Taxation (Venture Capital and Miscellaneous Provisions) Act 2004

Taxation (Venture Capital and Miscellaneous Provisions) Act 2004

Public Act2004 No 111
Date of assent21 December 2004

Contents

Amendments to Goods and Services Tax Act 1985

Amendment to Taxation Review Authorities Act 1994

Amendment to Income Tax Act 1976

Amendments to Taxation Review Authorities Regulations 1998


The Parliament of New Zealand enacts as follows:

1 Title
  • This Act is the Taxation (Venture Capital and Miscellaneous Provisions) Act 2004.

2 Commencement

Part 1
Amendments to Income Tax Act 1994

3 Income Tax Act 1994
  • This Part amends the Income Tax Act 1994.

4 Non-residents' exempt income
  • (1) In section CB 2(1)(f), company. is replaced by company: and the following is added:

    • (g) any amount derived by a person from the sale or other disposition by a qualifying foreign equity investor of a share, or option to buy a share, in a company (called in this paragraph the resident company) that is resident in New Zealand, if—

      • (i) the share or option, or an option or convertible note relating to the share, is purchased on a day that is 12 months or more before the day of the sale or other disposition; and

      • (ii) the person who purchases the share or option, or the option or convertible note relating to the share, and sells or disposes of the share or option is a qualifying foreign equity investor from the time of the purchase to the time of the sale or other disposition; and

      • (iii) the shares of the resident company are quoted on no official list of a recognised exchange—

        • (A) at the time of the purchase referred to in subparagraph (i):

        • (B) at some time in the 12-month period that begins from the time of the purchase referred to in subparagraph (i); and

      • (iv) throughout the period referred to in subparagraph (ii), the resident company does not have a main activity that is one or more of—

        • (A) land development:

        • (B) land ownership:

        • (C) mining:

        • (D) provision of financial services:

        • (E) insurance:

        • (F) construction of public infrastructure assets:

        • (G) acquisition of public infrastructure assets:

        • (H) investing with a main aim of deriving, from the investment, gross income in the form of interest, dividends, or lease payments that are not royalties:

    • (h) any amount derived by a person from the sale or other disposition by a qualifying foreign equity investor of a share, or option to buy a share, in a company (called in this paragraph the resident company) that is resident in New Zealand, if—

      • (i) the share or option, or an option or convertible note relating to the share, is purchased on a day that is 12 months or more before the day of the sale or other disposition; and

      • (ii) the person who purchases the share or option, or the option or convertible note relating to the share, and sells or disposes of the share or option is a qualifying foreign equity investor throughout the period that—

        • (A) begins at the time of the purchase referred to in subparagraph (i); and

        • (B) ends on the day of the sale or other disposition; and

      • (iii) the shares of the resident company are quoted on no official list of a recognised exchange at some time in the 12-month period that begins from the time of the purchase referred to in subparagraph (i); and

      • (iv) throughout the period referred to in subparagraph (ii), the main activity of the resident company is providing capital in the form of debt or equity funding to other companies; and

      • (v) each other company that is referred to in subparagraph (iv) and is resident in New Zealand—

        • (A) does not have, as a main activity, an activity that is referred to in paragraph (g)(iv)(A) to (C) and (E) to (G); and

        • (B) does not have, as a main activity, an activity that is referred to in paragraph (g)(iv)(D) or (H) and is not the provision of capital to other companies; and

        • (C) does not provide capital, directly or indirectly, to a company that is resident in New Zealand and has, as a main activity, an activity that is referred to in paragraph (g)(iv)(A) to (C) and (E) to (G); and

        • (D) does not provide capital, directly or indirectly, to a company that is resident in New Zealand and has, as a main activity, an activity that is referred to in paragraph (g)(iv)(D) or (H) and is not the provision of capital to other companies; and

      • (vi) each other company that is referred to in subparagraph (iv) and is not resident in New Zealand does not provide capital, directly or indirectly, to a company that is resident in New Zealand and has, as a main activity, an activity that is referred to in paragraph (g)(iv)(A) to (H); and

      • (vii) for each other company that is referred to in subparagraph (iv), there is a time in the period referred to in subparagraph (ii) at which—

      • (A) the shares of the other company are quoted on no official list of a recognised exchange; and

      • (B) the shares of the resident company are quoted on no official list of a recognised exchange.

    (2) In section CB 2(4), after the definition of pleasure craft, the following is added:

    qualifying foreign equity investor means a person who is not resident in New Zealand and who is one or more of the following

    • (a) a person who—

      • (i) is resident in a territory that is approved for the purpose of this definition by the Governor-General by an Order in Council; and

      • (ii) is not part of an unincorporated body that satisfies paragraph (b)(i) to (v); and

      • (iii) is not a legal entity that satisfies paragraph (c)(i) to (iii); and

      • (iv) is treated by the taxation laws of the territory referred to in subparagraph (i), or by the taxation laws of a part of the territory, as the person who derives the proceeds from a sale or other disposition of shares or options that are held by the person; and

      • (v) is not a person who—

        • (A) would, under this Act and in the absence of section CB 2(1)(g) and (h), be subject to tax on an amount derived from a sale or other disposition of shares or options to which section CB 2(1)(g) or (h) would apply; and

        • (B) would in any circumstances, under the taxation laws of the territory referred to in subparagraph (i) or under the taxation laws of part of the territory, be entitled to receive from the government of the territory or of the 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 subsubparagraph (A):

    • (b) a person who is a non-resident and is part of an unincorporated body that—

      • (i) is established under the laws of a territory that is approved for the purpose of this definition by the Governor-General by an Order in Council or under the laws of a part of such a territory; and

      • (ii) consists of persons who include the person (called in this paragraph partners); and

      • (iii) is treated by the taxation laws of the territory, or by the taxation laws of a part of the territory, as not being subject to a tax on income other than as a body that handles income of the partners; and

      • (iv) has at least 1 partner (called in this paragraph a general partner) who is liable for all debts of the unincorporated body and who has significant involvement in, and control of, the business activities of the unincorporated body; and

      • (v) has at least 1 partner (called in this paragraph a special partner) whose liability for debts of the unincorporated body is limited and who has limited involvement in, and control of, the business activities of the unincorporated body; and

      • (vi) does not have a general partner who is not resident in a territory that is approved for the purpose of this definition by the Governor-General by an Order in Council; and

      • (vii) does not have a partner who—

        • (A) has, when treated as holding the interests of any person who is associated with the partner under section OD 8(1), an interest of 10% or more in the capital of the unincorporated body; and

        • (B) is resident in a territory that is not approved for the purpose of this definition by the Governor-General by an Order in Council; and

      • (viii) does not have a partner who, when treated as holding the interests of any person who is associated with the partner under section OD 8(1), has an interest of 10% or more in the capital of the unincorporated body and—

        • (A) would, under this Act and in the absence of section CB 2(1)(g) and (h), be subject to tax on an amount derived from a sale or other disposition of shares to which section CB 2(1)(g) or (h) would apply; and

        • (B) would in any circumstances, under the taxation laws of the territory in which the partner is resident or under the taxation laws of part of the territory, be entitled to receive from the government of the territory or of the 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 subsubparagraph (A):

    • (c) a person who—

      • (i) is established as a legal entity under the laws of a territory that is approved for the purpose of this definition by the Governor-General by an Order in Council or under the laws of a part of such a territory; and

      • (ii) has persons (called in this paragraph members) who hold interests in the capital of the legal entity and who are entitled to shares of the income of the legal entity; and

      • (iii) is treated by the taxation laws of the territory referred to in subparagraph (i), or by the taxation laws of the part of the territory, as not being subject to a tax on income other than as a body that handles income of the members; and

      • (iv) 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

      • (v) does not have a member who—

        • (A) has, when treated as holding the interests of any person who is associated with the member under section OD 8(1), an interest of 10% or more in the capital of the legal entity; and

        • (B) is not resident in a territory that is approved for the purpose of this definition by the Governor-General by an Order in Council; and

      • (vi) does not have a member who, when treated as holding the interests of any person who is associated with the member under section OD 8(1), has an interest of 10% or more in the capital of the legal entity and who—

        • (A) would be entitled to receive an amount derived from a sale or other disposition, to which section CB 2(1)(g) or (h) would apply, of shares or options held by the legal entity; and

        • (B) would receive an amount referred to in subsubparagraph (A) that, in the absence of section CB 2(1)(g) and (h), would have been reduced by a tax imposed by this Act on the amount or on the proceeds of the sale or other disposition in the hands of the legal entity; and

        • (C) would in any circumstances, under the taxation laws of the territory in which the member is resident or under the taxation laws of part of the territory, be entitled to receive from the government of the territory or of the 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 subsubparagraph (B).

    (3) After section CB 2(5), the following is added:

    • (6) For the purpose of subsection (1)(g) and (h) and the definition of qualifying foreign equity investor in subsection (4), whether a person is resident in a territory other than New Zealand is determined—

      • (a) in the presence of a double tax agreement between New Zealand and the territory that is in force under the terms of the double tax agreement, under the double tax agreement:

      • (b) in the absence of a double tax agreement between New Zealand and the territory that is in force under the terms of the double tax agreement, under the laws of the territory.

    • (7) The Governor-General may, from time to time by Order in Council—

      • (a) approve a territory for the purpose of the definition of qualifying foreign equity investor in subsection (4):

      • (b) withdraw the approval of a territory for the purpose of the definition of qualifying foreign equity investor in subsection (4).

    • (8) An Order in Council under subsection (7) may—

      • (a) come into force on a date that is not earlier than 1 April 2004:

      • (b) apply for income years that do not precede the 2004-05 income year.

5 Other exempt income
  • (1) After section CB 9(g), the following is inserted:

    • (gb) any amount derived from providing a standard-cost household service if—

      • (i) the amount does not exceed the total amount of the costs that, under a determination of the Commissioner under section 91AA of the Tax Administration Act 1994, may be treated as being incurred by the taxpayer in deriving the amount; and

      • (ii) the taxpayer, in calculating the taxpayer's income tax liability for the income year, elects to include in the taxpayer's annual allowable deductions no amount that, in the absence of this paragraph, would be an allowable deduction incurred by the taxpayer in providing the standard-cost house-hold service:.

    (2) Subsection (1) applies for the 2003-04 and subsequent income years.

6 Meaning of term dividends
  • (1) Section CF 2(1)(i) is replaced by the following:

    • (i) all distributions by a unit trust to a unit holder and all other payments to and transactions with a unit holder, in relation to the unit holder's interest in the unit trust, that—

      • (i) would be dividends if made to or with a shareholder in relation to shares in a company; and

      • (ii) are not the transfer to the unit holder of money or property referred to in paragraph (ib):

    • (ib) money or property, of a unit trust that is a foreign company, in which a beneficial interest vests absolutely in a unit holder:.

    (2) After section CF 2(6)(a), the following is inserted:

    • (ab) a taxable bonus issue, within the meaning of paragraph (c) of the definition of that term, is the value of the money or property in which a beneficial interest would have vested in the unit holder if the taxable bonus issue had not been made; and.

    (3) Subsections (1) and (2) apply for beneficial interests that vest on or after the day on which this Act receives the Royal assent.

7 Exclusions from term dividends
  • (1) Section CF 3(2)(c)(ii) is replaced by the following:

    • (ii) the available subscribed capital per share will be deemed to be equal to—

      • (A) the value of the money or property in which a beneficial interest would have vested in the shareholder had the share not been issued, if the share is a taxable bonus issue within the meaning of paragraph (c) of the definition of that term; or

      • (B) the amount paid to the trust in respect of the issue of the share, if subsubparagraph (A) does not apply.

    (2) Subsection (1) applies for shares that are issued on or after the day on which this Act receives the Royal assent.

8 Election whether bonus issue taxable
  • In the words before section CF 8(a), or a distribution that satisfies paragraph (c) of the definition of taxable bonus issue is inserted after bonus issue in lieu.

9 Branch equivalent income calculation
  • (1) In section CG 11(7), , DO 4B, DO 4C, DO 4D, is inserted after DO 4.

    (2) Subsection (1) applies for the 2003-04 and subsequent income years.

10 Cases where assessable income calculation cannot be undertaken
  • In the heading to section CG 25, assessable income is replaced by foreign attribution.

11 Certain withdrawal amounts are gross income of superannuation fund
  • (1) In section CL 4(2)—

    • (a) the formula is replaced by the following:

      .
    • (b) after where—, the following is inserted:

      withdrawal is the amount withdrawn

      other contributions is the part, if any, of the amount withdrawn that the trustee of the superannuation fund establishes is not employer contributions to superannuation savings.

