credit
1: Section OP 35(1) Debit
1: A consolidated imputation group has an imputation debit for—
a: the amount of a transfer under section LA 6(2)(d) (Remaining refundable credits: PAYE, RWT, and certain other items) to the extent to which the transfer does not lead to a refund of income tax:
b: the amount of a refund under section LA 6(2)(e):
c: an amount used under section LH 2(6) (Tax credits relating to expenditure on research and development) to pay an amount payable under an Inland Revenue Act to the extent to which the use does not lead to a refund of income tax. Exclusion
1B: Despite subsection (1), a consolidated imputation group does not have an imputation debit to the extent to which—
a: the amount transferred, refunded, or used is a tax credit for a payment of FDP relating to a dividend derived by a group company; and
b: the dividend was derived when the company—
i: had an FDP account and was not part of a consolidated group; or
ii: was part of a consolidated group with an FDP account.
2: Section OP 35(3)
3: The debit date is—
a: for a debit referred to in subsection (1)(a), the day the amount is transferred:
b: for a debit referred to in subsection (1)(b), the day the amount is refunded:
c: for a debit referred to in subsection (1)(c), the day the amount is applied.
3: In section OP 35 FDP pay tax credit
4: Subsections (1) and (2) apply for the 2008–09 and later income years.
456: Section OP 38 repealed
1: Section OP 38
2: Subsection (1)
457: Consolidated ICA transfer to policyholder credit account
1: After section OP 44(5) Mandatory transfer for group with non-standard accounting year
6: Despite the absence of an election during the tax year, a consolidated imputation group that has adopted a non-standard accounting year is treated as having chosen at the end of the tax year to transfer the credit described in subsection (7) from the imputation credit account to the policyholder credit account. Credit
7: The consolidated imputation group is treated as having made an election for a tax year to the extent to which—
a: during the tax year, or no later than the end of the accounting year corresponding to the tax year, a credit arises under—
i: section OP 7: table O19 (imputation credits of consolidated imputation groups), row 2 (income tax paid for group tax liability) for a payment of provisional tax; or
ii: section OP 14: table O19 (imputation credits of consolidated imputation groups), row 9 (FDP paid by group company) for a payment of FDP; and
b: during the tax year, the credit has not been cancelled by a later debit arising under—
i: section OP 30: table O20 (imputation debits of consolidated imputation groups), row 4 (refund of income tax or provisional tax to group) for a refund of provisional tax paid during the accounting year:
ii: section OP 34: table O20 (imputation debits of consolidated imputation groups), row 8 (refund of FDP when no FDP account) for a refund of FDP paid during the accounting year; and
c: the credit has not been included in a credit balance transferred by an election under subsection (3). Ordering rule
8: For the purpose of determining under subsection (7)(b) whether a debit has cancelled a credit, debits are treated as cancelling credits in the order in which the credits arise.
2: In section OP 44 accounting year FDP pay provisional tax tax year
3: Subsection (1) applies for the 2008–09 and later income years.
458: Section OP 44 replaced
1: Section OP 44
OP 44: Consolidated ICA debit for policyholder base imputation credits
Debit
1: A consolidated imputation group has an imputation debit for the amount of an imputation credit attached to a dividend derived by a group company, to the extent to which it is derived by a group company that is a life insurer and apportioned to that life insurer's policyholder base. Table reference
2: The imputation debit in subsection (1) is referred to in table O20: imputation debits of consolidated imputation groups, row 18 (debit for policyholder base imputation credits). Debit date
3: The debit date is the last day of the tax year. Defined in this Act: consolidated imputation group, imputation credit, imputation debit, life insurer, policyholder base, tax year .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
459: Table O19: imputation credits of consolidated imputation groups
1: Table O19, row 9 is repealed.
2: Table O19, rows 15 and 16 are repealed.
3: Subsection (1)
4: Subsection (2) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
460: Table O20: imputation debits of consolidated imputation groups
1: In table O20, after row 7, the following is inserted: 7B Debit for transfer from tax pooling account for policyholder base liability 31 March section OP 33B
2: Table O20, row 9 is replaced by the following: 9 Transfer, refund, or use of tax credit day of transfer, refund, or use section OP 35
3: Table O20, row 12 is repealed.
4: In table O20, row 18, day of election set out in section OP 44
5: In table O20, row 18 is replaced by the following: 18 Debit for policyholder base imputation credits 31 March section OP 44
6: Subsections (1) and (5) apply––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
7: Subsections (2) and (4) apply for the 2008–09 and later income years.
8: Subsection (3)
461: When credits and debits arise only in consolidated FDP group accounts
1: Section OP 54(2)
2: The credit referred to in subsection (1) is a credit under section OP 58, described in table O21, row 4.
2: In section OP 54(4)(d) ratio). ratio):
e: section OP 74, row 12 (debit for policyholder base FDP credits).
3: Subsection (1)
4: Subsection (2) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
462: Section OP 56 repealed
1: Section OP 56
2: Subsection (1)
463: Section OP 57 repealed
1: Section OP 57
2: Subsection (1)
464: Section OP 61 repealed
1: Section OP 61
2: Subsection (1)
465: Section OP 62 repealed
1: Section OP 62
2: Subsection (1)
466: Consolidated FDPA refund of tax credit
1: Section OP 68(1)
1: A consolidated FDP group has an FDP debit for the amount of a transfer or refund under section LA 6(2)(d) or (e) (Remaining refundable credits: PAYE, RWT, and certain other items) to the extent to which the amount transferred or refunded is a tax credit under subpart LF (Tax credits for FDP credits) relating to a dividend derived by a group company that is part of the group at the time it derives the dividend.
2: Section OP 68(3)
3: The debit date is the day the transfer or refund is made.
3: Subsections (1) and (2) apply for the 2008–09 and later income years.
467: Section OP 74 replaced
1: Section OP 74
OP 74: Consolidated FDPA debit for policyholder base FDP credits
Debit
1: A consolidated FDP group has an FDP debit for the amount of an FDP credit attached to a dividend derived by a group company, to the extent to which it is derived by a group company that is a life insurer and apportioned to that life insurer's policyholder base. Table reference
2: The FDP debit in subsection (1) is referred to in table O22: FDP debits of consolidated FDP groups, row 12 (debit for policyholder base FDP credits). Debit date
3: The debit date is the last day of the tax year. Defined in this Act: consolidated FDP group, FDP credit, FDP debit, life insurer, policyholder base, tax year .
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
468: Table O21: FDP credits of consolidated FDP groups
1: Table O21, rows 2, 3, 7, and 8 are repealed.
2: Subsection (1)
469: Table O22: FDP debits of consolidated FDP groups
1: Table O22, row 8 is repealed.
2: In table O22, row 12 is replaced by the following: 12 Debit for policyholder base FDP credits 31 March section OP 74
3: Subsection (1)
4: Subsection (2) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
470: CTR accounts of consolidated groups
1: In section OP 78(1) has must maintain
2: Subsection (1) applies for the 2008–09 and later income years.
471: When credits and debits arise only in CTR group accounts
1: Section OP 79(2)
2: The credit referred to in subsection (1) is a credit under section OD 7, described in table O5, row 4.
2: Subsection (1)
472: Section OP 81 repealed
1: Section OP 81
2: Subsection (1)
473: Section OP 82 repealed
1: Section OP 82
2: Subsection (1)
474: Section OP 88 repealed
1: Section OP 88
2: Subsection (1)
475: Section OP 95 repealed
1: Section OP 95
2: Subsection (1)
476: Table O23: conduit tax relief credits of consolidated groups
1: Table O23, rows 2 and 3 are repealed.
2: Subsection (1)
477: Table O24: conduit tax relief debits of consolidated groups
1: Table O24, row 3 is repealed.
2: Subsection (1)
478: Section OP 99 repealed
1: Section OP 99
2: Subsection (1)
479: Heading and sections OP 105 to OP 108 repealed
1: The heading before section OP 105 and sections OP 105 to OP 108
2: Subsection (1)
480: New heading and section OP 108B inserted
1: Before table O25, the following is inserted: Debit if credit balance at beginning of first affected income year
OP 108B: Consolidated BETA group with credit balance at beginning of first affected income year
If a consolidated BETA group has a credit balance in its branch equivalent tax account at the beginning of the first income year for which this section applies to the group, a branch equivalent tax debit of an amount equal to the credit balance arises in the branch equivalent tax account at that time. Defined in this Act: branch equivalent tax account, branch equivalent tax debit, consolidated BETA group, income year .
2: Subsection (1)
481: Table O25: branch equivalent tax credits of consolidated BETA groups
1: Table O25, row 2 is repealed.
2: Subsection (1)
482: Table O26 repealed
1: Table O26 is repealed.
2: Subsection (1)
483: Headings and sections OP 109 to OP 116 repealed
1: The headings before section OP 109 and sections OP 109 to OP 116
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
484: Tables O27 and O28 repealed
1: Tables O27 and O28 are repealed.
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
485: ASCA lost excess available subscribed capital
1: Section OZ 5(6)(a)
a: non-taxable gains and losses, including exempt income; and .
2: Subsection (1)
486: Modifying ratios for imputation credits and FDP credits
1: In section OZ 10(2) section OA 5(2) and (3) (Credits) sections LE 8, LE 9, LF 6, and LF 7 (which relate to tax credits for imputation credits and FDP credits)
2: Subsection (1) applies for the 2008–09 and later income years.
487: New section OZ 18 added
After section OZ 17
OZ 18: Credit-back of PCA balance
When this section applies
1: This section applies for a life insurer immediately before a day (the application day
a: 1 July 2010, if the life insurer does not have an early life regime application day, or
b: their early life regime application day, if the life insurer does have an early life regime application day. Credit-back
2: Immediately before the application day,—
a: the credit balance of a life insurer's policyholder credit account is credited as an imputation credit to the life insurer's imputation credit account, and the policyholder credit account is debited accordingly:
b: the credit balance of a consolidated group's policyholder credit account is credited as an imputation credit to the consolidated group's imputation credit account, and the consolidated group's policyholder credit account is debited accordingly. Defined in this Act: early life regime application day, consolidated group, imputation credit, imputation credit amount, life insurer, policyholder credit account .
488: What this Part does
1: Section RA 1(g)
2: In section RA 1 FDP
3: Subsection (1)
489: Tax obligations for employment-related taxes
1: In section RA 5 Withholding and payment obligations .
2: Section RA 5(c)
c: an employer's superannuation cash contribution.
3: In section RA 5 Timing for PAYE income payments
2: An amount of tax withheld from a PAYE income payment must be withheld at the time the person makes the payment.
4: In section RA 5 employer's superannuation contribution employer's superannuation cash contribution
5: Subsections (1) to (3) apply for the 2008–09 and later income years.
490: Withholding and payment obligations for passive income
1: Section RA 6(3)
2: After section RA 6(3) Timing for payments of passive income
4: An amount of tax withheld under subsections (1) and (2) must be withheld at the time the person makes the payment.
3: In section RA 6 FDP foreign dividend
4: Subsection (1)
5: Subsection (2) applies for the 2008–09 and later income years.
491: When obligations not met
1: In section RA 10(1)(a) an employer's superannuation contribution an employer's superannuation cash contribution
2: In section RA 10(1)(b) the amount; or the amount.
3: In section RA 10 employer's superannuation contribution employer's superannuation cash contribution
4: In section RA 10 FDP
5: Subsection (1) applies for the 2008–09 and later income years.
6: Subsection (2)
492: Payment dates for interim and other tax payments
1: Section RA 15(2)(b) to (d)
b: when the period for which the payment is made is a month or a period that is longer than a month but not a period referred to in paragraph (c) or (d), by the 20th day of the month after the relevant end date:
c: when the period for which the payment is made is an income year or a tax year other than that referred to in paragraph (d), or both, or the last quarter of a tax year, by 31 May:
d: for a close company that pays FBT on an income year basis, by terminal tax date.
2: Section RA 15(2)(c)
c: when the period for which the payment is made is a tax year or income year or both, by 31 May:
cb: despite subsection (3)(c), for FBT payable for the last quarter of a tax year, by 31 May: .
3: Section RA 15(3)(c)
c: for FBT payable quarterly under sections RD 58 RD 59 RD 62 .
4: In section RA 15 FDP
5: Subsection (1) applies for the 2008–09 and later income years. However, subsection (1) does not apply to a person in relation to a tax position taken by the person—
a: in the period from 1 April 2008 to the date of Royal assent of this Act; and
b: in relation to the payment of FDP; and
c: relying upon section RA 15(2)
6: Subsection (3)
493: Amalgamation of companies
1: In section RA 20 Amalgamated company's obligation .
2: In section RA 20 Thresholds for close companies
2: For the purpose of determining whether the threshold under section RD 60 section RA 5(1)(a) and (c)
3: In section RA 20 amalgamation close company gross income year
4: Subsections (1) and (2) apply for the 2008–09 and later income years.
494: Regulations
1: In section RA 21(4) subsection (2) subsection (3)
2: Subsection (1) applies for the 2008–09 and later income years.
495: Application of other provisions for purposes of ESCT rules and NRWT rules
1: In section RA 23(2) an amount of tax for an employer's superannuation contribution ESCT
2: Section RA 23(2)
3: In section RA 23 employer's superannuation contribution
4: Subsection (1) applies for the 2008–09 and later income years.
496: Payment of terminal tax
1: In section RB 1 section RA 3 (Terminal tax obligations) section RA 13 (Payment dates for terminal tax)
2: Subsection (1) applies for the 2008–09 and later income years.
497: Schedular income tax liability for filing taxpayers for non-resident passive income
1: In section RB 3(2) paragraph (h) paragraph (f)
2: Subsection (1) applies for the 2008–09 and later income years.
498: Who is required to pay provisional tax?
1: Section RC 3(2)(d)
d: a multi-rate PIE that does not choose to calculate and pay tax using the provisional tax calculation option under section HM 44 (Provisional tax calculation option).
2: In section RC 3
a: portfolio tax rate entity
b: multi-rate PIE
3: Subsection (1) applies for the 2010–11 and later income years.
499: Estimation method
1: Section RC 7(7)
2: In section RC 7 qualifying event self-assessed adverse event
500: Attribution rule for income from personal services
1: Section RC 34(1) to (6) When this section applies
1: This section applies for the purposes of the provisional tax rules and Part 7 section GB 27 working person associated entity Associated entity transferring amount to working person
2: If, in a tax year, the associated entity pays an amount of tax that is more than the provisional tax payable for the tax year, the entity may transfer some or all of the overpayment to the working person to the extent to which the amount of provisional tax paid by the person is less than their residual income tax for the tax year. Working person transferring amount to associated entity
3: If, in a tax year, the working person pays an amount of tax that is more than the provisional tax payable for the tax year, they may transfer some or all of the overpayment to the associated entity to the extent to which the amount of provisional tax paid by the entity is less than their residual income tax for the tax year. When transfer made
4: The associated entity and the working person may transfer an amount under subsection (2) or (3), as applicable, on or after the later of—
a: the day on which the overpayment of provisional tax is paid by the entity or person, as applicable:
b: the day on which the instalment of provisional tax payable for the tax year becomes payable by—
i: the person, if the entity is making the transfer; or
ii: the entity, if the person is making the transfer. Notice
5: The Commissioner must be notified of a transfer under subsection (2) or (3) in a notice that—
a: names the person to whom a transfer is made, and the amount to be transferred; and
b: states the date on which the overpayment is treated as transferred to the associated entity or working person, as applicable; and
c: is provided within the time for filing a return of income for the tax year for the person to whom the transfer is made, or an extended time allowed by the Commissioner. When transfer made and how transfer treated
6: For the purposes of this section,—
a: a transfer under subsection (2) or (3) is treated as made on the day stated in the notice; and
b: provisional tax transferred by the associated entity to the working person for a tax year is treated as provisional tax paid by the working person and not by the associated entity; and
c: provisional tax transferred by the working person to the associated entity is treated as provisional tax paid by the associated entity and not by the working person.
2: In section RC 34 amount of tax associated person
3: Subsection (1) applies for the 2008–09 and later income years.
501: Section RC 36 repealed
Section RC 36
502: PAYE rules and their application
Section RD 2(1)(b)
b: sections LA 6, LB 1, and LD 4 (which relate to tax credits); and .
503: PAYE income payments
1: Section RD 3(1)(b)(iii)
iii: an amount paid or benefit provided, by a person (the claimant personal service rehabilitation payment
2: Section RD 3(3)
3: The person may choose to treat all amounts paid to them in the income year in their capacity as employee of the close company as income other than from a PAYE income payment.
3: Section RD 3(4)
4: All amounts paid to the person in later income years in their capacity as employee of the close company are treated as income other than from a PAYE income payment.
4: Subsections (2) and (3) apply for the 2008–09 and later income years. However, subsections (2) and (3) do not apply to a person in relation to a tax position taken by the person—
a: in the period from 1 April 2008 to the date of Royal assent of this Act; and
b: relating to the treatment of an amount of income; and
c: relying upon section RD 3(3) and (4)
504: Salary or wages
1: In section RD 5(1)(b)(ii) subsections (2) to (7) subsections (2) to (8)
2: Section RD 5(1)(c)(v)
v: an employer's superannuation contribution other than a contribution referred to in subsection (8): .
3: Section RD 5(6)(a)
a: a gratuitous payment as described in paragraph (a) of the definition of pension .
4: In section RD 5(6)(c) 1987 or section 303 of the Education Act 1989 1987, section 303 of the Education Act 1989, or an enactment substituted for those sections
5: After section RD 5(7) Accommodation benefits
8: A benefit treated as income under section CE 1(1)(c) (Amounts derived in connection with employment) is included in salary or wages.
6: After section RD 5(8) Cash contributions
9: An amount of an employer's superannuation cash contribution that an employee chooses to have treated as salary or wages under section RD 68 is included in salary or wages.
7: In section RD 5 accommodation
8: In section RD 5 employer's superannuation cash contribution,
9: Subsections (1), (2), and (6) apply for the 2008–09 and later income years.
10: Subsections (3) and (4) apply for the 2008–09 and later income years.
505: Certain benefits and payments
1: Section RD 6(1)(a) and (b)
a: an accommodation benefit treated as income under section CE 1(1)(c) (Amounts derived in connection with employment); or
b: another benefit in kind that is included in their salary or wages; or .
2: In section RD 6 accommodation
506: Schedular payments
In section RD 8(1)(b)(v) who does not have who has
507: Reduction in certain circumstances
1: After section RD 11(3) When Commissioner makes determination under section RD 8(3)
4: If the Commissioner makes a determination under section RD 8(3) in relation to the amount or proportion of expenditure that a person incurs in deriving a schedular payment, the basis for calculating the amount of tax for the schedular payment is the reduced amount found after subtracting the amount or proportion of expenditure determined by the Commissioner from the amount of the payment. This subsection overrides section RD 10(3).
2: In section RD 11 amount schedular payment
3: In section RD 11 NC 13 NC 13, Income Tax (Withholding Payments) Regulations 1979, regulation 6(3)
4: Subsection (1) applies for the 2008–09 and later income years.
508: Multiple payments of salary or wages
1: Section RD 12(2)(b)
b: to salary or wages from employment as a casual agricultural employee, election day worker, or non-resident seasonal worker.
2: In section RD 12 non-resident seasonal worker
3: Subsection (1) applies for the 2009–10 and later income years.
509: Advance payments of salary or wages
1: Section RD 13(1)(a)
a: an employee receives from an employer a payment of salary or wages referred to in section RA 5(1)(a) and (c) (Tax obligations for employment-related taxes); and .
2: Subsection (1) applies for the 2008–09 and later income years.
510: New section RD 13B inserted
After section RD 13
RD 13B: Adjustments for payroll donations
When this section applies
1: This section applies when an employee makes a payroll donation for a pay period for which they have a tax credit under section LD 4 (Tax credits for payroll donations). Subtracting amount of tax credit
2: The employer or PAYE intermediary must subtract the amount of the tax credit from the amount of tax for the employee's PAYE income payment for the pay period and record the information in the relevant employer monthly schedule. Defined in this Act: employee, employer, employer monthly schedule, pay period, PAYE income payment, PAYE intermediary, payroll donation, tax credit .
511: Payments of extra pay with other PAYE income payments
1: In section RD 17(1) the sum of the extra pay and the annualised value of all PAYE income payments made the annualised value of all PAYE income payments, excluding the extra pay, made
2: Subsection (1) applies for the 2008–09 and later income years.
512: Schedular payments without notification
1: Section RD 18(3) Additional amount of tax
3: The person must withhold, in addition to the amount calculated under section RD 10(3), an amount of tax for the schedular payment determined as follows:
a: 5% of the amount of the schedular payment if—
i: the person receiving the payment is a company that is a non-resident contractor; and
ii: the non-resident contractor receives the payment other than as a result of a choice that is made for the purposes that include a purpose of defeating the intent and application of paragraph (b):
b: 15% of the amount of the schedular payment in all other cases. Non-application to non-resident entertainers
4: This section does not apply if the schedular payment is made to a non-resident entertainer.
2: Subsection (1) applies for the 2008–09 and later income years.
513: Schedular payments to non-resident entertainers
Section RD 19(2)
514: PAYE income payment forms for amounts of tax paid to Commissioner
1: In section RD 22 Returns for amounts of tax paid to Commissioner
2: Section RD 22(1) Paying amount withheld with returns
1: An employer or a PAYE intermediary who withholds an amount of tax from a PAYE income payment must pay the amount to the Commissioner under section RD 4 and provide an employer monthly schedule and a PAYE income payment form in relation to the amount.
3: In section RD 22(2)
2: The employer or PAYE intermediary must provide the employer monthly schedule and PAYE income payment form referred to in subsection (1) by— .
4: Section RD 22(3) Returns when gross amounts of tax are less than $100,000
3: Despite subsection (2), an employer who meets the requirements of subsection (3B) must provide the employer monthly schedule and the PAYE income payment form by the 20th day of the month following that in which an amount of tax is withheld. Requirements
3B: For the purposes of subsection (3), the employer must—
a: not be a new employer; and
b: have gross amounts of tax of less than $100,000 withheld under section RA 5(1)(a) and (c) (Tax obligations for employment-related taxes) for both—
i: PAYE income payments:
ii: employer's superannuation cash contributions.
5: In the heading to section RD 22(3) $100,000 $500,000
6: In section RD 22(3B) $100,000 $500,000
7: Section RD 22(4)
4: Despite subsection (2), an employer who is a new employer must provide the employer monthly schedule and the PAYE income payment form by the 20th day of the month following that in which an amount of tax is withheld until their gross amounts of tax for PAYE income payments and employer's superannuation cash contributions payable for the tax year are more than $100,000.
8: In section RD 22(4) $100,000 $500,000
9: Section RD 22(6)
6: In addition to the requirements of subsections (2) to (4), if the employer stops carrying on a business in relation to which an amount of tax for a PAYE income payment has been withheld, they must notify the Commissioner of the cessation by the 15th day of the second month following the month in which the business is ended.
10: In section RD 22 employer monthly schedule employer's superannuation cash contribution
11: Subsections (4) and (7) apply for the 2008–09 and later income years.
515: Calculation of all-inclusive pay
In section RD 51(3)(a) or applied on their account
516: Value of and payments towards fringe benefits
In section RD 54 s ND 1S ss GC 15(3), (4), ND 1S
517: Close company option
1: Section RD 60(1)(a) is replaced by the following:
a: the gross amounts of tax for both PAYE income payments and employer's superannuation cash contributions withheld under section RA 5(1)(a) and (c) (Tax obligations for employment-related taxes) for the tax year were no more than $100,000; or .
2: In section RD 60(1)(a) $100,000 $500,000
3: In section RD 60(6) referred to in subsection (1) withheld under section RA 5(1)(a) and (c)
4: In section RD 60
a: employer's superannuation contribution
b: employer's superannuation cash contribution
5: Subsections (1) and (3) apply for the 2008–09 and later income years.
518: Small business option
1: Section RD 61(1)(a)
a: the gross amounts of tax for both PAYE income payments and employer's superannuation cash contributions withheld under section RA 5(1)(a) and (c) (Tax obligations for employment-related taxes) for the tax year were no more than $100,000; or .
2: In section RD 61(1)(a) $100,000 $500,000
3: In section RD 61(6) referred to in subsection (1) withheld under section RA 5(1)(a) and (c)
4: In section RD 61 employer's superannuation cash contribution
5: Subsections (1) and (3) apply for the 2008–09 and later income years.
519: Employer's superannuation contributions
1: In section RD 65 Employer's superannuation cash contributions
2: Section RD 65(1)
1: An employer's superannuation cash contribution
3: In section RD 65(2) employer's superannuation contribution employer's superannuation cash contribution
4: In section RD 65(2)(b) amount of tax amount of tax withheld
5: In section RD 65(3) employer's superannuation contribution employer's superannuation cash contribution
6: In section RD 65(4) employer's superannuation contribution employer's superannuation cash contribution
7: Section RD 65(4) Contributions to KiwiSaver schemes and complying superannuation funds
4: Subsection (3) and, as applicable, sections RD 67 to RD 69, do not apply to an employer's superannuation cash contribution (the current contribution
a: for an employee described in sections 101C(a) to (c) of the KiwiSaver Act 2006; and
b: for the employee's KiwiSaver scheme, or for their complying superannuation fund and subject to the complying fund rules; and
c: no more than 2% of the payment of salary or wages to which the current contribution relates.
8: In section RD 65(7) employer's superannuation contribution employer's superannuation cash contribution
9: In section RD 65(11) employer's superannuation contribution employer's superannuation cash contribution
10: Section RD 65(12)
11: In section RD 65(13) KiwiSaver calculation period KiwiSaver calculation period
a: beginning with the later of—
i: 1 year before the date on which the employer makes the current contribution:
ii: the date on which the employer is first required to withhold from the employee's salary or wages a superannuation contribution to which the complying fund rules apply; and
b: ending with the date on which the employer makes the current contribution .
12: In section RD 65 employer's superannuation contribution employer's superannuation cash contribution
13: Subsections (1) to (6) and (8) to (11) apply for the 2008–09 and later income years.
520: Calculating amounts of tax for employer's superannuation contributions
1: In section RD 67 Calculating amounts of tax for employer's superannuation cash contributions
2: In section RD 67 employer's superannuation contribution employer's superannuation cash contribution
3: Section RD 67(a)
a: if the employer chooses under section RD 69(1), the amount determined under schedule 1, part D, clause 1 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits); or .
4: In section RD 67 employer's superannuation contribution employer's superannuation cash contribution
5: Subsections (1) to (3) apply for the 2008–09 and later income years.
521: Choosing to have amount treated as salary or wages
1: In section RD 68 Amount treated as salary or wages .
2: In section RD 68(1) employer's superannuation contribution employer's superannuation cash contribution
3: After section RD 68(1) Revoking election
2: The employee's election is valid until revoked in writing.
4: In section RD 68 employer's superannuation contribution employer's superannuation cash contribution
5: Subsections (1) to (3) apply for the 2008–09 and later income years.
522: Choosing different rates for employer's superannuation contributions
1: In section RD 69 Choosing different rates for employer's superannuation cash contributions
2: In section RD 69(1) employer's superannuation contribution employer's superannuation cash contribution
3: In section RD 69 employer's superannuation contribution employer's superannuation cash contribution
4: Subsections (1) and (2) apply for the 2008–09 and later income years.
523: Calculating amounts on failure to withhold
1: Section RD 70(1)
1: This section applies when an employer or PAYE intermediary does not withhold under section RD 65(3) an amount of tax for an employer's superannuation cash contribution.
2: In section RD 70 employer's superannuation contribution employer's superannuation cash contribution
3: Subsection (1) applies for the 2008–09 and later income years.
524: Amounts of tax treated as paid to and received by superannuation funds
1: In section RD 71(a) an amount of tax an amount of tax withheld
2: Section RD 71(c)
c: the payment referred to in paragraph (a) and the receipt referred to in paragraph (b) are treated as having occurred when the superannuation fund received the employer's superannuation cash contribution.
3: In section RD 71 employer's superannuation contribution employer's superannuation cash contribution
4: Subsections (1) and (2) apply for the 2008–09 and later income years.
525: Resident passive income
1: In section RE 2(1) resident in New Zealand
2: In section RE 2(3)(c) paid to a person resident in New Zealand who is acting as agent or nominee of a non-resident
3: In section RE 2 resident in New Zealand
4: Subsections (1) and (2) apply for the 2008–09 and later income years. However, subsections (1) and (2) do not apply to a person in relation to a tax position taken by the person—
a: in the period from 1 April 2008 to 3 December 2008; and
b: in relation to the payment of an amount of resident passive income to a non-resident engaged in business in New Zealand; and
c: relying upon section RE 2
526: Obligation to withhold RWT
1: Section RE 3(1)(a) and (b)
a: they have an obligation to withhold an amount of tax under section RE 4 and are not excluded under sections RE 5 and RE 6 from meeting the obligation: .
2: Subsection (1) applies for the 2008–09 and later income years.
527: Persons who have withholding obligations
1: In section RE 4(6)
6: For the purposes of subsection (5), in the calculation of the amount of RWT to be credited against income tax, the amount must be converted to New Zealand currency at the option of the person deriving the resident passive income at either— .
2: In section RE 4 FDP
3: Subsection (1)
528: Agents' or trustees' obligations in relation to certain dividends
1: Section RE 9(2)
2: To the extent to which the resident passive income consists of a dividend other than a dividend treated as interest, an amount of tax that must be withheld under section RE 3 is treated as an amount to which the RWT rules apply.
2: In section RE 9 FDP rules
3: Subsection (1)
529: Notification by companies
1: In section RE 11(3) schedule 1, part D, clause 5 schedule 1, part D, clause 4
2: Subsection (1) applies for the 2008–09 and later income years.
530: Interest
1: In section RE 12(3)(a) schedule 1, part D, clause 4 or 5 schedule 1, part D, clause 3 or 4
2: Subsection (1) applies for the 2008–09 and later income years.
531: Non-resident passive income
1: The heading to section RF 2(1) Interest, certain dividends, and royalties
2: Section RF 2(2)(b)
b: an amount of income to which section CV 17 (Non-resident film renters) applies:
c: an amount of excluded income under section CX 56 (Portfolio investor allocated income and distributions of income by portfolio investment entities).
3: In section RF 2(2)(c) section CX 56 (Portfolio investor allocated income and distributions of income by portfolio investment entities) section CX 56C (Distributions to investors by listed PIEs)
4: In section RF 2(5) consisting of interest or an investment society dividend other than those described in subsection (3)(b) and (d) consisting of interest, investment society dividends, or a royalty other than those described in subsection (3)
5: In section RF 2 excluded income
6: Subsections (1) and (2) apply for the 2008–09 and later income years.
7: Subsection (4) applies for the 2008–09 and later income years. However, subsection (4) does not apply to a person in relation to a tax position taken by the person—
a: in the period from 1 April 2008 to 3 December 2008; and
b: in relation to a payment of non-resident passive income; and
c: relying on section RF 2(5)
8: Subsection (3) applies for the 2010–11 and later income years.