    (2) Section CL 4(6) is omitted.

    (3) Subsections (1) and (2) apply to a withdrawal from a superannuation fund that is made on or after 14 September 2000.

12 Exception for withdrawal when member ceases employment
  • Section CL 8(2) is replaced by the following:

    • (2) Subsection (3) applies for a withdrawal if, when the member ceases employment with the employer—

      • (a) the member has been in employment throughout the period (called in this subsection and subsection (2B) the minimum employment period) that—

        • (i) begins on the 1st day of the 2nd-to-last of the income years that end on or before the day on which the member ceases employment; and

        • (ii) ends on the day on which the member ceases employment; and

      • (b) the employer or another employer has made, on behalf of the member, specified superannuation contributions that—

        • (i) have been made to the superannuation fund or to another superannuation fund that has transferred to the superannuation fund, whether directly or indirectly, the funds relating to the member; and

        • (ii) have not been part of a withdrawal, other than as a result of a transfer between superannuation funds that is referred to in subparagraph (i); and

      • (c) the specified superannuation contributions that are part of the withdrawal—

        • (i) satisfy subsection (2B):

        • (ii) do not include employer contributions to superannuation savings that exceed the amount found by multiplying $5,000 by the number of income years for which the specified superannuation contributions were made on behalf of the member.

    • (2B) Specified superannuation contributions that are made on behalf of a member satisfy this subsection if—

      • (a) the contributions have been made for all or part of the minimum employment period and—

        • (i) have not, for each of the complete income years in the minimum employment period, been 150% or more of the specified superannuation contributions made on behalf of the member in the previous income year; and

        • (ii) do not, for the income year in which the member ceases employment, have an annualised value that is 150% or more of the specified superannuation contributions made on behalf of the member in the previous income year:

      • (b) the contributions have been made for all or part of the minimum employment period and the Commissioner considers that the contributions made by each employer are—

        • (i) consistent in size and frequency with the specified superannuation contributions made by the employer on behalf of other employees in comparable positions; and

        • (ii) consistent in size and frequency during the period or periods to which the specified superannuation contributions relate.

13 Expenditure relating to determination of liability to tax
  • In section DJ 5(4), in paragraph (b)(i) of the definition of goods and services tax payable, section 27(6) is replaced by section 51B.

14 Patent expenses
  • (1) Before section DJ 6(1), the following is inserted:

    • (1A) A taxpayer who applies for the grant of a patent and is refused the grant or withdraws the application is allowed, in the income year of the refusal or withdrawal, a deduction for expenditure—

      • (a) that the taxpayer incurs in relation to the application; and

      • (b) that would have been part of the cost of fixed life intangible property if the application had been granted; and

      • (c) for which the taxpayer is not allowed a deduction under another provision.

    (2) Subsection (1) applies for applications of a taxpayer that are refused or withdrawn in the 2004-05 and subsequent income years.

15 New section DJ 11B inserted
  • After section DJ 11, the following is inserted:

    DJ 11B Expenditure incurred by company in respect of dividend from foreign company
    • Despite section BD 2(2)(b), a company that incurs expenditure in deriving a dividend that is exempt income of the company under section CB 10(1) is allowed a deduction of—

      • (a) the amount of expenditure, if the company is not a conduit tax relief company:

      • (b) the amount calculated using the following formula if the company is a conduit tax relief company:

        a x (1 -- b)

        where—

        • a is the amount of the expenditure incurred by the company in deriving the dividend

        • b is the fraction of the company's shareholders that are not resident in New Zealand, as calculated under section NH 7(2) and (4).

16 New section DJ 14B inserted
  • (1) After section DJ 14, the following is inserted:

    DJ 14B Expenditure on unsuccessful application for resource consent
    • A taxpayer who applies for the grant of a resource consent under the Resource Management Act 1991 and is refused the grant or withdraws the application is allowed, in the income year of the refusal or withdrawal, a deduction for expenditure—

      • (a) that the taxpayer incurs in relation to the application; and

      • (b) that would have been part of the cost of a resource consent that is depreciable property if the application had been granted; and

      • (c) for which the taxpayer is not allowed a deduction under another provision.

    (2) Subsection (1) applies for applications of a taxpayer that are refused or withdrawn in the 2004-05 and subsequent income years.

17 Expenditure on land improvements used for farming or agriculture
  • (1) In section DO 4—

    • (a) in subsection (1), Subject to sections DO 4B, DO 4C and DO 4D, is inserted before Any taxpayer:

    • (b) in subsection (2), Subject to sections DO 4B, DO 4C and DO 4D, is inserted before Any taxpayer:

    • (c) in subsection (4), vines or trees is replaced by non-listed horticultural plants.

    (2) Subsection (1) applies for the 2003-04 and subsequent income years.

18 New sections DO 4B to DO 4D inserted
  • (1) After section DO 4, the following are inserted:

    DO 4B Accounting for expenditure on listed horticultural plants under sections DO 4C and DO 4D
    • (1) In this section and sections DO 4C and DO 4D

      planting for a taxpayer and an income year means 1 or more listed horticultural plants that are involved in the business of the taxpayer during the income year and for which the taxpayer must account under sections DO 4C and DO 4D, for the income year, separately from other listed horticultural plants, if any, that are involved in the business of the taxpayer

      plot means the land occupied by the listed horticultural plants in a planting

      replaced area fraction for a planting and an income year means the amount calculated using the formula—

      .

      where—

      • a is the area, at the end of the income year, of the part of the plot on which listed horticultural plants in the planting are planted or regrafted during the income year as replacement plants

      • b is the total area, at the end of the income year, of the plot.

      (2) Subject to subsection (3), a taxpayer to whom section DO 4C applies and who has had an allowable deduction under section DO 4D for either or both of the 2 income years that immediately precede an income year must, for the income year and subsequent income years, account separately under sections DO 4C and DO 4D for the listed horticultural plants that—

      • (a) the taxpayer acquires in the income year; and

      • (b) benefit the business of the taxpayer in the income year; and

      • (c) are not replacement plants.

      (3) A taxpayer to whom section DO 4C applies and who has had no allowable deduction under section DO 4D for listed horticultural plants for both of the 2 income years that immediately precede an income year may account under sections DO 4C and DO 4D for the listed horticultural plants as 1 planting for the income year and subsequent income years.

    DO 4C Expenditure on land-planting of listed horticultural plants
    • (1) This section applies to a taxpayer if—

      • (a) the taxpayer carries on a farming or agricultural business (including a horticultural business) on land in New Zealand; and

      • (b) the land is developed by the planting on the land of listed horticultural plants.

      (2) Subject to subsection (3), in an income year in which the development of the land benefits the business, the taxpayer has an allowable deduction relating to expenditure incurred by the taxpayer, or by another person, in the development of the land.

      (3) The taxpayer does not have an allowable deduction under subsection (2) in an income year in which—

      • (a) if the taxpayer owns the land, the taxpayer disposes of the land; or

      • (b) if the taxpayer does not own the land, the taxpayer ceases carrying on the business on the land.

      (4) Subject to subsections (5) and (6), the amount of the allowable deduction is calculated using the formula

      1.2 x a × b

      where—

      • a is the percentage rate determined for the type of listed horticultural plant by the Commissioner under section 91AAB of the Tax Administration Act 1994

      • b is the diminished value of the expenditure.

      (5) If a listed horticultural plant of the taxpayer ceases in an income year to exist or to be used in deriving gross income and the taxpayer has no allowable deduction under section DO 4D for the income year for expenditure incurred in replacing the listed horticultural plant, the taxpayer has an allowable deduction—

      • (a) of the amount of the diminished value of the expenditure on the listed horticultural plant at the time that the listed horticultural plant ceases to exist or to be used in deriving income:

      • (b) for the income year.

      (6) A taxpayer who has an allowable deduction under section DO 4D for an income year for expenditure incurred on a replacement plant in a planting may, by taking a tax position in a tax return for the income year—

      • (a) elect to increase the diminished value, at the end of the income year, of the expenditure on listed horticultural plants that are in the planting at the end of the income year by the diminished value, immediately before the replacement, of the expenditure on a listed horticultural plant that is replaced; and

      • (b) choose a method of making the increase referred to in paragraph (a).

    DO 4D Expenditure on land—horticultural replacement planting
    • (1) This section applies to a taxpayer who carries on a horticultural business on land in New Zealand and who, in an income year (called the current income year)—

      • (a) plants, or causes to be planted, on the land a listed horticultural plant as a replacement plant:

      • (b) regrafts, or causes to be regrafted, a listed horticultural plant on the land as a replacement plant.

      (2) The taxpayer has an allowable deduction for the current income year, of the amount given by one of subsections (3) and (4) for the expenditure incurred in the current income year by the taxpayer in replacing a listed horticultural plant if, in the current income year—

      • (a) the replacement plant benefits the business; and

      • (b) the taxpayer does not dispose of the land on which the listed horticultural plant is cultivated; and

      • (c) the taxpayer elects, by taking a tax position in a tax return for the current year, that this section apply to the expenditure.

      (3) For a taxpayer who has had no allowable deduction under this section for either or both of the 2 income years that immediately precede the current income year, the amount of the allowable deduction under subsection (2) for expenditure incurred in replacing a listed horticultural plant in a planting is calculated using the formula—

      .

      where—

      • c is the amount of the expenditure incurred by the taxpayer

      • d is the greater of 7.5% and the replaced area fraction for the planting for the current year.

      (4) For a taxpayer who has had an allowable deduction under this section for a planting for both of the 2 income years that immediately precede the current income year, the amount of the allowable deduction under subsection (2) for expenditure incurred in replacing a listed horticultural plant in the planting is the smaller of—

      • (a) the amount that is calculated using the formula

        .

        where—

        • c is the amount of the expenditure incurred by the taxpayer

        • d is the greater of 7.5% and the replaced area fraction for the planting for the current year:

      • (b) the amount that is calculated using the formula:

        .

        where—

        • c is the amount of the expenditure incurred by the taxpayer

        • e is the replaced area fraction for the planting for the current year

        • f is the smaller of 7.5% and the replaced area fraction for the planting for the earlier of the 2 income years that immediately precede the current year

        • g is the smaller of 7.5% and the replaced area fraction for the planting for the later of the 2 income years that immediately precede the current year.

    (2) Subsection (1) applies for the 2003-04 and subsequent income years.

19 Amalgamated company entitled to deductions for farming, agriculture, and aquaculture expenditure
  • (1) In section DO 8(c), or section DO 5 is replaced by , DO 4C, DO 4D or DO 5.

    (2) Subsection (1) applies for the 2003-04 and subsequent income years.

20 Accrual expenditure
  • (1) Section EF 1(5)(a) is replaced by the following:

    • (a) where the expenditure relates to the purchase of goods, the amount of expenditure incurred on goods that—

      • (i) are not used in deriving gross income; and

      • (ii) are not destroyed or rendered useless for the purpose of deriving gross income:.

    (2) Subsection (1) applies for the 2003-04 and subsequent income years.

21 Disposition of depreciable property
  • (1) Section EG 19(3) is replaced by the following:

    • (3) Subject to subsection (4), a taxpayer who in an income year disposes of depreciable property for a consideration that is less than the adjusted tax value of the property at the time of disposition is allowed for the income year a deduction that is equal to the amount by which the adjusted tax value of the property on the date of disposition exceeds the consideration derived by the taxpayer if the depreciable property—

      • (a) is not a building; or

      • (b) is a building that is destroyed or rendered useless for the purpose of deriving gross income as a result of an event that is a qualifying event under paragraph (a) or (b) of the definition of that term.

    (2) Subsection (1) applies for the 2003-04 and subsequent income years.

22 Deduction to lessee in non-specified lease
  • (1) In section EO 2(1), or a finance lease is inserted after specified lease.

    (2) In section EO 2(2), or a finance lease is inserted after specified lease.

23 Application of subpart
  • (1) In section ES 1(1)(b)—

    • (a) in the words before subparagraph (i)(A), or losses is omitted:

    • (b) subparagraph (i)(B) is replaced by the following:

      • (B) net losses of a loss attributing qualifying company, to the extent that shareholders with effective interests in the company are deemed under section HG 16 to have allowable deductions that correspond to the net losses; and::

    • (c) in subparagraph (ii), and losses is omitted.

    (2) In section ES 1(1)(e)(i), date: is replaced by date; and.

    (3) In section ES 1(1)(e)(ii)(F), section CH 2. is replaced by section CH 2: and the following is added:

    • (G) shares in a foreign company, if the proceeds of a disposition of the shares would not be gross income of the holder other than under the FIF rules.

    (4) In section ES 1(2), gross income, allowable deductions and losses is replaced by gross income and allowable deductions.

    (5) In section ES 1(3), gross income, allowable deductions and losses is replaced by gross income and allowable deductions.

    (6) Subsections (1) to (5) apply for the 2004-05 and subsequent income years subject to subsection (7).

    (7) Subsections (1) to (5) do not apply to a participant for an arrangement that the participant enters before the 2004-05 income year unless—

    • (a) at the time of entering the arrangement, the participant could reasonably expect that 10 or more persons would acquire an interest in the arrangement; and

    • (b) 70% or more of the allowable deductions of the participant from the arrangement for the income year, calculated on the same basis as for section ES 1(1)(b)(i) of the Income Tax Act 1994 as amended by subsection (1), arise from an interest of the participant in—

      • (i) fixed life intangible property:

      • (ii) software.

24 Defined terms for subpart
  • (1) In section ES 2(3)(c), in the words before subparagraph (i), a purpose or effect of achieving is omitted.

    (2) Section ES 2(3)(d) is replaced by the following:

    • (d) involves money that is provided by—

      • (i) a lender who is not an associated person of the borrower under a provision of section OD 7 or OD 8(3) and who does not provide the money on arm's-length terms and who—

        • (A) is not a person who regularly provides money to persons on arm's-length terms under arrangements that do not satisfy paragraphs (a) to (c):

        • (B) is not resident in New Zealand under section OE 1 or OE 2 and does not carry on business in New Zealand through a fixed establishment in New Zealand; or

      • (ii) a lender who is an associated person of the borrower under a provision of section OD 7 or OD 8(3) and who obtains the money under an arrangement that satisfies paragraphs (a) to (c).

    (3) Subsection (2) applies for the 2004-05 and subsequent income years, subject to subsection (4).

    (4) Subsection (2) does not apply to a participant for an arrangement that the participant enters before the 2004-05 income year unless—

    • (a) at the time of entering the arrangement, the participant could reasonably expect that 10 or more persons would acquire an interest in the arrangement; and

    • (b) 70% or more of the allowable deductions of the participant from the arrangement for the income year, calculated on the same basis as for section ES 1(1)(b)(i) of the Income Tax Act 1994 as amended by section 23(1), arise from an interest of the participant in—

      • (i) fixed life intangible property:

      • (ii) software.

25 Deferral of surplus allowable deductions from arrangement
  • (1) In section ES 3(1)—

    • (a) paragraph (a)(i) is replaced by the following:

      • (i) allowable deductions, including any allowable deduction under subsection (3) or section HG 16; and:

    • (b) in paragraph (a)(ii), and losses is omitted:

    • (c) paragraph (b)(i) is replaced by the following:

      • (i) allowable deductions, including any allowable deduction under subsection (3) or section HG 16; and:

    • (d) in paragraph (b)(ii), and losses is omitted.

    (2) In section ES 3(2)—

    • (a) the definitions of items a and b are replaced by the following:

      • a is the amount for the income year by which the allowable deductions, including any allowable deduction under subsection (3) or section HG 16, of the participant from the arrangement exceed the gross income, other than under this section, of the participant from the arrangement

      • b is the total amount for the income year by which the allowable deductions, including any allowable deduction under subsection (3) or section HG 16, from the arrangement exceed the gross income, other than under this section, from the arrangement for the group that consists of—

        • (a) the participant; and

        • (b) the affected associates of the participant who are not a loss attributing qualifying company and who each have for the income year allowable deductions, including any allowable deduction under subsection (3) or section HG 16, from the arrangement that in total exceed the gross income, other than under this section, from the arrangement.

    • (b) paragraph (a) of the definition of item c is replaced by the following:

      • (a) the total amount for the income year by which the allowable deductions, including any allowable deduction under subsection (3) or section HG 16, from the arrangement exceed the gross income, other than under this section, from the arrangement for the group that consists of—

        • (i) the participant; and

        • (ii) the affected associates of the participant who are not a loss attributing qualifying company that has incurred a net loss from the arrangement for the income year; and.

    (3) Subsections (1) and (2) apply for the 2004-05 and subsequent income years subject to subsection (4).

    (4) Subsections (1) and (2) do not apply to a participant for an arrangement that the participant enters before the 2004-05 income year unless—

    • (a) at the time of entering the arrangement, the participant could reasonably expect that 10 or more persons would acquire an interest in the arrangement; and

    • (b) 70% or more of the allowable deductions of the participant from the arrangement for the income year, calculated on the same basis as for section ES 1(1)(b)(i) of the Income Tax Act 1994 as amended by section 23(1), arise from an interest of the participant in—

      • (i) fixed life intangible property:

      • (ii) software.

26 Section EZ 9 replaced
  • (1) Section EZ 9 is replaced by the following:

    EZ 9 New start grants for farmers
    • (1) This section applies to a taxpayer if—

      • (a) the taxpayer 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 taxpayer is paid a new start grant in respect of the business for an event that is a qualifying event; and

      • (c) the taxpayer in carrying on the business incurs, before the declaration of the state of emergency that relates to the qualifying event, a liability—

        • (i) to make a payment under a financial arrangement:

        • (ii) for expenditure or loss that is, before the date that is 3 months after the expiration of the state of emergency, taken into account in calculating the taxpayer's taxable income for an income year:

      • (d) as a prerequisite for the payment of the new start grant and on or before 30 September 2005, the liability referred to in paragraph (c) is forgiven or otherwise remitted; and

      • (e) but for this section, the amount of the remitted liability would be gross income of the taxpayer under the accrual rules or under section CE 4.

      (2) The amount of a remitted liability referred to in subsection (1) is not gross income of the taxpayer to the extent that the amount cannot be set off—

      • (a) against a loss that is incurred by the taxpayer in carrying on the business in the income year in which the liability is remitted:

      • (b) under section IE 1, IE 2 or IF 1, against a loss that is incurred by the taxpayer in carrying on the business and is available to be set off against the taxpayer's net income in the income year in which the liability is remitted:

      • (c) under subsection (3).

      (3) The Commissioner may, despite sections IE 1, IE 2 and IF 1, require that an amount of a remitted liability referred to in subsection (1) be set off against a loss of another person if—

      • (a) the other person and the taxpayer are associated persons; and

      • (b) the other person—

        • (i) also carries on or has carried on the business in respect of which the new start grant is paid; or

        • (ii) is or was the owner of an estate in fee simple or leasehold estate in land used in the business in respect of which the new start grant is paid; and

      • (c) the Commissioner is satisfied that the taxpayer has—

        • (i) a substantial degree of control over the other person:

        • (ii) a substantial identity of interests with the other person; and

      • (d) the loss of the other person is—

        • (i) incurred in respect of the business or the land that is used in the business; and

        • (ii) of a kind referred to in subsection (2)(a) and (b).

      (4) In determining the amount that is set off under subsection (3), the Commissioner must have regard to the interests of the associated person that are separate from those of the taxpayer.

      (5) The Commissioner must give to the associated person notice in writing of a determination under subsection (3).

    (2) Subsection (1) applies for the 2003-04 and subsequent income years.

27 New section EZ 9B
  • (1) After section EZ 9, the following is inserted:

    EZ 9B Deduction for diminished value of expenditure on improvements destroyed or rendered useless by qualifying event
    • Subject to section DJ 1, a taxpayer is allowed for an income year a deduction that is equal to the diminished value for the income year of expenditure of a kind that is referred to in Schedule 7 if—

      • (a) the taxpayer or another person incurred the expenditure on improvements in preparing or developing a business or land that is used in a business; and

      • (b) the improvements were destroyed or rendered useless for the purpose of deriving gross income as a result of an event that is a qualifying event under paragraph (a) or (b) of the definition of that term; and

      • (c) the taxpayer would have been entitled for the income year to a deduction under section DL 2, DO 4 or DO 5 for the expenditure if the improvement had not been destroyed or rendered useless.

    (2) Subsection (1) applies for the 2003-04 and subsequent income years.

28 Rules for lease asset during term of finance lease
  • (1) In section FC 8B(2), before or is inserted before on the date.

    (2) In section FC 8B(3), at the end of the lease term is replaced by by the date that the lease term ends.

    (3) Subsections (1) and (2) apply for an arrangement that is entered on or after 29 March 2004.

29 Taxation of hire purchase agreements
  • In section FC 10(8)(a), consideration paid to the lessee for the hire purchase agreement is replaced by consideration provided to the lessee under the hire purchase agreement.

30 Special provisions relating to dispositions of property
  • (1) In section FD 10(3)(b), DO 4C, DO 4D, is inserted after DO 4,.

    (2) Subsection (1) applies for the 2003-04 and subsequent income years.

31 Companies that may constitute imputation group
  • (1) Section FDB 1(1)(e) is repealed.

    (2) After section FDB 1(2)(a), the following is inserted:

    • (ab) all members of the consolidated group are or would be members of the imputation group; and.

    (3) In section FDB 1(2)(b), the words before subparagraph (i) are replaced by for an imputation group that contains or will contain members of more than 1 consolidated group, all of the consolidated groups have been part of a single wholly-owned group of companies throughout the period that—.

32 Income assessable to beneficiaries
  • In the heading to section GC 14, assessable to is replaced by of.

33 Sale of trading stock for inadequate consideration
  • (1) In the heading to section GD 1, Sale is replaced by Sale or other disposition.

    (2) Section GD 1(4) is replaced by the following:

    • (4) This section does not apply in respect of any trading stock that—

      • (a) is transferred to a person under a relationship agreement; or

      • (b) is donated, or supplied for consideration worth less than the market value of the trading stock, to a person as a result of an event that is a qualifying event under paragraph (a) or (b) of the definition of that term.

    (3) Subsections (1) and (2) apply for the 2003-04 and subsequent income years.

34 Part HC repealed
  • (1) Part HC is repealed.

    (2) Subsection (1) applies to gross income and allowable deductions of a partner from a special partnership for the 2004/05 and subsequent income years.

35 Gross income assessable to beneficiaries
  • In the heading to section HH 3, assessable to is replaced by of.

36 Election to become Maori authority
  • (1) Section HI 3(3) is replaced by the following:

    • (3) A person who elects to become a Maori authority becomes a Maori authority—

      • (a) on the first day of the income year in which the person gives notice of the election to the Commissioner, if paragraph (b) does not apply:

      • (b) on the first day of the income year immediately succeeding the income year in which the person gives notice of the election to the Commissioner, if the person nominates that date in the notice of the election.

    (2) Subsection (1) applies for the 2004-05 and subsequent income years.

37 Distributions by Maori authority
  • (1) In section HI 4(1)(e), consideration. is replaced by consideration: and the following is added:

    • (f) a taxable bonus issue.

    (2) Subsection (1) applies for the 2004-05 and subsequent income years.

38 Amount distributed to member by Maori authority
  • (1) After section HI 5(3), the following is added:

    • (4) A taxable bonus issue that is made by a Maori authority to a member is a taxable Maori authority distribution.

    (2) Subsection (1) applies for the 2004-05 and subsequent income years.

39 Table HI 8—Transitional rules
  • (1) In the transitional rules in Table HI 8, row 4 is replaced by the following:

    4a Maori authoritya trust that is not a Maori authoritytaxable income derived by the Maori authority is treated as trustee income

    (2) Subsection (1) applies for the 2004-05 and subsequent income years.

40 No offset in calculating some income tax liabilities
  • (1) Section ID 1(2) is omitted.

    (2) Subsection (1) applies for the 2003-04 and subsequent income years.

41 Net losses may be offset against future net income
  • (1) After section IE 1(2), the following is inserted:

    • (2B) A taxpayer who is a partner in a special partnership may not under this section carry forward a net loss if—

      • (a) the taxpayer has a deduction in an income year that arises from the activities of the special partnership; and

      • (b) the net loss arises from the deduction; and

      • (c) during the income year, the taxpayer derives no gross income, whether from the activities of the special partnership or otherwise.

    • (2C) A taxpayer may not carry forward under this section a net loss to the extent that the net loss is offset against a remitted amount of an associated person as determined by the Commissioner under section EZ 9.