532: Certain dividends
In section RF 8 fully imputed
533: When dividends fully imputed or fully credited
1: In section RF 9(1) section RF 8(1)(d) to (f) sections RF 8 and RF 10
2: Subsection (1) applies for the 2008–09 and later income years.
534: Non-cash dividends
1: Section RF 10(1) When subsections (2) to (5) apply
1: Subsections (2) to (5) apply when a person makes a payment of non-resident passive income that consists of a non-cash dividend to the extent to which the amount is not fully imputed.”
2: In section RF 10(2) rate A × dividend payment + rate B × amount paid. 1 – rate A
3: After section RF 10(5) Fully imputed non-cash dividends
5B: When a payment of non-resident passive income consists of a non-cash dividend, the rate of NRWT payable on the amount is 0% to the extent to which the amount is fully imputed.
4: In section RF 10 fully imputed
5: In section RF 10 s NG 9 ss NG 2(1)(b)(ii), NG 9
6: Subsections (1) and (3) apply for the 2008–09 and later income years.
535: Dividends paid to companies under control of non-residents
1: The heading to section RF 11 Dividends paid to companies associated with non-residents
2: Section RF 11(1)(b) and (c)
b: while the non-resident held the share, company A was associated with the non-resident; and
c: the non-resident has disposed of the share to another company ( company B .
3: Subsections (1) and (2) apply for the 2010–11 and later income years.
536: Section RF 12 replaced by sections RF 12 to RF 12C
1: Section RF 12
RF 12: Interest paid by approved issuers or transitional residents
When this section applies
1: This section applies in relation to an amount of non-resident passive income that consists of—
a: interest that—
i: is paid by an approved issuer under a registered security; and
ii: is derived by a person not associated with the approved issuer; and
iii: is not a payment to which section RF 12B applies:
b: interest that—
i: is paid by a transitional resident in relation to money borrowed by them while non-resident; and
ii: is not paid in relation to a business carried on through a fixed establishment in New Zealand; and
iii: is derived by a person not associated with the transitional resident; and
iv: is not a payment to which section RF 12B applies. Zero-rating
2: The rate of NRWT payable on the amount is 0%. Interest paid under registered securities
3: For the purposes of the NRWT rules, an amount of interest is paid by an approved issuer under a registered security only if it is treated as paid in respect of a registered security under section 86I of the Stamp and Cheque Duties Act 1971. Defined in this Act: amount, approved issuer, associated person, business, company, fixed establishment, income, interest, life insurer, New Zealand, non-resident, non-resident passive income, NRWT, NRWT rules, pay, registered security, resident in New Zealand, transitional resident 2004 No 35 s NG 2(1)(b)(i), (ib)
RF 12B: Interest derived jointly with residents
When payment derived jointly with resident
1: If a person makes a payment of non-resident passive income that consists of interest derived by 2 or more persons jointly and at least 1 person deriving the interest is a New Zealand resident, the amount of tax for the payment is calculated using the formula— (tax rate × (interest paid + foreign withholding tax)) − foreign withholding tax. Definition of items in formula
2: In the formula,—
a: tax rate
b: interest paid
c: foreign withholding tax Treatment as filing taxpayer
3: For the purposes of this section, the New Zealand resident referred to in subsection (1) is treated as a filing taxpayer. Defined in this Act: amount, amount of tax, filing taxpayer, foreign withholding tax, interest, New Zealand resident, non-resident passive income, pay 2004 No 35 s NG 2(1)(ab)
RF 12C: Amount derived from non-resident life insurer becoming resident
When this section applies
1: This section applies when an amount of non-resident passive income is—
a: derived by a life insurer from a company resident in New Zealand; and
b: treated as income as a result of the granting of the insurer's application under section EY 49 (Non-resident life insurer becoming resident). Zero-rating
2: The rate of NRWT payable on the amount is 0%. Defined in this Act: amount, company, life insurer, New Zealand, non-resident passive income, NRWT, pay, resident in New Zealand 2004 No 35 s NG 2(1)(b)(iii) .
2: Subsection (1) applies for the 2008–09 and later income years.
537: Credit balance in branch equivalent tax account
1: In section RG 5(2) section RF 2(5) and (6) (Non-resident passive income) section RG 4
2: Subsection (1) applies for the 2008–09 and later income years.
538: Using loss balances
1: In section RG 6(3)(a) section RF 2(5) and (6) (Non-resident passive income) section RG 4
2: Subsection (1) applies for the 2008–09 and later income years.
539: Reduction of payments for conduit tax relief
1: In section RG 7(2)(b) section 32M of the Tax Administration Act 1994 section RG 6
2: Subsection (1) applies for the 2008–09 and later income years.
540: Subpart RG repealed
1: Subpart RG
2: Subsection (1)
541: Refunds for overpaid tax
1: After section RM 2(1) Refundable credits
1B: An amount of tax under subsection (1) includes an amount of a refundable tax credit to which section LA 5(5) (Treatment of remaining credits) applies.
2: In section RM 2 refundable tax credit
542: Overpayment on income statements
1: After section RM 5(1) Refundable credits
1B: An amount of tax under subsection (1) includes an amount of a refundable tax credit to which section LA 5(5) (Treatment of remaining credits) applies.
2: In section RM 5 refundable tax credit
543: Using refund to satisfy tax liability
1: Section RM 10(1)
1: This section applies when a person is entitled to a refund of an amount of tax under sections RM 2 and RM 4 to RM 6. Section LB 4 (Tax credits for families) may apply to adjust the amount available.
2: In section RM 10(1) An amount of tax under this section includes an amount of a refundable tax credit under section LA 5(5) (Treatment of remaining credits). RM 6.
3: In section RM 10(4) section LA 7 (Remaining refundable credits: tax credits for families) section LA 7
4: In section RM 10 refundable tax credit
5: Subsection (1) applies for the 2008–09 and later income years.
544: Operation of PAYE intermediaries' trust accounts
1: In section RP 6(2)(b) employer's superannuation contribution employer's superannuation cash contribution
2: In section RP 6(3)(b) employer's superannuation contribution employer's superannuation cash contribution
3: In section RP 6(3)(d) employer's superannuation contribution employer's superannuation cash contribution
4: In section RP 6 employer's superannuation contribution employer's superannuation cash contribution
5: Subsections (1) to (3) apply for the 2008–09 and later income years.
545: General responsibility of employers
1: In section RP 7(3) the employer's superannuation contribution on the employee's behalf the employer's superannuation cash contribution made on the employee's behalf
2: In section RP 7 employer's superannuation contribution employer's superannuation cash contribution
3: Subsection (1) applies for the 2008–09 and later income years.
546: Information required from employers
After section RP 8(a)(ii)
iii: the amount of any payroll donations for the pay period; and
iv: the amount of any tax credit under section LD 4 (Tax credits for payroll donations); and .
547: Employer's superannuation contributions
1: In section RP 11 Employer's superannuation cash contributions
2: In section RP 11 employer's superannuation contribution employer's superannuation cash contribution
3: In section RP 11 employer's superannuation contribution employer's superannuation cash contribution
4: Subsections (1) and (2) apply for the 2008–09 and later income years.
548: General responsibilities of PAYE intermediaries
1: In section RP 13(2) employer's superannuation contribution employer's superannuation cash contribution
2: In section RP 13 employer's superannuation contribution employer's superannuation cash contribution
3: Subsection (1) applies for the 2008–09 and later income years.
549: Collection, payment, and information requirements
After section RP 14(a)
ab: transfer the amount of any payroll donation to the relevant recipient within the period described in section 24Q of the Tax Administration Act 1994; and .
550: Tax pooling intermediaries
In section RP 17 provisional tax. provisional tax, terminal tax, or an increase in an assessment of tax as described in section RP 17B(3).
551: New section RP 17B inserted
After section RP 17
RP 17B: Tax pooling accounts and their use
Meaning
1: A tax pooling account Use of funds in tax pooling accounts
2: An amount held in a tax pooling account on behalf of a person may be refunded, transferred, sold, or used to satisfy a person's liability for terminal tax, provisional tax, or an increased amount of tax described in subsection (3). When original liability increased
3: For the purposes of this section, an increased amount of tax—
a: arises when a person's previous assessed liability is increased after—
i: the Commissioner amends an assessment under section 113 of the Tax Administration Act 1994:
ii: the Commissioner makes a determination under section 119 of that Act:
iii: an assessment is made because the Commissioner or the person is treated under section 89H of that Act as having accepted a proposed adjustment:
iv: the person makes a voluntary disclosure:
b: includes deferrable tax as defined in section 3(1) of the Tax Administration Act 1994 payable by the person:
c: does not include the amount of the previous assessment. Transfer within 60 days for provisional tax or terminal tax
4: If a person chooses to use funds in a tax pooling account to satisfy an obligation for provisional tax or terminal tax for a tax year, the tax pooling intermediary must ask the Commissioner within 60 days from the person's terminal tax date for the tax year to transfer the amount to the person's tax account with the Commissioner. Transfer within 60 days for increased amounts
5: If a person chooses to use funds in a tax pooling account to satisfy an obligation for an increased amount of tax under subsection (3)(a), the tax pooling intermediary must ask the Commissioner within 60 days from the date on which the Commissioner issues the notice of assessment increasing the amount to transfer the amount to the person's tax account with the Commissioner. Transfer within 60 days for deferrable tax
6: If a person chooses to use funds in a tax pooling account to satisfy an obligation for deferrable tax under subsection (3)(b), the tax pooling intermediary must ask the Commissioner within 60 days from the date on which the court proceedings are finally determined to transfer the amount to the person's tax account with the Commissioner. For the purposes of this subsection, court proceedings include proceedings before the Taxation Review Authority. Defined in this Act: amount, amount of tax, assessment, Commissioner, notice, pay, provisional tax, tax account with the Commissioner, tax pooling account, terminal tax .
552: Deposits in tax pooling accounts
1: In section RP 18(2)(c) person. person:
d: transferred at the person's request to another intermediary:
e: transferred at the intermediary's request to another intermediary.
2: After section RP 18(2) Effective date
2B: For the purposes of this section and sections RP 17B and RP 19, a deposit that is transferred between intermediaries under subsection (2)(d) or (e) retains its pre-transfer date.
3: Section RP 18(4) Confirming receipt of deposit and details
4: On receiving the deposit and details described in subsection (3), the Commissioner must provide confirmation of receipt.
553: Transfers from tax pooling accounts
1: Section RP 19(1) Transferring amounts
1: A tax pooling intermediary may ask the Commissioner to transfer an amount in their tax pooling account to the tax account of a person who is their client or to another intermediary. Treatment of transferred amounts
1B: An amount transferred and credited to the tax account of a person is treated as follows:
a: for an amount credited on or before the person's terminal tax date for a tax year, as income tax paid to meet a provisional tax obligation under the provisional tax rules:
b: for an amount credited after the person's terminal tax date for a tax year,—
i: first, as applied under section 120F of the Tax Administration Act 1994 to pay interest that the person is liable to pay; and
ii: secondly, as income tax paid to meet the person's provisional tax obligation.
2: In section RP 19(2) the person's tax account the person's tax account or the account of another intermediary
3: Section RP 19(3)
3: The credit date for an amount transferred to a person's tax account is—
a: for a request made within the 60-day period referred to in section RP 17B(4) to (6), the date sought under subsection (2); or
b: for any other case, the date on which the Commissioner receives the request for the transfer.
554: Standard method: 2008–09 and 2009–10 income years
1: In section RZ 3(3) the preceding tax year the tax year before the preceding tax year
2: Subsection (1) applies for the 2008–09 and later income years.
555: GST ratio method: 2008–09 and 2009–10 income years
1: In section RZ 4(1)(c) 2007–08 income year 2007–08 income year or an earlier income year
2: Subsection (1) applies for the 2008–09 and later income years.
556: New section RZ 11 added
After section RZ 10
RZ 11: Refunds for life insurers
The Commissioner must refund an amount of tax that a life insurer has paid to the extent to which––
a: the tax paid gave rise to imputation credits; and
b: for a tax year corresponding to an income year before the income year that includes 1 July 2010, the life insurer would be entitled to a refund under section RM 2(1) (Refunds for overpaid tax) or any provision corresponding to it in an earlier Act, treating section RM 2(1)(a) and any corresponding provision as modified so as to exclude the amount of the life insurer's policyholder base income tax liability from the tax required to be paid by them; and
c: all other relevant requirements for a refund are met. Defined in this Act: amount of tax, Commissioner, imputation credit, income year, life insurer, pay, policyholder base income tax liability, tax .
557: Definitions
1: This section amends section YA 1
2: The definition of 1973 version provisions
3: The definition of 1988 version provisions
4: The definition of 1990 version provisions
5: After the definition of accident insurance contract accommodation .
6: In the definition of actuarial reserves section EY 3 section EZ 59
7: Before the definition of actuary actuarially determined .
8: The definition of after-income tax earnings
9: The definition of after-income tax loss
10: In the definition of agricultural, horticultural, or viticultural company schedule 4, part C schedule 4, part C, clause 1(b)
11: After the definition of approved issuer arm's length amount .
12: After the definition of asset asset base .
13: The definition of associated, associated person, person associated associated, associated person, person associated .
14: After the definition of associated mining operations associated non-attributing active CFC
a: associated with the CFC under section YB 2 (Two companies with common control); and
b: subject with the CFC to the laws of the same country or territory under which each company is liable to income tax on its income because of its domicile, residence, place of incorporation, or centre of management; and
c: a non-attributing active CFC .
15: In the definition of associated non-attributing active CFC
a: associated with the CFC under section YB 2 (Two companies); and .
16: After the definition of association rebate attributable CFC amount .
17: After the definition of attributed CFC net loss attributed PIE income attributed PIE loss .
18: After the definition of attributing interest attribution period .
19: After the definition of benefit benefit fund PIE
a: meets the requirements of section HM 7 (Requirements); and
b: chooses to become a PIE under section HM 71 (Choosing to become PIE); and
c: has not chosen to cancel PIE status under section HM 29 (Choosing to cancel status); and
d: does not attribute amounts to investors .
20: After the definition of benefit fund PIE best estimate assumptions
a: are actuarially determined; and
b: are made using professional judgement, training and experience; and
c: are not deliberately overstated or understated .
21: After the definition of bonus issue in lieu boutique investor class
a: the class does not have 20 or more members; and
b: the entity has 1 or more other investor classes that include 20 or more persons; and
c: no investor in the class described in paragraph (a), other than the manager or trustee of the entity, can control investment decisions relating to the class; and
d: the interests of investors in all investor classes described in paragraph (a) of the entity add up to less than 10% of the total value of interests in the entity .
22: In the definition of branch equivalent income as that provision read immediately before being amended by section 161 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009
23: In the definition of branch equivalent loss as that provision read immediately before being amended by section 161 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009
24: After the definition of calculation method calculation period
a: consists of 1 or more attribution periods:
b: for a calculation under the quarterly calculation option, is a quarter:
c: for a calculation under the exit calculation or provisional tax calculation options, is an income year:
d: for a calculation under the exit calculation option when an exit period arises, is the exit period .
25: In the definition of cancellation including on the liquidation of the company including on the liquidation of a company, and when a stapled debt security ceases to be a share
26: In the definition of charitable or other public benefit gift subpart LD (Tax credits for charitable or other public benefit gifts) sections LD 1 to LD 3 (which relate to tax credits for charitable or other public benefit gifts)
27: After the definition of class class of policies .
28: In the definition of consideration
aa: includes the amount owing under a stapled debt security when the security ceases to be a share, in section CD 43 (Available subscribed capital (ASC) amount): .
29: In the definition of consolidated FDPA group consolidated FDPA group consolidated FDP group
30: In the definition of continuity provisions
i: section OE 10 (BETA credit for loss of shareholder continuity); and .
31: The definition of control
32: The definition of convert convert .
33: After the definition of counted associate cover review period .
34: In the definition of credit account continuity provisions
c: section OE 10 (BETA credit for loss of shareholder continuity) .
35: After the definition of credit account continuity provisions credit card repayment insurance .
36: In the definition of creditable membership
a: in paragraph (b)(i), first received a contribution for the person is first received
b: after paragraph (b)(i), the following is inserted:
ib: the period beginning on the day which the Commissioner nominates when requested by the person, in circumstances where, due to matters outside the control of the person, the first deduction of KiwiSaver contributions was delayed, and ending on the day on which securities are first allotted by the KiwiSaver scheme for the person: .
37: After the definition of creditable membership creditor workout
a: a compromise (as that term is defined in section 227 of the Companies Act 1993) that is binding under Part 14 or 15 of that Act, to the extent to which the compromise does not cancel all of a debt:
b: an executed deed of company arrangement under Part 15A of the Companies Act 1993, to the extent to which it is a compromise (as that term is defined in section 227 of that Act) that does not cancel all of a debt:
c: a suspension in part of the repayment of any deposit, the payment of any debt, or the discharge of any obligation, under section 44 of the Corporations (Investigation and Management) Act 1989 .
38: The definition of current accounting year
39: After the definition of debenture holder debt security .
40: After the definition of debt security deductible foreign equity distribution
a: for which a deduction is allowed in the calculation of the income tax imposed by a country or territory other than New Zealand on the income of the foreign company or on the income of a company in the same group as the foreign company:
b: sourced directly or indirectly out of an amount paid to the foreign company in relation to a financial arrangement or share by another company if—
i: the foreign company is not liable for income tax imposed by a country or territory other than New Zealand on the amount paid to the foreign company; and
ii: the other company is allowed a deduction, in the calculation of the income tax imposed by a country or territory other than New Zealand on the income of the other company, for the amount paid to the foreign company .
41: The definition of derivative instrument derivative instrument .
42: The definition of direct income interest direct income interest
a: is defined in section EX 9 (Direct income interests) except for the FIF rules:
b: is defined in section EX 30 (Direct income interests in FIFs) for the FIF rules .
43: In the definition of dividend
a: is defined in sections CD 3 to CD 20 (which relate to income from equity) for the purposes of this Act, except for the definition of investment society dividend .
44: In the definition of dividend
a: paragraph (c)(ii) is replaced by the following:
ii: includes an amount paid to a shareholder that is a company and a person associated with the company paying the amount, if the amount is excluded from dividend treatment generally only as a result of sections CD 26(2)(b) (Capital distributions on liquidation or emigration) and CD 44; and :
b: paragraph (d)(i) is replaced by the following:
i: includes an amount paid to a shareholder that is a company and a person associated with the company paying the amount, if the amount is excluded from dividend treatment generally only as a result of sections CD 26(2)(b) and CD 44; and .
45: After the definition of dividend treated as interest donee organisation .
46: After the definition of early balance date early life regime application day .
47: After the definition of emergency call emergency event section 183ABA .
48: After the definition of emigrating company emissions unit .
49: In the definition of employee sections CW 17 (Expenditure on account, and reimbursement, of employees) and CW 18 (Allowance for additional transport costs) sections CW 17, CW 17B, CW 17C, and CW 18 (which relate to expenditure, reimbursement, and allowances of employees)
50: In the definition of employee schedule 4 (Rates of tax for schedular payments) schedule 4, parts A and I (Rates of tax for schedular payments)
51: In the definition of employee's superannuation accumulation
a: employer's superannuation cash contributions: .
52: In the definition of employer
a: paragraph (c)(i) is replaced by the following:
i: a payment referred to in section RD 5(1)(b)(iii), (3), (6)(b) and (c), and (7) (Salary or wages): :
b: in paragraph (c)(ii), schedule 4 (Rates of tax for schedular payments) schedule 4, parts A and I (Rates of tax for schedular payments)
53: In the definition of employer monthly schedule
e: for each employee in the month to which the schedule relates,—
i: the amount of gross earnings:
ii: the total amount of tax withheld:
iii: the total amount of tax credits under section LD 4 (Tax credits for payroll donations):
iv: the amount of earnings not liable to the earner premium; and .
54: In the definition of employer monthly schedule
h: for each employee in the month to which the schedule relates, if applicable, the amount of employer's superannuation cash contributions, less any ESCT payable under the ESCT rules; and .
55: In the definition of employer-sourced superannuation savings
a: in paragraph (a), employer's superannuation contributions employer's superannuation cash contributions under section RA 5(1)(c) (Tax obligations for employment-related taxes)
b: in paragraph (c),—
i: that is, employer's superannuation contributions that is, employer's superannuation cash contributions under section RA 5(1)(c)
ii: the employer's superannuation contributions those employer's superannuation cash contributions
56: After the definition of employer-sourced superannuation savings employer sponsored group policy .
57: The definition of employer's superannuation contribution employer's superannuation cash contribution employer's superannuation contribution .
58: The definition of ESCT ESCT
a: means employer's superannuation contribution tax; and
b: relates to an employer's superannuation cash contribution; and
c: refers to an amount payable as income tax under the ESCT rules .
59: In the definition of ESCT rate threshold amount ESCT rate threshold amount .
60: The definition of ETS unit
61: After the definition of excess debt entity excess debt outbound company .
62: In the definition of excluded ancillary tax
63: In the definition of excluded fixed rate security substituting debenture substituting debenture or stapled debt security
64: After the definition of excluded option excluded preference share .
65: After the definition of exemption certificate existing business .
66: After the definition of existing privilege exit level exit period .
67: Before the definition of expenditure expected life risk proportion .
68: The definition of fair dividend rate method fair dividend rate method .
69: The definition of fair value method fair value method .
70: The definition of FDP rules FDP rules
a: section GB 41 (FDPA arrangements for carrying amounts forward):
b: sections LF 1, LF 5, and LF 8 to LF 10 (which relate to tax credits for FDP credits):
c: subpart OC (Foreign dividend payment accounts (FDPA)):
d: section YA 2(2)(d) to (f) (Meaning of income tax varied) .
71: After the definition of financial arrangements rules financial asset .
72: After the definition of financial assistance financial risk .
73: The definition of financial statements financial statements .
74: The definition of first tracking date
75: After the definition of fixed principal financial arrangement fixed-rate foreign equity equity holder
a: at a rate that is a specific fixed percentage of the amount subscribed for the issue of the equity; or
b: at a rate that—
i: is a percentage of the amount subscribed for the issue of the equity; and
ii: has a fixed relationship to economic, commodity, industrial, or financial indices, to banking rates of interest, or to general commercial rates of interest; or
c: at a rate that would be given by paragraph (a) or (b) but for variations due to—
i: a fixed relationship to a rate of income tax:
ii: compensation to the holder for default by the foreign company:
iii: compensation to the holder for expenditure or loss related to the holding of the equity and suffered by the holder or by a person associated with the holder; or
d: equivalent to the payment of interest for money lent, having regard to—
i: whether or not the equity is redeemable:
ii: any security provided to the holder, including put or call options over the equity or an amount payable determined by reference to the amount of distributions payable:
iii: the variability or lack of variability of the distributions payable .
76: In the definition of fixed-rate share
a: in paragraph (e), equity) equity):
f: in section FA 2B (Stapled debt securities) and the definitions of proportional-stapling company stapled debt security
i: a share described in paragraph (a):
ii: a share that would be a share described in paragraph (a) but for any dividend or variation in the rate of dividend that may occur due to a gain arising when the share is converted into another share (the other share
A: a change in value of the other share in a period, and that period finishes when the share is converted, starts not more than 30 days before the share is converted, and was a term or condition of the share when the share was first issued:
B: a term or condition of the share that was a term or condition when the share was first issued, and that term or condition set, for the gain, a fixed percentage equal to 5%, or a lesser percentage, of the amount subscribed for the share:
iii: a share for which the dividend payable is the equivalent of the payment of interest for money lent having regard to the factors in paragraph (g):
g: for the purposes of paragraph (f)(iii), the factors are––
i: whether or not the share is redeemable:
ii: any security provided to the shareholder, including put or call options over the share or any amount payable determined by reference to the amount of dividend payable:
iii: the variability or lack of variability of the dividend payable :
b: paragraph (e) is repealed.
77: The definition of foreign dividend
78: The definition of foreign dividend company
79: The definition of foreign dividend company net earnings
80: The definition of foreign group
81: After the definition of foreign non-dividend income foreign PIE equivalent .
82: The definition of forest land unit forest land emissions unit .
83: After the definition of forestry company formation loss .
84: After the definition of fully credited for conduit tax relief fully imputed
a: for the purposes of sections CB 26, EX 20B, RF 8, and RF 10 (which relate to distributions by PIEs and certain dividends), means the amount calculated under section RF 9(2) (When dividends fully imputed or fully credited):
b: for the purposes of sections CW 15, HA 14, HA 16, and HA 19 (which relate to dividends paid by qualifying companies), means the amount calculated under section HA 15(2) (Fully imputed distributions) .
85: After the definition of general insurance general insurance contract .
86: After the definition of goods government screen production payment
a: is in the nature of a large budget screen production grant or New Zealand screen production incentive; and
b: is authorised by the New Zealand Film Commission in relation to a company that—
i: is resident in New Zealand:
ii: has a permanent establishment in New Zealand .
87: After the definition of grandparented consolidated company grandparenting start day .
88: The definition of grey list company grey list company
a: the company is liable in the country to income tax on the company's income because the company—
i: is domiciled in the country:
ii: is resident in the country:
iii: is incorporated in the country:
iv: has its place of management in the country:
b: the company is organised under the laws of the country and the country—
i: imposes on persons holding income interests in the company the liability for income tax on the company's income; and
ii: under the laws of the country, is the source of 80% or more of the income of the company .
89: The definition of grey list dividend
90: After the definition of group investment fund group life master policy .
91: In the definition of holding company
a: for a forestry company, means a company associated with the forestry company: .
92: After the definition of home vendor mortgage honorarium .
93: After the definition of IFRS IFRS 4 .
94: After the definition of IFRS 4 IFRSE .
95: In the definition of income from employment
d: in section DA 2(4), includes excluded income derived by a person from employment .
96: In the definition of income interest subpart OE subparts FE (Interest apportionment on thin capitalisation) and OE
97: In the definition of income tax liability
ii: income tax for the person and a tax year calculated under subpart HM (Portfolio investment entities), if the person is a multi-rate PIE; and .
98: In the definition of international tax rules
xiii: section YA 2 (Meaning of income tax varied): .
99: In the definition of international tax rules
xiv: the provisions of subpart YB (Associated persons and nominees) that apply for the purposes of the 1988 version provisions (which relate to the definition of associated persons): .
100: In the definition of international tax rules paragraph (a)(xiv)
101: In the definition of international tax rules sections 61 and 183 section 61
102: In the definition of investor
b: for a portfolio investment entity, is defined in section HM 4 (Who is an investor?) .
103: After the definition of investor investor class investor interest .
104: After the definition of joint venture agreement jurisdictional attributed income jurisdictional BE income jurisdictional income ratio .
105: The definition of Kyoto unit
106: After the definition of land land investment company
a: is not a portfolio investment entity:
b: on 80% or more of the days in the tax year on which the company has property with a market value of more than $100,000, 90% of that property consists of land or shares in a company that meets the description of this definition, and meets the requirements of section HM 12 (Income sources) land loss .
107: After the definition of land loss land provisions
a: sections CB 7 to CB 11 (which relate to certain land transactions), except CB 8 (Disposal: land used for landfill, if notice of election):
b: section CB 15 (Transactions between associated persons):
c: sections FB 3 to FB 5 (which relate to the transfer of land on a settlement of relationship property) .
108: The definition of large budget screen production grant
109: In the definition of lease paragraph (c) paragraph (d)
110: After the definition of licence-specific assets life financial reinsurance .
111: After the definition of life financial reinsurance life fund PIE
a: meets the requirements of section HM 7 (Requirements); and
b: chooses to become a PIE under section HM 71 (Choosing to become PIE); and
c: has not chosen to cancel PIE status under section HM 29 (Choosing to cancel status); and
d: holds investment subject to life insurance policies under which benefits are directly linked to the value of the investments held in the fund .
112: After the definition of life reinsurer life risk .
113: Before the definition of limitation rule life risk component
a: means––
i: for a premium paid under a life insurance policy, the amount of the premium that gives rise to income derived by the life insurer for providing services, including the bearing of life risk:
ii: for a claim payable under a life insurance policy, the amount of the claim that gives rise to deductions for the life insurer for providing services, including the bearing of life risk:
b: does not include an amount that is a savings component .
114: The definition of limited partnership net deduction limited partnership deduction .
115: After the definition of limited-recourse loan lines trust
a: has had shares allocated or transferred to or vested in it, being shares in—
i: an energy company as defined in section 2(1) of the Energy Companies Act 1992 under an approved establishment plan under that Act:
ii: a company under section 76 of the Energy Companies Act 1992:
iii: a company to which have been transferred assets and liabilities of the Crown under section 16 of the Southland Electricity Act 1993; and
b: continues to hold shares described in paragraph (a) .
116: After the definition of listed PAYE intermediary listed PIE
a: is listed on a recognised exchange in New Zealand or meets the requirements of section HM 18 (Requirements for listed PIEs: unlisted companies); and
b: meets the requirements of section HM 7 (Requirements); and
c: chooses to become a PIE under section HM 71 (Choosing to become PIE); and
d: has not chosen to cancel PIE status under section HM 29 (Choosing to cancel status); and
e: is not a life fund PIE; and
f: has not chosen under section HM 2(3) (What is a portfolio investment entity?) to become a multi-rate PIE .
117: In the definition of loan and subpart LL (Underlying foreign tax credits (UFTC)),
118: In the definition of market value circumstance applies or FA 2B (Stapled debt securities) applies
119: In the definition of member credit contribution
a: paragraph (a)(i) is replaced by the following:
i: an employer's superannuation cash contribution made for the person: :
b: after paragraph (a)(ii), the following is inserted:
iib: Crown contribution (as that term is defined in the KiwiSaver Act 2006) for the person: :
c: paragraph (b) is replaced by the following:
b: an amount received and held for the person by the Commissioner that is an amount to which section 73, 74, or 75 of the KiwiSaver Act 2006 applies, other than—
i: an employer's superannuation cash contribution made for the person:
ii: an amount received and held by the Commissioner but not paid to the provider of the person's KiwiSaver scheme in the relevant member credit year unless the amount has not been paid because of the person's death or because of a refund under section 113 of the KiwiSaver Act 2006 .
120: The definitions of mortality profit mortality profit formula
121: After the definition of motor vehicle multi-rate PIE
a: meets the requirements of section HM 7 (Requirements); and
b: chooses to become a PIE under section HM 71 (Choosing to become PIE); and
c: has not chosen to cancel PIE status under section HM 29 (Choosing to cancel status); and
d: is not a benefit fund PIE; and
e: is not a life fund PIE .
122: In the definition of multi-rate PIE
123: After the definition of natural resource net attributable CFC income net attributable CFC loss .
124: After the definition of new asset new business .
125: The definition of new start grant new start grant
a: designated by the Minister of Agriculture as a new start grant; and
b: paid by the Government of New Zealand to a person in relation to an emergency event .
126: In the definition of new tax rate person portfolio tax rate entity multi-rate PIE
127: The definition of New Zealand unit New Zealand emissions unit .
128: After the definition of nominee non-attributing active CFC non-attributing Australian CFC .