    (2) Subsection (1) applies to a net loss of a taxpayer for the 2004-05 and subsequent income years.

42 Net loss offset between group companies
  • (1) Section IG 2(2)(a)(i) is replaced by the following:

    • (i) a net loss for the year of offset that does not consist of a mining outgoing excess and is not prevented by section IE 1(2B) or (2C) from being carried forward under sections IE 1 and IF 1:.

    (2) Subsection (1) applies to a net loss of a taxpayer for the 2004–05 and subsequent income years.

43 Rebate for gifts of money
  • (1) In section KC 5(1)(cl), Zealand. is replaced by Zealand: and the following is added:

    • (cm) Medicine Mondiale:

    • (cn) New Zealand Jesuits in India Trust:

    • (co) Operation Vanuatu Charitable Trust.

    (2) Subsection (1) applies for the 2004-05 and subsequent income years.

44 Granting of underlying foreign tax credit
  • (1) After section LF 2(2)(d), the following is inserted:

    • (db) if the company, as a result of the payment of the dividend, is liable to pay no income tax in relation to an amount, or part of an amount, from which the dividend is sourced; or.

    (2) Subsection (1) applies for dividends that are derived on or after the day on which this Act receives the Royal assent.

45 New Part MBC inserted
  • (1) After Part MBB, the following is inserted:

    Subpart BCEarly-payment discount of income tax

    MBC 1 Purpose
    • (1) The purpose of this subpart is to encourage, by means of a discount of income tax, payments of amounts as income tax by small-business taxpayers in the income year that precedes the income year in which the taxpayers are first required to pay provisional tax.

      (2) In this subpart—

      early-payment discount means a discount of income tax under this subpart

      small-business taxpayer means a taxpayer who—

      • (a) conducts a business on the taxpayer's own account, acting alone or as a partner in a partnership; and

      • (b) does not use a company or a trust in the conduct of the business; and

      • (c) derives gross income that is predominantly—

        • (i) from the business; and

        • (ii) not interest, dividends, royalties, rents or beneficiary income.

    MBC 2 Availability of early-payment discount
    • (1) This section applies to a small-business taxpayer for an income year if the small-business taxpayer—

      • (a) is not required to make payments of provisional tax in the income year; and

      • (b) on or before the taxpayer's balance date for the income year, makes payments as income tax for the income year; and

      • (c) throughout the period from the taxpayer's balance date for the income year to the taxpayer's terminal tax date for the income year, has a credit in an account with the Commissioner that is greater than or equal to the lesser of the following:

        • (i) the amount that, on or before the small-business taxpayer's balance date for the income year, the small-business taxpayer pays as income tax for the income year:

        • (ii) the amount of terminal tax for the income year for which the taxpayer would be liable in the absence of this section; and

      • (d) has, for earlier income years—

        • (i) never been required to make payments of provisional tax and—

          • (A) never received an early-payment discount; or

          • (B) derived gross income from a business at no time in a period of 4 income years that began after the latest income year for which the small-business taxpayer received an early-payment discount; or

        • (ii) derived gross income from a business at no time in a period of 4 income years that began after the latest income year for which the small-business taxpayer was required to make payments of provisional tax.

      (2) If a small-business taxpayer to whom this section applies makes a return of income for the income year and applies for an early-payment discount, the Commissioner must credit the income tax account of the small-business taxpayer with an early-payment discount found by multiplying the discount rate referred to in subsection (4) by the lesser of the following:

      • (a) the amount that, on or before the small-business taxpayer's balance date for the income year, the small-business taxpayer paid as income tax for the income year:

      • (b) 105% of the small-business taxpayer's residual income tax for the income year.

      (3) The small-business taxpayer must make the application required by subsection (2) on or before the date given by section 37(5) of the Tax Administration Act 1994 as the last date for filing a return of income for the income year to which the application relates.

      (4) The discount rate is—

      • (a) 6.7% if no rate is prescribed under paragraph (b):

      • (b) the rate prescribed by the Governor-General by Order in Council.

    MBC 3 Credit treated as being payment as income tax
    • A credit of an early-payment discount for a small-business taxpayer for an income year is treated as being a payment made on the day after the last day of the income year by the small-business taxpayer as income tax for the income year.

    (2) Subsection (1) applies for income years commencing on and after 1 April 2005.

46 Refund of excess tax
  • (1) Section MD 1(1) is replaced by the following:

    • (1) Subject to sections MD 2, MD 2A, MD 2B, MD 3 and NH 4, and subsection (2), the Commissioner must refund an amount that a taxpayer has paid as tax if—

      • (a) the Commissioner is satisfied that the amount represents an excess over the tax properly payable by the taxpayer; and

      • (b) the 4-year period referred to in section 108 of the Tax Administration Act 1994 has not expired.

    (2) Section MD 1(2) is replaced by the following:

    • (2) Subject to sections MD 2, MD 2A, MD 2B, MD 3, and NH 4, the Commissioner must refund an amount that a taxpayer has paid as tax if—

      • (a) the taxpayer paid the amount as a result of an amendment to an assessment that increased the amount of tax payable by the taxpayer; and

      • (b) the Commissioner is satisfied that the amount represents an excess over the tax properly payable by the taxpayer; and

      • (c) the 4-year period beginning at the end of the income year in which the assessment was amended has not expired.

    • (2B) The Commissioner may refund an amount of an overpayment of tax that is referred to in subsection (1) or (2) after the end of the 4-year period referred to in the subsection if—

      • (a) the overpayment arises from—

        • (i) a clear mistake or simple oversight of the taxpayer:

        • (ii) an entitlement of the taxpayer to a rebate of income tax under Part KD; and

      • (b) the refund is made—

        • (i) within the period of 4 years beginning from the end of the 4-year period referred to in the subsection:

        • (ii) as a result of an application by or on behalf of the taxpayer that the Commissioner receives before or within the period of 4 years beginning from the end of the 4-year period referred to in the subsection.

    (3) Subsections (1) and (2) apply for the 2004-05 and subsequent income years.

47 Limits on refunds of tax in relation to Maori authorities
  • (1) In section MD 2B(1)(a), the end is replaced by unless subsection (1B) applies, the end.

    (2) After section MD 2B(1), the following is inserted:

    • (1B) Despite subsection (1)(a), a Maori authority that furnishes its Maori authority credit account return for an imputation year before the end of the next imputation year may be refunded income tax in accordance with section MD 1 if—

      • (a) the Maori authority has furnished the Maori authority credit account return within an extension of time given by the Commissioner; and

      • (b) the amount of the refund does not exceed the credit balance in the Maori authority's Maori authority credit account on the last day of the imputation year for which the Maori authority credit account return was furnished.

    (3) In section MD 2B(4), If income is replaced by Unless subsection (4B) applies, if income.

    (4) After section MD 2B(4), the following is inserted:

    • (4B) Despite subsection (4), the income tax not refunded may be credited on a provisional tax instalment date if residual income tax is treated as being payable on the date specified in Part 7 of the Tax Administration Act 1994.

    (5) Subsections (1) to (4) apply for the 2004-05 and subsequent income years.

48 Application of income tax or dividend withholding payments not refunded
  • (1) This section amends section MD 4 as it read before being repealed by section 41 of the Taxation (GST, Trans-Tasman Imputation and Miscellaneous Provisions) Act 2003.

    (2) Section MD 4 is amended by adding the following:

    • (2) Subsection (1) does not prevent a credit (called a permitted credit), of an amount given by subsection (3), arising in an imputation credit account or dividend withholding payment account if—

      • (a) a company or consolidated group is entitled to a refund of overpaid income tax or overpaid dividend withholding payment; and

      • (b) the Commissioner transfers the refundable amount to another period or another tax type; and

      • (c) after the overpayment that gives rise to the entitlement to a refund and before the transfer, a debit in the imputation credit account or dividend withholding payment account arises under section ME 5(1)(i), ME 12(1)(h), MG 5(1)(i) or MG 15(1)(i); and

      • (d) a credit would have arisen to the account of the company or consolidated group in the event that—

        • (i) the refundable amount had been refunded by the Commissioner at the time of the transfer; and

        • (ii) the company or consolidated group had immediately paid the amount of the refund to the Commissioner in payment of a tax liability for the other period or tax type; and

      • (e) the company or consolidated group requests at any time that this subsection apply to the transfer of the refundable amount.

    • (3) The amount of the permitted credit to which subsection (2) refers is the amount of the credit to which subsection (2)(d) refers, reduced by the amount of the debit that would have arisen under section ME 5(1)(e), ME 12(1)(d), MG 5(1)(d) or MG 15(1)(d) at the time of the refund to which subsection (2)(d)(i) refers.

    (3) Subsection (2) applies for the 1997-98 and subsequent income years.

49 Companies required to maintain imputation credit account
  • Section ME 1(2)(a) is replaced by the following:

    • (a) resident in a country other than New Zealand; or.

50 Companies electing to maintain imputation credit account
  • Section ME 1B(4)(a) is replaced by the following:

    • (a) for the purpose of section ME 6, from—

      • (i) the date that is 30 days after the date on which the Commissioner receives the notice, if none of subparagraphs (ii) to (iv) apply; or

      • (ii) 1 October 2003, if the Commissioner receives the notice before 1 April 2004 and notifies the company that the notice is effective from 1 October 2003; or

      • (iii) 1 April 2004, if the Commissioner receives the notice before 1 April 2005 and notifies the company that the notice is effective from 1 April 2004; or

      • (iv) the beginning of the imputation year in which the Commissioner receives the notice, if the company is formed in the imputation year or becomes eligible under this section in the imputation year and the Commissioner notifies the company that the notice is effective from the beginning of the imputation year:.

51 Amount of dividend for imputation rules if paid in Australian currency
  • In section ME 1C, the formula is replaced by the following:

    a × b

52 Consolidated imputation group to maintain separate imputation credit account
  • Section ME 10(1D)(b) is replaced by the following:

    • (b) arise in relation to a company that, at the time the debit or credit arises—

      • (i) will be a member of the resident imputation sub-group, if the debit or credit arises before the formation of the resident imputation subgroup:

      • (ii) is a member of the resident imputation subgroup, if the debit or credit arises at or after the formation of the resident imputation subgroup.

53 Credits arising to imputation credit account of group
  • (1) After section ME 11(1)(f), the following is inserted:

    • (fb) an amount forming all or part of a credit balance in the dividend withholding payment account of a company that is a member of the consolidated imputation group, if the company elects under section MG 11 that the amount be a credit to the imputation credit account of the consolidated imputation group:.

    (2) After section ME 11(1)(j), the following is inserted:

    • (jb) an amount forming all or part of a credit balance in the policyholder credit account of a company, if the company elects under section ME 19(3)(a) during the imputation year that the amount be a credit to the imputation credit account of the consolidated imputation group:.

    (3) In section ME 11(2)(d), paragraphs (g) and (k) is replaced by paragraphs (fb), (g) and (k).

    (4) After section ME 11(2)(e), the following is inserted:

    • (eb) in the case of the credit referred to in paragraph (jb) of that subsection, on the date the relevant debit arose under section ME 18(4)(b):.

54 Debits arising to imputation credit account of group
  • Section ME 12(1)(b) is replaced by the following:

    • (b) an amount forming all or part of a credit balance in the imputation credit account of the consolidated imputation group, if the nominated company of the consolidated imputation group elects under section ME 14(1) during the imputation year that the amount be a credit to the policyholder credit account of the consolidated imputation group or of a member of the consolidated imputation group:.

55 Credits and debits arising to policyholder credit account of company
  • (1) In section ME 18(1)(a)—

    • (a) under section ME 7 by is omitted:

    • (b) in subparagraph (i), under section ME 14 by is inserted before nominated company:

    • (c) in subparagraph (ii), under section ME 7 by is inserted before the company,.

    (2) After section ME 18(1)(b), the following is inserted:

    • (bb) an amount equal to any allocation deficit debit that arises in the company's dividend withholding payment account under section MG 8B, if the amount of the allocation deficit debit is given by section MG 8B(3)(a):

    • (bc) an amount equal to the credit balance in the company's dividend withholding payment account immediately before an allocation deficit debit arises in the company's dividend withholding payment account under section MG 8B, if the amount of the allocation deficit debit is given by section MG 8B(3)(b):.

    (3) After section ME 18(2)(b), the following is inserted:

    • (bb) in the case of a credit referred to in paragraph (bb) or (bc) of that subsection, at the end of the imputation year in respect of which the credit arises:.