129: The definition of non-creditable dividend
130: In the definition of non-filing taxpayer
b: a person whose only income derived from New Zealand is schedular payments derived in the person's capacity as a non-resident entertainer and who chooses not to file a return for the relevant tax year; or .
131: After the definition of non-integral fee non-Kyoto greenhouse gas unit
a: issued by reference to the sequestration, reduction, or avoidance of emission, of human induced greenhouse gases; and
b: verified to an internationally recognised standard; and
c: not an emissions unit .
132: In the definition of non-refundable tax credit
ab: a tax credit under section LD 4 (Tax credits for payroll donations): .
133: In the definition of non-refundable tax credit
g: a tax credit under sections LS 3(3) and (4) and LS 4(3) and (4) (which relate to multi-rate PIEs and certain of their investors) and under section LS 1 (Tax credits for multi-rate PIEs) to the extent to which it arises under section HM 51 (Use of foreign tax credits by PIEs) .
134: In the definition of non-resident entertainer
b: undertakes a Part F activity .
135: After the definition of non-resident person non-resident seasonal worker .
136: After the definition of notice period notified investor rate .
137: After the definition of NZIAS 17 NZIAS 23 .
138: The definition of offshore development
139: The definition of onshore development
140: In the definition of operating lease means means, except in section EW 15I(1)(b)(iib) (Mandatory use of yield to maturity method for some arrangements),
141: After the definition of outstanding balance outstanding claims reserve
a: for an insurer who uses IFRS 4, the amount of the insurer's outstanding claims liability for general insurance contracts, excluding contracts having premiums to which section CR 3 (Income of non-resident general insurer) applies, as that liability is measured under Appendix D, paragraphs 5.1 to 5.2.12 of IFRS 4 for the insurer's financial statements:
b: for a life insurer, the amount that would be the life insurer's outstanding claims reserve under section EY 24(3) and (4) (Outstanding claims reserving amount: non-participation policies not annuities) for general insurance contracts, excluding contracts having premiums to which section CR 3 applies, if section EY 24(3) and (4) were modified so as to apply to general insurance contracts and reinsurance contracts, instead of to life insurance policies and reinsurance contracts .
142: After the definition of overseas pension overtime .
143: In the definition of ownership interest that section that section and section YC 18B (Corporate reorganisations not affecting economic ownership)
144: After the definition of parental tax credit Part F activity .
145: In the definition of pay
bb: is defined in section LD 4(7) (Tax credits for payroll donations) for the purposes of that section and section LD 8(1) (Meaning and ranking of payroll donation) and for section 24Q of the Tax Administration Act 1994 .
146: In the definition of PAYE income payment form
a: paragraph (h) is replaced by the following:
h: the amount of an employer's superannuation cash contribution and the amount of ESCT withheld and paid; and :
b: paragraph (i) is replaced by the following:
i: the amount of an employer's superannuation cash contribution and the amount of tax withheld and paid, other than that described in paragraph (h); and .
147: After the definition of payment relating to incapacity for work payroll donation .
148: In the definition of personal service rehabilitation payment
a: paragraph (a) is replaced by the following:
a: under section 81(3), 372, or 374 of the Injury Prevention, Rehabilitation, and Compensation Act 2001; and :
b: paragraph (c) is replaced by the following:
c: in providing to a person—
i: a key aspect of rehabilitation referred to in section 81(1)(b), (c), (e), or (g) (relating to attendant care, child care, home help, and training for independence) of that Act:
ii: a key aspect of rehabilitation referred to in section 81(1)(h) (relating to transport for independence) of that Act to the extent provided by paragraph (a)(i) of the definition of transport for independence
iii: similar rehabilitation referred to in an earlier Act corresponding to that Act .
149: After the definition of petroleum mining company petroleum mining development .
150: After the definition of physical cost of production PIE PIE rules
a: the following provisions:
i: section BC 7(4) (Income tax liability of person with schedular income):
ii: section CB 26 (Disposal of certain shares by portfolio investment entities):
iii: section CP 1 (Attributed income of investors in multi-rate PIEs):
iv: sections CX 55 to CX 57 (which relate to excluded income of investors in PIEs):
v: sections DB 53 and DB 54 (which relate to losses of certain investors in PIEs):
vi: subpart HM (Portfolio investment entities):
vii: section IA 7(10) (Restrictions relating to ring-fenced losses):
viii: section IC 3(2B) (Common ownership: group of companies):
ix: subpart LS (Tax credits for multi-rate PIEs and investors):
x: section OB 9B (ICA attributed PIE income with imputation credit):
b: sections 28B, 31B, 31C, 33(1C), 38(1B), 57B, and 61(1C) of the Tax Administration Act 1994 .
151: After the definition of plot policy liabilities section EY 29 .
152: The definition of policyholder base policyholder base policyholder base allowable deductions policyholder base income .
153: The definitions of policyholder base income tax liability policyholder credit policyholder credit account policyholder debit policyholder FDP ratio policyholder income policyholder income formula policyholder net loss
154: The definitions of portfolio allocation period portfolio calculation period portfolio class fraction portfolio class investment value portfolio class net income portfolio class net loss portfolio class taxable income portfolio class taxable loss portfolio defined benefit fund portfolio entity formation loss portfolio entity investment portfolio entity tax liability portfolio investor allocated income portfolio investor allocated loss portfolio investor class, portfolio investor exit period portfolio investor interest portfolio investor interest fraction portfolio investor proxy portfolio investor rate portfolio land company portfolio listed company portfolio tax rate entity
155: The definition of portfolio investment entity portfolio investment portfolio investment entity
a: a multi-rate PIE:
b: a listed PIE:
c: a benefit fund PIE:
d: a life fund PIE .
156: In the definition of portfolio investor rate the time; or the time; and
iii: the Commissioner has not notified the entity to disregard the rate that the investor has notified to the entity; or .
157: In the definition of portfolio listed company fund fund; and
f: has not chosen under section HL 11 (Election to become portfolio investment entity and cancellation of election) to be a portfolio tax rate entity .
158: In the definition of portfolio tax rate entity New Zealand; and New Zealand that has chosen to become a portfolio listed company under section HL 12 (Unlisted company choosing to become portfolio listed company); and
159: The definitions of post-1989 forest land post-1989 forest land unit post-1989 forest land post-1989 forest land emissions unit
a: transferred to the person under section 64 of the Climate Change Response Act 2002 for growing trees on post-1989 forest land; and
b: held continuously by the person since the issue .
160: The definitions of pre-1990 forest land pre-1990 forest land unit pre-1990 forest land pre-1990 forest land emissions unit
a: transferred to the person under Part 4 subpart 2 of the Climate Change Response Act 2002 in relation to pre-1990 forest land; and
b: held continuously by the person since the issue .
161: In the definition of premium
iii: does not include consideration received by a life insurer for the transfer of life insurance business: .
162: The definitions of premium loading premium loading formula
163: Before the definition of prepaid expenditure premium payback amount .
164: In the definition of prescribed investor rate none of paragraphs (b) and (c) none of paragraphs (b), (bb), and (c)
165: In the definition of prescribed investor rate
ii: the person is a resident who derives income as a trustee of a trust other than a trust referred to in paragraph (c)(i) and who chooses to be subject to this paragraph for the tax year; or .
166: In the definition of prescribed investor rate
bb: 19.5%, unless paragraph (c) applies to the person, if the person is a resident who derives income as a trustee and chooses to be subject to this paragraph for the tax year; or .
167: The definition of prescribed investor rate prescribed investor rate .
(168): After the definition of prescribed rate of interest present value (gross)
a: a present value calculated using the risk-free rate of return as the discount rate, gross of tax; but
b: face value, if the whole discount period is less than a year present value (net)
a: a present value calculated using the risk-free rate of return as the discount rate, net of tax; but
b: face value, if the whole discount period is less than a year .
169: After the definition of profit profit participation policy
a: means a class of life insurance policy having––
i: a segregated or identifiable asset base; and
ii: policyholders who are entitled to a share of profits that is distributed to, or vested in, the policyholders from the asset base, and the policies provide for the entitlement; and
iii: a fixed formula, expressed in terms of a proportion of a policyholder's share of profits from the asset base, that calculates a transfer to the benefit of the life insurer's shareholders from the profits of the asset base, and that fixed formula is consistently applied:
b: includes a class of life insurance policy that substantially meets the requirements of paragraph (a) and that has a guarantee by the life insurer that capital invested will be returned or that a minimum return on capital will be paid, if—
i: the life insurer has irrevocably chosen that the class be treated as a profit participation policy; and
ii: the Commissioner receives a notice of the election before the start of the first income year to which it relates .
170: In the definition of profit-related debenture for the purposes of that section
171: After the definition of property proportional-stapling company
a: each share in the company that is not a stapled debt security and not a fixed-rate share (a participating share
b: for each participating share in the company, the amount payable for the issue of its stapled debt security is the same proportion of the available subscribed capital calculated under the slice rule of the participating share as it is for each other participating share .
172: After the definition of provisional tax rules PSR period .
173: The definition of qualifying event
174: After the definition of recognised exchange recognised seasonal employment scheme .
175: The definition of redundancy payment redundancy payment
a: to a person whose employment in a position is terminated because the position has become superfluous to the requirements of their employer; and
b: in compensation for the loss of the person's employment .
176: In the definition of refundable tax credit election) election):
e: a tax credit under section LS 1 (Tax credits for portfolio tax rate entities and their investors) .
177: In the definition of refundable tax credit
d: a tax credit under sections LS 2, LS 3(2), and LS 4(2) (which relate to multi-rate PIEs and certain of their investors):
e: a tax credit under section LS 1 (Tax credits for multi-rate PIEs) to the extent to which it arises under section HM 53 or HM 55 (which relate to the use of tax credits other than foreign tax credits) .
178: After the definition of reinsurance contract reinsurance grandparenting start day .
179: The definition of related person related person .
180: The definition of relative relative
a: except in section HC 36 (Trusts and minor beneficiary rule), means a person connected with another person by—
i: being within the second degree of blood relationship to the other:
ii: being in a marriage, civil union, or de facto relationship with the other:
iii: being in a marriage, civil union, or de facto relationship with a person who is within the second degree of blood relationship to the other:
iv: being adopted as a child of the other or as a child of a person who is within the first degree of relationship to the other:
v: being the trustee of a trust under which a relative has benefited or is eligible to benefit:
b: is defined in section HC 36(5) for the purposes of that section .
181: The definition of replacement ETS unit replacement forest land emissions unit
a: the person has previously disposed of a post-1989 forest land emissions unit other than by surrender under the Climate Change Response Act 2002; and
b: the person has not since the disposal acquired another emissions unit that replaces the post-1989 forest land emissions unit .
182: The definition of required interest
183: After the definition of resident foreign trustee resident group member .
184: After the definition of resident passive income residential mortgage backed security .
185: The definition of retained earnings
186: The definition of revenue account property revenue account property
a: is trading stock of the person:
b: if disposed of, would produce income for the person other than income under section EE 48 (Effect of disposal or event), FA 5 (Assets acquired or disposed of after deductions of payments under lease), or FA 9 (Treatment when lease ends: lessee acquiring asset):
c: is an emissions unit of the person .
187: After the definition of right RMBS special purpose vehicle section HR 9
a: derives no exempt income; and
b: has interests in New Zealand-originated residential mortgages, or in loans secured by New Zealand-originated residential mortgages, that are treated, for financial reporting purposes, by a registered bank as held by the registered bank; and
c: the only provision of funds by financial arrangements is in respect of––
i: residential mortgage backed securities it has issued; and
ii: financial arrangements incidental to its operations; and
d: has residential mortgage backed securities it has issued––
i: held by the registered bank with the intention of participating in the Reserve Bank of New Zealand's domestic liquidity operations:
ii: held by the Reserve Bank of New Zealand and accepted in that bank's domestic liquidity operations:
iii: transferred by the Reserve Bank of New Zealand, after acceptance in that bank's domestic liquidity operations, to a person who is resident in New Zealand, or who is not resident in New Zealand but is not associated with the registered bank .
188: In the definition of salary or wages for the purposes of that section and schedule 28, clause 7 (Requirements for complying fund rules) for the purposes of those sections
189: After the definition of salary or wages savings component
a: for a premium paid under a life insurance policy, the actuarially determined amount of the premium that is like the policyholder making an investment and is accounted for as increasing policyholder liabilities:
b: for a claim payable under a life insurance policy, the actuarially determined amount of the claim that is like the policyholder withdrawing an investment and is accounted for as reducing policyholder liabilities savings product policy .
190: In the definition of schedular income
a: schedular policyholder base income: .
191: In the definition of schedular income
192: In the definition of schedular income
db: income derived by a multi-rate PIE: .
193: In the definition of schedular income section RE 4(4) (Persons who have withholding obligations) section RF 2(3) (Non-resident passive income)
194: After the definition of schedular payment schedular policyholder base income .
195: After the definition of section 200 secured amounts .
196: In the definition of settlor
c: has the meaning given in paragraph (a) modified by section YB 10 (Who is a settlor?) for the purposes of sections YB 7 to YB 9 (which relate to associated persons) .
197: In the definition of share
bb: includes a stapled debt security to which section FA 2B(2) (Stapled debt securities) applies: .
198: The definition of share purchase agreement share purchase agreement .
199: In the definition of share reorganisation held by the person, including the person, who holds attributing interests in the FIF held by persons, including the person, who hold attributing interests in the FIF
200: After the definition of shareholder shareholder agreement
a: includes an arrangement to which the shareholders of the company are parties, in their capacity as shareholders; but
b: does not include an arrangement that is––
i: the company's constitution:
ii: the terms of a debt security:
iii: the terms of the company's shares .
201: After the definition of shareholder agreement shareholder base shareholder base allowable deductions shareholder base income .
202: After the definition of standing timber stapled stapled debt security .
203: The definition of starting date
204: In the definition of substituting debenture for the purposes of that section
205: After the definition of supply supporting asset base section EY 17 .
206: The definition of surrender surrender .
207: After the definition of surrender surrender value surrender amount debt obligations .
208: The definition of taxation law taxation law
a: a provision that is a taxation law under section 91B of the Tax Administration Act 1994:
b: a provision of the Income Tax Act 1994 or Income Tax Act 2004 .
209: The definition of tax pooling account tax pooling account .
210: The definition of tax withheld tax withheld
a: withheld from a PAYE income payment under the PAYE rules to the extent to which it is a tax credit under section LB 1
b: withheld and paid to the Commissioner under the RWT and NRWT rules to the extent to which it is a tax credit under section LB 3 or LB 5 (which relate to tax credits for passive income):
c: paid under regulations made under section 225 of the Tax Administration Act 1994 .
211: After the definition of technology telecommunications service
a: the transmission, emission, or reception of such information in analogue or digital code by a technical system using any equipment, including a cable or satellite and associated equipment, for the transmission through any medium of energy in any form, including electric current or electromagnetic radiation:
b: the transfer or assignment of the right to transmit, emit, or receive such information by a system referred to in paragraph (a):
c: the provision of access to a global network for the transmission, emission, or reception of such information .
212: The definition of tracking account
213: The definition of tracking associate
214: In the definition of trading stock
a: in paragraph (b), in sections GC 6 in sections EB 24 (Apportionment on disposal of business assets that include trading stock), GC 6
b: paragraph (c) is replaced by the following:
c: for the purposes of section GC 1 (Disposals of trading stock at below market value), has an expanded meaning as set out in section GC 1(3): .
215: The definition of UFTC
216: The definition of UFTC accounting period
217: After the definition of unlisted widely-held trust unwind section HR 10 .
218: After the definition of unwind valuation premiums .
219: Before the definition of voting interest volunteer .
220: The definition of widely-held GIF widely-held GIF
a: section HM 14(1) (Minimum number of investors), treating the group investment fund as having 1 investor class consisting of all investors in the fund:
b: 1 or more of paragraphs (a) and (c) to (e) of the definition of public unit trust .
221: The definition of widely-held superannuation fund widely-held superannuation fund
a: section HM 14(1) (Minimum number of investors), treating the superannuation fund as having 1 investor class consisting of all investors in the fund:
b: 1 or more of paragraphs (a) and (c) to (e) of the definition of public unit trust .
222: After the definition of working day work-related relocation .
223: The definition of zero-rated portfolio investor zero-rated investor
224: Subsections (7) and (141) apply—
a: for an insurer who uses IFRS 4,––
i: for the 2009–10 and later income years, unless subparagraph (ii) applies:
ii: for the first income year for which an insurer adopts IFRSs for the purposes of financial reporting and later income years, if that first income year is before the 2009–10 income year and the person chooses to use IFRS 4 in a return of income for that first year:
b: for a life insurer,––
i: on and after 1 July 2010, unless subparagraph (ii) applies:
ii: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
225: Subsections (5), (10), (29), (36), (42), (51), (54), (55), (57), (58), (59), (62), (68), (84), (88), (99), (109), (119), (130), (134), (144), (145), (146), (184), (187), (193), (195), (198), (199), (214), and (217) apply for the 2008–09 and later income years.
226: Subsections (6), (12), (20), (27), (33), (35), (46), (56), (65), (67), (72), (87), (90), (112), (113), (120), (122), (124), (151), (152), (153), (161), (162), (163), (168), (169), (172), (178), (189), (190), (194), (201), (205), (207), (218), and (219) apply––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
227: Subsections (2), (3), (4), (13), (15), (31), (44), (91), (100), (107), (115), (179), (180), and (196)
a: provisions other than the land provisions, for the 2010–11 and later income years:
b: the land provisions other than section CB 11
c: section CB 11
228: Subsections (50) and (52) apply for the 2008–09 and later income years. However, subsections (50) and (52) do not apply to a person in relation to a tax position taken by the person—
a: in the period from 1 April 2008 to 3 December 2008; and
b: in relation to the rate of tax applying to a schedular payment; and
c: relying on the definition of employee employer
229: Subsections (8), (9), (11), (14), (16), (22), (23), (30), (34), (38), (40), (41), (43), (61), (70), (71), (74), (75), (77), (78), (79), (80), (89), (94), (96), (104), (117), (123), (128), (129), (182), (183), (185), (203), (208), (211), (212), (213), (215), and (216)
558: Meaning of income tax varied
1: Section YA 2(6)
2: Subsection (1)
559: Treatment of qualifying company election tax, FBT, FDP penalty tax, imputation penalty tax, and withdrawal tax
Section YA 3
560: Two companies with common control
In section YB 2(6) This section Subsection (3)
561: Two companies with common control: 1988 version provisions
After section YB 3(3) Exception for government-related entities
3B: This section does not apply to make a company an associated person of another company if the first company is an entity referred to in section YB 2(6).
562: Some definitions
Section YB 20(2)(d)
d: section DT 2 (Arrangement for petroleum exploration expenditure and sale of property): .
563: Table, heading, and sections YB 1 to YB 20 replaced
1: Table Y1, the heading before section YB 1 sections YB 1 to YB 20 Associated persons
YB 1: What this subpart does
Associated person rules and nominee rules
1: This subpart sets out the rules that—
a: define when 2 persons are associated persons; and
b: determine how nominees are treated. Other references
2: If a rule in this subpart states that 2 persons are associated persons for 1 or more provisions in this Act, a reference in the relevant provision to persons who are associated with each other includes those persons. Tests
3: The tests of association are categorised as follows:
a: two companies, see
b: a company and a person other than a company, see
c: two relatives, see
d: a person and a trustee for a relative, see
e: a trustee and a beneficiary, see
f: trustees with a common settlor, see
g: a trustee and a settlor, see
h: a settlor and a beneficiary, see
i: a trustee and a person with a power of appointment or removal, see
j: a partnership and a partner, see
k: two persons who are each associated with the same third person, see Application
4: The sections in this subpart relating to associated persons apply for the purposes of the whole Act unless a section expressly states otherwise. Loss-attributing qualifying companies and shareholders
5: A special rule provides that a shareholder in a loss-attributing qualifying company and that LAQC are treated as associated persons for the purposes of section DS 4 (Meaning of film reimbursement scheme), see Low-turnover traders
6: A special rule applies for the purposes of subpart EB (Valuation of trading stock (including dealer's livestock)) to determine when a low-turnover trader is associated with a company, see Control interests in foreign companies
7: A special rule applies for the purposes of section EX 3 (Control interests: total of direct, indirect, and associated person interests) to determine when a New Zealand resident is associated with a non-resident relative, see Supplementary dividend holding companies
8: A special rule applies for the purposes of section LP 2 (Tax credits for supplementary dividends) to determine when a company is associated with a supplementary dividend holding company, see Defined in this Act: associated person, company, loss-attributing qualifying company, low-turnover trader, New Zealand resident, nominee, non-resident, relative, settlor, shareholder, supplementary dividend holding company, trustee
YB 2: Two companies
Common voting interests
1: Two companies are associated persons if a group of persons exists whose total voting interests in each company are 50% or more. Common market value interests
2: Two companies are associated persons if—
a: a market value circumstance exists for either company; and
b: a group of persons exists whose total market value interests in each company are 50% or more. Common control by other means
3: Two companies are associated persons if a group of persons exists who control both companies by any other means. General aggregation rule
4: For the purposes of subsections (1) to (3), if a person ( person A person B Aggregation rule for land provisions
5: For the purposes of subsections (1) to (3) person A person B sections YB 4(1)(b) and (2) to (4), YB 7, YB 8, and YB 10 to YB 14 Exception for certain government entities
6: Subsection (3) does not apply to 2 companies if either or both are—
a: a state enterprise:
b: a Crown Research Institute:
c: a Crown health enterprise:
d: a company that is part of the same group of companies as an entity referred to in any of paragraphs (a) to (c). Exception for international tax rules
7: In the international tax rules, 2 companies are not associated persons if 1, but not both, is a non-resident. Exception for managed funds
8: For the purposes of the land provisions, 2 companies are not associated persons if 1 is a portfolio investment entity or an entity that qualifies for PIE status. Defined in this Act: associated person, company, Crown Research Institute, group of companies, group of persons, international tax rules, land provisions, market value circumstance, market value interest, non-resident, PIE, portfolio investment entity, state enterprise, voting interest
YB 3: Company and person other than company
Company and 25% voting interest holder
1: A company and a person other than a company are associated persons if the person has a voting interest in the company of 25% or more. Company and 25% market value interest holder
2: A company and a person other than a company are associated persons if—
a: a market value circumstance exists for the company; and
b: the person has a market value interest in the company of 25% or more. General aggregation rule
3: For the purposes of subsections (1) and (2), if a person ( person A person B Aggregation rule for land provisions
4: For the purposes of subsections (1) and (2) person A person B Person other than company
5: In this section, a person other than a company includes a company acting in its capacity as a trustee of a trust. Defined in this Act: associated person, company, land provisions, market value circumstance, market value interest, voting interest
YB 4: Two relatives
Degree of relationship
1: Two persons are associated persons if —
a: they are within 2 degrees of blood relationship:
b: they are married, in a civil union, or in a de facto relationship:
c: 1 person is within 2 degrees of blood relationship to the other person's spouse, civil union partner, or de facto partner. Exception: blood relationships
2: For the purposes of the land provisions and sections EB 13 (Low turnover valuation) and EC 5 (Transfer of livestock because of self-assessed adverse event), subsection (1)(a) and (c) does not apply, and persons are associated persons because of a blood relationship only if 1 is the infant child of the other. Treatment of adoption
3: For the purposes of this section, a child by adoption is treated as a natural child of the adoptive parents and not as a natural child of the birth parents. Exception
4: A person is not associated with another person under this section if the person cannot reasonably be expected to know that—
a: the other person exists:
b: the person is within 2 degrees of blood relationship to the other person. Defined in this Act: associated person, land provisions
YB 5: Person and trustee for relative
Association
1: Two persons ( person A person B Land provisions
2: This section does not apply for the purposes of the land provisions. Defined in this Act: associated person, land provisions, trustee
YB 6: Trustee and beneficiary
Association
1: A trustee of a trust and a person who has benefited or is eligible to benefit under the trust are associated persons. Land provisions
2: This section does not apply for the purposes of the land provisions. Defined in this Act: associated person, land provisions
YB 7: Two trustees with common settlor
Association
1: A trustee of a trust and a trustee of another trust are associated persons if the same person is a settlor of both trusts. Treatment of spouses and partners
2: For the purposes of this section, 2 persons who are married, in a civil union, or in a de facto relationship are treated as the same single person. Defined in this Act: associated person, settlor, trustee
YB 8: Trustee and settlor
Association
1: A trustee of a trust and a settlor of the trust are associated persons. Exclusion
2: This section does not apply if the trust is a charitable trust. Defined in this Act: associated person, charitable trust, settlor, trustee
YB 9: Settlor and beneficiary
Association
1: A settlor of a trust and a person who has benefited or is eligible to benefit under the trust are associated persons. Land provisions
2: This section does not apply for the purposes of the land provisions. Defined in this Act: associated person, land provisions, settlor, trustee
YB 10: Who is a settlor?
For the purposes of sections YB 7 to YB 9, settlor Defined in this Act: settlor
YB 11: Trustee and person with power of appointment or removal
A trustee of a trust and a person who has a power of appointment or of removal of the trustee are associated persons. Defined in this Act: associated person, trustee
YB 12: Partnership and partner
Association
1: A partnership and a partner in the partnership are associated persons. Limited partnerships
2: Subsection (1) does not apply if the partner is a limited partner. Instead a limited partnership and a limited partner are associated persons if the limited partner has a partnership share of 25% or more in a right, obligation, or other property, status, or thing of the limited partnership. Limited partnerships: general aggregation rule
3: For the purposes of subsection (2), if a person ( person A person B Limited partnerships: aggregation rule for land provisions
4: For the purposes of subsection (2) person A person B sections YB 2, YB 3, YB 4(1)(b) and (2) to (4), YB 7, YB 8, YB 10, YB 11, and YB 14 Defined in this Act: associated person, limited partner, limited partnership, partnership share
YB 14: Tripartite relationship
Test
1: Two persons ( person A person B
a: person B is associated with a third person ( person C
b: person C is associated with person A under any of sections YB 2 to YB 13, excluding the section under which person B is associated with person C. Exception: companies tests
2: Subsection (1) does not apply if—
a: person B is associated with person C under section YB 2; and
b: person C is associated with person A under section YB 3. Association for purposes of research and development tax credits
3: Subsection (1) does not apply in relation to the association of a company and a person, for the purposes of section LH 1(2) (Who this subpart applies to). Defined in this Act: associated person, company, tax credit
YB 15: Exceptions for employee trusts
Beneficiaries
1: Section YB 6(1) does not apply if—
a: the trust is only for the benefit of employees of an employer; and
b: neither the beneficiary nor any person associated with the beneficiary directly or indirectly controls the trust. Non-corporate settlors
2: For a settlor that is not a company, sections YB 7, YB 8, and YB 9(1) do not apply if—
a: the settlor settles property on the terms of the trust only for the benefit of employees of the settlor; and
b: neither the settlor nor any person associated with the settlor directly or indirectly controls the trust. Corporate settlors
3: For a settlor that is a company, sections YB 7, YB 8, and YB 9(1) do not apply if—
a: the settlor settles property on the terms of the trust only for the benefit of its employees; and
b: none of the following directly or indirectly controls the trust:
i: the settlor:
ii: a person associated with the settlor:
iii: an executive of the settlor:
iv: a director of the settlor:
v: a person holding a direct voting interest of 25% or more in the settlor:
vi: if a market value circumstance exists for the settlor, a person holding a direct market value interest of 25% or more in the settlor. Persons with power of appointment or removal
4: Section YB 11 does not apply if—
a: the trust is only for the benefit of employees of an employer; and
b: neither the person ( person A Defined in this Act: associated person, company, direct voting interest, employee, employer, market value circumstance, market value interest, settlor
YB 16: Exceptions for certain trusts and charitable organisations
Trustee and beneficiary and trustee for relative tests: certain trusts
1: Sections YB 5 and YB 6(1) do not apply to a trustee and another person if the trust is—
a: a lines trust established under the Energy Companies Act 1992:
b: an approved unit trust referred to in clause 2 of the Income Tax Act (Exempt Unit Trusts) Order 1990. Trustee and beneficiary and settlor and beneficiary tests: charitable organisation
2: Sections YB 6(1) and YB 9(1) do not apply to a trustee and a beneficiary or a settlor and a beneficiary if the beneficiary is a charitable organisation. Defined in this Act: charitable organisation, lines trust, unit trust .
2: Subsection (1) applies, for the purposes of—
a: provisions other than the land provisions, for the 2010–11 and later income years:
b: the land provisions other than section CB 11
c: section CB 11
564: Transparency of nominees
In section YB 21 s OD 9 ss HH 1(1), OD 9
565: Heading for subpart YC
The heading for subpart YC Measurement of company ownership
566: Heading and section YC 1 repealed
1: The heading before section YC 1
2: Subsection (1) applies for the 2010–11 and later income years.
567: Look-through rule for corporate shareholders
In section YC 4 OD 4(4) OD 4(3)(d), (4)
568: Disregarding certain securities
1: In section YC 6(4) section YC 19 section YC 20
2: Subsection (1) applies for the 2008–09 and later income years.
569: Reverse takeovers
1: In section YC 18(6)
a: in paragraph (a), , if paragraph (b) does not apply
b: in paragraph (b), , if a market value circumstance exists for the company
2: In section YC 18 market value circumstance
570: New section YC 18B inserted
After section YC 18
YC 18B: Corporate reorganisations not affecting economic ownership
When subsection (3) applies
1: Subsection (3) applies if a company (the initial parent Description of arrangement
2: The description of the arrangement for the purposes of subsection (1) is as follows:
a: the initial parent is a limited attribution company that is treated under section YC 11(3) and (4) as holding ownership interests in another company before the arrangement is entered into; and
b: the ownership of the initial parent is reorganised so that another company (the new parent
c: the percentage ownership interests (the final percentage inital percentage
i: facilitates the arrangement, and the relevant ownership interests have a market value that is merely nominal relative to the value of the ownership interests in the new parent:
ii: is the direct result of impossibility or impracticability caused by securities law requirements; and
d: a person holding ownership interests in the initial parent before the arrangement is entered into does not receive a dividend, gift, or other direct benefit as a result of the arrangement. For the purposes of this paragraph,—
i: ownership interests in the initial parent for which paragraph (c)(ii) applies are excluded from a person's holding of ownership interests:
ii: ownership interests in the new parent are excluded from being a dividend, gift, or other direct benefit. Loss balance and credit account continuity
3: For the purposes of the tests of ownership and control in Part I and subparts LP, OA, OB, OC, OE, and OP (which relate to loss balances, tax credits, and memorandum accounts), starting from when the initial parent is first treated under section YC 11(3) and (4) as holding the ownership interests in another company, the new parent is treated as—
a: existing and having the shareholders it has immediately after the arrangement's implementation:
b: holding the ownership interests that the initial parent is treated under section YC 11(3) and (4) as holding:
c: holding all ownership interests in the initial parent. Effect of subsection (3)
4: Subsection (3) does not prevent a change in shareholders, the holdings of ownership interests, or other circumstances, after the implementation of the arrangement from having an effect on the application of the continuity provisions and the provisions described in subsection (3) after the implementation of the arrangement. Definitions
5: In this section,––
a: ownership interest
b: excluded preference share Defined in this Act: arrangement, company, continuity provision, dividend, excluded preference share, limited attribution company, ownership interest, share, shareholder .
571: Residence of natural persons
1: Section YD 1(9) and (10)
2: After section YD 1(8) Treatment of non-resident seasonal workers
11: Despite subsection (3), a non-resident seasonal worker is treated for the duration of their employment under the recognised seasonal employment scheme as a non-resident.
3: In section YD 1 transitional resident
4: In section YD 1 non-resident seasonal worker recognised seasonal employment scheme
5: Subsection (2) applies for the 2009–10 and later income years.
572: Country of residence of foreign companies
1: In section YD 3(4)(b) head head office
2: Subsection (1) applies for the 2008–09 and later income years.
573: Classes of income treated as having New Zealand source
In the compare note to section YD 4 s OE 4(1) ss FB 2(2)
574: Apportionment of income derived partly in New Zealand
1: After section YD 5(1) Relationship with source rules
1B: This section does not apply to limit the effect of—
a: any of the source rules in section YD 4 other than those in section YD 4(2) and (3); or
b: the source rules in section YD 4(2) and (3) to the extent to which the income referred to is also income referred to in any source rule other than those in section YD 4(2) and (3).
2: In section YD 5(3) The result of the apportionment The result of the apportionment, to the extent consistent with subsection (2),
3: In section YD 5 FB 2 FB 2(1A)
575: General rules for currency conversion
1: Section YF 1(1)(c)
c: this Act does not contain a specific currency conversion rule that requires the conversion of the amount into New Zealand currency under a method other than those in this section.
2: In section YF 1(3) Alternative use of monthly average rates
3: Section YF 1(3)(b)
b: a provision in this Act specifically allows it.
4: Section YF 1(4)
576: New section YZ 2 inserted
1: After section YZ 1
YZ 2: Saving of effect of section 394L(4A) of Income Tax Act 1976
Section 394L(4A) of the Income Tax Act 1976 continues to apply in the same manner as it applied immediately before the repeal of that Act by the Income Tax Act 1994. 2004 No 35 s YA 5B .
2: Subsection (1) applies for the 2008–09 and later income years.
577: Schedule 1—Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits
1: In schedule 1
a: in the heading policyholder income schedular policyholder base income
b: in the words after the heading, policyholder income schedular policyholder base income
2: In schedule 1 CB 28, CD 53, CS 1, EK 8, EK 12, EK 23, EX 20, EX 50, EY 43, FE 22, FM 28, HA 15, HA 24, HC 22, HC 34, HF 1, HL 29, LC 1, LC 2, LE 2, LJ 5, LP 8, LP 10, OA 18, OB 19, OB 42, OB 46, OB 69, OB 73, OB 75, OB 78, OB 80, OC 36, OC 38, OE 7, OE 8, OP 100, OP 102, RD 50, RD 51, RD 66, RD 67, RD 69, RD 70, RD 72, RE 11–RE 19, RF 9, RF 12, RM 21, YA 1.
3: Subsection (1)
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
578: Schedule 2—Basic tax rates for PAYE income payments
In schedule 2 clause 7
8: `NSW' tax code
If an employee has notified their employer that the employee's tax code is NSW
579: Schedule 4—Rates of tax for schedular payments
1: In schedule 4, part C, clause 1
a: paragraph (b) is replaced by the following:
b: cultivation contract work: :
b: paragraph (e) is repealed.
2: In schedule 4, part C, clause 2 horticultural contract work farming contract work cultivation contract work—
a: means work or services provided under a contract or arrangement on or in connection with land that is used for the cultivation of fruit crops, vegetables, orchards, or vineyards:
b: includes work or services provided—
i: under a contract or arrangement for the supply of labour, or substantially for the supply of labour:
ii: in relation to land that is intended to be used for the cultivation of fruit crops, vegetables, orchards, or vineyards:
c: does not include work or services provided by—
i: a post-harvest facility:
ii: a management entity under a formal management agreement under which the entity is responsible for payment for the work or services provided .
3: In schedule 4 Payments for activities related to sports, media, entertainment, and public speaking
4: In schedule 4, part F, clause 4 schedular entertainment activities a Part F activity
5: In schedule 4, part F, clauses 5 6 schedular entertainment activities a Part F activity
6: In schedule 4, part F, clause 7 modelling fee Part F activity
a: connected with—
i: a sporting event or competition:
ii: making speeches or giving lectures or talks for any purpose:
iii: acting, singing, playing music, dancing, or entertaining generally, for any purpose and whether alone or not; and
b: undertaken by a person who meets the requirements of any of the following paragraphs:
i: they are not fully or partly sponsored under a cultural programme of an overseas government or the Government of New Zealand:
ii: they are not an official representative of a body that administers a game or sport in an overseas country:
iii: they are not undertaking an activity or performance under a programme of a foundation, trust, or organisation outside New Zealand which exists for the promotion of a cultural activity and is not carried on for individual profit of the member or shareholder:
iv: if they are an employee, officer, or principal of a company, firm, or other person, includes the company, firm, or other person .
7: In schedule 4, part F, clause 7 schedular entertainment activities
8: Subsections (3) to (7) apply for the 2008–09 and later income years.
580: Schedule 5—Fringe benefit values for motor vehicles
1: Schedule 5, clause 3(c)
c: determined under clause 4 if, in the period of 2 years before the vehicle's acquisition by the person ( person A person B
2: Subsection (1) applies for the 2008–09 and later income years.
581: Schedule 13—Depreciable land improvements
1: In schedule 13 17 pipes
2: In schedule 13, after item 17, the following is added: 18 purpose-built surfaces for outdoor sports facilities
3: Subsections (1) and (2) apply for the 2008–09 and later income years.
582: Schedule 20—Expenditure on farming, horticultural, aquacultural, and forestry improvements
1: In schedule 20 unless clause 2 applies unless clause 2 applies, preparation
2: In schedule 20 6 45
3: Subsections (1) and (2) apply for the 2008–09 and later income years.
583: Schedule 21—Expenditure and activities related to research and development
1: Schedule 21
8: Expenditure or an amount of depreciation loss incurred in acquiring or producing things which are inputs subjected to a process or transformation for the purposes of testing or trialling as part of the research and development activities.
2: In schedule 21
7: Expenditure or an amount of depreciation loss that is described in schedule 21, part A, clause 8, if what results from the relevant process or transformation are things that are not a trial model of, or a preliminary version of, an item of depreciable property, but only to the extent to which the expenditure or amount of depreciation loss is less than or equal to the total of—
a: the amount paid for the disposal of things that result from the process or transformation, if the things are disposed of to a person who is not an associated person:
b: the market value of things that result from the process or transformation, if the things are not disposed of, or are disposed of to a person who is an associated person.
3: Subsections (1) and (2) apply for the 2008–09 and later income years.
584: Schedule 24—International tax rules: grey list countries
In schedule 24 ss DZ 11, YA 1
585: Schedule 25—Foreign investment funds
1: In schedule 25 ss CQ 5, DN 6, EX 28, EX 29, EX 31, EX 32, EX 35–EX 39, EX 46, EZ 32
2: In schedule 25 Foreign entities to which the FIF exemptions do not apply
3: Subsection (2) applies for the 2008–09 and later income years.
586: Schedule 27—Countries and types of income with unrecognised tax
In schedule 27 ss LJ 1, LK 2
587: Schedule 28––Requirements for complying fund rules
Schedule 28
7: The sixth requirement is that the rules require, as a minimum, contributions to be deducted for an employee at the rate of 2% of gross salary or wages
588: New schedule 29—Portfolio investment entities: listed investors
After schedule 28 “ ss HM 21, HM 22 Portfolio investment entities: listed investors
A:
1: A PIE or an entity that qualifies for PIE status.
2: A foreign PIE equivalent.
3: A life insurer.
4: The New Zealand Superannuation Fund.
5: The Accident Compensation Corporation, or a Crown entity subsidiary of the Corporation.
6: The Earthquake Commission.
7: Auckland Regional Holdings.
8: A boutique investor class, treating interests combined under section HM 16 as held by 1 person.
B:
1: A superannuation fund established under the proposal for the restructuring of the National Provident Fund required by the National Provident Fund Restructuring Act 1990.
2: The fund established by the Government Superannuation Fund Act 1956.
3: A public unit trust.
4: A community trust.
5: A superannuation fund that—
i: was in existence before 17 May 2006; and
ii: would, if treated as a unit trust, meet the requirements of 1 or more of paragraphs (a) and (c) to (e) of the definition of public unit trust
iii: has no investor, other than its manager or trustee, who can control its investment decisions.
589: Schedule 32—Recipients of charitable or other public benefit gifts
1: In schedule 32 Bright Hope International Trust
2: In schedule 32 Educational Aid for International Development Trust Board Global Hope Ingwavuma Orphan Trust Fund of New Zealand Kyrgyzstan New Zealand Rural Trust L Women of Africa Fund Partners Relief and Development NZ Tender Trust The Band Aid Box The Destitute Children's Home, Pokhara, Charitable Trust The Palestine Children's Relief Fund Charitable Trust Triyog Himalaya Trust UNHCR (United Nations High Commissioner for Refugees)
3: Subsections (1) and (2) apply for the 2008–09 and later income years.
590: Schedule 49—Enactments amended
In the amendments to the Injury Prevention, Rehabilitation, and Compensation Act 2001
a: the second item amending section 204(1)(b) section HG 16
b: in the item amending schedule 4 an amount of tax, amount of tax an amount of tax, which amount
591: Schedule 50—Amendments to Tax Administration Act 1994
1: The item amending section 3(4)(b)
2: The item inserting the new Part 2B
3: The item amending section 125(d)
592: Schedule 51—Identified changes in legislation
In schedule 51 MC 6 The reference to veteran's pension is omitted because the in-work tax credit is an incentive to return to work.
593: Schedule 52—Comparative tables of old and rewritten provisions
1: In schedule 52, part A FB 2(1), (2)
a: an entry for FB 2(1), (1A) YD 5
b: an entry for FB 2(2) YD 4
2: In schedule 52, part A GC 15(1)–(3) GC 15(1)–(3) GC 15
3: In schedule 52, part A, in the second column of the entry for GC 15(3), (4) CX 18 CX 18, RD 54
4: In schedule 52, part A HH 1(1)–(4), (8), (10)
a: an entry for HH 1(1) YB 21
b: an entry for HH 1(2)–(4), (8), (10) HC 28
5: In schedule 52, part A KD A1 MC 1(2) omitted
6: In schedule 52, part A KD 3(1) KD 3(1) KD 3(1) qualifying person
7: In schedule 52, part A KD 3(1) MC 4 MC 3
8: In schedule 52, part A ND 1 RA 5(b), RA 10 RA 5(1)(b), RA 10
9: In schedule 52, part A NE 3 RA 5(c), RD 66(3)–(7), (13) RA 5(1)(c), RD 66(3)–(7), (13)
10: In schedule 52, part A NG 2(1)(ab), (b)(ib), (c)
a: an entry for NG 2(1)(b)(i), (ib) RF 12
b: an entry for NG 2(1)(ab) RF 12B
c: an entry for NG 2(1)(b)(iii) RF 12C
d: an entry for NG 2(1)(b)(ii) RF 10(5B)
11: In schedule 52, part A OD 4(4) OD 4(4) OD 4(3)(d), (4)
12: In schedule 52, part A OD 4(5A)–(5C)
13: In schedule 52, part A OD 5(5) OD 5(5A)–(5C) YC 12
14: In schedule 52, part B GB 32 GC 15(1)–(3) GC 15
15: In schedule 52, part B IC 7 IG 2(d), (11) IG 2(2)(d), (11)
16: In schedule 52, part B MC 1 KD A1, KD 1A KD 1A
17: In schedule 52, part B MC 6 KD 3(1) KD 3(1) qualifying person
18: In schedule 52, part B RD 54 ND 1S GC 15(3), (4), ND 1S
19: In schedule 52, part B RF 10 NG 9 NG 2(1)(b)(ii), NG 9
20: In schedule 52, part B RF 12 NG 2(1)(ab), (b)(ib), (c) NG 2(1)(b)(i), (ib), (iii)
21: In schedule 52, part B
a: an entry for RF 12B NG 2(1)(ab)
b: an entry for RF 12C NG 2(1)(b)(iii)
22: In schedule 52, part B YB 21 OD 9 HH 1(1), OD 9
23: In schedule 52, part B YC 4 OD 3(3)(d), OD 4(3)(d), (4)
24: In schedule 52, part B YC 12 OD 5(5A)–(5C)
25: In schedule 52, part B OE 4(1) FB 2(2)
26: In schedule 52, part B FB 2 FB 2(1A)
594: Consequential amendments: associated person and list of defined terms
In the sections listed in schedule 1
2: Amendments to Tax Administration Act 1994
595: Tax Administration Act 1994
This Part amends the Tax Administration Act 1994 2009-10-06 Tax Administration Act 1994 2010-01-06 Tax Administration Act 1994 ss 605(1), (3), 606, 610, 682 2010-04-01 Tax Administration Act 1994 ss 599(2), 611, 613, 618, 621, 622, 626, 628(5) and (6), 645, 651(4) and (6), 679, 681 2010-07-01 Tax Administration Act 1994 ss 629, 663
596: Interpretation
1: This section amends section 3(1)
2: After the definition of disclosure notice discovery obligation .
3: The definition of late filing penalty late filing penalty .
4: The definition of response period response period .
5: In the definition of tax
6: Subsection (2) applies for a challenge—
a: commenced on or after the date on which this Act receives the Royal assent:
b: commenced before the date on which this Act receives the Royal assent if,—
i: at that date, a court or Taxation Review Authority has not held a case management conference or directions hearing or other hearing for the challenge and has not directed that there be no case management conference or directions hearing for the challenge; and
ii: the issues raised by the challenge are not substantially similar to issues being considered by a court or Taxation Review Authority in another challenge for which, at that date, a case management conference or directions hearing or other hearing has been held or a direction has been given that there be no case management conference or directions hearing.
7: Subsection (3), for a tax return required to be filed under sections 16 to 18
8: Subsection (4) applies for the 2008–09 and later income years.
9: Subsection (5)
597: Construction of certain provisions
1: Section 4A(2)(a)
2: In section 4A(2)(c) paragraph (a) or
3: In section 4A(2)(d) paragraph (a) or
4: In section 4A(2)(d) unpaid tax. unpaid tax:
e: despite paragraph (d), and only for the purposes of Part 10B, the amount of tax deemed to be withheld referred to in paragraph (b) is treated as tax paid although it may not have been paid to the Commissioner by the due date.
5: In section 4A(4) RF 13, RG 3, or RG 6 or RF 13
6: Subsections (1) to (3) and (5)
598: Part 2B replaced
1: Part 2B
2B: Intermediaries for PAYE, provisional tax, and resident passive income
PAYE intermediaries
15C: PAYE intermediaries and listed PAYE intermediaries
1: A person who meets the requirements of section 15F may apply under section 15D to the Commissioner for approval to become a PAYE intermediary.
2: A PAYE intermediary may apply under section 15G to the Commissioner to become a listed PAYE intermediary. To make an application, the PAYE intermediary must meet, on a continuing basis, the requirements for a PAYE intermediary. 2004 No 35 ss NBA 1, NBB 3
15D: Application for approval as PAYE intermediary
1: In order to become a PAYE intermediary, a person must—
a: meet the requirements of section 15F; and
b: have established a trust account that meets the requirements of section RP 6 of the Income Tax Act 2007; and
c: operate systems to protect the personal information and payment details that are obtained in the course of running the account.
2: The Commissioner may approve an application if the Commissioner is satisfied that the applicant—
a: will comply with the PAYE rules and the ESCT rules if they assume an employer’s obligations under those rules; and
b: has systems to allow them to make payments and provide information in the format required by the Commissioner.
3: The Commissioner may approve a person as a PAYE intermediary for a set period. 2004 No 35 s NBA 2(1)(a)–(c), (2), (3)
15E: Revocation of approval
1: The Commissioner may revoke an approval given under section 15D if the person—
a: does not comply with the PAYE rules:
b: does not comply with the ESCT rules when they have assumed an employer’s obligations under those rules:
c: is no longer fit to be a PAYE intermediary because they do not meet the requirements of section 15F:
d: when they are not a natural person, has been put into liquidation or receivership:
e: when they are a company, is no longer registered in New Zealand.
2: If the Commissioner revokes an approval under subsection (1)(b), the Commissioner must notify the person, and any employer for whom the person is a PAYE intermediary, of the revocation and its effective date. The effective date must not be less than 14 days from the date of notification.
3: A decision by the Commissioner under this section is not open to challenge. 2004 No 35 s NBA 2(4)
15F: Fitness of applicants
1: This section applies for the purposes of section 15D to the following:
a: an applicant who is a natural person or a corporation sole:
b: each member of an applicant that is an unincorporated body:
c: an officer of an applicant that is a body corporate:
d: a principal of an applicant.
2: The applicant, member, officer, or principal, as applicable,—
a: must not be a discharged or undischarged bankrupt; or
b: must not have been convicted of an offence involving fraud; or
c: must be eligible to be a company director. 2004 No 35 s NBA 2(1)(c)
15G: Application for approval as listed PAYE intermediary
1: In order to become a listed PAYE intermediary, a PAYE intermediary must—
a: meet the requirements of section 15D; and
b: have completed and filed the returns of income required from them; and
c: paid the required amounts of tax due from them.
2: A PAYE intermediary is a listed PAYE intermediary only for a period that is no more than the period for which they have been approved as a PAYE intermediary.
3: On approval of an application under this section and before acting as a listed PAYE intermediary for an employer, the listed PAYE intermediary must inform an employer who contracts their services as a listed PAYE intermediary that the Commissioner does not guarantee payment by the intermediary to an employee of the employer, or the performance of a service provided by them.
4: The Commissioner may approve a PAYE intermediary as a listed PAYE intermediary for a set period. 2004 No 35 s NBB 2
15H: Grounds for revocation of listing
The Commissioner may revoke the listing of a listed PAYE intermediary if—
a: an approval of the person as a PAYE intermediary is revoked:
b: the person no longer meets the requirements of section 15F:
c: the person does not provide a subsidy claim form by the date and in the format required by the Commissioner:
d: the person does not comply with an obligation of a listed PAYE intermediary:
e: the Commissioner considers revocation is necessary in order to protect the integrity of the tax system. 2004 No 35 s NBB 4(1)
15I: Procedure for revocation of listing
1: The Commissioner must notify a listed PAYE intermediary of an intended revocation under section 15H, and must provide reasons for the intended revocation.
2: If the listed PAYE intermediary who is notified by the Commissioner under subsection (1) does not resolve the matters set out in the notice to the satisfaction of the Commissioner within 30 days of the date on which they are notified, the Commissioner may give 14 days' notice of revocation.
3: At the end of the 14-day notice period under subsection (2), the listing of the listed PAYE intermediary is revoked.
4: A decision by the Commissioner under this section is not open to challenge under Part 8A. 2004 No 35 s NBB 4(2)–(5)
15J: Employers’ arrangements with PAYE intermediaries
1: An employer who wishes to enter an arrangement with a PAYE intermediary must notify the Commissioner of the proposed arrangement, providing—
a: the name of the PAYE intermediary:
b: the period for which the PAYE intermediary is to act for the employer:
c: the bank account number of the PAYE intermediary into which the employer will deposit amounts:
d: whether the proposed arrangement requires the PAYE intermediary to collect amounts under the ESCT rules.
2: On approval of the arrangement, the Commissioner must notify the employer, and the approval applies to pay periods that begin on or after 14 days after the date on which the notice is given.
3: An employer or a PAYE intermediary may end the arrangement by notifying the other party and the Commissioner. The notice must state the date that is after the notification for the end of the arrangement.
4: An employer or a listed PAYE intermediary may end an arrangement by notifying the other party and the Commissioner. The notice must state the date on which the arrangement is to end that must begin on or after 14 days after the date on which the notice is given. 2004 No 35 ss NBA 3, NBA 8, NBB 7
15K: Privacy requirements
The PAYE intermediary must operate and maintain systems to protect the personal information and payment details that they acquire in running the systems. 2004 No 35 s NBA 5(3)
15L: Amended monthly schedules
The PAYE intermediary may make an amended monthly schedule relating to the employee and a pay period, and is then responsible for the accuracy of the amendments. 2004 No 35 s NBA 5(4)
15M: Subsidy claim forms
1: A listed PAYE intermediary must file a subsidy claim form within 1 month of the date of filing an employer monthly schedule to which the form relates.
2: The Commissioner may amend the details in a subsidy claim form to correct an error. The amendment must be made within 2 years of receiving the form.
3: For the purposes of subsection (2), the Commissioner must give the listed PAYE intermediary 14 days' notice of a proposed amendment.
4: For the purposes of section 22, a listed PAYE intermediary must keep the necessary records to verify the information in a subsidy claim form. 2004 No 35 ss NBB 3(2), NBB 5(1)–(3) RWT proxies
15N: RWT proxies
1: If the requirements in subsection (2) are met, a person may choose to become an RWT proxy for a person who pays resident passive income that consists of a dividend by notifying the Commissioner.
2: The requirements are that—
a: the person paying the resident passive income is a non-resident unit trust; and
b: the person receiving the resident passive income is a natural person or a trustee of a qualifying trust who has asked the person referred to in subsection (1) to act as an RWT proxy in relation to the payment; and
c: the person has agreed to act as the RWT proxy; and
d: the payment of resident passive income is made while the notice is effective.
3: For the purposes of subsection (1), the notification to the Commissioner must contain the person’s election, their name, postal address, and the date from which the election applies.
4: The RWT proxy may cancel their election by notifying the Commissioner. The election stops applying from the later of—
a: the date set out in the notice of cancellation:
b: the date on which the Commissioner receives a notice of cancellation. 2004 No 35 s NF 2AA .
2: After section 15N Tax pooling intermediaries
15O: Establishing tax pooling accounts
A person who meets the requirements of section 15R may apply under section 15Q to the Commissioner to establish a tax pooling account. 2004 No 35 s MBA 3(1)
15P: Role of Commissioner
1: The Commissioner is not required to oversee or audit the operation of a tax pooling account.
2: The Commissioner is not liable for any loss related to the operation of a tax pooling account through—
a: the failure of a tax pooling intermediary to deposit in a tax pooling account an amount paid to them by a taxpayer:
b: the unauthorised withdrawal by a tax pooling intermediary from a tax pooling account:
c: the failure of a tax pooling intermediary to ask for a transfer of funds from a tax pooling account to a taxpayer’s tax account with the Commissioner. 2004 No 35 s MBA 4(5), (6)
15Q: Applications to establish tax pooling accounts
1: In order to establish and maintain a tax pooling account, an intermediary must—
a: hold the account in their name; and
b: operate systems to protect the personal information and payment details that are obtained in the course of running the tax pooling account; and
c: record the balance in the tax pooling account contributed by each taxpayer.
2: A tax pooling account continues until it is wound up under section 15T. 2004 No 35 s MBA 4
15R: Fitness of applicants
1: This section applies for the purposes of section 15Q to—
a: an applicant who is a natural person; and
b: an officer of an applicant who is not a natural person; and
c: a principal of an applicant.
2: The applicant—
a: must not be a discharged or undischarged bankrupt; or
b: must not have been convicted of an offence involving dishonesty; or
c: must be eligible to be a company director. 2004 No 35 s MBA 3(d)
15S: Requirements for applications to establish tax pooling accounts
1: An application to establish a tax pooling account must contain—
a: the applicant’s full name, address, and tax file number; and
b: a statement that the applicant—
i: will operate systems that allow them to meet the requirements set out in section 15Q(1); and
ii: will maintain and operate the systems to meet those requirements; and
c: confirmation that the applicant will establish a trust account into which they agree to pay amounts received in their role as intermediary; and
d: an undertaking that, before acting as intermediary for a taxpayer, the applicant will inform the taxpayer of the following matters:
i: the operation of the tax pooling account is not subject to the Commissioner’s oversight or audit:
ii: the Commissioner has no liability for any loss related to the tax pooling account:
iii: the applicant is fit to operate the tax pooling account as required by section 15R:
iv: the applicant has met the requirements set out in paragraphs (a) to (c).
2: The Commissioner may approve an application to establish a tax pooling account if the Commissioner is satisfied that the applicant—
a: is able to operate the account correctly; and
b: has systems to allow them to make payments and provide information in the format required by the Commissioner. 2004 No 35 s MBA 3
15T: Winding up tax pooling accounts
1: An intermediary may wind up their tax pooling account at any time.
2: The Commissioner may require an intermediary to wind up their tax pooling account if—
a: the intermediary’s actions are preventing a taxpayer from effectively managing their liability to pay provisional tax and use of money interest; or
b: the intermediary is or has breached their obligations under this Part; or
c: the tax pooling account is in deficit; or
d: fewer than 100 taxpayers are, or are likely to be, making deposits in the tax pooling account; or
e: the intermediary does not meet the requirements of section 15Q; or
f: when they are not a natural person, the intermediary has been put into liquidation or receivership.
3: For the purposes of subsection (2),—
a: the Commissioner may require the winding up immediately or may set another date for the winding up:
b: the Commissioner must give 30 days’ notice to the intermediary of any intended action using subsection (2)(d).
4: On the winding up of a tax pooling account, the Commissioner may refund the balance of the account to the former holder of the account, or may apply to a court for directions for the disposal of the balance of the account. 2004 No 35 s MBA 8 .
3: Subsection (1) applies for the tax on income derived in the 2008–09 or later income years.
599: Information to be furnished on request of Commissioner
1: In section 17(1C)(a)(ii) paragraph (b) paragraph (a)
2: Section 17(1C)(a)
a: in determining whether a non-resident is controlled by a New Zealand resident, the New Zealand resident is treated as holding anything held by a person who is resident in New Zealand, or is a controlled foreign company, and is associated with the New Zealand resident; and .
600: No requirement to disclose tax advice document
1: In section 20B(1) or under a discovery obligation under 1 or more of sections 16 to 19
2: Subsection (1) applies for a challenge—
a: commenced on or after the date on which this Act receives the Royal assent:
b: commenced before the date on which this Act receives the Royal assent if,—
i: at that date, a court or Taxation Review Authority has not held a case management conference or directions hearing or other hearing for the challenge and has not directed that there be no case management conference or directions hearing for the challenge; and
ii: the issues raised by the challenge are not substantially similar to issues being considered by a court or Taxation Review Authority in another challenge for which, at that date, a case management conference or directions hearing or other hearing has been held or a direction has been given that there be no case management conference or directions hearing.
601: Treatment of book or document
1: In section 20C(1) request for information request for, or discovery obligation for disclosure of, information
2: Section 20C(2)(a)
a: from the time of the request for, or discovery obligation for disclosure of, information: .
3: Section 20C(3)(a)
a: the book or document is ruled not to be a tax advice document for the person by—
i: the District Court:
ii: a court or Taxation Review Authority, if the claim is made in response to a discovery obligation in proceedings before the court or Authority: .
4: Subsections (1) to (3) apply for a challenge—
a: commenced on or after the date on which this Act receives the Royal assent:
b: commenced before the date on which this Act receives the Royal assent if,—
i: at that date, a court or Taxation Review Authority has not held a case management conference or directions hearing or other hearing for the challenge and has not directed that there be no case management conference or directions hearing for the challenge; and
ii: the issues raised by the challenge are not substantially similar to issues being considered by a court or Taxation Review Authority in another challenge for which, at that date, a case management conference or directions hearing or other hearing has been held or a direction has been given that there be no case management conference or directions hearing.
602: Claim that book or document is tax advice document
1: In section 20D(4)(d) information. information:
e: if the requirement to disclose information is under a discovery obligation, by the date by which the discovery obligation requires the disclosure of information.
2: Subsection (1) applies for a challenge—
a: commenced on or after the date on which this Act receives the Royal assent:
b: commenced before the date on which this Act receives the Royal assent if,—
i: at that date, a court or Taxation Review Authority has not held a case management conference or directions hearing or other hearing for the challenge and has not directed that there be no case management conference or directions hearing for the challenge; and
ii: the issues raised by the challenge are not substantially similar to issues being considered by a court or Taxation Review Authority in another challenge for which, at that date, a case management conference or directions hearing or other hearing has been held or a direction has been given that there be no case management conference or directions hearing.
603: Person must disclose tax contextual information from tax advice document
1: In section 20F(2)(d) information. information:
e: if the requirement to disclose information is under a discovery obligation, by the date by which the discovery obligation requires the disclosure of information.
2: In section 20F(5)
5: The Commissioner may apply to a District Court Judge, or to a court or Taxation Review Authority in relation to a tax advisor making a statutory declaration considered in proceedings before the court or Authority, that a tax advisor be barred from making statutory declarations under this section, if the tax advisor is convicted of an offence under— .
3: After section 20F(5)
6: An application under subsection (5) may be made in the course of proceedings before a court or Taxation Review Authority.
4: Subsections (1) to (3) apply for a challenge—
a: commenced on or after the date on which this Act receives the Royal assent:
b: commenced before the date on which this Act receives the Royal assent if,—
i: at that date, a court or Taxation Review Authority has not held a case management conference or directions hearing or other hearing for the challenge and has not directed that there be no case management conference or directions hearing for the challenge; and
ii: the issues raised by the challenge are not substantially similar to issues being considered by a court or Taxation Review Authority in another challenge for which, at that date, a case management conference or directions hearing or other hearing has been held or a direction has been given that there be no case management conference or directions hearing.
604: Challenge to claim that book or document is tax advice document
1: In section 20G(1) District Court Judge District Court Judge, or to the court or Taxation Review Authority hearing the proceedings giving rise to the claim,
2: Section 20G(1)(b)
b: information provided or withheld by the person is tax contextual information in relation to the book or document: .
3: In section 20G(2) District Court Judge District Court Judge, court, or Taxation Review Authority
4: After section 20G(3)
4: An application under this section may be made in the course of proceedings before a court or Taxation Review Authority.
5: Subsections (1) to (4) apply for a challenge—
a: commenced on or after the date on which this Act receives the Royal assent:
b: commenced before the date on which this Act receives the Royal assent if,—
i: at that date, a court or Taxation Review Authority has not held a case management conference or directions hearing or other hearing for the challenge and has not directed that there be no case management conference or directions hearing for the challenge; and
ii: the issues raised by the challenge are not substantially similar to issues being considered by a court or Taxation Review Authority in another challenge for which, at that date, a case management conference or directions hearing or other hearing has been held or a direction has been given that there be no case management conference or directions hearing.
605: Keeping of business and other records
1: After section 22(2)(ec)
ed: is an employer to whom section RD 13B of that Act applies in relation to the treatment of a tax credit for a payroll donation: .
2: Section 22(2)(j)
3: After section 22(2)(kd)
ke: the transfer under section 24Q of an amount of an employee's payroll donation to the recipient of the donation; and .
4: Subsection (2)
606: Records to be kept by employer or PAYE intermediary
In section 24(1) withheld from it withheld from it, and the amount of any payroll donation
607: PAYE tax codes
1: In section 24B(3)
gb: NSW .