    (4) In section ME 18(3)(b)—

    • (a) in subparagraph (i), and not a member of a consolidated group is omitted:

    • (b) in subparagraph (ii), or of a consolidated group that is a consolidated imputation group is omitted.

    (5) In section ME 18(4)(b), company's imputation credit account is replaced by imputation credit account of the company or imputation group.

    (6) Subsections (2) and (3) apply for the 2004-05 and subsequent imputation years.

    (7) Subsections (2) and (3) apply to a company for an imputation year that begins after 31 March 1995 and before 1 April 2004 if the company makes an election under section MG 8B of the Income Tax Act 1994 that applies for the company for the imputation year.

    (8) Subsections (2) and (3) apply for an imputation year that begins after 31 March 1995 and before 1 April 2004 to a company that was an amalgamating company if the amalgamated company makes an election under section MG 8B of the Income Tax Act 1994 that applies for the amalgamating company for the imputation year.

56 Election to use credit balance as credit against policyholder base income tax liability or as credit in imputation credit account
  • (1) In section ME 19(3)(a), and not a member of a consolidated group is omitted.

    (2) In section ME 19(3)(b), or of a consolidated group that is a consolidated imputation group is omitted.

    (3) In section ME 19(4)(b)(i), and not a member of a consolidated group is omitted.

    (4) In section ME 19(4)(b)(ii), , if the company is not a member of an imputation group or of a consolidated group that is a consolidated imputation group is omitted.

57 Credits and debits arising to group policyholder credit account
  • (1) After section ME 26(2)(c), the following is added:

    • (d) an amount equal to any allocation deficit debit that arises in the consolidated group's dividend withholding payment account under section MG 8B, if the amount of the allocation deficit debit is given by section MG 8B(3)(a):

    • (e) an amount equal to the credit balance in the consolidated group's dividend withholding payment account immediately before an allocation deficit debit arises in the consolidated group's dividend withholding payment account under section MG 8B, if the amount of the allocation deficit debit is given by section MG 8B(3)(b):.

    (2) After section ME 26(3)(c), the following is inserted:

    • (d) in the case of a credit referred to in paragraph (d) or (e) of that subsection, at the end of the imputation year in respect of which the credit arises:.

    (3) Subsections (1) and (2) apply for the 2004-05 and subsequent imputation years.

    (4) Subsections (1) and (2) apply for an imputation year that begins after 31 March 1995 and before 1 April 2004 for a consolidated group if the nominated company for the consolidated group makes an election under section MG 8B of the Income Tax Act 1994 that applies for the consolidated group for the imputation year.

58 Credits and debits arising to branch equivalent tax account of company
  • (1) In section MF 4(2)(a), or paragraph (b) is omitted.

    (2) Subsection (1) applies for the 1997-98 and subsequent income years, subject to subsection (3).

    (3) Subsection (1) does not apply to a taxpayer for an income year if—

    • (a) the taxpayer has, before 26 June 2003, filed a return of income for the income year; and

59 Use of credit to reduce dividend withholding payment, or use of debit to satisfy income tax liability
  • (1) Section MF 5(2) is repealed.

    (2) Section MF 5(6B) is replaced by the following:

    • (6B) If an election under subsection (4) relates to an amount that exceeds the income tax liability, for the income year, of the company that receives the offset under subsection (6), the excess amount is treated as giving rise to a net loss of the company for the purpose of Parts IF and IG of an amount given by the following formula:

      .

      where—

      • a is the amount of the excess

      • b is the basic rate of income tax, expressed as a percentage, stated in—

        • (a) Schedule 1, Part A, clause 5, if the company is not a Maori authority; or

        • (b) Schedule 1, Part A, clause 2, if the company is a Maori authority.

    (3) Subsections (1) and (2) apply for the 1997-98 and subsequent income years, subject to subsection (4).

    (4) Subsections (1) and (2) do not apply to a taxpayer for an income year if—

    • (a) the taxpayer has, before 26 June 2003, filed a return of income for the income year; and

60 Debits and credits arising to group branch equivalent tax account
  • (1) In section MF 8(2)(a)—

    • (a) in the definition of item d, or LC 5 is replaced by , LC 5 or LC 16:

    • (b) in the definition of item e, companies that are members of the consolidated group is replaced by other companies.

    (2) In section MF 8(3)(a)—

    • (a) the credits referred to in paragraphs (a) and (b) is replaced by a credit referred to in paragraph (a):

    • (b) those paragraphs is replaced by that paragraph.

    (3) Subsections (1) and (2) apply for the 1997-98 and subsequent income years, subject to subsection (4).

    (4) Subsections (1) and (2) do not apply to a taxpayer for an income year if—

    • (a) the taxpayer has, before 26 June 2003, filed a return of income for the income year; and

61 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(2) is repealed.

    (2) Section MF 10(5B) is replaced by the following:

    • (5B) If an election under subsection (3) or (4) relates to an amount that exceeds the income tax liability, for the income year, of the company or group that receives the offset under subsection (5), the excess amount is treated as giving rise to a net loss of the company or group for the purpose of Parts IF and IG of an amount given by the following formula:

      .

      where—

      • a is the amount of the excess

      • b is the basic rate of income tax, expressed as a percentage, stated in—

        • (a) Schedule 1, Part A, clause 5, if the company is not a Maori authority or the group does not consist of Maori authorities; or

        • (b) Schedule 1, Part A, clause 2, if the company is a Maori authority or the group consists of Maori authorities.

    (3) Subsections (1) and (2) apply for the 1997-98 and subsequent income years, subject to subsection (4).

    (4) Subsections (1) and (2) do not apply to a taxpayer for an income year if—

    • (a) the taxpayer has, before 26 June 2003, filed a return of income for the income year; and

62 Debits arising to dividend withholding payment account
  • (1) In section MG 5(1)(c), company's imputation credit account is replaced by imputation credit account of the company or of an imputation group to which the company belongs.

    (2) In section MG 5(1)(f), section MG 8 is replaced by section MG 8(4).

    (3) In section MG 5(1)(g), section MG 8(5) is replaced by section MG 8B.

    (4) Subsection (3) applies for the 2004-05 and subsequent imputation years.

    (5) Subsection (3) applies to a company for an imputation year that begins after 31 March 1995 and before 1 April 2004 if the company makes an election under section MG 8B of the Income Tax Act 1994 that applies for the company for the imputation year.

    (6) Subsection (3) applies for an imputation year that begins after 31 March 1995 and before 1 April 2004 to a company that was an amalgamating company if the amalgamated company makes an election under section MG 8B of the Income Tax Act 1994 that applies for the amalgamating company for the imputation year.

63 Allocation rules for dividend withholding payment credits
  • (1) Section MG 8(5) to (7) are repealed.

    (2) Subsection (1) applies for the 2004-05 and subsequent imputation years.

    (3) Subsection (1) applies to a company for an imputation year that begins after 31 March 1995 and before 1 April 2004 if the company makes an election under section MG 8B of the Income Tax Act 1994 that applies for the company for the imputation year.

    (4) Subsection (1) applies for an imputation year that begins after 31 March 1995 and before 1 April 2004 to a company that was an amalgamating company if the amalgamated company makes an election under section MG 8B of the Income Tax Act 1994 that applies for the amalgamating company for the imputation year.

64 New section MG 8B inserted
  • After section MG 8, the following is inserted:

    MG 8B Policyholder credit account companies and dividend withholding payment credits
    • (1) This section applies to a policyholder credit account company (called the company) that is not a conduit tax relief company and an imputation year (called the dividend year) in which the company pays a dividend with a dividend withholding payment credit attached.

      (2) An allocation deficit debit of an amount given by subsection (3) arises at the end of the dividend year in the company's dividend withholding payment account if—

      • (a) the total of the amounts of the company's policyholder income and policyholder net loss for the DWP reference period, found using the policyholder base calculation for each imputation year, is greater than nil; and

      • (b) the shareholder DWP ratio for the DWP reference period exceeds the policyholder DWP ratio for the DWP reference period.

      (3) The amount of the allocation deficit debit that arises under subsection (2) is—

      • (a) equal to the maximum deficit debit, if the maximum deficit debit is less than or equal to the credit balance that is in the company's dividend withholding payment account immediately before any allocation deficit debit arises under this section:

      • (b) equal to the reduced deficit debit, if paragraph (a) does not apply.

      (4) In this section—

      DWP reference period means the period that consists of—

      • (a) the dividend year:

      • (b) the longest period of consecutive imputation years—

        • (i) that begins on or after the date on which this section applies for the company; and

        • (ii) that ends immediately before the dividend year; and

        • (iii) in which the company paid no dividend that had a dividend withholding payment credit attached

      maximum deficit debit means the quantity that is given by the following formula

      (a - b) x d x (1 - r)

      where—

      • a is the company's shareholder DWP ratio for the DWP reference period:

      • b is the company's policyholder DWP ratio for the DWP reference period:

      • d is the total of the amounts of the company's policy-holder income and policyholder net loss found for the DWP reference period using the policyholder base calculation:

      • r is the basic rate of income tax, expressed as a percentage, stated in—

        • (a) Schedule 1, Part A, clause 5, if the company is not a Maori authority:

        • (b) Schedule 1, Part A, clause 2, if the company is a Maori authority

      policyholder DWP ratio means the quantity that is given by the following formula

      .

      where—

      • c is the total for the DWP reference period of all the credits that have arisen in the company's policyholder credit account as a result of an election by the company under section MG 7 in relation to a credit balance in the company's dividend withholding payment account

      • d is the total of the amounts of the company's policy-holder income and policyholder net loss found for the DWP reference period using the policyholder base calculation

      • r is the basic rate of income tax, expressed as a percentage, stated in—

        • (a) Schedule 1, Part A, clause 5, if the company is not a Maori authority:

        • (b) Schedule 1, Part A, clause 2, if the company is a Maori authority

      reduced deficit debit means the quantity that is given by the following formula

      .

      where—

      • c is the total for the DWP reference period of all the credits that have arisen in the company's policyholder credit account as a result of an election by the company under section MG 7 in relation to a credit balance in the company's dividend withholding payment account

      • d is the total of the amounts of the company's policy-holder income and policyholder net loss found for the DWP reference period using the policyholder base calculation

      • e is the credit balance in the company's dividend withholding payment account at the end of the dividend year immediately before any allocation deficit debit arises under this section

      • f is the total amount of DWP credits that the company has attached to dividends paid by the company in the DWP reference period

      • g is the total amount of dividends paid by the company in the DWP reference period

      • r is the basic rate of income tax, expressed as a percentage, stated in—

        • (a) Schedule 1, Part A, clause 5, if the company is not a Maori authority:

        • (b) Schedule 1, Part A, clause 2, if the company is a Maori authority

      shareholder DWP ratio means the quantity given by the following formula

      .

      where—

      • f is the total amount of DWP credits that the company has attached to dividends paid by the company in the DWP reference period

      • g is the total amount of dividends paid by the company in the DWP reference period.

      (5) This section does not apply to a dividend that is the subject of a determination made by a statutory producer board or a co-operative company under section ME 30 or section ME 35.

      (6) This section applies for the 2004-05 and subsequent imputation years.

      (7) If a company makes an election in writing for an imputation year that begins after 31 March 1995 and before 1 April 2004, this section applies for the company for the imputation year and for subsequent imputation years.

      (8) If an amalgamated company makes an election in writing for an imputation year that begins after 31 March 1995 and before 1 April 2004 and for a company that was an amalgamating company in relation to the amalgamated company, this section applies for the amalgamating company for the imputation year and for subsequent imputation years.

      (9) If a nominated company for a consolidated group makes an election in writing for an imputation year that begins after 31 March 1995 and before 1 April 2004, this section applies for the consolidated group for the imputation year and for subsequent imputation years.

65 Further dividend withholding payment payable by company
  • (1) In section MG 9(5C)(b), payment of income tax is replaced by dividend withholding payment.

    (2) Subsection (1) applies for imputation years that begin on and after 1 April 1998.

66 Transfer of credit balance to imputation credit account
  • Section MG 11(1) is replaced by the following:

    • (1) A company that is not a conduit tax relief company and has a credit balance in the dividend withholding payment account of the company at the end of an imputation year, or immediately before a debit arises in the account under section MG 5(1)(j), may elect that all or part of the credit balance be, for the imputation year in which the credit balance occurs—

      • (a) a debit to the dividend withholding payment account of the company; and

      • (b) a credit to the imputation credit account of the company, or of an imputation group of which the company is a member at the time the credit balance occurs.