2: Subsection (1) applies for the 2009–10 and later income years.
608: Special tax code certificates
1: After section 24F(5)
5B: This section does not apply to an employee who is a non-resident seasonal worker.
2: Subsection (1) applies for the 2009–10 and later income years.
609: Variation of requirements
1: In section 24P 24B, 24H, and 24I RD 22 of the Income Tax Act 2007, and 24B, 24H, 24I, and 24L
2: Subsection (1) applies for the 2008–09 and later income years.
610: New heading and section 24Q inserted
After section 24P Payroll donations
24Q: Transfer of payroll donations by employers
1: This section applies for a pay period and employer who agrees to offer payroll giving to their employees, when a person asks their employer to transfer an amount of a payroll donation from the person's pay to a donee organisation.
2: The employer or PAYE intermediary must transfer the amount to the recipient of the donation on or by the relevant date required by sections RA 15 and RD 4 of the Income Tax Act 2007 that occurs nearest to the expiry of 2 months after the end of the pay period. Until transferred to the recipient, the amount is held on trust for the person.
3: Before the transfer referred to in subsection (2) is made, the person must—
a: ensure that the recipient of the donation is a donee organisation; and
b: supply the employer with sufficient details of the recipient to enable the transfer to be made.
611: Section 28B replaced
1: Section 28B
28B: Notification of investors’ tax rates
A New Zealand resident who is an investor in a multi-rate PIE must provide their tax file number to the PIE within 1 month of the date of a request from the PIE for the number.
2: Subsection (1) applies for the 2010–11 and later income years.
612: Portfolio tax rate entity to give statement to investors and request information
1: Section 31B(1)
2: Section 31B(2B)
2B: A portfolio tax rate entity must give a notice required by subsection (2)—
a: by the end of the month following the quarter in which an investor has a portfolio exit period, if the investor has a prescribed investor rate of more than zero and invests in an entity that pays tax under section HL 22 of the Income Tax Act 2007:
b: by 30 June, if the investor is not an investor referred to in paragraph (a) and invests in a portfolio tax rate entity that pays tax under section HL 22 or HL 24 of that Act:
c: by 30 June, or 2 months after the end of the entity's income year if that date is after 30 June, if the investor invests in a portfolio tax rate entity that pays tax under section HL 23 of that Act.
2C: For the purposes of subsection (2B)(a), if the quarter is a second or third quarter, the portfolio tax rate entity may provide a combined notice for the affected period.
3: In section 31B(2B) subsection (1) or (2) subsection (2)
4: In section 31B(3) subsections (1) and (2) do not apply subsection (2) does not apply
613: Section 31B replaced
1: Section 31B
31B: Notification requirements for PIEs
1: An entity choosing under section HM 71 of the Income Tax Act 2007 to become a PIE must notify the Commissioner of the election. The notice must be in the prescribed electronic format.
2: A PIE choosing under section HM 29 of that Act to cancel PIE status must notify the Commissioner of the election. The notice must be in the prescribed electronic format and be provided within 1 month of the cancellation of PIE status.
31C: Notification requirements for multi-rate PIEs
1: This section sets out the notice requirements for a multi-rate PIE in relation to its investors or a proxy for investors in a multi-rate PIE. The notices must contain the information that the Commissioner considers relevant for a calculation period.
2: For an exiting investor and a PIE that calculates and pays tax using the quarterly calculation option under section HM 43 of the Income Tax Act 2007, the notice must be provided for each calculation period in which the exit period falls. The notice must be given by the end of the month following the quarter in which the exit period ends.
3: For an investor not referred to in subsection (2) who invests in a PIE that calculates and pays tax using the provisional tax calculation option under section HM 44
4: For an investor not referred to in subsections (2) and (3) who invests in a PIE that calculates and pays tax using the quarterly or exit calculation options under sections HM 42 and HM 43 of that Act, the PIE must notify the investor by 30 June after the end of the tax year.
5: The PIE must, at least once in a tax year, ask an investor to provide their tax rate under sections HM 56 to HM 59 of that Act.
6: The PIE must ask a person when they become an investor to provide their tax file number to the PIE. For each investor for whom no tax file number is held, the PIE must, at least once in a tax year, ask the investor to provide their tax file number.
2: Subsection (1) applies for the 2010–11 and later income years.
614: Records to be provided by employer who contributes to superannuation fund
1: In section 32A(1) employer's superannuation contributions employer's superannuation cash contributions
2: Subsection (1) applies for the 2008–09 and later income years.
615: Certification requirements for withdrawals subject to section CS 1 of Income Tax Act 2007
1: In section 32B(1)(a), (b), (c), (k), and (l) employer's superannuation contributions employer's superannuation cash contributions
2: Subsection (1) applies for the 2008–09 and later income years.
616: Applications for RWT exemption certificates
1: After section 32E(2)(eb)
ec: the trustee of the Niue International Trust Fund:
ed: the trustee of the Tokelau International Trust Fund: .
2: Section 32E(2)(i)(ii)
ii: whose annual gross income for the tax year for which they last filed a return of income is more than $2,000,000: .
617: Heading and section 32N repealed
1: The heading before section 32N
2: Subsection (1)
618: Returns of income
1: Section 33(1)
1: In each tax year, a taxpayer, other than a taxpayer to whom section 33A applies or a multi-rate PIE that calculates income tax using the exit calculation or quarterly calculation option under sections HM 42 and HM 43 of the Income Tax Act 2007, must furnish to the Commissioner a return of income in the prescribed form for the preceding tax year, together with such other particulars as may be prescribed.
2: Section 33(1C)
1C: A multi-rate PIE or a proxy for an investor in the entity that calculates income tax using the exit calculation or quarterly calculation options under sections HM 42 and HM 43 of that Act must provide returns for which the entity is responsible under section 57B.
3: Subsections (1) and (2) apply for the 2010–11 and later income years.
619: Annual returns of income not required
1: After section 33A(1)(b)(ixa)
ixb: salary or wages from employment as a non-resident seasonal worker if the employee has used the NSW .
2: After section 33A(1)(b)(ixb)
ixc: salary or wages from employment as a non-resident seasonal worker; and .
3: In section 33A(1)(i) Student Loan Scheme Act 1992. Student Loan Scheme Act 1992; and
j: is a non-resident seasonal worker.
4: Section 33A(2)(a)
a: is a non-resident other than a non-resident seasonal worker employed under the recognised seasonal employment scheme; or .
5: Subsections (1) and (4) apply for the 2009–10 and later income years.
6: Subsection (2) applies for the 2008–09 income year.
7: Subsection (3) applies for the 2008–09 and later income years.
620: Electronic format of employer monthly schedule and PAYE payment form
1: In section 36A(2) that certificate in an electronic format that payment form in electronic format
2: After section 36A(2)
2B: An employer or PAYE intermediary to whom section RD 22(1) of the Income Tax Act 2007 applies must provide their employer monthly schedules and PAYE income payment forms to the Commissioner by electronic means and in the required format. But the requirement to file electronically does not apply if the employer—
a: is not a new employer and has gross amounts of tax for PAYE income payments and employer's superannuation contributions payable for the preceding tax year of less than $100,000:
b: is a new employer but only in relation to the months in the income year for which the total amounts of tax for PAYE income payments and employer's superannuation contributions remain under the $100,000 threshold:
c: is authorised under section 36B to provide the schedule and form in a format other than an electronic format.
3: Subsection (1) applies for the 2008–09 and later income years.
621: Section 36AB replaced
1: Section 36AB
36AB: Electronic return requirements for multi-rate PIEs
The Commissioner must prescribe 1 or more electronic formats in which a return required under section 57B must be provided by a multi-rate PIE or a proxy for an investor in the PIE. The Commissioner may specify conditions relating to the format, either general or in a particular case.
2: Subsection (1) applies for the 2009–10 and later income years.
622: Returns to annual balance date
1: Section 38(1B)
1B: A multi-rate PIE that does not calculate and pay tax using the provisional tax calculation option under section HM 44 of the Income Tax Act 2007 must not make an election under subsection (1).
2: Subsection (1) applies for the 2010–11 and later income years.
623: Returns by persons with tax credits for housekeeping payments and charitable or other public benefit gifts
1: Section 41A(1)
1: A person who has a tax credit under section LC 6 or sections LD 1 to LD 3 of the Income Tax Act 2007 may apply to the Commissioner for 1 or more refunds.
2: Section 41A(3)
3: The sum of the housekeeping payments under section LC 6 of that Act and charitable or other public benefit gifts under sections LD 1 to LD 3 of that Act made by a person must be no more than their taxable income in the tax year in which the payment or gift, or both, is made.
3: Section 41A(5)(b)
b: the amount of a charitable or other public benefit gift to which sections LD 1 to LD 3 of that Act apply.
4: Section 41A(10)
10: When the Commissioner has considered an application, the Commissioner must notify the person of the amount of the tax credit under section LC 6 or sections LD 1 to LD 3 of that Act and of the amount of refund allowed.
624: Return by person claiming rebate on redundancy payment
1: The section heading to section 41B Return by person applying for tax credit on redundancy payment
2: Section 41B(1)
1: A person who has a tax credit under section ML 2
3: Section 41B(4)
4: When the Commissioner has considered an application for a refund, the Commissioner must, by notice, inform the taxpayer of the amount of the tax credit the taxpayer has under sections ML 1 to ML 3 of the Income Tax Act 2007 and the amount of refund allowed.
625: Portfolio tax rate entities and portfolio investor proxies to make returns, file annual reconciliation statement
1: The subsection between section 57B(3)
3B: A person who is required to perform responsibilities under subsection (3)(a) for a portfolio investor exit period must perform them by the day that is—
a: the end of the 1-month period beginning from the end of the portfolio investor exit period, if paragraph (b) does not apply; or
b: the 15 January following the end of the portfolio investor exit period, if the portfolio investor exit period ends in November.
2: In section 57B(6)(c) by the end of the second month by the end of the third month
626: Section 57B replaced
1: Section 57B
57B: Return requirements for multi-rate PIEs
1: This section sets out the return requirements for a multi-rate PIE or a proxy for an investor in the PIE.
2: The responsibilities for each period are—
a: to file a return in the prescribed form showing—
i: the amount of the tax liability of the entity for the period; and
ii: further information that the Commissioner considers relevant; and
b: to pay an amount of tax equal to the PIE’s tax liability for the investor for the period.
3: If the PIE does not calculate and pay its tax liability using the exit calculation or provisional tax calculation option in section HM 42 or HM 44 of the Income Tax Act 2007 for a tax year, the PIE must carry out their responsibilities for a calculation period in the tax year by the end of the month that follows the month in which the calculation period ends.
4: If the PIE calculates and pays its income tax liability using the provisional tax calculation option under section HM 44 of that Act for a tax year, the PIE must carry out their responsibilities for the tax year as a person with a provisional tax liability under the provisional tax rules.
5: If the PIE calculates and pays its income tax liability using the exit calculation option under section HM 42 of that Act for a tax year, the PIE must carry out their responsibilities—
a: for an exiting investor whose exit period falls in the tax year, for the exit period by—
i: the end of the month that follows the month in which the exit period ends:
ii: 15 January after the end of the exit period, if the period ends in November; and
b: for an investor who holds an investor interest at the end of the tax year, for the tax year by the end of the month after the end of the tax year.
6: If the PIE voluntarily makes a payment of income tax under section HM 45 of that Act for a period in a tax year that is not included in a return required under subsection (5), the PIE must file a return in the prescribed form as described in subsection (2)—
a: the end of the month that follows the month in which the period ends:
b: 15 January after the end of the period, if the period ends in November.
7: For a tax year, the PIE must file a return in the prescribed form in relation to information prescribed by the Commissioner—
a: by the 30 June after the end of the tax year if—
i: the PIE has a corresponding income year that does not end after the end of the tax year; and
ii: the PIE continues to meet the requirements for PIE status at the end of the corresponding income year; or
b: by the end of the 2nd month after that in which the PIE’s corresponding income year ends, if—
i: the PIE has a corresponding income year that ends after the end of the tax year; and
ii: the PIE continues to meet the requirements for PIE status at the end of the corresponding income year; or
c: by the end of the 3rd month after that in which the PIE loses PIE status, if the cessation occurs in the corresponding income year.
2: Subsection (1) applies for the 2010–11 and later income years.
627: Disclosure of trust particulars
In section 59(2)
a: sections HC 27(4) and YB 21 section YB 21
b: section HH 1(1) of that Act section YB 21 of that Act
628: Disclosure of interest in foreign company or foreign investment fund
1: In section 61(1)
1: Where any person has at any time in an income year an income interest or a control interest in a foreign company or an attributing interest in a foreign investment fund, that person shall disclose to the Commissioner, in the prescribed form and with that person's return of income for the relevant tax year,— .
2: In section 61(1)
1: Where any person has at any time in an income year an income interest or a control interest in a foreign company or an attributing interest in a foreign investment fund, that person shall disclose to the Commissioner, in the prescribed form and within the time allowed by section 37 for providing the person's return of income for the relevant tax year,— .
3: In section 61(1) EX 3(b) or (d) EX 3(1)(b) or (d)
4: Section 61(1C)
1C: A portfolio tax rate entity that does not make payments of tax under section HL 23 of the Income Tax Act 2007 is required to make a disclosure under subsection (1) in the prescribed form by the due date for the entity's return under section 57B(6) for the tax year.
5: Section 61(1C)
1C: A multi-rate PIE that does not calculate and pay tax using the provisional tax calculation option under section HM 44 of the Income Tax Act 2007 must make a disclosure under subsection (1) in the prescribed form within the time allowed by section 37 for filing its return for the corresponding tax year under section 57B(7).
6: Subsection (5) applies for the 2010–11 and later income years.
629: Section 66 repealed
1: Section 66
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
630: Tax credit relating to KiwiSaver and complying superannuation fund members: member credit form
1: In section 68C(2)
a: in the words before the paragraphs, section KJ 1 of the Income Tax Act 2004 section MK 1(1) of the Income Tax Act 2007
b: in paragraph (b), meets the requirements of section KJ 2(d) of that Act resides mainly in New Zealand
c: in paragraph (c), section KJ 2(a) to (c), and (e) and (f) section MK 2(1)(a) to (c), and (d)(i) and (ii)
2: Section 68C(3)(b) is repealed.
631: Statements in relation to research and development tax credits: single persons
1: Section 68D(1)
2: In section 68D(2) The person A person who is not a member of an internal software development group
3: In section 68D(3)(b)(i) or 2009–10
4: Section 68D(4)
5: Subsections (1) to (4) apply for the 2008–09 and later income years.
632: Section 68E replaced
1: Section 68E is replaced by the following:
68E: Statements in relation to research and development tax credits: internal software development groups
1: The nominated member of an internal software development group must furnish, in the electronic format prescribed by the Commissioner, a statement relating to the research and development tax credits that the members of the group have under section LH 2 of the Income Tax Act 2007 for a tax year.
2: The statement described in subsection (1) must be furnished to the Commissioner no later than—
a: the day that is—
i: 30 days after the latest day for a member of the group to furnish a return of income or joint return of income under section 37 for the relevant tax year; or
ii: a later day allowed by the Commissioner, if the Commissioner considers that a failure to meet the requirements of subparagraph (i) is a result of simple oversight; or
b: the day that is 2 years after the latest day for a member of the group to furnish a return of income under section 37 for the relevant tax year if—
i: the tax year is the 2008–09 tax year; and
ii: no member has an amount of a research and development tax credit under section LH 2 in a return of income for that tax year.
2: Subsection (1) applies for the 2008–09 and later income years.
633: New section 68F inserted
1: After section 68E
68F: Requirements for statements in relation to research and development tax credits
1: A person making a statement in relation to a research and development tax credit under section 68D or 68E is excluded from the following requirements:
a: the requirement under section 23(1) to retain a copy of their statement for 7 years:
b: the requirement under section 36(3) to print off and sign a copy of the statement.
2: A person making a statement in relation to a research and development tax credit under section 68D or 68E is not taking a tax position in relation to which a liability to a tax shortfall under section 141 may arise.
2: Subsection (1) applies for the 2008–09 and later income years.
634: Section 78E repealed
1: Section 78E
2: Subsection (1)
635: Section 78F repealed
1: Section 78F
2: Subsection (1)
636: New section 80KLB inserted
1: After section 80KL
80KLB: Recovery of excess tax credits
1: This section applies when—
a: the Commissioner pays a person a tax credit by instalment under section MF 1 of the Income Tax Act 2007 in a tax year; and
b: in paying a tax credit by instalment in an earlier tax year, the Commissioner has overpaid the tax credit as described in section MF 6
2: The Commissioner may use the amount of an instalment payable to the person to satisfy an amount added under section MF 6(2) of that Act to the tax payable by the person for the earlier tax year.
2: Subsection (1) applies for the 2008–09 and later income years.
637: Effect of extra instalment on entitlement to tax credit
1: Section 80KW(1)(b)
b: receives a payment under either section 80KI or 80KN of an instalment of the credit for each period of a fortnight or a week in the tax year, as applicable; and”.
2: In section 80KW(2)(b) under section 80KI
3: In section 80KW(5)(b) under section 80KN
4: In section 80KW(6) (tax credit – parental tax credit) × 53. 52
5: Section 80KW(7)(b)
b: parental tax credit
6: Subsections (1) to (5) apply for the 2008–09 and later income years.
638: Officers to maintain secrecy
1: Section 81(4)(p)
p: communicating, for the purpose of section 85F, information to a person who is an officer, employee, or agent of the New Zealand Film Commission responsible for the administration of a scheme under which government screen production payments are made and who is authorised to receive the information by the Chief Executive of the New Zealand Film Commission: .
2: In section 81(4)(s)(ii) section 85K. section 85K:
t: communicating to any person who is an employee of the Treasury (as defined in section 2 of the Public Finance Act 1989), any information communicated to that person for the purposes of section LH 15 of the Income Tax Act 2007.
639: Disclosure of information for verification of large budget screen production grant entitlement
1: In the heading to section 85F large budget screen production grant government screen production payment
2: Section 85F(1) and (2)
1: The purpose of this section is to facilitate the exchange of information between the Commissioner and the Commission for the purpose of providing to the Commission information which the chief executive considers necessary to enable the Commission to determine the entitlement of a company to a government screen production payment.
2: For the purposes of subsection (1), on request from the chief executive, the Commissioner may, at any time, provide to any authorised officer of the Commission all of the following information that is held by the Department:
a: particulars relating to the amount of expenditure incurred in relation to a project that is the subject of an application for a government screen production payment:
b: particulars relating to the amount of expenditure incurred in New Zealand in relation to a project that is the subject of an application for a government screen production payment:
c: the Commissioner's opinion as to the accuracy of any information provided by an applicant in relation to the application for a government screen production payment.
3: In section 85F(3) company refers: refers. large budget screen production grant
640: Disclosure of information in relation to Working for Families tax credits
1: In section 85G(1)(b) sections MD 1, or MD 1 and ME 1 of that Act section MD 1, or sections MD 1 and ME 1, of the Income Tax Act 2007
2: In section 85G(1)(c) of that Act
3: Subsection (2) applies for the 2008–09 and later income years.
641: Further secrecy requirements
Section 87(5)(d)
d: being a person who is an officer, employee, or agent of the New Zealand Film Commission responsible for the administration of a scheme under which government screen production payments are made and who is authorised to receive information provided under section 85F; or .
642: New section 89AB inserted
1: After section 89A
89AB: Response periods
1: This section applies for the purposes of Parts 4A and 8A to set the period for a notice in response to another notice (the initiating notice response period
2: When the initiating notice is a notice of proposed adjustment, the response period is a 2-month period starting on the date of issue of the notice.
3: When the initiating notice is a notice of assessment issued by a taxpayer, the response period for a notice of proposed adjustment under section 89DA is—
a: a 4-month period starting on the date of issue of the initiating notice; or
b: if the notice of proposed adjustment relates solely to the amount of a tax credit under section LH 2 of the Income Tax Act 2007, a period starting on the date the initiating notice is received in an office of the department and ending 2 years after the latest date to provide a return of income for the relevant tax year.
4: When the initiating notice is either a notice of disputable decision or a notice revoking or varying a disputable decision that is not an assessment, the response period for a notice is—
a: a 2-month period starting on the date of issue of the initiating notice, unless paragraph (b) or (c) applies; or
b: for a notice of proposed adjustment to which paragraph (c) does not apply, a 4-month period starting on the date of issue of the initiating notice; or
c: for a notice of proposed adjustment relating solely to the amount of a tax credit under section LH 2 of that Act, a period starting on the date the notice of proposed adjustment is received in an office of the department and ending on the later of—
i: 4 months after the date of the initiating notice:
ii: 2 years after the latest date to provide a return of income for the relevant tax year.
5: When the initiating notice is a disclosure notice, a notice issued by the Commissioner rejecting an adjustment proposed by a disputant, or a disputant's statement of position, the response period is a 2-month period starting on the date of issue of the initiating notice.
6: For the purposes of subsections (3)(b) and (4)(c)(ii), if the taxpayer is a member of an internal software development group to which section 68E applies, the latest date for providing a return means the latest date for any member of the group.
2: Subsection (1) applies for the 2008–09 and later income years.
643: Taxpayers and others with standing may issue notices of proposed adjustment
1: After section 89D(2D)
2E: If the Commissioner makes an assessment of an amount of research and development credit, a taxpayer who has not provided a statement under section 68D or 68E in relation to an assessment period may dispute the assessment only by providing a statement for the period within the time allowed under section 68D or 68E, as applicable.
2: Subsection (1) applies for the 2008–09 and later income years.
644: Taxpayer may issue notice of proposed adjustment for taxpayer assessment
1: After section 89DA(2)
3: A taxpayer who makes an assessment of an amount of research and development credit but does not provide a statement under section 68D or 68E in relation to the tax year referred to in subsection (1), may dispute the assessment only by providing a statement for the tax year within the time allowed under section 68D or 68E, as applicable.
2: Subsection (1) applies for the 2008–09 and later income years.
645: Completing the disputes process
1: Section 89N(1)(c)(iii)
iii: the Commissioner has reasonable grounds to believe that a person who is an associated person of the disputant may take steps in relation to the existence or location of the disputant's assets to avoid or delay the collection of tax from the disputant: .
2: Section 89N(1)(c)(v)
v: a person who is an associated person of the disputant and is involved in another dispute with the Commissioner involving similar issues has begun judicial review proceedings in relation to the other dispute: .
646: Determination on economic rate
1: After section 91AAF(1)
1B: For the purposes of subsection (1), the rate set by the Commissioner may be a default rate for kinds of items of depreciable property.
2: Section 91AAF(4)(b)
b: is reacquired after the date on which the new determination is issued, by the person who disposed of it before the date on which the new determination is issued.
3: After section 91AAF(5)
6: The Commissioner may revoke a determination setting an economic rate. The revocation takes effect on the day after the date of publication of the Gazette
4: Subsections (1) and (2) apply for the 2005–06 and later income years.
5: Subsection (3) applies for the 2008–09 and later income years.
647: Determination on special rates and provisional rates
1: Section 91AAG(1)(b)
b: a provisional rate when no applicable rate, other than a default rate, is set in a determination under section 91AAF.
2: In section 91AAG(3)
3: The Commissioner may issue a determination setting a special rate or a provisional rate using, as applicable,— .
3: After section 91AAG(3)(c)
cb: the formula in section EZ 23 of that Act; or .
4: Section 91AAG(4)(a)
a: determining a figure using the applicable formula from subsection (3); and .
5: After section 91AAG(6)
7: The Commissioner may revoke a provisional determination if it no longer applies to an item or if the item is no longer in use or available for use. The revocation takes effect on the day after the date of publication of the Gazette
6: Subsections (1) to (4) apply for the 2005–06 and later income years.
7: Subsection (5) applies for the 2008–09 and later income years.
648: Commissioner may decline to issue special rate or provisional rate
1: Section 91AAH(3)(a)
a: an economic rate, other than a default rate, already applies to the item; or
ab: if a default rate applies to the item, the provisional rate would differ from the default rate by an amount that is less than 50% of the amount by which the next highest or lowest rate, as applicable, set out in schedule 12 of the Income Tax Act 2007 is more or less than the default rate; or .
2: Subsection (1) applies for the 2008–09 and later income years.
649: Notice of setting of economic rate
1: In section 91AAK of issuing a determination of issuing or revoking a determination
2: Subsection (1) applies for the 2008–09 and later income years.
650: Applications for determinations
1: In section 91AAM(4) of issuing a determination under section 91AAG(4) of issuing a determination under section 91AAG(4) or revoking a determination under section 91AAG(7)
2: Subsection (1) applies for the 2008–09 and later income years.
651: Determination on type of interest in FIF and use of fair dividend rate method
1: In section 91AAO(1) section EX 40 of the Income Tax Act 2004 section EX 46 of the Income Tax Act 2007
2: Section 91AAO(2)(b)(i)
i: are loans, fixed-return foreign equity as defined in section YA 1 of the Income Tax Act 2007, or arrangements with a fixed economic return: .
3: After section 91AAO(3B)
3C: Subsection (3D) applies to a portfolio tax rate entity that makes payments of tax under section HL 22 of the Income Tax Act 2007.
3D: A determination does not apply for the portfolio tax rate entity for a quarter beginning before the date of the determination unless the PIE chooses that the determination apply for the quarter.
4: Section 91AAO(3C) and (3D)
3C: Subsection (3D) applies to a multi-rate PIE that calculates and pays its income tax liability under the quarterly calculation option as set out in section HM 43 of the Income Tax Act 2007.
3D: A determination does not apply for the multi-rate PIE for a quarter beginning before the date of the determination unless the PIE chooses that the determination apply for the quarter and all following quarters in the income year.
5: Subsection (2)
6: Subsection (4) applies for the 2010–11 and later income years.
652: New heading and section 91AAQ inserted
After section 91AAP Determinations relating to non-attributing active CFCs
91AAQ: Determination on insurer as non-attributing active CFC
1: A person may apply in writing to the Commissioner for a determination that, for the purposes of section EX 21B of the Income Tax Act 2007,—
a: a CFC is a non-attributing active CFC, if the CFC satisfies subsection (2); or
b: the members of a group of CFCs are non-attributing active CFCs, if the members satisfy subsection (3).
2: A CFC satisfies this subsection if—
a: the CFC is controlled by a company resident in New Zealand that—
i: has a business of insurance registered and rated under the Insurance Companies (Ratings and Inspection) Act 1994:
ii: is in the same group of companies as a company resident in New Zealand that has a business of insurance registered and rated under that Act; and
b: the CFC has, in a country or territory outside New Zealand, a business of insurance that is registered under the laws of the country or territory relating to the business of insurance; and
c: the CFC or a company in the group of companies to which the CFC belongs, before and after 30 June 2009,—
i: was controlled by a New Zealand resident; and
ii: had the business in the country or territory.
3: A group of CFCs satisfies this subsection if—
a: the group is a group of companies that, before and after 30 June 2009,––
i: was controlled by a New Zealand resident; and
ii: had, in a country or territory outside New Zealand, a business of insurance that is registered under the laws of the country or territory relating to the business of insurance; and
b: each CFC is––
i: controlled by a company resident in New Zealand that has a business of insurance registered and rated under the Insurance Companies (Ratings and Inspection) Act 1994 or that is in the same group of companies as such a company; and
ii: is incorporated in the same country or territory as the other CFCs; and
iii: is subject to the laws of the country or territory; and
iv: is liable in the country or territory to income tax on its income; and
v: derives its income mainly from the country or territory; and
vi: has a main business that is insurance or is related to insurance.
4: In deciding whether or not to grant an application, the Commissioner must consider whether the business of the CFC or group of CFCs—
a: is carried on with the main purpose of producing a commercial return on the capital of the CFC or group; and
b: produces all or nearly all of the income of the CFC or group from—
i: premiums from insurance contracts, other than reinsurance contracts, covering risks arising in the country or territory in which the business of the CFC or group is located:
ii: proceeds from investment assets having a total value commensurate with the value of those insurance contracts.
5: For the purposes of subsection (4), the Commissioner may take into account the following:
a: the nature and extent of the activities undertaken by the CFC or group in the business of insurance:
b: the nature and extent of the risks arising in the country or territory that are assumed by the CFC or group in the business:
c: the nature and value of the assets used by the CFC or group in the business compared with the nature and extent of the risks assumed by the CFC or group in the business:
d: the nature and amount of deductions that the company controlling the CFC or group has for expenditure or loss incurred in giving support in relation to the business compared with the nature and amount of the assessable income that the company has from the CFC or group in relation to the business.
6: A determination may be made for income years specified in the determination.
7: A determination may provide for the extension, limitation, variation, cancellation, or revocation of an earlier determination.
8: A determination must be published in the Gazette
653: New heading and section 91AAR inserted
After section 91AAQ, the following is inserted: Determinations relating to relocation payments
91AAR: Determination relating to eligible relocation expenses
1: The Commissioner may determine that a type of expenditure is an eligible relocation expense for the purposes of section CW 17B of the Income Tax Act 2007, section CW 13B of the Income Tax Act 2004, and section CB 12(1B) of the Income Tax Act 1994.
2: The determination may set out the income year or income years for which it is to apply, but may not apply for income years before the 2002–03 income year.
3: In determining whether a type of expenditure is an eligible relocation expense, the Commissioner may take into account whether the expenditure necessarily arises from a work-related relocation of an employee, rather than arising as a cost, including a private or capital cost, that an employee has incurred, or will incur, gradually over time irrespective of whether the employee would have relocated. In this regard, the Commissioner may bear in mind—
a: whether the expenditure amounts to a substitution for an employee's salary or wages:
b: whether employers generally treat the type of expenditure as a relocation expense:
c: the difficulty of and costs in measuring any element of private benefit.
4: The determination may provide for the extension, limitation, variation, cancellation, or revocation of an earlier determination. The Commissioner must give at least 30 days' notice of the implementation date of any change to the determination.
5: A person affected by a determination made under this section may dispute or challenge the determination under Parts 4A and 8A.
6: Within 30 days of issuing or changing a determination under this section, the Commissioner must publish a notice in the Gazette
a: gives notice that the determination has been issued or changed, as applicable; and
b: states where copies of the determination can be obtained.
654: Assessment of shortfall penalties
1: In section 94A(2) separately from the tax. separately from the tax. However, this subsection does not apply to a penalty under section 141ED.
2: Subsection (1) applies for a tax position taken on or after 1 April 2008.
655: Section 102 repealed
1: Section 102
2: Subsection (1)
656: Section 103 repealed
1: Section 103
2: Subsection (1)
657: Section 103A repealed
1: Section 103A
2: Subsection (1)
658: Section 104 repealed
1: Section 104
2: Subsection (1)
659: Time bar for amendment of income tax assessment
1: Section 108(1B)(b)
b: 2 years have passed from the latest date to provide a return of income for the relevant tax year and, for a member of an internal software development group to which section 68E applies, the latest date means the latest date for any member of the group; and .
2: Section 108(1B)(c)
c: the taxpayer—
i: has not issued a notice of proposed adjustment to the Commissioner for an amount of a tax credit for research and development expenditure for the relevant tax year within the relevant response period; and
ii: has not asked for an assessment to be amended under section 113, having provided a detailed research and development statement under section 68D or 68E, as applicable, within the time limit referred to in paragraph (b).
3: Subsections (1) and (2) apply for the 2008–09 and later income years.
660: Extension of time bars
1: In section 108B(3)(d) section 108(1) section 108(1) and (1A)
2: Subsection (1) applies for the 2008–09 and later income years.
661: Amended assessments for research and development tax credits
1: In section 113D
2: If a taxpayer asks for an assessment to be amended under section 113, having provided a detailed research and development statement under section 68D or 68E, as applicable, within the time limit referred to in section 108(1B)(b), the Commissioner may not increase the amount of the credit by more than the amount set out in the taxpayer's request.
2: Subsection (1) applies for the 2008–09 and later income years.
662: Definitions
In section 120C(1) tax paid tax paid
a: an amount of tax that—
i: is paid or credited by the time for a tax liability; and
ii: has not been refunded or applied by the Commissioner to satisfy another tax liability:
b: an amount credited by the time to a tax pooling account under sections RP 17 to RP 21 of the Income Tax Act 2007:
c: an amount credited or transferred by the time to a taxpayer's account with the Commissioner from a tax pooling account under sections RP 17 to RP 21 of that Act .
663: Section 120EA repealed
1: Section 120EA
2: Subsection (1) applies––
a: on and after 1 July 2010, unless paragraph (b) applies:
b: for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in this Act in a return of income for the tax year corresponding to the first relevant income year.
664: Provisional tax instalments in transitional years
1: In section 120KD Three interest start dates apply: 16 January, 29 April, and 29 June (s 120KD(2)). Three interest start dates apply: 16 January, 8 May, and 29 June (s 120KD(2)).
2: Subsection (1) applies for the 2008–09 and later income years.
665: Where provisional tax paid by company does not count as overpaid tax
In section 120M(a) but for that section but for those sections
666: Variation to definition of date interest starts
1: Section 120O(e)
2: Subsection (1)
667: Interest paid on deposits in tax pooling accounts
Section 120OE(1)
1: Interest paid by the Commissioner on an amount deposited in a tax pooling intermediary's tax pooling account accrues to the benefit of the intermediary from the date of the deposit to, as applicable,—
a: the date the amount is refunded; or
b: the date of a transfer under section RP 19 of the Income Tax Act 2007.
668: Section 120R repealed
1: Section 120R
2: Subsection (1)
669: Certain rights of objection not conferred
Section 125(d)
d: any decision or determination of the Commissioner approving or not approving a sickness, accident, or death benefit fund for the purposes of section CW 34 of the Income Tax Act 2007; or .
670: Certain rights of challenge not conferred
In section 138E(1)(e)(iv), 34B,
671: Non-electronic filing penalty
1: In section 139AA(1)(a) RD 23(2) RD 22(2)
2: Subsection (1) applies for tax on income derived in the 2008–09 and later income years.
672: Late payment penalty
1: After section 139B(5A)
5B: A taxpayer is liable to pay a late payment penalty under subsection (2) in relation to a default date if—
a: the Commissioner has given the taxpayer a notice of a further date for the payment of unpaid tax under subsection (1)(c)(i); and
b: after giving the notice, the Commissioner becomes aware of a default by the taxpayer that arose before the date of the notice; and
c: the further date for payment referred to in paragraph (a)—
i: falls outside the period referred to in subsection (1)(b); and
ii: should have been given in relation to the default referred to in paragraph (b).
5C: If the taxpayer enters into an instalment arrangement for the default under section 177B and a late payment penalty is imposed under section 139BA(1), the taxpayer is treated for the purposes of this section as paying on time, to the extent of the default, the amount of tax due for payment.
2: Section 139B(6)(c)
c: The term unpaid tax
3: Subsection (1) applies for unpaid tax that becomes due for payment on or after 1 April 2008.
4: Subsection (2) applies for a tax position taken on or after 1 April 2008.
673: Imposition of late payment penalties when financial relief sought
1: Section 139BA(3)(b)
b: the last day of the response period allowed by section 177(4) if the taxpayer does not provide the information sought or respond to a counter offer.
2: Subsection (1) applies for the 2008–09 and later income years.
674: Imputation penalty tax payable where end of year debit balance
1: In section 140B(1) section OB 65 section OB 65 or OC 30
2: Subsection (1)
675: Imputation penalty tax payable in some circumstances
1: In section 140BB Transitional imputation penalty tax payable in some circumstances
2: In section 140BB(1) as only having–– as having only the balances and adjustments referred to in subsections (1B) and (1C)
3: Section 140BB(1)(a) and (b)
4: After section 140BB(1)
1B: For the purposes of subsection (1), for the transitional period, the following adjustments must be made to the company's ICA balance at the end of the company's 2007–08 income year for transactions occurring after the end of that income year:
a: first, the company must subtract any overpayment of income tax for the 2007–08 or earlier income year in which the company was an ICA company:
b: secondly, the company must subtract—
i: any payment for an income year after the 2007–08 income year:
ii: any amount that is or would be refundable for an income year after the 2007–08 income year:
c: thirdly, the company must add any income tax paid for the 2007–08 or earlier income year in which the company was an ICA company.
1C: For the purposes of subsection (1), the company must include in its ICA balance the following debits arising in the transitional period for transactions occurring after the end of the company's 2007–08 income year:
a: any debit arising from a dividend paid under section OZ 8 of the Income Tax Act 2007 when the ratio is greater than 30/70:
b: any debit that relates to the company's ICA balance at the end of the company's 2007–08 income year—
i: including any adjustment under subsection (1B):
ii: excluding any debit for an imputation credit attached to a dividend at an imputation ratio of 30/70 or less.
5: After section 140BB(3)
4: Despite subsection (2), the company is not liable for imputation penalty tax for the transitional period unless it pays a dividend with imputation credits attached when––
a: the imputation ratio is greater than 30/70; and
b: the payment is made after the earlier of––
i: the date on which the company's 2007–08 return of income was filed; or
ii: 25 March 2009.
676: Section 140C repealed
1: Section 140C
2: Subsection (1)
677: FDP penalty tax payable in some circumstances
1: In section 140CA Transitional FDP penalty tax payable in some circumstances
2: In section 140CA(1) as only having–– as having only the balances and adjustments referred to in subsections (1B) and (1C)
3: Section 140CA(1)(a) and (b)
4: After section 140CA(1)
1B: For the purposes of subsection (1), for the transitional period, the following adjustments must be made to the company's FDP account balance at the end of the company's 2007–08 income year for transactions occurring after the end of that income year:
a: first, the company must subtract any overpayment of FDP for the 2007–08 or earlier income year in which the company was an FDPA company:
b: secondly, the company must subtract—
i: any payment for an income year after the 2007–08 income year:
ii: any amount that is or would be refundable for an income year after the 2007–08 income year:
c: thirdly, the company must add any payment of FDP for the 2007–08 or earlier income year in which the company was an FDPA company.
1C: For the purposes of subsection (1), the company must include in its FDP account balance the following debits arising in the transitional period for transactions occurring after the end of the company's 2007–08 income year:
a: any debit arising from a dividend paid under section OZ 8 of the Income Tax Act 2007 when the ratio is greater than 30/70:
b: any debit that relates to the company's FDP account balance at the end of the company's 2007–08 income year—
i: including any adjustment under subsection (1B):
ii: excluding any debit for an FDP credit attached to a dividend at an FDP ratio of 30/70 or less.
5: After section 140CA(3)
4: Despite subsection (2), the company is not liable for FDP penalty tax for the transitional period unless it pays a dividend with FDP credits attached when––
a: the FDP ratio is greater than 30/70; and
b: the payment is made after the earlier of––
i: the date on which the company's 2007–08 return of income was filed; or
ii: 25 March 2009.
678: Section 140CA repealed
1: Section 140CA
2: Subsection (1)
679: Tax shortfalls
1: Section 141(7)(c)
c: the 2 taxpayers are associated persons,— .
2: In section 141(7D) of this Act
680: Unacceptable tax position
1: In section 141B(8) subsection (2)(b) subsection (2)
2: Subsection (1) applies for a tax position taken on or after 1 April 2008.
681: Abusive tax position
Section 141D(3B)(b)
b: the sum of the tax shortfall from the arrangement for the taxpayer and the tax shortfalls from the arrangement for persons with whom the taxpayer is associated is less than $50,000; and .
682: Evasion or similar act
Section 141E(1)(c)
c: knowingly does not make a deduction, withholding of tax, or transfer of payroll donation required to be made by a tax law; or .
683: Not paying employer monthly schedule amount
1: After section 141ED(3)(a)
ab: during the period, the taxpayer is negotiating an instalment arrangement with the Commissioner to pay the unpaid amount: .
2: After section 141ED(5)
5B: For the purposes of subsection (5), if the returned amount is varied or corrected by the taxpayer or the Commissioner in the period that starts on the date when the employer monthly schedule is provided to the Commissioner and ends on the day before the penalty date, the amount of the penalty that relates to the unpaid amount is based on the varied or corrected amount.
5C: An amount paid by the taxpayer or applied by the Commissioner on account of the taxpayer in relation to the taxpayer's liability to pay unpaid tax and a penalty under this section must first be applied towards payment of the penalty.
3: Subsections (1) and (2) apply for a tax position taken on or after 1 April 2008.
684: Limitation on reduction of shortfall penalty
1: Section 141J(3)
2: Subsection (1) applies for voluntary disclosures made on or after 17 May 2007.
685: New date for payment of tax that is not a penalty
After section 142A(3)(a)
ab: if the assessment referred to in subsection (1)(a) is a default assessment; or .
686: Due dates for payment of imputation penalty tax, FDP penalty tax, and underestimation penalty tax
1: The heading to section 142E Due dates for payment of imputation penalty tax
2: Section 142E(2)
3: Subsections (1) and (2)
687: Knowledge offences
1: Section 143A(3) and (6)
2: Subsection (1)
688: Evasion or similar offence
1: Section 143B(3)
2: Subsection (1)
689: Recovery of civil penalties
Section 156A(1)(a) and (b)
a: for which the penalty is imposed; or
b: if the penalty is a late filing penalty, for which the tax return is to be provided; or
c: if the penalty is a non-electronic filing penalty, for which the return is provided.
690: Taxes that may be recovered
1: In section 173D
2: For the purposes of this Part, assistance in the recovery of taxes includes assistance in the recovery of charges associated with the taxes, whether interest, administrative penalties, costs of collection or conservancy, or another related amount.
2: Subsection (1) applies in relation to events and periods occurring before or after 1 April 2008.
691: Transfer of excess tax within taxpayer's accounts
1: After section 173L(2)(b)
bb: in the case of a tax credit for expenditure on research and development, a day after the end of the accounting year to which the credit relates: .
2: Section 173L(3)
3: Despite subsection (2)(b) and (bb), a taxpayer who has an early balance date must, for tax withheld or deducted on their behalf or a tax credit for expenditure on research and development, choose a day after the end of the tax year in which the amount was withheld or deducted or the tax year corresponding to the accounting year to which the credit relates.
3: Subsections (1) and (2) apply for the 2008–09 and later income years.
692: Transfer of excess tax to another taxpayer
1: Section 173M(2)(g)
fb: a tax pooling intermediary's tax pooling account; or
g: another taxpayer not listed in paragraphs (a) to (fb).
2: After section 173M(4)(a)
ab: if subsection (2)(fb) applies, a date that occurs on or after the date of the request: .
693: Instalment arrangements
1: After section 177B(6)
7: Despite sections LA 6(2) and LH 2(6) of the Income Tax Act 2007, a taxpayer with an instalment arrangement who is meeting their obligations under it may choose to have an amount of refundable tax credit remaining for a tax year paid to them rather than used under the ordering rules set out in those sections.
2: Subsection (1) applies for the 2008–09 and later income years.
694: Relief to taxpayers to whom new start grants payable
In section 177D(3) qualifying event, as defined by section OB 1 of the Income Tax Act 1994 emergency event, as declared by the Governor-General by Order in Council under section 183ABA
695: Section 181 repealed
1: Section 181
2: Subsection (1)
696: Section 183 repealed
Section 183
697: Remission for reasonable cause
1: Section 183A(1)(e)
2: Subsection (1)
698: Section 183ABA replaced
Section 183ABA
183ABA: Remission in circumstances of emergency event
1: This section applies for a taxpayer if—
a: an emergency event physically prevents the taxpayer from making a payment required by a tax law on or before the due date for the payment; and
b: the taxpayer is charged with interest under Part 7 for failing to make the payment by the due date; and
c: the taxpayer is a member of a class of persons to whom a remission under this section is available, if such a class of persons is described in the Order in Council declaring the emergency event.
2: The taxpayer may ask the Commissioner to remit the interest.
3: The Commissioner may remit the interest if the Commissioner is satisfied that—
a: it is equitable that the interest be remitted; and
b: the taxpayer asked for the relief as soon as practicable; and
c: the taxpayer made the payment as soon as practicable.
4: The Governor-General may from time to time by Order in Council—
a: declare an event that meets the requirements of paragraphs (a) and (b) of the definition of emergency
b: describe a class or classes of persons to whom a remission under this section is available in relation to the emergency event.
5: An Order in Council (the Order subsection (4)
a: may relate to an event that occurred after the commencement of this Act and before the commencement of the Order:
b: expires, if not renewed under paragraph (c)
i: the period given in the Order, if such a period is given; or
ii: if no such period is given, 6 months from the promulgation of the Order:
c: may be renewed or replaced from time to time by an Order in Council made before or after the date on which the Order would otherwise expire.
699: Small amounts of penalties and interest not to be charged
Section 183F(1)
1: Despite any other provision in this Act,—
a: a taxpayer is not liable to pay a late payment penalty if an amount of income tax or ancillary tax that remains outstanding after the due date is $100 or less:
b: a taxpayer is not liable to pay interest under Part 7 if an amount of income tax or ancillary tax that remains outstanding after the due date is $100 or less:
c: a taxpayer is not liable to pay a penalty for not paying an employer monthly schedule amount if the unpaid amount on the day before the date of the Commissioner's notice under section 141ED(1)(b) is $100 or less:
d: the Commissioner is not liable to pay interest under Part 7 on overpaid tax of $100 or less.
700: Remission on application
1: Section 183H(a)(ii)
2: Subsection (1)
701: Payments into, and out of, Listed PAYE Intermediary Bank Account
Section 185D(1)
1: All payments received by the Commissioner from a listed PAYE intermediary and made under sections RP 2 to RP 5 of the Income Tax Act 2007 must be paid into the Listed PAYE Intermediary Bank Account.
702: Power to make interim payments of WFF tax credit
1: In section 225A(2)(b)(iii) under that Act
2: In section 225A(2)(b)(iv) under that Act
3: Amendments to Goods and Services Tax Act 1985
703: Goods and Services Tax Act 1985
This Part amends the Goods and Services Tax Act 1985 2009-10-06 Goods and Services Tax Act 1985 ss 704–709, 710(1) and (2), 711, 712 2010-04-01 Goods and Services Tax Act 1985 ss 710(3), 713
704: Interpretation
1: This section amends section 2(1)
2: The definition of emissions unit emissions unit .
3: After the definition of local authority loyalty programme .
4: The definition of New Zealand unit
5: In the definition of public authority and includes offices of Parliament; and includes offices of Parliament, the Parliamentary Service, and the Office of the Clerk of the House of Representatives;
705: Meaning of term supply
Section 5(14)
14: If a supply is charged with a tax under section 8, but section 11, 11A, 11AB, 11B, or 11C requires part of the supply to be charged at the rate of 0%, that part of the supply is treated as being a separate supply.
706: Supply of certain imported services
In section 5B sections 8(1), 15, 15A sections 8(1), 15A to 15E
707: Time of supply
After section 9(8)
9: Despite subsection (1), an operator of a loyalty programme who meets the requirements of section 11C may treat a supply of services in a loyalty transaction as taking place at the time at which the loyalty points are redeemed for reward. But this subsection does not apply to a token, stamp, or voucher to which section 5(11D) to (11H) applies.
10: For the purposes of subsection (9), in a case where the operator is not resident in New Zealand but the supply of services is treated under section 8(4B) as made in New Zealand, the purchaser referred to in section 11C may treat the supply as taking place at the time at which the loyalty points are redeemed for reward if—
a: the operator meets the first and second requirements set out in section 11C; and
b: the purchaser meets the third requirement imposed on the operator under section 11C.
708: Value of supply of goods and services
In section 10(4) section 11(3) section 11(3) or (3C)
709: Zero-rating of goods
After section 11(3)
3B: Subsection (3)(a) does not apply to a supply of goods if the recipient gives the registered person at or before the time of the supply an undertaking in writing that neither the recipient nor an associated person will cause the goods to be reimported into New Zealand in a condition that is substantially the same as the condition the goods were in when the supply was charged with tax under subsection (1)(a) to (1)(l).
3C: Despite subsection (3B), a registered person is treated as having supplied goods in the course or furtherance of a taxable activity and must be charged with tax at the rate specified in section 8 if—
a: the supply of the goods by the registered person was charged with tax under subsection (1)(a) to (l); and
b: the goods are imported into New Zealand; and
c: the goods are reacquired by the registered person in substantially the same condition as the condition the goods were in when the supply was charged with tax under subsection (1)(a) to (l); and
d: the registered person deducted under section 20(3) input tax as defined in section 3A(1)(c) in relation to the original supply of the goods under subsection (1)(a) to (l).
3D: Subsection (3C)—
a: applies at the time the goods are reacquired by the registered person:
b: does not apply if tax is paid under section 12 on the importation of the goods into New Zealand.
710: Zero-rating of services
1: Section 11A(1)(s)
s: the services are an emissions unit and the supply is the transfer of the emissions unit under—
i: section 64 of the Climate Change Response Act 2002:
ii: Part 4, subpart 2 of that Act:
iii: a covenant entered under the Forests (Permanent Forest Sink) Regulations 2007; or .
2: Section 11A(1)(v)
v: the services are an emissions unit and the supply is a sale or other disposal of the emissions unit, other than a transfer of the emissions unit from the Crown without payment of a price.
3: In section 11A(1)(v) price. price; or
w: the supply is a sale or other disposal of services that are a unit—
i: issued by reference to the sequestration, or avoidance of emission, of human-induced greenhouse gases; and
ii: other than an emissions unit; and
iii: verified to an internationally recognised standard.
711: New section 11C inserted
After section 11B
11C: Treatment of supplies by operators of loyalty programmes
1: This section applies when an operator of a loyalty programme makes a supply of services by entering into an arrangement (a loyalty transaction purchaser
2: The operator may defer the time of the supply of the services under section 9(9) to the time at which loyalty points are redeemed for reward if they meet the requirements of subsections (3) to (5).
3: The first requirement is that 25% or more of the operator's taxable supplies must be zero-rated supplies of goods or services. The 25% threshold—
a: may be met by including the taxable activity of an associated person:
b: must be met for the 12-month period that ends with the month in which the supply of services under the loyalty transaction is made, and the operator must have reasonable grounds for believing the threshold will be met for the 12-month period that begins with the month in which that supply of services is made.
4: The second requirement is that —
a: the operator or an associated person must make supplies of goods or services in a business activity (the main business activity
b: the loyalty points supplied by the operator must only be able to be redeemed for reward as part of the main business activity.
5: The third requirement is that when the loyalty points are redeemed, the operator must be able to identify whether—
a: tax under section 8 has been imposed on the supply of the loyalty points:
b: the time of supply has been deferred under section 9(9).
6: If the operator has a partner in an associated loyalty programme, the second requirement is still treated as met if, in addition to those requirements, loyalty points supplied by the operator are able to be redeemed for reward by the partner.
712: Fringe benefits and entertainment expenses
In section 21I(5) section CW 17 or CW 18 section CW 17, CW 17B, CW 17C, or CW 18
713: Group of companies
In section 55(1)(a)(iii) portfolio tax rate entity multi-rate PIE
4: Amendments to KiwiSaver Act 2006
714: KiwiSaver Act 2006
This Part amends the KiwiSaver Act 2006 2009-10-06 KiwiSaver Act 2006 ss 715–733
715: Interpretation
1: This section amends section 4(1)
2: In the definition of Crown contribution
a: section KJ 1 of the Income Tax Act 2004 section MK 1 of the Income Tax Act 2007
b: section KJ 5(2) section MK 5
3: In the definition of PAYE period in paragraph (a) of the definition of payment period payment period
4: The definition of PAYE period PAYE period .
716: Section 13 repealed
Section 13
717: Other situations when automatic enrolment rules do not apply
In section 14(1)(d) section OE 1(5) of the Income Tax Act 2004 section YD 1(7) of the Income Tax Act 2007
718: Eligibility to be exempt employer
Section 25(1)(b)
b: the scheme must be a registered superannuation scheme that is registered on or before the day after the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 receives the Royal assent; and
bb: the relevant participation agreement must be entered into by the employer before the day after the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 receives the Royal assent; and .
719: Involuntary transfers
In section 57(1)(d) paragraph (h) of the definition of complying fund rules clauses 4(a) and 5(a) in schedule 28 of the Income Tax Act 2007
720: What happens when initial back-dated validation ends, with no confirmed back-dated validation?
In section 59D(4) paragraph subsection (3)
721: Contribution rate
Section 64(2) is replaced by the following:
2: Despite subsection (1), the employee may choose a contribution rate of 2%, 4%, or 8% of their gross salary or wages by giving notice to their employer of the rate they choose.
722: Interest rate
In section 86(1) lowest tax rate column 2 column 3
723: How and when interest is paid on refunds
Sections 89(3) and (4)
724: Refunds of employer contribution by Commissioner if employee opts out
In section 100 may must
725: General
After section 101A(2)
2B: Despite subsection (1), an employer does not have to pay a compulsory employer contribution as provided in sections 101FB and 101FC.
726: Compulsory employer contribution amount: general rule
1: In section 101D(5)(b)(iii)(B) ; and ; or
C: one that has had contributions paid or credited to the contributions scheme or a prior scheme for the contributions scheme by a previous employer, and those contributions met the requirements described in paragraph (b)(i) to (iii); and .
2: In section 101D(8)(b) percentage of the employee's total contributions percentage (inclusive of amounts payable under the ESCT rules) of the employee's total contributions
727: New sections 101FB and 101FC inserted
After section 101F
101FB: Grace periods: employers
1: An employer does not have to pay a compulsory employer contribution for a payment of gross salary or wages to an employee in a grace period described in subsection (2), if, for the whole of the relevant grace period,—
a: 1 or more of the following apply:
i: the automatic enrolment rules apply to the employee:
ii: the employer does not receive a notice under section 34(1) or 39 that the employee has opted in; and
b: the employer does not deduct any amount of contributions required to be deducted from an employee's salary or wages; and
c: the employer does not receive a notice under section 61 that requires the deduction of contributions for the employee.
2: The grace periods for the purposes of subsection (1) are—
a: the period starting on the day that the employee starts new employment and finishing on the earlier of the day—
i: that is 1 year after the day that the employee starts new employment:
ii: that the employee ceases employment:
b: the period starting on the day that is 1 year after the day that the employee starts new employment and finishing on the earliest of—
i: the day that is before the day on which the employer receives a notice under section 34(1) or 39 that the employee has opted in:
ii: the day that is before the day on which the employer receives a notice under section 61 that requires the deduction of contributions for the employee:
iii: the day that the employee ceases employment.
101FC: De minimis: other contributions and hybrid schemes amount
For a payment of gross salary or wages to an employee, an employer does not have to pay a compulsory employer contribution for the employee, if, in respect of the payment of gross salary or wages, one of the following amounts is equal to or more than the relevant CEC rate
a: the amount of other contributions
b: the hybrid schemes amount
728: Rules: providers
1: In section 101G(3)
a: or complying superannuation fund
b: or a rule the same as that clause
2: After section 101G(3)
4: If a member of a complying superannuation fund will be entitled within 2 months to withdraw an amount from the fund under a rule the same as clause 4(3) of the KiwiSaver scheme rules, the provider must send a notice to the member's employer stating the date on which the member will be entitled to withdraw.
729: Terms relating to members' tax credits implied into trust deed
In section 128A(1) section KJ 1 of the Income Tax Act 2004 section MK 1 of the Income Tax Act 2007
730: Terms relating to lump sum payments by complying superannuation funds
In section 128C(1) paragraph (cc) of the definition of complying fund rules clause 2(c) in schedule 28 of the Income Tax Act 2007
731: Crown contribution
1: In section 226(1) a contribution 1 contribution
2: Section 226(4)
4: If A ceases being a member of the first KiwiSaver scheme of which they are a member because the Commissioner accepts an opt-out notice outside the time limit in section 16 or because A's enrolment is invalid, and the amount of the contribution under this section was never paid, then the next KiwiSaver scheme of which A is a member is treated as their first one, for the purposes of this section and entitlement to the contribution.
732: Regulations relating to mortgage diversion facility
1: In section 229(2)(i) is a fixed dollar amount, and
2: After section 229(2)(i)
ia: an amount may not be diverted if it was received by the relevant provider before the provider has received from the person a request to divert amounts under the mortgage diversion facility: .
733: Schedule 1––KiwiSaver scheme rules
1: Schedule 1, clause 8(1)
1: This clause applies to a member if the member has not made a withdrawal under this clause before (whether or not from the member's current KiwiSaver scheme or from a KiwiSaver scheme to which the person previously belonged) and,––
a: at least 3 years have expired after the Commissioner received the first contribution in respect of the person (whether or not a contribution in relation to the scheme of which the member is currently a member); or
b: the person has been a member of 1 or more KiwiSaver schemes for a period of 3 years or more.
2: Schedule 1, clause 9
9: Withdrawal on death
If a member dies, the trustees must,––
a: on application by the member's personal representative, pay to that person an amount that is equal to the value of the member's accumulation at the date on which the application is accepted as part of the member's estate; or
b: if the requirements of section 65 of the Administration Act 1969 are met, pay to the relevant person any sum authorised by that section, subject to that Act.
3: In schedule 1, clause 14(1) section KJ 1 of the Income Tax Act 2004 section MK 1 of the Income Tax Act 2007
4: In schedule 1, clause 17
a: before the member, the personal representative, or the relevant person under section 65 of the Administration Act 1969 (as the case may be) gives the fund provider .
5: In schedule 1, clause 17
a: in the words before the paragraphs, section KJ 1 of the Income Tax Act 2004 section MK 1 of the Income Tax Act 2007
b: in paragraph (a), Income Tax Act 2004 Income Tax Act 2007
c: in paragraph (b), the number of included days they have got the time for which the member meets the requirements of section MK 2 of the Income Tax Act 2007 wrong
5: Amendments to Income Tax Act 2004
734: Income Tax Act 2004
This Part amends the Income Tax Act 2004 2009-10-06 Income Tax Act 2004
735: New section CC 8B inserted
1: After section CC 8
CC 8B: Certain commercial bills: non-resident holders
When this section applies
1: This section applies in relation to a commercial bill held by a non-resident when—
a: neither the financial arrangements rules nor the old financial arrangements rules apply to the calculation and allocation of income and expenditure in relation to the commercial bill because of the application of section EW 9(2) to (4) or EZ 45(e) (which relate to the application of the rules); and
b: the non-resident holder—
i: disposes of the commercial bill other than by redemption; or
ii: redeems a commercial bill whose issuer is an associated person of the non-resident. Income: disposal
2: The value of the commercial bill on the day the non-resident holder disposes of it is income of the person. Income: redemption
3: The amount that the non-resident holder receives on redemption is income of the person. Defined in this Act: amount, associated person, commercial bill, financial arrangements rules, income, non-resident, old financial arrangements rules .
2: Subsection (1) applies for the 2005–06 and later income years.
736: What is a transfer of value?
1: After section CD 4(2) When shares are cancelled
2B: The market value of any transfer from the shareholder to the company on the cancellation of a share of the shareholder's rights as a shareholder is zero.
2: In section CD 4 market value share shareholder
3: Subsection (1) applies for the 2005–06 and later income years.
737: Returns of capital: off-market share cancellations
In section CD 14(9) non-participating redeemable share ; or or section FC 2B(2) (Stapled debt securities); or
738: Treasury stock acquisitions
1: Section CD 17(4)
4: If subsection (2) applies, then, with effect from the cancellation or the first anniversary, depending on which first causes subsection (2) to apply, the available subscribed capital of the class of the share is reduced by the lesser of—
a: the amount paid to the shareholder on the acquisition; and
b: the available subscribed capital per share calculated under the ordering rule, and calculated in the case of the first anniversary as if the share and any other shares to which this subsection applies on that date were cancelled on that date.
2: Subsection (1) applies for the 2005–06 and later income years.
739: Foreign investment fund income
1: In section CD 26 Amount not dividend
2: In section CD 26(b)(iv) method; and method.
3: After section CD 26(b) Exclusion for interests in grey list companies
2: Subsection (1)(b)(iv) does not apply if—
a: the FIF is a grey list company; and
b: the person holds a direct income interest of 10% or more in the FIF at the beginning of the income year in which the period falls. Application of rule for certain managed funds
3: Subsection (2) does not apply if—
a: the person is a portfolio investment entity, an entity eligible to be a portfolio investment entity, or a life insurance company; and
b: the FIF is a foreign investment vehicle.
4: In section CD 26 direct income interest foreign investment vehicle life insurance portfolio investment entity
740: Available subscribed capital amount
In section CD 32 consideration
741: Amounts derived in connection with employment
1: In section CE 1 Income
2: Section CE 1(c)
c: the market value of accommodation that the person receives in connection with their employment or service other than an amount paid under section CW 13B (Relocation payments): .
3: After section CE 1(g) Meaning of accommodation
2: For the purposes of this section and section CX 24 (Accommodation), accommodation
4: In section CE 1 accommodation
742: Meaning of expenditure on account of an employee
After section CE 5(3)(b)
bb: an amount paid under section CW 13B (Relocation payments) or section CW 13C (Payments for overtime meals): .
743: Benefits, pensions, compensation, and government grants
Section CF 1(2)(f)
f: a payment under the Injury Prevention, Rehabilitation, and Compensation Act 2001 paid by the Corporation as defined in that Act, of weekly compensation that is not recovered or recoverable under section 248 of that Act:
g: a payment under section 81(1)(b) of the Injury Prevention, Rehabilitation, and Compensation Act 2001 paid by the Corporation as defined in that Act, for attendant care as defined in schedule 1, clause 12 of that Act.
744: New section CR 3 added
1: After section CR 2
CR 3: Income for general insurance outstanding claims reserve
When this section applies
1: This section applies for—
a: an insurer who uses IFRS 4, Appendix D for general insurance contracts; and
b: general insurance contracts, excluding contracts having premiums to which section FC 14 applies. Formula for insurer's OCR income
2: For an income year (the current year opening outstanding claims reserve Definition of items in formula
3: In the formula,—
a: opening outstanding claims reserve
i: the amount of the insurer’s closing outstanding claims reserve for the income year before the current year (the prior year
ii: the amount of the insurer's reserve for outstanding claims liability, calculated at the end of the prior year, using the basis the insurer used for tax purposes in that prior year, if the current year is the first year that this section applies to the insurer:
b: closing outstanding claims reserve Defined in this Act: amount, general insurance contract, IFRS 4, income, income year, insurer, life insurer, outstanding claims reserve .