67 Debits arising to group dividend withholding payment account
  • (1) In section MG 15(1)(f), section MG 8 is replaced by section MG 8(4).

    (2) In section MG 15(1)(g), section MG 8(5) is replaced by section MG 8B.

    (3) Subsection (1) applies for the 2004-05 and subsequent imputation years to a company that is at the time of payment a member of the consolidated group.

    (4) Subsection (1) applies to a consolidated group for an imputation year that begins after 31 March 1995 and before 1 April 2004 if the nominated company for the consolidated group makes an election under section MG 8B of the Income Tax Act 1994 that applies for the consolidated group for the imputation year.

68 Application of specific dividend withholding provisions to consolidated groups
  • (1) Section MG 16A(1) is replaced by the following:

    • (1) Section MG 8 applies with any necessary modifications to a consolidated group—

      • (a) as if the consolidated group were a company; and

      • (b) for the purpose of section MG 8(2) to (4), without taking into account any dividend that is paid by a member of the consolidated group to another member of the consolidated group.

    • (1B) Section MG 8B applies with any necessary modifications to a consolidated group that has a policyholder credit account—

      • (a) as if the consolidated group were a company; and

      • (b) as if a reference to section MG 7 were a reference to section NH 6(2); and

      • (c) without taking into account any dividend that is paid by a member of the consolidated group to another member of the consolidated group.

    (2) Subsection (1) applies for the 2004-05 and subsequent imputation years.

    (3) Subsection (1) applies for a consolidated group for an imputation year that begins after 31 March 1995 and before 1 April 2004 if the nominated company for the consolidated group makes an election under section MG 8B of the Income Tax Act 1994 that applies for the consolidated group for the imputation year.

69 Further tax payable for end of year debit balance or when Maori authority ceases to exist
  • (1) Section MK 8(5) is replaced by the following:

    • (5) A Maori authority that pays an amount of further income tax for which the authority is liable may elect, with effect from the date on which the Commissioner receives the payment, that the amount paid be also credited in payment of a liability of the authority to pay income tax or provisional tax in relation to an income year that corresponds to an imputation year in which the authority was required to establish and maintain a Maori authority credit account.

    • (5B) A Maori authority that pays an amount of income tax in relation to an income year in which the authority was required to establish and maintain a Maori authority credit account and that is liable to pay further income tax in relation to an imputation year may elect, with effect from the date on which the Commissioner receives the payment, that the amount of the payment of tax be also credited in payment of the liability of the authority to pay the further income tax.

    (2) Subsection (1) applies for the 2004-05 and subsequent income years.

70 Accreditation requirements of PAYE intermediaries
  • (1) In section NBB 2(1)(c), the words before subparagraph (i) are replaced by the applicant, if a natural person or corporation sole, or each member of the applicant, if the applicant is an unincorporated body, or each of the persons acting as a director, secretary or statutory officer of the applicant, if the applicant is a body corporate, and any principal of the applicant.

    (2) In section NBB 2(4)(b), the words before subparagraph (i) are replaced by the person, if a natural person or corporation sole, or a member of the person, if the person is an unincorporated body, or a person acting as a director, secretary or statutory officer of the person, if the person is a body corporate, or a principal of the person.

71 Employer having PAYE intermediary—responsibilities and status under PAYE rules and SSCWT rules
  • (1) Section NBB 4(1) is replaced by the following:

    • (1) An employer who is in an arrangement with a PAYE intermediary that applies to an employee and a pay period must—

      • (a) if the employer has authorised the PAYE intermediary to direct the transfer of amounts from a bank account of the employer in satisfaction of the obligations under the arrangement of the PAYE intermediary to make payments on behalf of the employer, ensure that, at a time specified by the PAYE intermediary, the funds in the bank account of the employer that are available for transfer are sufficient to satisfy the obligations of the PAYE intermediary that relate to the employee and the pay period; or

      • (b) if the employer has not authorised the PAYE intermediary as described in paragraph (a), pay into the trust account established by the PAYE intermediary and identified in the employer's notice to the Commissioner under section NBB 3—

        • (i) if subparagraph (ii) does not apply, the employee's gross salary or wages for the pay period after deduction of any amount that is owed by the employee to the employer and may be lawfully withheld by the employer from the salary or wages:

        • (ii) if the employer has paid salary or wages to the employee in the way authorised by subsection (4), the amount that the employer is required by subsection (4)(d) to make available to the PAYE intermediary:

        • (iii) if the PAYE intermediary has agreed to assume obligations of the employer under the SSCWT rules, the specified superannuation contributions that are made in the pay period by the employer on behalf of the employee.

    • (1B) An employer who is in an arrangement with a PAYE intermediary that applies to an employee and a pay period must—

      • (a) keep records of the gross salary or wages of the employee for the pay period and the amounts withheld by the employer for the pay period; and

      • (b) provide information requested by the PAYE intermediary within the time agreed by the employer and the PAYE intermediary.

    (2) In section NBB 4(2), subsection (1) is replaced by subsections (1) and (1B).

    (3) In section NBB 4(3), subsection (1) is replaced by subsections (1) and (1B).

    (4) Section NBB 4(4)(c) and (d) are replaced by the following:

    • (c) the employer makes from the gross salary or wages of the employee the deduction that the PAYE rules and SSCWT rules would require of an employer who did not have a PAYE intermediary; and

    • (d) the employer makes available to the PAYE intermediary, in the way required by subsection (1), the amount of the deduction referred to in paragraph (c).

72 PAYE intermediary—responsibilities and status under PAYE rules and SSCWT rules
  • (1) In section NBB 5(1), and (1B) is inserted after section NBB 4(1) in both places that it occurs.

    (2) After section NBB 5(1), the following is inserted:

    • (1B) If a PAYE intermediary has been authorised by an employer to direct the transfer of amounts from a bank account of the employer as described in section NBB 4(1)(a), the PAYE intermediary must direct that, at or before the time of the transfer of the amount of salary or wages owing to the employee, an amount representing the deductions from the gross salary or wages of the employee that are required by the PAYE rules and SSCWT rules be transferred to—

      • (a) the Commissioner:

      • (b) the trust account established by the PAYE intermediary and identified in the employer's notice to the Commissioner under section NBB 3.

    (3) In section NBB 5(2B), and (1B) is inserted after section NBB 4(1) in both places that it occurs.

73 Operation of trust account
  • In section NBB 6(2), the following is inserted before paragraph (a):

    • (aa) deductions from gross salary or wages that are required by the PAYE rules and SSCWT rules:.

74 Amounts of tax deductions
  • (1) Section NC 6(1) is repealed.

    (2) In section NC 6(1A), For a period for which the amount of a tax deduction is not fixed by an annual taxing Act, the is replaced by A.

    (3) In section NC 6(1B), by an annual taxing Act or is omitted.

    (4) In section NC 6(1C), by an annual taxing Act or is omitted.

    (5) Section NC 6(2) is repealed.

75 Delivery of withholding declaration
  • (1) Section NC 7(2) is replaced by the following:

    • (2) If a person who is making a withholding payment has not received the withholding declaration required by subsection (1), the person must make from the withholding payment a tax deduction that is equal to the sum of the amount of the tax deduction that would, apart from this subsection, be made from the withholding payment and an amount equal to—

      • (a) 15% of the amount of the withholding payment, if neither of paragraphs (b) and (c) applies; or

      • (b) 5% of the amount of the withholding payment, if—

        • (i) the person receiving the withholding payment is a company that is a non-resident contractor for the purposes of the Income Tax (Withholding Payments) Regulations 1979; and

        • (ii) the person referred to in subparagraph (i) receives the withholding payment other than directly or indirectly as a result of a choice that is made for purposes that include a purpose of defeating the intent and application of paragraph (a); and

        • (iii) paragraph (c) does not apply; or

      • (c) nil, if the withholding payment is a payment of the class specified in clause 4(b) of Part B of the Schedule of the Income Tax (Withholding Payments) Regulations 1979.

    (2) Subsection (1) applies for withholding payments made on or after the date on which this Act receives the Royal assent.

76 Amount of tax deductions for pay period current when tax deductions altered
  • In section NC 12(1), by an annual taxing Act or is omitted.

77 Special filing rule for employer who stops employing staff during year
  • In section ND 12, section ND 10(4) and ND 10(5) is replaced by section ND 10(3) to (5).

78 Application of RWT rules
  • (1) In section NF 1(2)(a)(x), Commissioner. is replaced by Commissioner; or and the following is added:

    • (xi) interest payable on overpaid tax in accordance with section 120D of the Tax Administration Act 1994.

    (2) Section NF 1(3) and (3A) are repealed.

    (3) Subsections (1) and (2) apply to payments of interest made on or after 1 April 2005.

79 Liability to make deduction in respect of foreign withholding payment dividend
  • (1) Section NH 1(2)(a) is replaced by the following:

    • (a) a dividend that is paid by a foreign company and that—

      • (i) is derived by a company that is resident in New Zealand; and

      • (ii) is exempt income under section CB 10(1), (4) or (5) for the company that is resident in New Zealand; and

      • (iii) would not, in the absence of section CB 10, be exempt income under section CB 3(b) or CB 4 for the company that is resident in New Zealand:.

    (2) Section NH 1(3) is repealed.

    (3) Subsections (1) and (2) apply for a dividend that is derived in or after the 1997-98 income year.

80 Application of specific dividend withholding payment provisions to consolidated groups
  • (1) Section NH 6(3) and (4) are repealed.

    (2) In section NH 6(6)(a)(ii), payment is inserted after dividend withholding.

    (3) Subsection (1) applies for the 2004-05 and subsequent imputation years.

    (4) Subsection (1) applies for a consolidated group for an imputation year that begins after 31 March 1995 and before 1 April 2004 if the nominated company for the consolidated group makes an election under section MG 8B of the Income Tax Act 1994 that applies for the consolidated group for the imputation year.

81 Definitions
  • (1) This section amends section OB 1.

    (2) In the definition of allocation deficit debit, or section MG 8(5) is replaced by or MG 8B.

    (3) The definition of business of farming is omitted.

    (4) In the definition of community trust, section 2 is replaced by section 4.

    (5) In paragraph (b) of the definition of depreciable property

    • (a) in subparagraph (vi)—

      • (i) DO 4D, is inserted after DO 3,:

      • (ii) DO 4C, is inserted after DO 4,:

    • (b) in subparagraph (viii), DO 4, DO 4C, is inserted after DO 3,.

    (6) In the definition of diminished value

    • (a) in the introductory words, DO 4C is inserted after sections DL 2, DO 4,:

    • (b) in paragraph (b), sections DL 2, DO 4, DO 4C, DO 4D and DO 5 replaces section DL 2 or section DO 4 or section DO 5.

    (7) After the definition of dual resident company, the following is inserted:

    DWP reference period is defined in section MG 8B(4) for the purpose of that section.

    (8) After the definition of early income year, the following is inserted:

    early-payment discount is defined in section MBC 1 for the purpose of Part MBC.

    (9) In the definition of estimated useful life, the following is added:

    • (c) in respect of a listed horticultural plant, the period of time over which the listed horticultural plant might reasonably be expected to be useful to a person in deriving income or in carrying on a business in New Zealand, with the expectation based on an assumption of normal and reasonable maintenance.

    (10) The definition of finance lease is replaced by the following:

    finance lease for a taxpayer means a lease of a lease asset that at the time of entry by the taxpayer involves or is part of an arrangement that involves—

    • (a) the transfer of the ownership of the lease asset to the lessee or an associate of the lessee during or at the end of the lease term:

    • (b) the lessee or an associate of the lessee having the option of acquiring the lease asset for an amount that is likely to be substantially lower than the lease asset's market value on the date of acquisition:

    • (c) a lease term that is more than 75% of the lease asset's estimated useful life:

    • (d) a right of an associate of the lessee to acquire the lease asset, or a right of the lessor to require an associate of the lessee to acquire the lease asset, during the lease term under an arrangement that does not entitle the associate to receive all of the lease payments that may fall due after the acquisition.

    (11) The definition of insurer is replaced by the following:

    insurer, in the definition of insured person and in sections CN 4 and OE 4, means a person who assumes liability under a contract of insurance.

    (12) The definition of land tax is repealed.

    (13) In paragraph (f) of the definition of lease

    • (a) in the words preceding subparagraph (i)—

      • (i) operating lease, is inserted after lease term,:

      • (ii) FC 8G is replaced by FC 8I:

    • (b) after subparagraph (ii), the following is inserted:

      • (iib) includes a licence to use intangible property; and.