2: Subsection (1) applies for the first income year for which an insurer adopts IFRSs for the purposes of financial reporting and later income years, if the person chooses to use IFRS 4 in a return of income for that first year.
745: Section CW 3B repealed
Section CW 3B
746: Expenditure on account, and reimbursement, of employees
1: After section CW 13(3) Relationship with sections CW 13B and CW 13C
4: This section does not apply to an amount referred to in section CW 13B (Relocation payments) or section CW 13C (Payments for overtime meals).
2: After section CW 13(4) Depreciation loss included
5: In this section, expenditure includes an amount of depreciation loss.
3: In section CW 13 depreciation loss
4: Subsection (2) does not apply in relation to a tax position taken by a person—
a: in the period from 1 April 2005 to 31 March 2008; and
b: in relation to a deduction for an amount of depreciation loss; and
c: relying on section CW 13 in the absence of the amendment made by subsection (2).
747: New sections CW 13B and CW 13C inserted
After section CW 13
CW 13B: Relocation payments
Exempt income
1: An amount that an employer pays to or on behalf of an employee in connection with the expenses of the employee in a work-related relocation is exempt income of the employee. Actual expenditure
2: The amount paid must be no more than the actual cost incurred by or on behalf of the employee on an expense that the Commissioner lists as an eligible relocation expense in a determination made under subsection (6). Time limit
3: Subsection (1) applies only to expenditure incurred to the end of the tax year following that in which the relocation occurs. For the purposes of this subsection, a temporary move that has not been treated as a work-related relocation under this section is ignored. Meaning of work-related relocation
4: For the purposes of this section, work-related relocation
a: because the employee's workplace is not within reasonable daily travelling distance of their residence; and
b: as a result of the employee—
i: taking up new employment with a new employer; or
ii: taking up new duties at a new location with their existing employer; or
iii: continuing in their current position but at a new location. Exemption from distance test
5: The requirement in subsection (4)(a) for a workplace to be beyond reasonable travelling distance of the person's residence does not apply to a person whose accommodation forms an integral part of their work. Determinations
6: The Commissioner may issue a determination for the purposes of this section under section 91AAR of the Tax Administration Act 1994 to provide a list of eligible relocation expenses, and may extend or modify the list from time to time as required. The Commissioner must give at least 30 days notice of the implementation date of any alteration. Defined in this Act: amount, Commissioner, employee, employer, exempt income, tax year, work-related relocation
CW 13C: Payments for overtime meals and certain other allowances
Exempt income: overtime meals
1: An amount that an employer pays to or on behalf of an employee for a meal for the employee when the employee is working overtime is exempt income of the employee. Exempt income: certain sustenance allowances
2: An amount that an employer pays to an employee as a sustenance allowance for the employee for a day is exempt income of the employee if—
a: the employee works a minimum of 7 hours on the day; and
b: their employment requires them—
i: to work outdoors and away from their employment base for most of the day; and
ii: to undertake a long period of physical activity in travelling through a neighbourhood or district on foot or by bicycle; and
c: it is not practicable for the employer to provide sufficient sustenance on the day for the period when the employee is working outdoors; and
d: the allowance recognises—
i: the arduous physical nature of the employee's work as described in paragraph (b); and
ii: that the employer would normally provide tea, coffee, water, or similar refreshments at the employment base in the course of their business. Eligibility requirements: overtime meals
3: Subsection (1) applies only if—
a: the employee has worked at least 2 hours' overtime on the day of the meal; and
b: either—
i: the employee's employment agreement provides for pay for overtime hours worked; or
ii: the employer has an established policy or practice of paying for overtime meals. Eligibility requirements: sustenance allowances
4: Subsection (2) applies only if the employer has an established policy or practice of paying a sustenance allowance. Actual cost or reasonable estimate
5: The amount paid must be—
a: the actual cost to the employee, and for an overtime meal referred to in subsection (1), with documentation required for amounts over $20 per meal; or
b: a reasonable estimate of the expenditure likely to be incurred by the employee or a group of employees for whom an amount is payable. Meaning of overtime
6: For the purposes of this section, overtime Defined in this Act: amount, employee, employer, exempt income, overtime, pay .
748: Local and regional promotion bodies
In section CW 33 associated person
749: Benefits provided instead of allowances
In section CX 17(1)(b transport costs). transport costs); or
c: an amount that, if it had been paid, would have been exempt income under section CW 13B (Relocation payments).
750: Section CX 24 replaced
1: Section CX 24
CX 24: Accommodation
The value of accommodation that an employer provides to an employee in connection with the employment or services is not a fringe benefit. Defined in this Act: accommodation, employee, employer, employment, fringe benefit .
2: Subsection (1) applies for the 2005–06 and later income years.
751: Government grants to businesses
1: In section CX 41(1)(d)(i) for which they are allowed a deduction for which they would be allowed a deduction in the absence of section DF 1 (Government grants to businesses)
2: In section CX 41(3)(b)(ii) (Government grants to businesses)
3: Subsections (1) and (2) apply for the 2005–06 and later income years.
752: New heading inserted
After section CX 44E, the following is inserted: Emissions units under Climate Change Response Act 2002 .
753: New section CX 44G inserted
After section CX 44F
CX 44G: Disposal of pre-1990 forest land units
Who this section applies to
1: This section applies to a person who disposes of a pre-1990 forest land unit other than by surrender. Excluded income: disposal
2: An amount of income that the person derives from the disposal is excluded income if, at the time of the disposal, the person would not derive income, other than exempt income or excluded income, from a disposal without timber of the pre-1990 forest land to which the unit relates. Defined in this Act: amount, excluded income, income, pre-1990 forest land, pre-1990 forest land unit, surrender .
754: Determining tax liabilities
1: Section DB 3(4)
4: This section supplements the general permission and overrides the capital limitation, the private limitation, and the employment limitation. The other general limitations still apply.
2: In section DB 3 capital limitation
3: Subsection (1) applies for the 2005–06 and later income years.
755: New section DB 8B inserted
After section DB 8
DB 8B: Interest or expenditure connected to stapled debt security
No deduction
1: A company that issues a stapled debt security is denied, while section FC 2B(2) (Stapled debt securities) applies to the security, a deduction for—
a: interest payable under the security:
b: expenditure or loss incurred in connection with the security:
c: expenditure or loss incurred in borrowing the money secured by or owing under the security. Relationship with sections DB 5 to DB 8
2: This section overrides sections DB 5 to DB 8. Link with subpart DA
3: This section overrides the general permission. Defined in this Act: deduction, general permission, interest, pay, stapled debt security .
756: Cost of revenue account property
Section DB 17(3)(a)
757: Gifts of money by company
Section 757 repealed 8 December 2009 section 167 Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009
758: New section DB 46B inserted
After section DB 46
DB 46B: Liabilities for emissions
When this section applies
1: This section applies when a person incurs a liability under the Climate Change Response Act 2002 for emissions relating to post-1989 forest land or pre-1990 forest land. No deduction
2: The person is denied a deduction for the liability. Link with subpart DA
3: Subsection (2) overrides the general permission. Defined in this Act: amount, deduction, general permission, post-1989 forest land, pre-1990 forest land .
759: Criteria for approval of share purchase schemes: before period of restriction ends
1: Section DC 12(5)(d) is replaced by the following:
d: the trustee to be prohibited from applying a dividend to the repayment of any sum owing to the company or to the trustee; and .
2: Subsection (1) applies for the 2005–06 and later income years.
760: Employment-related activities
1: The heading to section DD 4(3) Relocation expenses, employees' meals, and sustenance allowances
2: Section DD 4(3)(a)
a: an amount that is exempt income of an employee under sections CW 13B and CW 13C (which relate to relocation expenses, expenditure on overtime meals, and sustenance allowances): .
3: In section DD 4 amount
761: Interpretation: reimbursement and apportionment
In section DD 10(a) section CW 13 (Expenditure on account, and reimbursement, of employees) sections CW 13, CW 13B, and CW 13C (which relate to expenditure and reimbursement of employees)
762: Forestry business on land bought from the Crown, Maori owners, or holding company: no deduction
1: In the heading to section DP 7(3) and FZ 2 , FC 2B, and FZ 2
2: In section DP 7(3) do and section FC 2B (Stapled debt securities) do
763: New section DT 1A inserted
1: Before section DT 1
DT 1A: Ring-fenced allocations
When this section applies
1: This section applies to an amount of a person's deductions, expenditure and loss for an income year to the extent to which it is—
a: petroleum exploration expenditure:
b: petroleum development expenditure:
c: residual expenditure. Basis for allocation of deductions
2: If, but for this subsection, an amount that relates to petroleum mining operations undertaken outside New Zealand would be allocated to an income year (the current year Excess allocations: carrying forward and re-instating next year
3: Any excess not able to be allocated to the current year because of the basis for allocation described in subsection (2) is carried forward and treated as—
a: relating to petroleum mining operations undertaken outside New Zealand for the next income year; and
b: allocated to that next income year. Restriction on reinstating excess allocations
4: Despite subsection (3), the excess is not allocated to the next income year, and no deduction is allowed or allocated to any income year in respect of the excess, if section IF 1 (Net losses may be offset against future net income) would not have allowed the excess to be carried forward to that next income year, treating the excess as a net loss for the current year. Defined in this Act: deduction, income year, net loss, New Zealand, petroleum development expenditure, petroleum exploration expenditure, petroleum mining operation, residual expenditure .
2: Subsection (1) applies for expenditure incurred on or after 4 March 2008.
764: Arrangement for petroleum exploration expenditure and sale of property
1: Section DT 2(1)(c)(ii) and (iii)
ii: a petroleum permit; or
iii: material or a permit that relates to petroleum mining operations undertaken outside New Zealand, and that material or permit are substantially the same as those described in subparagraphs (i) or (ii), with necessary modifications made to this subpart and the Crown Minerals Act 1991.
2: After section DT 2(5) Meaning of associated person
5B: In this section, associated person has the meaning given in section OD 7 or OD 8(3) (which relate to the meaning of associated person).
3: Subsection (1) applies for expenditure incurred on or after 1 December 2007.
765: Petroleum development expenditure
1: Section DT 5(1) and (2) Deduction
1: A petroleum miner is allowed a deduction for petroleum development expenditure incurred by them. Timing of deduction
2: For an income year, an amount of the deduction is allocated to that year, as provided by—
a: section EJ 11 (Petroleum development expenditure: default allocation rule); or
b: section EJ 11B (Petroleum development expenditure: reserve depletion method).
2: Subsection (1) applies for expenditure incurred on or after 1 April 2008.
766: Disposal of petroleum mining asset to associate
1: Section DT 9(1)(b)
b: section EJ 14(2) (Disposal of petroleum mining asset to associate) prevents the miner from taking the full amount of a deduction allocated under section EJ 11 or EJ 11B (which relate to petroleum development expenditure) to the income year in which the miner disposes of the asset.
2: Section DT 9(2)(b)
b: the amount of the deduction allocated under section EJ 11 or EJ 11B to the income years after the income year in which the miner disposes of the asset.
3: Subsections (1) and (2) apply for expenditure incurred on or after 1 April 2008.
767: Amount written off by holding company
1: In section DU 12(3)(a) tax year income year
2: Section DU 12(3)(b)
b: the prescribed proportion of the total amount of mining exploration expenditure and mining development expenditure incurred by the mining company before the end of the income year in which the amount referred to in subsection (1) is written off, reduced by the total amount of deductions the holding company is allowed under this section in all income years before the income year in which that amount is written off.
3: Subsection (1) applies for the 2005–06 and later income years.
768: New section DW 3 added
1: After section DW 2
DW 3: Deduction for general insurance outstanding claims reserve
When this section applies
1: This section applies for—
a: an insurer who uses IFRS 4, Appendix D for general insurance contracts; and
b: general insurance contracts, excluding contracts having premiums to which section FC 14 (Non-resident general insurers' income) applies. No deduction on account of claims
2: For an insurer's general insurance contracts, the insurer is not allowed a deduction relating to the insurer's outstanding claims liability or for a claim's expenditure or loss, except as provided by this section. Formula for insurer's OCR deduction
3: For an income year (the current year opening outstanding claims reserve Definition of items in formula
4: In the formula,—
a: opening outstanding claims reserve
i: the amount of the insurer's closing outstanding claims reserve for the income year before the current year (the prior year
ii: the amount of the insurer's reserve for outstanding claims liability, calculated at the end of the prior year, using the basis the insurer used for tax purposes in that prior year, if the current year is the first year that this section applies to the insurer:
b: closing outstanding claims reserve Deduction for payments of current claims
5: The insurer is allowed a deduction for the amount of expenditure or loss of a claim paid to an insured under a general insurance contract. Link with subpart DA
6: This section supplements the general permission. The general limitations still apply. Defined in this Act: amount, deduction, general insurance contract, general limitation, general permission, IFRS 4, income year, insurer, life insurer, outstanding claims reserve .
2: Subsection (1) applies for the first income year for which an insurer adopts IFRSs for the purposes of financial reporting and later income years, if the person chooses to use IFRS 4 in a return of income for that first year.
769: Prepayments
In section EA 3(7) sections CW 13 (Expenditure on account, and reimbursement, of employees) and CW 14 (Allowance for additional transport costs) sections CW 13, CW 13B, CW 13C, and CW 14 (which relate to expenditure, reimbursement, and allowances of employees)
770: Pool method: calculating amount of depreciation
1: Section EE 21(5) to (8) Starting adjusted tax value
5: Starting adjusted tax value
a: the pool's adjusted tax value at the start of the income year, increased as applicable by the amount referred to in section EE 22(2)(b); or
b: zero, if the pool did not exist at the start of the income year. Ending adjusted tax value
6: Ending adjusted tax value
a: increased by the amounts referred to in section EE 22(1) and (2)(a):
b: decreased by the amount referred to in section EE 22(3). Months
7: Months
a: is the number of whole or part months in their income year:
b: may be more or less than 12.
2: Subsection (1) applies for the 2005–06 and later income years.
771: Economic rate for plant, equipment, or building, with high residual value
1: Section EE 25E(1)(b)
b: the estimated residual market value for the item is more than 13.5% of cost; and .
2: Subsection (1) applies for the 2005–06 and later income years.
772: Annual rate for item acquired in person's 1995–96 or later income year
1: In section EE 26(2)
a: the item's economic rate, special rate, or provisional rate, for an item not described in either paragraph (b) or (c):
b: the item's economic rate, special rate, or provisional rate multiplied by 1.2, for an item that— .
2: Subsection (1) applies for the 2005–06 and later income years.
773: Meaning of adjusted tax value
1: Section EE 46(1)(b)
b: for a pool, the total adjusted tax value determined under section EE 21.
2: Subsection (1) applies for the 2005–06 and later income years.
774: Section EJ 11 replaced
1: Section EJ 11
EJ 11: Petroleum development expenditure: default allocation rule
When this section applies
1: This section applies when a petroleum miner's petroleum development expenditure that relates to petroleum mining developments in a permit area is incurred on or after 1 April 2008, if section EJ 11B does not apply to the expenditure. Default allocation rule
2: For the purposes of section DT 5(2)(a) (Petroleum development expenditure), a deduction for the petroleum development expenditure is allocated in equal amounts over a period of 7 income years. The period of 7 years starts with the income year in which the expenditure is incurred. Relationship with other petroleum mining provisions
3: Sections EJ 12 to EJ 14 override subsection (2). Sections DT 7, DT 8, DT 10, DT 11, DT 16, and IH 3 (which relate to petroleum miners) override this section. Defined in this Act: amount, deduction, income year, permit, petroleum development expenditure, petroleum miner, petroleum mining development
EJ 11B: Petroleum development expenditure: reserve depletion method
When this section applies
1: This section applies when a petroleum miner's petroleum development expenditure that relates to petroleum mining developments in a permit area, if the expenditure is incurred––
a: on or after 1 April 2008; and
b: an election to apply this section, described in subsection (2), is made for the permit area. Choice: first year of commercial production and later years
2: An election to apply this section may be made by a petroleum miner for a permit area, in a return of income for an income year, only if that income year is the first one in which petroleum is produced in commercial quantities in the permit area. The election is irrevocable, and applies this section to petroleum development expenditure that relates to petroleum mining developments in the relevant permit area for the income year and later income years. Reserve depletion method expense allocation rule
3: For the purposes of section DT 5(2)(b) (Petroleum development expenditure), the deduction allocated to an income year for the petroleum development expenditure that relates to a petroleum mining development in the relevant permit area is the amount calculated using the following formula, if the amount is positive: (reserve expenditure − previous expenditure) × reserve depletion for probable reserves. Definition of items in formula
4: The items in the formula are defined in subsections (5) to (8). Reserve expenditure
5: Reserve expenditure Previous expenditure
6: Previous expenditure Reserve depletion for the year
7: Reserve depletion for the year Probable reserves
8: Probable reserves Relationship with other petroleum mining provisions
9: Sections EJ 12 to EJ 14 override subsection (3). Sections DT 7, DT 8, DT 10, DT 11, DT 16, and IH 3 (which relate to petroleum miners) override this section. Defined in this Act: amount, deduction, income year, permit area, petroleum development expenditure, petroleum miner, petroleum mining development .
2: Subsection (1) applies for expenditure incurred on or after 1 April 2008.
775: Relinquishing petroleum permit
1: Section EJ 12(2)(b)
b: any part of the deduction allocated to earlier income years under section EJ 11(2) or EJ 11B(3).
2: Subsection (1) applies for expenditure incurred on or after 1 April 2008.
776: New sections EJ 12B and EJ 12C inserted
1: After section EJ 12
EJ 12B: Dry well drilled
When this section applies
1: This section applies when—
a: the petroleum miner has petroleum development expenditure for a well, the drilling of which stops in an income year, and, from the time of stopping, the well—
i: will never produce petroleum in commercial quantities; and
ii: is abandoned; and
b: part of a deduction under section DT 5 (Petroleum development expenditure) for the petroleum development expenditure described in paragraph (a) has not been allocated under section EJ 11 or EJ 11B. Allocation
2: The part of the deduction described in subsection (1) is allocated to the income year. Defined in this Act: amount, deduction, income year, petroleum development expenditure
EJ 12C: Well not producing
When this section applies
1: This section applies when—
a: the petroleum miner has petroleum development expenditure for a well that, in an income year—
i: stops producing petroleum in commercial quantities; and
ii: is abandoned; and
b: the petroleum miner has elected to apply section EJ 11B for the petroleum development expenditure described in paragraph (a) before the start of the income year; and
c: part of a deduction under section DT 5 (Petroleum development expenditure) for the petroleum development expenditure described in paragraphs (a) and (b) has not been allocated under section EJ 11B. Allocation
2: The part of the deduction described in subsection (1) is allocated to the income year. Defined in this Act: amount, deduction, income year, petroleum development expenditure .
2: Subsection (1) applies for expenditure incurred on or after 1 April 2008.
777: Disposal of petroleum mining asset
1: Section EJ 13(2)(b)
b: it has not been allocated under section EJ 11 or EJ 11B to the income year in which the miner disposes of the asset or to an earlier income year.
2: Subsection (1) applies for expenditure incurred on or after 1 April 2008.
778: Sections EJ 17 and EJ 18 replaced
1: Sections EJ 17 EJ 18
EJ 18: Meaning of petroleum mining development
Meaning
1: In sections EJ 11 and EJ 11B, petroleum mining development Activities: inclusions
2: The activities are those carried out in connection with—
a: developing a permit area for producing petroleum:
b: producing petroleum:
c: processing, storing, or transmitting petroleum before its dispatch to a buyer, consumer, processor, refinery, or user:
d: removal or restoration operations. Activities: exclusions
3: The activities do not include further treatment to which all the following apply:
a: it occurs after the well stream has been separated and stabilized into crude oil, condensate, or natural gas; and
b: it is done—
i: by liquefaction or compression; or
ii: for the extraction of constituent products; or
iii: for the production of derivative products; and
c: it is not treatment at the production facilities. Defined in this Act: permit area, petroleum, removal or restoration operations .
2: Subsection (1) applies for expenditure incurred on or after 1 April 2008.
779: What spreading methods do
1: After section EW 14(2)(d)
e: a financial reporting method, to which sections EW 21 and EW 23 are relevant; or .
2: Subsection (1) applies for the 2007–08 and later income years.
780: IFRS taxpayer method
1: After section EW 15B(2) Functional currency
2B: The IFRS taxpayer method must be applied using New Zealand dollars, even if another currency may be used as the functional currency under IFRSs. Financial statements
2C: Unless the context otherwise requires, references to IFRSs in the IFRS taxpayer method are references to the IFRS rules used to prepare the person's financial statements.
2: After section EW 15B(4)(b)(ii)
iib: is, under NZIAS 17 and in the person's financial statements, classified as an operating lease: .
3: In section EW 15B NZIAS 17
4: Subsections (1) and (2) apply for—
a: the 2007–08 and later income years, unless paragraph (b) or (c) applies; or
b: the first income year for which a person adopts IFRSs for the purposes of financial reporting and later income years, if that first income year is before the 2007–08 income year and the person chooses to apply the IFRS taxpayer method in a return of income for that first year; or
c: the 2008–09 and later income years, if a person’s 2008–09 income year starts before 1 January 2008 and the person has not adopted IFRSs for the purposes of financial reporting before 1 January 2007.
781: IFRS method
1: After section EW 15C(2) Fair value method not used for certain financial arrangements
2B: A person must not use the fair value method for a financial arrangement if—
a: the financial arrangement is treated under IFRSs by the person as a hedge of another financial arrangement; and
b: the person uses a method other than the IFRS method for the other financial arrangement.
2: Section EW 15C(3)(a)
a: if the financial arrangement is a financial asset, an amount arising from an impaired credit adjustment under IFRSs is not allocated to an income year. However, when the fair value method is used, adjustments for financial arrangements held by the person are excluded from this paragraph, if the financial arrangements are not derivative instruments and the person's business includes dealing in those financial arrangements: .
3: After section EW 15C(3)(a)
ab: borrowing costs are not capitalised under NZIAS 23: .
4: In section EW 15C derivative instrument NZIAS 23
5: Subsections (1) to (3) apply for––
a: the 2007–08 and later income years, unless paragraph (b) or (c) applies; or
b: the first income year for which a person adopts IFRSs for the purposes of financial reporting and later income years, if that first income year is before the 2007–08 income year and the person chooses to apply the IFRS taxpayer method in a return of income for that first year; or
c: the 2008–09 and later income years, if a person's 2008–09 income year starts before 1 January 2008 and the person has not adopted IFRSs for the purposes of financial reporting before 1 January 2007.
6: Despite subsection (5), subsection (3) does not apply for a taxpayer and an income year if the taxpayer has,—
a: before 30 June 2009, filed a return of income for the income year; and
b: taken a tax position in the return which ignores subsection (3).
782: Determination alternatives to IFRS
1: Section EW 15D(1)(d)
d: the financial arrangement––
i: is not treated under IFRSs by the person as a hedge; or
ii: is treated under IFRSs by the person as a hedge of other financial arrangements, for each of which the person does not use the fair value method.
2: In section EW 15D(2) The person must use 1 of the following methods for the financial arrangement, as modified by subsection (3) or (4):
3: Subsections (1) and (2) apply for—
a: the 2007–08 and later income years, unless paragraph (b) or (c) applies; or
b: the first income year for which a person adopts IFRSs for the purposes of financial reporting and later income years, if that first income year is before the 2007–08 income year and the person chooses to apply the IFRS taxpayer method in a return of income for that first year; or
c: the 2008–09 and later income years, if a person’s 2008–09 income year starts before 1 January 2008 and the person has not adopted IFRSs for the purposes of financial reporting before 1 January 2007.
783: Expected value method and equity-free fair value method
1: Section EW 15E(1)(c)
c: the financial arrangement––
i: is not treated under IFRSs by the person as a hedge; or
ii: is treated under IFRSs by the person as a hedge of other financial arrangements, for each of which the person does not use the fair value method; and .
2: Section EW 15E(1)(f)
f: the person and all companies in a group of companies to which the person belongs have chosen to use the modified fair value method described in subsection (2) or the equity-free fair value method described in subsection (3), and have notified the Commissioner at the time of filing a return of income. This paragraph may be ignored in whole or in part if the person carries on a business that is not of a substantially similar nature to other companies in the group, and––
i: the person and the other parties to the financial arrangement are not associated; or
ii: the person and the other parties to the financial arrangement are associated and use the same method for the arrangement.
3: In section EW 15E(3) If the person chooses under subsection (1)(f) to use the equity-free IFRS method for the financial arrangement, the person must use a method that is the fair value method under section EW 15C.
4: Section EW 15E(4)
5: In section EW 15E associated person
6: Subsections (1) to (4) apply for—
a: the 2007–08 and later income years, unless paragraph (b) or (c) applies; or
b: the first income year for which a person adopts IFRSs for the purposes of financial reporting and later income years, if that first income year is before the 2007–08 income year and the person chooses to apply the IFRS taxpayer method in a return of income for that first year; or
c: the 2008–09 and later income years, if a person’s 2008–09 income year starts before 1 January 2008 and the person has not adopted IFRSs for the purposes of financial reporting before 1 January 2007.
784: New section EW 21 inserted
1: After section EW 20
EW 21: Financial reporting method
A person who is a party to a financial arrangement may use a financial reporting method if––
a: the person cannot use the yield to maturity method or an alternative; and
b: the person––
i: may not use the straight-line method or a market valuation method; or
ii: may use the straight-line method or a market valuation method but chooses not to do so; and
c: the person is not required to use the IFRS taxpayer method by section EW 15B; and
d: the Commissioner has not made a determination for the financial arrangement under section 90AC(1)(d) of the Tax Administration Act 1994; and
e: the method conforms with commercially acceptable practice; and
f: the method is also used by the person for financial reporting purposes for financial arrangements that are the same as, or similar to, the arrangement (although section EW 23 may apply if the method is not used in this way); and
g: the method allocates a reasonable amount to each income year over the financial arrangement's term. Defined in this Act: amount, Commissioner, financial arrangement, IFRS taxpayer method, income year .
2: Subsection (1) applies for the 2007–08 and later income years.
785: Default method
1: In section EW 22(c) alternative alternative, or a financial reporting method
2: Subsection (1) applies for the 2007–08 and later income years.
786: Failure to use method for financial reporting purposes
1: In section EW 23(1) EW 18(f), and EW 20(2)(f) EW 18(1)(f), EW 20(2)(f), and EW 21(f)
2: In section EW 23(2) EW 18(f), and EW 20(2)(f) EW 18(1)(f), EW 20(2)(f), and EW 21(f)
3: Subsections (1) and (2) apply for the 2007–08 and later income years.
787: Change of spreading method
1: Section EW 26(1) is replaced by the following: Requirements for change from straight-line and market value method
1: A person may change from the straight-line method or the market value method if they change to a method that is not the IFRS taxpayer method, and the Commissioner has given written authorisation for the change.
2: In section EW 26(2) A person may change from any spreading method to any other method if the Commissioner's written authorisation under subsection (1) is not required for the change, and they have a sound commercial reason for the change.
3: In section EW 26(6) Despite subsection (3), that subsection, subsection (4), and section EW 27 do not apply to the extent to which the person's spreading method change involves, for a financial arrangement, a change from the fair value method under the IFRS method described in section EW 15C or a change from the market value method to the IFRS taxpayer method.
4: Section EW 26(7)(a)
a: starting to use or ceasing to use IFRSs to prepare financial statements at the same time as starting to use or ceasing to use the IFRS taxpayer method: .
5: Subsections (1) to (4) apply for—
a: the 2007–08 and later income years, unless paragraph (b) or (c) applies; or
b: the first income year for which a person adopts IFRSs for the purposes of financial reporting and later income years, if that first income year is before the 2007–08 income year and the person chooses to apply the IFRS taxpayer method in a return of income for that first year; or
c: the 2008–09 and later income years, if a person’s 2008–09 income year starts before 1 January 2008 and the person has not adopted IFRSs for the purposes of financial reporting before 1 January 2007.
788: When calculation of base price adjustment required
1: Section EW 29(13)
13: A party to a financial arrangement who, for the financial arrangement, changes from the fair value method under the IFRS method described in section EW 15C to any other method or from the market value method to the IFRS taxpayer method must calculate a base price adjustment as at the date of the change.
2: Subsection (1) applies for—
a: the 2007–08 and later income years, unless paragraph (b) or (c) applies; or
b: the first income year for which a person adopts IFRSs for the purposes of financial reporting and later income years, if that first income year is before the 2007–08 income year and the person chooses to apply the IFRS taxpayer method in a return of income for that first year; or
c: the 2008–09 and later income years, if a person’s 2008–09 income year starts before 1 January 2008 and the person has not adopted IFRSs for the purposes of financial reporting before 1 January 2007.
789: Base price adjustment formula
1: In section EW 31(7)
a: ignoring non-contingent fees,
b: , ignoring–– . For the purposes of this subsection, the following are ignored:
2: In section EW 31(9)(a) , under section CC 3 (Financial arrangements),
3: Subsection (1) applies for––
a: the 2007–08 and later income years, unless paragraph (b) or (c) applies; or
b: the first income year for which a person adopts IFRSs for the purposes of financial reporting and later income years, if that first income year is before the 2007–08 income year and the person chooses to apply the IFRS taxpayer method in a return of income for that first year; or
c: the 2008–09 and later income years, if a person's 2008–09 income year starts before 1 January 2008 and the person has not adopted IFRSs for the purposes of financial reporting before 1 January 2007.
4: Subsection (2) applies for the 2005–06 and later income years.
790: Direct control interests
In section EX 5(5)(c) shares) shares) or FC 2B (Stapled debt securities)
791: Direct income interests
In section EX 9(6)(c) shares) shares) or FC 2B (Stapled debt securities)
792: Direct income interests in FIFs
In section EX 31(6)(c) shares) shares) or FC 2B (Stapled debt securities)
793: Exemptions: direct income interests in FIF in grey list country
1: In section EX 33(4)(d)
d: at all times in the year, the grey list company holds more than 50% of the voting interests in a company (the resident company .
2: Section EX 33(4)(e)
e: the year begins less than 10 years after the grey list company first held more than 50% of the voting interests in the resident company; and .
3: In section EX 33 voting interest
794: Use of particular calculation methods required
Section EX 40B(b)
b: the deemed rate of return method, if use of the comparative value method is not practical because the person cannot determine the market value of the attributing interest at the end of the income year.
795: Comparative value method
Section EX 44(5)
5: Opening value
796: Fair dividend rate method: usual method
1: After section EX 44C(4) Exclusion for certain managed funds
4B: Subsection (4)(c) does not apply if—
a: the person is a portfolio investment entity, an entity eligible to be a portfolio investment entity, or a life insurance company; and
b: the FIF is a foreign investment vehicle.
2: In section EX 44C company foreign investment vehicle life insurance portfolio investment entity
797: Fair dividend rate method: method for unit valuers and persons valuing interests daily
1: After section EX 44D(4) Exclusion for certain managed funds
4B: Subsection (4)(c) does not apply if—
a: the person is a portfolio investment entity, an entity eligible to be a portfolio investment entity, or a life insurance company; and
b: the FIF is a foreign investment vehicle.
2: In section EX 44D company foreign investment vehicle life insurance portfolio investment entity
798: Cost method
1: In section EX 45B(4)(ac)(ii) income year; or income year; and
iii: the interest was not an attributing interest for the income year before the relevant income year; or .
2: In section EX 45B attributing interest
799: Codes: comparative value method, deemed rate of return method, fair dividend rate method, and cost method
1: Section EX 47(1)(c)
c: the fair dividend rate method: .
2: After section EX 47(1) Exclusion for interests in grey list companies
1B: Subsection (1)(c) does not apply if—
a: the FIF is a grey list company; and
b: the person holds a direct income interest of 10% or more in the FIF at the beginning of the income year in which the period falls. Application of rule for certain managed funds
1C: Subsection (1B) does not apply if—
a: the person is a portfolio investment entity, an entity eligible to be a portfolio investment entity, or a life insurance company; and
b: the FIF is a foreign investment vehicle.
3: In section EX 47 direct income interest foreign investment vehicle life insurance portfolio investment entity
800: Measurement of cost
Section EX 56(2B)
801: Transitional rule for IFRS financial reporting method
1: In section EZ 50(1)(b) EW 18(f) EW 18(1)(f)
2: In section EZ 50(2) EW 18(f) EW 18(1)(f)
802: New sections EZ 51 and EZ 52 added
After section EZ 50
EZ 51: Transitional rule for financial reporting method
1: This section applies for a financial arrangement when––
a: the first income year for which a person adopts IFRSs for the purposes of financial reporting is before the 2007–08 income year and the person has not chosen to apply the IFRS taxpayer method in a return of income for any year before the 2008–09 income year; and
b: the income year is that first income year or any subsequent income year that is before the 2008–09 income year.
2: Despite sections EW 21(e) and EW 23, for an income year described in subsection (1)(b), the person may apply a method that is not used by the person for financial reporting purposes if it is a method that they would be allowed to use if they had not adopted IFRSs. The requirements for using a financial reporting method, other than the requirement in section EW 21(e), must still be met by the person. Defined in this Act: financial arrangement, IFRS, IFRS taxpayer method, income year, return of income
EZ 52: Transitional rule for changes from the fair value method
1: This section applies for a financial arrangement when––
a: the person chooses to apply the IFRS taxpayer method in a return of income for the 2005–06 income year; and
b: the person uses the fair value method under the IFRS method described in section EW 15C in the 2005–06 income year.
2: Despite section EW 26(2) and (7) (Change of spreading method), the person is treated as having a sound commercial reason for changing from the fair value method to another method under the IFRS taxpayer method in the 2006–07 or 2007–08 income year. Defined in this Act: financial arrangement, IFRS taxpayer method, income year, return of income, sound commercial reason .
803: Floating rate of interest on debentures
After section FC 1(3)
4: This section does not apply to a debenture treated as a share under section FC 2B.
804: Interest on debentures issued in substitution for shares
After section FC 2(4)
4B: This section does not apply to a debenture treated as a share under section FC 2B.
805: New section FC 2B inserted
1: After section FC 2
FC 2B: Stapled debt securities
1: Stapled debt security
a: the debt security is stapled to a share in the company or to a share in another company; and
b: the share is not a fixed rate share.
2: The stapled debt security is treated as a share issued by the company and—
a: interest payable under the stapled debt security is treated as a dividend; and
b: section DB 8B may deny deductions for expenditure or loss related to the security.
3: A stapled debt security and a share to which it is stapled are treated as a single share for the purposes of applying—
a: the definition in section CD 14(9) of non-participating redeemable share
b: the definition in section LF 2(3) of fixed rate share
c: the definition in section OB 1 of fixed rate share subsection (1)(b)
4: In this section, debt security
a: the financial arrangement provides funds to the company; and
b: the financial arrangement gives rise to an amount for which the company would have a deduction but for this section; and
c: the amount does not arise only from either a movement in a currency exchange rate or a non-contingent fee.
5: In this section, a debt security is stapled
a: the debt security can, or ordinarily can, be disposed of only together with the share; and
b: the arrangement that requires the debt security and the share to be disposed of together is an arrangement to which the company that issued the debt security or the company that issued the share is a party. Exclusion: small company shareholder agreements
6: This section does not apply if the debt security is stapled to the share using a shareholder agreement for a company that is not a widely-held company. Exclusion: stapling before 25 February 2008
7: This section does not apply if the debt security was stapled to the share before 25 February 2008.
2: Subsection (1) applies if a debt security is stapled to a share on or after 25 February 2008.
806: Rules for calculating New Zealand group debt percentage
Section FG 4(2)(b)
b: the financial arrangement—
i: gives rise to an amount for which the taxpayer, or another group member, would be allowed a deduction, other than an amount that arises only from movement in currency exchange rates:
ii: is a stapled debt security that is held by a person resident in New Zealand and is stapled to shares other than shares of a company that is a proportional-stapling company.
807: New Zealand net equity of New Zealand banking group
1: In section FG 8G(1) FRS FRS – SDS
2: In section FG 8G(1) FRS SDS
a: owned by a person resident in New Zealand; and
b: included in the value of item EQV
c: stapled to shares other than shares of a company that is a proportional-stapling company .
808: Section GC 14EB repealed
Section GC 14EB
809: Dividends from qualifying company
1: Section HG 13(3)(a)
a: the maximum imputation credit which may be attached to that dividend by virtue of section ME 8(1); and .
2: Section HG 13(4)(a)
a: the maximum dividend withholding payment credit which may be attached to that dividend by virtue of sections MG 8(1) and MG 10(1) (after taking into account for the purposes of section MG 10(1) any imputation credit attached to that dividend under subsection (3)); and .
810: Modification of agency provisions in respect of income from company debentures
In section HK 13(1) debentures issued debentures that are a stapled debt security to which section FC 2B applies, or to debentures issued
811: Effect of failure to meet eligibility requirements for entities
1: Section HL 4(1)(a)
a: referred to in sections HL 2(2) and HL 3; and .
2: Section HL 4(2)(a)
a: the portfolio investor class of the entity fails to meet a requirement under section HL 6 or HL 9 on the last day of a quarter—
i: beginning 6 months or more after the date on which the portfolio investor class is formed; and
ii: ending more than 3 months before an announcement by the entity to its investors that the portfolio investor class is winding up within 12 months of the announcement; and
ab: the entity fails to meet a requirement under section HL 10 on the last day of a quarter—
i: beginning 6 months or more after the date on which the entity becomes a portfolio investment entity; and
ii: ending more than 3 months before an announcement by the entity to its investors that the entity is winding up within 12 months of the announcement; and .
3: Section HL 4(2)(b)(ii)
ii: is repeated on the last day of the quarter following the quarter referred to in paragraph (a) and ending more than 3 months before the announcement referred to in paragraphs (a)(ii) and (ab)(ii).
812: Investor membership requirement
1: After section HL 6(1)(i)
ib: Auckland Regional Holdings: .
2: In section HL 6(1)(j)(iii) entity: entity
3: Section HL 6(3) No investor membership requirement for public unit trusts
3: There is no investor membership requirement for a portfolio investor class that, if treated as a unit trust, would meet the requirements of 1 or more of paragraphs (a) and (c) to (e) of the definition of public unit trust No investor membership requirement for certain superannuation funds and others
3B: There is no investor membership requirement for a portfolio investor class that includes an investor that is—
a: a superannuation fund established under the proposal for the restructuring of the National Provident Fund required by the National Provident Fund Restructuring Act 1990:
b: the fund established by the Government Superannuation Fund Act 1956:
c: a superannuation fund that—
i: existed before 17 May 2006; and
ii: on or after 17 May 2006, if treated as a unit trust, would have met the requirements of 1 or more of paragraphs (a) and (c) to (e) of the definition of public unit trust
iii: has no investor, other than the fund's manager or trustee, that can control the investment decisions relating to that class:
d: a public unit trust.
4: Section HL 6(4)(a) and (b)
a: the investor is not listed in subsection (1)(b) to (ib); and
b: the associated person is not listed in subsection (1)(b) to (ib); and .
813: Investor interest size requirement
1: After section HL 9(4)(i)
ib: Auckland Regional Holdings:
ic: a portfolio investor class of less than 20 persons, treating all interests held by associated persons and included by subsection (6) as being held by 1 person, if—
i: the entity has 1 or more other portfolio investor classes that meet the requirements of section HL 6(1)(a); and
ii: no investor in the class, other than the entity's manager or trustee, can control the investment decisions relating to that class; and
iii: investors for which the entity would not meet the investor membership requirement in the absence of this paragraph have portfolio investor interests with a total value of less than 10% of the total value of portfolio investor interests in the entity: .
2: In section HL 9(4)(j) subsection (5): subsection (5)
3: In section HL 9(5) subsection (4)(a) to (i) subsection (4)(a) to (ic)
4: Section HL 9(6)(a) and (b)
a: the investor is not listed in subsection (4)(a) to (ic); and
b: the associated person is not listed in subsection (4)(a) to (ic); and .
814: Further eligibility requirements relating to investments
Section HL 10(2)(b)(iii)
iii: an amount of income from a lease of land, but this subparagraph does not apply if the lessee under the lease is associated with the entity deriving the amount: .
815: Unlisted company may choose to become portfolio listed company
Section HL 11B(1)(a)
a: has at least 100 shareholders; and .
816: Becoming portfolio investment entity
Section HL 12(1)(b)
b: the entity, if treated as becoming a portfolio investment entity when the election would be effective, would cease under section HL 4 to be eligible through a failure to meet 1 or more of the requirements in section HL 6, HL 9, or HL 10 in each quarter of the 12-month period.
817: Credits received by portfolio tax rate entity or portfolio investor proxy
In section HL 27(7)
7: The investor is treated as receiving for the allocated credits, for the tax year corresponding to the investor's income year or, in the case of an investor having a portfolio investor exit period, for the quarter to which the portfolio investor exit period relates,— .
818: Determination of amount of credit in certain cases
Section LB 1(1)(c) to (e)
c: in the case of an imputation credit attached to a dividend that has an imputation ratio greater than the ratio calculated in accordance with the formula stated in section ME 8(1), so much of the imputation credit as would arise if the imputation ratio of the dividend were the ratio so calculated:
d: in the case of a dividend withholding payment credit attached to a dividend with a dividend withholding payment ratio greater than the ratio calculated in accordance with the formula stated in section MG 8(1), so much of the dividend withholding payment credit as would arise if the dividend withholding payment ratio of the dividend were the ratio so calculated:
e: in the case of a dividend with a combined imputation and dividend withholding payment ratio greater than the ratio calculated in accordance with the formula stated in section MG 8(1), so much of the dividend withholding payment credit and the imputation credit as remain after any reduction of the dividend withholding payment credit or the imputation credit in accordance with subsection (5): .
819: Credit of tax for imputation credit
1: Section LB 2(2)
2: Any such credit of tax is credited, in so far as it extends, against the income tax liability of the taxpayer for the income year.
2: In section LB 2(8) from an interest in an attributing interest in a foreign investment fund from an attributing interest in a foreign investment fund
820: Credit of tax for dividend withholding payment credit in hands of shareholder
Section LD 8(1)(a)
a: the taxpayer is entitled to a credit of tax equal to the dividend withholding payment credit so included in assessable income; and .
821: Credits in respect of dividends to non-resident investors
Section LE 2(13)
822: Special rules for holding companies
In section LE 3(6) T T schedule 1, part A, clause 5 .
823: Credits arising to imputation credit account
1: After section ME 4(1)(ed)
ee: the amount of any imputation credit allocated under section HL 27(7)(b) to the company by a portfolio tax rate entity during the imputation year: .
2: After section ME 4(2)(cd)
ce: in the case of a credit referred to in subsection (1)(ee), on the date the credit is allocated: .
824: Allocation rules for imputation credits
Section ME 8(7)
825: Amount of imputation credit to be attached to cash distribution
Section ME 31(3)
826: Notional distribution deemed to be dividend
Section ME 33(4)
827: Amount of imputation credit to be attached to cash distribution
Section ME 36(3)
828: Notional distribution deemed to be dividend or taxable Maori authority distribution
Section ME 38(3)
829: Branch equivalent tax account of company
Section MF 3(3)
830: Credits and debits arising to branch equivalent tax account of company
Section MF 4(7)
831: Debits and credits arising to group branch equivalent tax account
Section MF 8(7)
832: Use of consolidated group credit to reduce dividend withholding payment, or use of group or individual debit to satisfy income tax liability
1: Section MF 10(4B) to (4D) are repealed.
2: After section MF 10(4)
4B: An election made for a consolidated group under section MF 10(3) by any company described in section MF 10(3)(a) to (c) for an income year is invalid to the extent to which the total of all those elections is greater than an amount calculated for the consolidated group for the year using the formula in section MF 8(2)(a) (but treating item e
4C: An election made for a company (the first company e
4D: An amount of election that is invalid under subsections (4B) or (4C)—
a: is not recorded as a credit in the branch equivalent tax account of the company or the consolidated group, as the case may be, that makes the election:
b: is not an amount of debit balance for which the election is made:
c: does not relate to the election.
3: Subsections (1) and (2) apply for the 2005–06 and later income years.
833: Allocation rules for dividend withholding payment credits
Section MG 8(9)
834: Dividend with both imputation credit and dividend withholding payment credit attached
Section MG 10(3)
835: Conduit tax relief account
Section MI 3(3)
836: Credits arising to conduit tax relief account
Section MI 4(3)
837: Debits arising to conduit tax relief account
Section MI 5(8)
838: Consolidated group conduit tax relief account
Section MI 15(2)
839: Credits arising to group conduit tax relief account
Section MI 17(3)
840: Debits arising to group conduit tax relief account
Section MI 18(5)
841: Retirement scheme contributors
1: In section NEB 6(2)
2: An entity may choose to become a retirement scheme contributor for a person for an income year if,— .
2: Subsection (1) applies for the 2007–08 and later income years.
842: Application of RWT rules
Section NF 1(2)(b)(xii)
843: Resident withholding tax deductions from dividends deemed to be dividend withholding payment credits
Section NF 8(1)(a)
a: sections LB 1 and LD 9: .
844: Definitions
1: This section amends section OB 1
2: After the definition of accident insurance contract accommodation .
3: Before the definition of actuary actuarially determined .
4: In the definition of cancellation including on the liquidation of the company including on the liquidation of a company, and when a stapled debt security ceases to be a share
5: In the definition of consideration
aa: in section CD 32 (Available subscribed capital amount), includes the amount owing under a stapled debt security when the security ceases to be a share: .
6: In the definition of creditable membership
i: the period ending on the day on which securities are first allotted by the KiwiSaver scheme for the person, and beginning on the earliest of—
A: the first day of the month in which contributions are first received by the Commissioner for the person:
B: the first day of the month in which KiwiSaver contributions are first deducted for the person:
C: the day which the Commissioner nominates in answer to a request by the person for such nomination, in circumstances where, due to matters outside the control of the person, the first deduction of KiwiSaver contributions was delayed: .
7: After the definition of debentures debt security .
8: The definition of derivative instrument derivative instrument .
9: In the definition of employee sections CW 13 (Expenditure on account, and reimbursement, of employees) and CW 14 (Allowance for additional transport costs) sections CW 13, CW 13B, CW 13C, and CW 14 (which relate to expenditure, reimbursement, and allowances of employees)
10: In the definition of excluded security shares) shares) or FC 2B (Stapled debt securities)
11: The definition of fair value method fair value method .
12: In the definition of fixed rate share section LF 2(3) section LF 2(3):
f: in section FC 2B (Stapled debt securities) and the definitions of proportional-stapling company stapled debt security
i: a share described in paragraph (a):
ii: a share that would be a share described in paragraph (a) but for any dividend or variation in the rate of dividend that may occur due to a gain arising when the share is converted into another share (the other share
A: a change in value of the other share in a period, and that period finishes when the share is converted, starts not more than 30 days before the share is converted, and was a term or condition of the share when the share was first issued:
B: a term or condition of the share that was a term or condition when the share was first issued, and that term or condition set, for the gain, a fixed percentage equal to 5%, or a lesser percentage, of the amount subscribed for the share:
iii: a share for which the dividend payable is the equivalent of the payment of interest for money lent having regard to the factors in paragraph (g):
g: for the purposes of paragraph (f)(iii), the factors are––
i: whether or not the share is redeemable:
ii: any security provided to the shareholder, including put or call options over the share or any amount payable determined by reference to the amount of dividend payable:
iii: the variability or lack of variability of the dividend payable .
13: After the definition of general insurance general insurance contract .
14: After the definition of identical share IFRS 4 .
15: In the definition of income interest EX 14 EX 8
16: In the definition of market value circumstance applies or FC 2B (Stapled debt securities) applies
17: After paragraph (a)(ii) of the definition of member credit contributions
iib: Crown contribution (as that term is defined in the KiwiSaver Act 2006) for the person: .
18: After the definition of NZIAS 17 NZIAS 23 .
19: The definition of offshore development
20: The definition of onshore development
21: In the definition of operating lease means means, except in section EW 15B(4)(b)(iib) (IFRS taxpayer method),
22: After the definition of outstanding balance outstanding claims reserve .
23: After the definition of overseas pension overtime .
24: After the definition of petroleum mining company petroleum mining development .
25: In the definition of portfolio investor rate 33%, if 30%, if the investor has provided their tax file number to the Commissioner and
26: In the definition of prescribed investor rate
ii: the person is a resident who derives income as a trustee of a trust other than a trust referred to in paragraph (c)(i) and who chooses to be subject to this paragraph for the tax year; or .
27: After the definition of property proportional-stapling company
a: each share in the company that is not a fixed-rate share (a participating share
b: for each participating share in the company, the amount payable for the issue of its stapled debt security is the same proportion of the available subscribed capital calculated under the slice rule of the participating share as it is for each other participating share .
28: In the definition of share shares) shares) or FC 2B (Stapled debt securities)
29: After the definition of shareholder shareholder agreement
a: includes an arrangement to which the shareholders of the company are parties, in their capacity of shareholders; but
b: does not include an arrangement that is––
i: the company's constitution:
ii: the terms of a debt security:
iii: the terms of the company's shares .
30: After the definition of standing timber stapled stapled debt security .
31: After the definition of working day work-related relocation .
(32): Subsections (3), (13), (14), and (22)
33: Subsections (15) and (25) apply for the 2005–06 and later income years.
34: Subsections (19), (20), and (24) apply for expenditure incurred on or after 1 April 2008.
35: Subsections (8), (18), and (21) apply for—
a: the 2007–08 and later income years, unless paragraph (b) or (c) applies; or
b: the first income year for which a person adopts IFRSs for the purposes of financial reporting and later income years, if that first income year is before the 2007–08 income year and the person chooses to apply the IFRS taxpayer method in a return of income for that first year; or
c: the 2008–09 and later income years, if a person’s 2008–09 income year starts before 1 January 2008 and the person has not adopted IFRSs for the purposes of financial reporting before 1 January 2007.
845: Schedule 16—Depreciable land improvements
1: In schedule 16 17 pipes
2: Subsection (1) applies for the 2005–06 and later income years.
6: Amendments to other Acts and regulations
Income Tax Act 1994
846: Income Tax Act 1994 amended
Sections 847 to 854 Income Tax Act 1994 2009-10-06 Income Tax Act 1994 ss 847–854
847: Exempt income—employee allowances and expenditure on account of employee
1: In section CB 12(1)(b), employee. employee; or
c: despite section DE 1, includes a depreciation deduction component.
2: After section CB 12(1), the following are inserted:
1B: An amount, not being an amount or part of an amount that is exempt income under subsection (1), is exempt income to the extent to which—
a: the amount is paid to or on behalf of an employee in respect of the costs to the employee in a work-related relocation; and
b: the amount paid does not exceed the actual cost incurred by or on behalf of the employee on an expense that is listed as an eligible relocation expense in a determination made by the Commissioner under section 91AAR of the Tax Administration Act 1994; and
c: the expenditure is incurred to the end of the tax year in which the relocation occurs, and for this purpose, a temporary move that has not been treated as a work-related relocation under this subsection is ignored.
1C: An amount, not being an amount or part of an amount that is exempt income under subsection (1), is exempt income to the extent to which—
a: the amount is paid to or on behalf of an employee for a meal for the employee when the employee is working overtime; and
b: the amount paid—
i: does not exceed the actual cost to the employee, with documentation required for amounts over $20 per meal; or
ii: is a reasonable estimate of the expenditure likely to be incurred by the employee or a group of employees for whom an amount is payable; and
c: the employee has worked at least 2 hours overtime and either—
i: the employment agreement provides for pay for overtime hours; or
ii: the employer's established practice or policy provides for pay for overtime hours worked.
1D: An amount, not being an amount or part of an amount that is exempt income under subsection (1), is exempt income to the extent to which the amount is paid to an employee as a sustenance allowance for a day when—
a: the employee works a minimum of 7 hours on the day; and
b: the employee's employment requires them—
i: to work outdoors and away from their employment base for most of the day; and
ii: to undertake a long period of physical activity in travelling through a neighbourhood or district on foot or by bicycle; and
c: it is not practicable for the employer to provide sufficient sustenance on the day for the period when the employee is working outdoors; and
d: the allowance recognises—
i: the arduous physical nature of the employee's work as described in paragraph (b); and
ii: that the employer would normally provide tea, coffee, water, or similar refreshments at the employment base in the course of their business; and
e: the employer has an established policy or practice of paying a sustenance allowance; and
f: the amount paid—
i: does not exceed the actual cost to the employee:
ii: is a reasonable estimate of the expenditure likely to be incurred by the employee or a group of employees for whom an amount is payable.
3: Subsections (1) and (2) apply for the 2002–03 to 2004–05 income years, except when subsection (4) applies.
4: Subsection (1) does not apply in relation to a tax position taken by a person—
a: in the period from 1 October 2001 to 31 March 2005; and
b: in relation to employees' allowances; and
c: relying on section CB 12(1) in the absence of the amendment made by subsection (1).
848: Meaning of
fringe benefit
1: After section CI 1(o)(v), the following is inserted:
vb: it removes a need which would otherwise exist for the employer of the employee to pay the employee an amount in respect of a work-related relocation as described in section CB 12(1B) or a payment for an overtime meal as described in section CB 12(1C): .
2: Subsection (1) applies for the 2002–03 to 2004–05 income years.
849: Accrual expenditure
In section EF 1(5A), section CB 12(1) section CB 12(1) or (1B) to (1D)
850: Special and provisional economic rates
1: Section EG 10(1)(b) is replaced by the following:
b: a provisional basic economic rate, where no applicable economic depreciation rate other than a default economic depreciation rate is specified in a determination under section EG 4.
2: Subsection (1) applies for the 1995–96 and later income years.
851: Use of consolidated group credit to reduce dividend withholding payment, or use of group or individual debit to satisfy income tax liability
1: Section MF 10(4B) to (4D) are replaced by the following:
4B: An election made for a consolidated group under section MG 10(3) by any company described in section MF 10(3)(a) to (c) for an income year is invalid to the extent to which the total of all those elections is greater than an amount calculated for the consolidated group for the year using the formula in section MF 8(2)(a) (but treating item e
4C: An election made for a company (the first company e
4D: An amount of election that is invalid under subsection (4B) or (4C)—
a: is not recorded as a credit in the branch equivalent tax account of the company or the consolidated group, as the case may be, that makes the election:
b: is not an amount of debit balance for which the election is made:
c: does not relate to the election.
2: Subsection (1) applies for the 1997–98 and later income years.
852: Definitions
1: This section amends section OB 1.
2: In the definition of expenditure on account of an employee
e: an amount paid under section CB 12(1B): .
3: In the definition of monetary remuneration but does not include any employer superannuation contribution: but does not include any employer superannuation contribution, or for the purposes of paragraph (a)(iii), any amount paid under section CB 12(1B):
4: After the definition of overseas company overtime .
5: After the definition of working partner work-related relocation
a: for an employee other than an employee whose accommodation forms an integral part of their work, means a relocation of the place where the employee lives that is required because the employee's workplace is not within reasonable daily travelling distance of their residence as a result of the employee—
i: taking up new employment with a new employer; or
ii: taking up new duties at a new location with their existing employer; or
iii: continuing in their current position but at a new location:
b: for an employee whose accommodation forms an integral part of their work, means a relocation of the place where the employee lives that is required as a result of the employee—
i: taking up new employment with a new employer; or
ii: taking up new duties at a new location with their existing employer; or
iii: continuing in their current position but at a new location .
6: Subsections (2) to (5) apply for the 2002–03 to 2004–05 income years.
853: Schedule 6A—Specified types of entertainment
After schedule 6A, part B, clause 3(a), the following are inserted:
ab: for an employee making a work-related relocation described in section CB 12(1B), the employer pays an amount for the cost of food or beverages consumed during the period of the relocation that is an eligible relocation expense; and
ac: the employer pays an employee a sustenance allowance described in section CB 12(1D); and .
854: Schedule 16—Depreciable land improvements
1: In schedule 16, after item 16, the following is added: 17. Pipes.
2: Subsection (1) applies for the 1995–96 and later income years. Income Tax Act 1976
855: Special and provisional economic rates
1: Section 108I(1)(b) of the Income Tax Act 1976 is replaced by the following:
b: a provisional basic economic rate, where no applicable economic depreciation rate other than a default economic depreciation rate is specified in a determination under section 108C of this Act.
2: Subsection (1) applies for the 1993–94 and later income years. 2009-10-06 Income Tax Act 1976
856: Schedule 21—Depreciable land improvements
1: In schedule 21 of the Income Tax Act 1976, after item 16, the following is added: 17. Pipes.
2: Subsection (1) applies for the 1993–94 and later income years. 2009-10-06 Income Tax Act 1976 Estate and Gift Duties Act 1968
857: Interpretation
In section 2(2) of the Estate and Gift Duties Act 1968, after the definition of dutiable gift general power of appointment
a: any power or authority created on or before the 31st day of March 1967 that—
i: is conferred by the will of any person dying on or before that date, or is conferred by any settlement inter vivos
ii: enables, or would enable if the holder were of full capacity, the holder of the power or authority to appoint or dispose of any property, or to charge any sum of money upon any property, as the holder thinks fit for the holder's own benefit; and
iii: is exercisable by instrument inter vivos
iv: is not a power or authority exercisable by a person in a fiduciary capacity under a disposition not made by the person, or exercisable by a mortgagee:
b: any power or authority created on or after the 1st day of April 1967 that—
i: is conferred by the will of any person dying on or after that date, or is conferred by any settlement inter vivos
ii: enables, or would enable if the holder were of full capacity, the holder of the power or authority to obtain or appoint or dispose of any property, or to charge any sum of money upon any property, as the holder thinks fit for the holder's own benefit; and
iii: is exercisable orally or by instrument inter vivos
iv: is not a power or authority exercisable by a person in a fiduciary capacity under a disposition not made by the person, or exercisable by a mortgagee . 2009-10-06 Estate and Gift Duties Act 1968 Stamp and Cheque Duties Act 1971
858: Interpretation
1: In section 86F paid payment paragraph (c) of the definition of pay paragraph (d) of the definition of pay
2: In section 86F paid payment paragraph (d) of the definition of pay paragraph (a) of the definition of pay
3: Subsection (1) applies for the 2005–06 and later income years.
4: Subsection (2) applies for the 2008–09 and later income years. 2009-10-06 Stamp and Cheque Duties Act 1971 Taxation Review Authorities Act 1994
859: Hearing of objections by an Authority
1: In section 16(3)(b) section 22 section 22 or 22B
2: Subsection (1) applies for the 2008–09 and later income years. 2009-10-06 Taxation Review Authorities Act 1994 Taxation (Business Taxation and Remedial Matters) Act 2007
860: Use of consolidated group credit to reduce dividend withholding payment or use of group or individual debit to satisfy income tax liability
In section 287(2) 2005–06 1997–98 2009-10-06 Taxation (Business Taxation and Remedial Matters) Act 2007 Acts referring to associated person
861: Consequential amendments to other Acts: associated person
The enactments listed in schedule 2 2010-04-01 Fisheries Act 1996 Insolvency Act 2006 Misuse of Drugs Amendment Act 2005 Privacy Act 1993 Public Service Investment Society Management Act (No 2) 1979 Radiocommunications Act 1989 Smoke-free Environments Act 1990 Trustee Companies Management Act 1975 Unit Trusts Act 1960 Companies Act 1993
862: Schedule 7—Preferential claims
In schedule 7
aa: subject to clause 3(1), all untransferred amounts of an employee's payroll donations by an employer or PAYE intermediary under section 24Q of the Tax Administration Act 1994 during the 4 months before the commencement of the liquidation: . 2010-01-06 Companies Act 1993 Insolvency Act 2006
863: Priority of payments to preferential creditors
In the Insolvency Act 2006 section 274(2)(a)
aa: subject to section 276(1), all untransferred amounts of an employee's payroll donations by an employer or PAYE intermediary under section 24Q of the Tax Administration Act 1994 during the 4 months before the adjudication: . 2010-01-06 Insolvency Act 2006 Income Tax (Depreciation Determinations) Regulations 1993
864: Income Tax (Depreciation Determinations) Regulations 1993
1: In the Income Tax (Depreciation Determinations) Regulations 1993, 91AE 91AAG
a: regulation 2, paragraph (a) of the definition of depreciation determination
b: regulation 3(1)(c) and (2):
c: regulation 6(1)(a):
d: regulation 9(1).
2: In the Income Tax (Depreciation Determinations) Regulations 1993, 91AJ 91AAL
a: regulation 2, paragraph (b) of the definition of depreciation determination
b: regulation 6(1)(b).
3: Subsections (1) and (2) apply for the 2005–06 and later income years. 2009-10-06 Income Tax (Depreciation Determinations) Regulations 1993 Goods and Services Tax (Grants and Subsidies) Order 1992
865: Schedule—Non-taxable grants and subsidies
In the schedule
a: under the Income Tax Act 2004 under the Income Tax Act 2007, Income Tax Act 2004,
b: under subpart KJ of the Income Tax Act 2004 under subpart MK of the Income Tax Act 2007 or subpart KJ of the Income Tax Act 2004 2009-10-06 Goods and Services Tax (Grants and Subsidies) Order 1992 KiwiSaver Regulations 2006
866: KiwiSaver Regulations 2006 amended
Sections 628 629 KiwiSaver Regulations 2006 2009-10-06 KiwiSaver Regulations 2006 ss 867 and 868
867: What member of KiwiSaver scheme must do next to participate in mortgage diversion facility
Regulation 26(a)
a: a request to divert, in respect of his or her mortgage, contributions that are received after the provider receives such request; and .
868: What scheme provider must do to participate in mortgage diversion facility
In regulation 27(b) section 229(2)(i) section 229(2)(i) and (ia)