    (14) In paragraph (b) of the definition of lessee, , hires, or bails is omitted.

    (15) In paragraph (a) of the definition of lessee's acquisition cost, means the consideration provided to the lessee for the finance lease asset (as determined under the definition of consideration) is replaced by for a finance lease asset, means the consideration provided to the lessee under the finance lease, as determined under the definition of consideration,.

    (16) After the definition of listed company the following is inserted:

    listed horticultural plant, in sections DO 4B, DO 4C and DO 4D—

    • (a) means a horticultural plant, tree, vine, bush, cane, or similar plant that is cultivated on land, that is of a type that is listed in a determination made by the Commissioner under section 91AAB of the Tax Administration Act 1994:

    • (b) does not include—

      • (i) a tree planted mainly for the purpose of timber production:

      • (ii) a tree or other similar plant planted mainly for the purpose of ornament:

      • (iii) a vine planted mainly for the purpose of producing grapes for wine production.

    (17) After the definition of Maui field, the following is inserted:

    maximum deficit debit is defined in section MG 8B(4) for the purpose of that section.

    (18) After the definition of minibus, the following is inserted:

    minimum employment period is defined in section CL 8(2) for the purpose of that section.

    (19) In the definition of net loss, section 177C(4) is replaced by section 177C(5).

    (20) The definition of new start grant is replaced by the following:

    new start grant means a grant of money that is designated by the Minister of Agriculture as a new start grant and is paid by the Government of New Zealand to a person in respect of—

    • (a) an adverse event:

    • (b) an event that is a qualifying event.

    (21) After the definition of non-filing taxpayer, the following is inserted:

    non-listed horticultural plant, in sections DO 4 and Schedule 7, Part A, item 12—

    • (a) means—

      • (i) a horticultural plant, tree, vine, bush, cane, or similar plant that is cultivated on land, that is not a listed horticultural plant:

      • (ii) a tree or other similar plant planted mainly for the purpose of ornament:

    • (b) does not include a tree planted mainly for the purpose of timber production.

    (22) The definition of non-taxable bonus issue is replaced by the following:

    non-taxable bonus issue means a bonus issue that is not a taxable bonus issue.

    (23) In paragraph (a)(ii) of the definition of PAYE intermediary, section NBB 3; or is replaced by section NBB 3; and and the following is added:

    • (iii) has entered agreements that have been approved by the Commissioner under section NBB 3 with not less than 10 employers; or.

    (24) After the definition of physical cost of production, the following is inserted:

    planting is defined in section DO 4B(1) for the purpose of sections DO 4B, DO 4C and DO 4D.

    (25) After the definition of pleasure craft, the following is inserted:

    plot is defined in section DO 4B(1) for the purpose of sections DO 4B, DO 4C and DO 4D.

    (26) After the definition of policyholder credit account person, the following is inserted:

    policyholder DWP ratio is defined in section MG 8B(4) for the purpose of that section.

    (27) In the definition of premium, paragraph (b) is replaced by the following:

    • (b) in the definition of insured person, and in sections CN 4, GD 13 and OE 4, means a premium, guarantee fee or other amount payable in respect of a contract of insurance.

    (28) The definition of qualifying event is replaced by the following:

    qualifying event means—

    • (a) the extreme climatic conditions that occurred during the month of February 2004 in New Zealand:

    • (b) the storm event that occurred during the month of July 2004 in the Bay of Plenty area:

    • (c) any naturally-occurring event that occurs after the month of July 2004 and—

      • (i) in respect of which a state of emergency is declared under the Civil Defence Act 1983 or under Part 4 of the Civil Defence Emergency Management Act 2002; and

      • (ii) that the Governor-General by Order in Council declares to be a qualifying event.

    (29) After the definition of qualifying event, the following is inserted:

    qualifying foreign equity investor is defined in section CB 2(4) for the purpose of that section.

    (30) In the definition of recognised exchange, CB 2(1), is inserted after sections.

    (31) After the definition of reduced deduction, the following is inserted:

    reduced deficit debit is defined in section MG 8B(4) for the purpose of that section.

    (32) After the definition of rents, the following is inserted:

    replaced area fraction is defined in section DO 4B(1) for the purpose of sections DO 4B, DO 4C and DO 4D.

    (33) After the definition of replacement permit, the following is inserted:

    replacement plant, in sections DO 4, DO 4B, DO 4C and DO 4D, means a listed horticultural plant that replaces a listed horticultural plant, whether or not it is of the same type of listed horticultural plant.

    (34) In the definition of resident in Australia, paragraph (a) is omitted.

    (35) In the definition of schedular gross income, paragraph (g) is omitted.

    (36) After the definition of shareholder dividend statement, the following is inserted:

    shareholder DWP ratio is defined in section MG 8B(4) for the purpose of that section.

    (37) After the definition of significant financial hardship, the following is inserted:

    small-business taxpayer is defined in section MBC 1 for the purpose of Part MBC.

    (38) In the definition of special corporate entity, after paragraph (h), the following is added:

    • (j) any body incorporated under the Incorporated Societies Act 1908, for an income year in which the body on no day in the income year has shares on issue to the members of the body.

    (39) The definition of tax credit advantage is replaced by the following:

    tax credit advantage is defined in—

    • (a) section GC 22(9) for the purpose of that section:

    • (b) section GC 27B(10) for the purpose of that section.

    (40) In the definition of taxable bonus issue, the following is added after paragraph (b):

    • (c) a bonus issue that is made by a unit trust that is a foreign company to a unit holder under an arrangement or decision that the unit trust will make the bonus issue instead of causing a beneficial interest in money or property of the unit trust to vest absolutely in the unit holder.

    (41) In the definition of taxable period, 1975 is replaced by 1985.

    (42) Subsection (38), other than in the application of Part IG, applies for the 1995-96 and subsequent income years.

    (43) Subsection (38), in the application of Part IG—

    • (a) in relation to a society and an income year for which section OD 3(4) does not apply, applies for an income year that is—

      • (i) one of the 1995-96 to 1999-2000 income years if before 29 March 2004 the society makes a tax return for the income year in which the society adopts a tax position that is consistent with the amendment made by subsection (38); or

      • (ii) the 2000-01 or a subsequent income year:

    • (b) in relation to a society and an income year for which section OD 3(4) does apply, applies—

      • (i) for the purpose of section IG 2(1) and (2)(e), for an income year that is—

        • (A) one of the 1995-96 to 1999-2000 income years if before 29 March 2004 the society makes a tax return for the income year in which the society adopts a tax position that is consistent with the amendment made by subsection (38); or

        • (B) the 2000-01 or a subsequent income year:

      • (ii) other than for the purpose of section IG 2(1) and (2)(e), for an income year that is—

        • (A) the 1995-96 or 1996-97 income year if before 29 March 2004 the society makes a tax return for the income year in which the society adopts a tax position that is consistent with the amendment made by subsection (38); or

        • (B) the 2003-04 or a subsequent income year.

    (44) Subsection (13)(a)(i) does not apply for a taxpayer and an income year if before 29 March 2004 the taxpayer furnishes a tax return for the income year in which the taxpayer takes a tax position that is consistent with the definition of lease that would apply for the income year but for the amendment made by subsection (13)(a)(i).

    (45) Subsections (10), (13)(b) and (14) apply for an arrangement entered on or after 29 March 2004.

    (46) Subsections (22) and (40) apply for bonus issues that are made on or after the day on which this Act receives the Royal assent.

    (47) Subsections (3), (5), (6), (9), (16), (20), (21), (24), (25), (32), (33) and (35) apply for the 2003-04 and subsequent income years.

    (48) Subsections (4) and (39) apply for the 2004 05 and subsequent income years.

    (49) Subsections (2), (7), (17), (26), (31) and (36) apply for the 2004-05 and subsequent imputation years.

    (50) Subsections (2), (7), (17), (26), (31) and (36) apply for a company or consolidated group for an imputation year that begins after 31 March 1995 and before 1 April 2004 if the company or the nominated company for the consolidated group makes an election under section MG 8B of the Income Tax Act 1994 that applies for the company or consolidated group for the imputation year.

    (51) Subsection (2) applies for an imputation year that begins after 31 March 1995 and before 1 April 2004 for a company that was an amalgamating company if the amalgamated company makes an election under section MG 8B of the Income Tax Act 1994 that applies for the amalgamating company for the imputation year.

    (52) Subsection (23) applies for pay periods beginning on or after 1 April 2004.

    (53) Subsections (8) and (37) apply for income years commencing on and after 1 April 2005.

82 Meaning of income tax
  • In section OB 6(1)(b), CB 2, is inserted before CB 10.

83 Voting interests
  • (1) After section OD 3(3), the following is added:

    • (4) For the purpose of Part IG, other than section IG 2(1) and (2)(e)—

      • (a) if a society that is incorporated under the Incorporated Societies Act 1908 has issued no shares, each member of the society, while being a member, is treated as holding a share issued by the society:

      • (b) a person who is a member of a society at the beginning of the 1997-98 income year is treated as holding a share referred to in paragraph (a) for all previous income years:

      • (c) a share referred to in paragraph (a) is treated as holding all the types of right that are shareholder decision-making rights:

      • (d) all the shareholder decision-making rights in the society are treated as being carried by the shares that the society is treated as having issued under paragraph (a):

      • (e) section OD 3(3)(d) does not apply to a share referred to in paragraph (a).

    (2) After section OD 3(4), as inserted by subsection (1), the following is added:

    • (5) For the purpose of Part IG, other than section IG 2(1) and (2)(e), the members at the beginning of the 2003-04 income year of a society are treated as being the members of the society for the 1997-98 to 2002-03 income years if the society is—

      • (a) subject to subsection (3) for the 2002-03 income year; and

      • (b) a special corporate entity at the beginning of the 2003-04 income year.

    (3) Subsection (1) applies for a taxpayer and a tax position taken by the taxpayer for the 1997-98 to 2002-03 income years.

    (4) Subsection (2) applies for a taxpayer and a tax position taken by the taxpayer for the 2003-04 and subsequent income years.

84 Further definitions of associated persons
  • In section OD 8(1), CB 2(4), is inserted after sections.

85 Schedule 7—Expenditure on land and aquaculture improvements
  • (1) In Schedule 7, Part A, item 12, vines or trees on the land other than trees planted primarily and principally for the purposes of timber production is replaced by non-listed horticultural plants on the land.

    (2) Subsection (1) applies for the 2003-04 and subsequent income years.

Part 2
Amendments to Tax Administration Act 1994

87 Purpose of Act
  • In section 2(4), that are not in Part 6 (which relates to assessments) and is inserted after provisions of this Act.

88 Interpretation
  • (1) This section amends section 3(1).

    (2) After the definition of contested tax, the following is inserted:

    contract payment, for the purpose of section 141AA, has the meaning given by regulation 2(1) of the Income Tax (Withholding Payments) Regulations 1979.

    (3) In paragraph (b)(iii) of the definition of disputable decision, Part 8A: is replaced by Part 8A; or and the following is added:

    • (iv) that is left to the Commissioner's discretion under sections 89K, 89L, 89M(8) and (10) and 89N(3).

    (4) After the definition of disputant's statement of position, the following is inserted:

    disqualifying offence is defined in section 141FB(3) for the purpose of section 141FB

    disqualifying penalty is defined in section 141FB(3) for the purpose of section 141FB.

    (5) After the definition of GST, the following is inserted:

    GST payable has the meaning given to tax payable by section 2 of the Goods and Services Tax Act 1985.

    (6) In the definition of late payment penalty, 21Q is replaced by 12Q.

    (7) The definition of response period is replaced by the following:

    response period for a notice in response to another notice (called the initiating notice) means—

    • (a) the 2-month period starting on the date of issue of the initiating notice, if the initiating notice is—

      • (i) a notice of proposed adjustment:

      • (ii) a notice of disputable decision:

      • (iii) a notice revoking or varying a disputable decision that is not an assessment:

      • (iv) a disclosure notice:

      • (v) a notice from the Commissioner rejecting an adjustment proposed by a disputant:

    • (b) the 2-month period starting on the date of issue of the initiating notice, if the initiating notice is a disputant's statement of position:

    • (c) if the notice is a notice of proposed adjustment that is issued by a taxpayer under section 89D and the initiating notice is a notice of assessment issued by the Commissioner, the 4-month period starting on the date of the initiating notice:

    • (d) if the notice is a notice of proposed adjustment that is issued by a taxpayer under section 89DA and the initiating notice is a notice of assessment issued by the taxpayer, the 4-month period starting on the date on which the taxpayer's notice of assessment is received at an office of the department.

    (8) After the definition of response period, the following is inserted:

    responsible department, in sections 81(4)(f) and (o), 82 and 85, means—

    • (a) in relation to a benefit that is not a student allowance, the department for the time being responsible for administration of the Social Security Act 1964:

    • (b) in relation to a student allowance, the department for the time being responsible for administration of Part 25 of the Education Act 1989.

    (9) After the definition of status ruling, the following is inserted:

    student allowance means an allowance paid under regulations made under section 303 of the Education Act 1989.

    (10) Subsection (7) applies—

    • (a) for notices issued in relation to GST return periods that commence on or after 1 April 2005:

    • (b) for notices that are not issued in relation to GST return periods and that are issued on or after 1 April 2005.

89 Information to be furnished on request of Commissioner
  • In section 17(1C)(a)(i), in the knowledge, possession or control of is replaced by held by, in both places where it appears.

90 Section 33B repealed
  • (1) Section 33B is repealed.

    (2) Subsection (1) applies for the 2003-04 and subsequent income years.

91 Officers to maintain secrecy
  • (1) In section 81(4)(f), in the portion preceding subparagraph (i), the department for the time being responsible for the administration of the Social Security Act 1964 is replaced by the responsible department.

    (2) In section 81(4)(o), the department for the time being responsible for the administration of the Social Security Act 1964 where it first appears is replaced by the responsible department and where it appears for the second time is replaced by that department.

92 Disclosure of information for matching purposes
  • (1) In section 82(1), the department for the time being responsible for the administration of the Social Security Act 1964 is replaced by the responsible department.

    (2) In section 82(2), the department for the time being responsible for the administration of the Social Security Act 1964 is replaced by the responsible department.

    (3) In section 82(6), the department for the time being responsible for the administration of the Social Security Act 1964 is replaced by the responsible department.

    (4) In section 82(7), the department for the time being responsible for the administration of the Social Security Act 1964 is replaced by the responsible department.

    (5) After section 82(7), the following is inserted:

    • (7B) If the Commissioner supplies under subsection (6) or (7) information about a person to the responsible department, the Commissioner may also supply to that department the following additional information that is held by the Department and that relates to the person:

      • (a) the full name and date of birth of the person:

      • (b) if the information held by the Department includes information about the person's employment—

        • (i) the telephone number of each employer of the person:

        • (ii) the email address of each employer of the person:

        • (iii) the tax code or codes applicable to the person during each period for which the person received a benefit.

    (6) In section 82(9)

    • (a) in paragraph (a) of the definition of authorised officer, the department for the time being responsible for the administration of the Social Security Act 1964 is replaced by the responsible department:

    • (b) the definition of beneficiary is replaced by the following:

      beneficiary means—

      • (a) a person who is receiving, or has received, a benefit or earnings related compensation:

      • (b) an applicant for a benefit or earnings related compensation:

      • (c) in the case of a benefit that is a student allowance, a person who is a spouse of the recipient of the benefit under regulation 2 of the Student Allowances Regulations 1998:

    • (c) after the definition of beneficiary information, the following is inserted:

      benefit includes a benefit payable under the Social Security Act 1964 and a student allowance payable under Part 25 of the Education Act 1989.

93 Disclosure of address information in relation to debtors
  • (1) Section 85(1) is replaced by the following:

    • (1) The purpose of this section is to facilitate the exchange of information between the Inland Revenue Department and the responsible department for the purpose of assisting the responsible department to recover money owed by debtors to the responsible department, acting in the name of the Crown.

    (2) In section 85(2), the department for the time being responsible for the administration of the Social Security Act 1964 is replaced by the responsible department.

    (3) In section 85(3), the department for the time being responsible for the administration of the Social Security Act 1964 is replaced by the responsible department.

    (4) Section 85(6) is amended by—

    • (a) in the definition of authorised officer, replacing the department for the time being responsible for the administration of the Social Security Act 1964 by the responsible department:

    • (b) after paragraph (c) of the definition of debtor, adding the following:

      • (d) a person who is not currently receiving a student allowance and from whom a debt relating to an allowance (as defined in section 302 of the Education Act 1989) is recoverable under section 307B of that Act.

94 Further secrecy requirements
  • (1) In section 87(5)(a)(i), (eb), is inserted after (e),.

    (2) Subsection (1) applies for secrecy certificates that are signed on or after the date on which this Act receives the Royal assent.

95 Notices of proposed adjustment required to be issued by Commissioner
  • (1) After section 89C(d), the following is inserted:

    • (db) the assessment is made in relation to a matter for which the material facts and relevant law are identical to those for an assessment of the taxpayer for another income year that is at the time the subject of court proceedings; or.

    (2) After section 89C(e), the following is inserted:

    • (eb) the Commissioner has reasonable grounds to believe that the taxpayer has left New Zealand and may have been involved in fraudulent activity; or.

    (3) Subsections (1) and (2) apply to assessments for which notices are issued on or after 1 April 2005.

96 Taxpayers and others with standing may issue notices of proposed adjustment
  • (1) After section 89D(2B) the following is inserted:

    • (2C) A taxpayer who has not provided a GST tax return for a GST return period may not dispute the assessment made by the Commissioner other than by providing a GST return for the GST return period.

    (2) Section 89D(4) is repealed.

    (3) Subsections (1) and (2) apply for GST return periods that begin on or after 1 April 2005.

97 Taxpayer may issue notice of proposed adjustment for taxpayer assessment
  • (1) In section 89DA(1), or a GST return period is inserted after income year.

    (2) Section 89DA(2) is replaced by the following:

    • (2) A notice of proposed adjustment under this section is not effective unless it is issued within the response period for the notice.

    (3) Subsections (1) and (2) apply to notices issued in relation to GST return periods that begin on or after 1 April 2005.

98 Election of small claims jurisdiction of Taxation Review Authority
  • (1) In section 89E(1), wherever it appears, $15,000 is replaced by $30,000.

    (2) Subsection (1) applies to disputes that are commenced under Part 4A of the Tax Administration Act 1994 on or after 1 April 2005.

99 Section 89F replaced
  • (1) Section 89F is replaced by the following:

    89F Content of notice of proposed adjustment
    • (1) A notice of proposed adjustment must—

      • (a) contain sufficient detail of the matters described in subsections (2) and (3) to identify the issues arising between the Commissioner and the disputant; and

      • (b) be in the prescribed form.

      (2) A notice of proposed adjustment issued by the Commissioner must—

      • (a) identify the adjustment or adjustments proposed to be made to the assessment; and

      • (b) provide a concise statement of the key facts and the law in sufficient detail to inform the disputant of the grounds for the Commissioner's proposed adjustment or adjustments; and

      • (c) state how the law applies to the facts.

      (3) A notice of proposed adjustment issued by a disputant must—

      • (a) identify the adjustment or adjustments proposed to be made to the assessment; and

      • (b) provide a statement of the facts and the law in sufficient detail to inform the Commissioner of the grounds for the disputant's proposed adjustment or adjustments; and

      • (c) state how the law applies to the facts; and

      • (d) include copies of the documents of which the disputant is aware at the time that the notice is issued that are significantly relevant to the issues arising between the Commissioner and the disputant.

    (2) Subsection (1) applies to disputes that are commenced under Part 4A of the Tax Administration Act 1994 on or after 1 April 2005.

100 Issue of response notice
  • (1) Section 89G(2) is replaced by the following:

    • (2) A notice of response must state concisely—

      • (a) the facts or legal arguments in the notice of proposed adjustment that the issuer of the notice of response considers are wrong; and

      • (b) why the issuer of the notice of response considers those facts or legal arguments to be wrong; and

      • (c) any facts and legal arguments relied on by the issuer of the notice of response; and

      • (d) how the legal arguments apply to the facts; and

      • (e) the quantitative adjustments to any figure referred to in the notice of proposed adjustment that result from the facts and legal arguments relied on by the issuer of the notice of response.

    (2) Subsection (1) applies to disputes that are commenced under Part 4A of the Tax Administration Act 1994 on or after 1 April 2005.

101 Late actions deemed to occur within response period
  • (1) In section 89K(1)(a)(ii), GST tax return is replaced by GST tax return; or and the following is added:

    • (iii) issuing a statement of position.

    (2) In section 89K(1)(a)(ii), in respect of a disputable decision or a GST tax return,— is replaced by or 89DA in respect of a disputable decision; or.

    (3) After section 89K(1)(a)(ii), the following is added:

    • (iii) issuing a statement of position,—.

    (4) In section 89K(1)(b)(ii)(A), or GST tax return is omitted.

    (5) In section 89K(1)(b)(ii)(B), section 89F is replaced by section 89F; or and the following is added:

    • (iii) a statement of position.

    (6) In section 89K(1)(d), proposed adjustment is replaced by proposed adjustment; or, and the following is added:

    • (e) the disputant's statement of position.

    (7) Section 89K(3)(a) and (b) are replaced by the following:

    • (a) an exceptional circumstance arises if—

      • (i) an event or circumstance beyond the control of a disputant provides the disputant with a reasonable justification for not rejecting a proposed adjustment, or for not issuing a notice of proposed adjustment or statement of position, within the response period for the notice:

      • (ii) a disputant is late in issuing a notice of proposed adjustment, notice of response or statement of position but the Commissioner considers that the lateness is minimal, or results from 1 or more statutory holidays falling in the response period:

    • (b) an act or omission of an agent of a disputant is not an exceptional circumstance unless—

      • (i) it was caused by an event or circumstance beyond the control of the agent that could not have been anticipated, and its effect could not have been avoided by compliance with accepted standards of business organisation and professional conduct; or

      • (ii) the agent is late in issuing a notice of proposed adjustment, notice of response or statement of position but the Commissioner considers that the lateness is minimal, or results from 1 or more statutory holidays falling in the response period.

    (8) Subsections (1) to (7) apply to disputes that are commenced under Part 4A of the Tax Administration Act 1994 on or after 1 April 2005.

102 Disclosure notices
  • (1) In section 89M(1), the Commissioner may issue is replaced by and subject to section 89N, the Commissioner must issue.

    (2) After section 89M(6), the following is inserted:

    • (6B) In subsections (4)(b) and (6)(b), evidence refers to the available documentary evidence on which the person intends to rely, but does not include a list of potential witnesses, whether or not identified by name.

    (3) Section 89M(7) is replaced by:

    • (7) A disputant who does not issue a statement of position in the prescribed form within the response period for the statement of position, is treated as follows:

      • (a) if the Commissioner has proposed the adjustment to the assessment, the disputant is treated as having accepted the Commissioner's notice of proposed adjustment or statement of position:

      • (b) if the disputant has proposed the adjustment to the assessment, the disputant is treated as not having issued a notice of proposed adjustment.

    (4) Subsections (1) to (3) apply to disputes that are commenced under Part 4A of the Tax Administration Act 1994 on or after 1 April 2005.

103 New sections 89N and 89O inserted
  • (1) After section 89M, the following are inserted:

    89N Completing the disputes process
    • (1) This section applies if—

      • (a) a notice of proposed adjustment has been issued; and

      • (b) the dispute has not been resolved by agreement between the Commissioner and the disputant; and

      • (c) none of the following applies:

        • (i) the Commissioner notifies the disputant that, in the Commissioner's opinion, the disputant in the course of the dispute has committed an offence under an Inland Revenue Act that has had an effect of delaying the completion of the disputes process:

        • (ii) the Commissioner has reasonable grounds to believe that 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:

        • (iii) the Commissioner has reasonable grounds to believe that a person who is, under section OD 8(3) of the Income Tax Act 2004, 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:

        • (iv) the disputant has begun judicial review proceedings in relation to the dispute:

        • (v) a person who is, under section OD 8(3) of the Income Tax Act 2004, 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:

        • (vi) during the disputes process, the disputant receives from the Commissioner a request under a statute for information relating to the dispute and fails to comply with the request within a period that is specified in the request:

        • (vii) the disputant elects under section 89E to have the dispute heard by a Taxation Review Authority acting in its small claims jurisdiction:

        • (viii) the disputant and the Commissioner agree in writing that they have reached a position in which the dispute would be resolved more efficiently by being submitted to the court or Taxation Review Authority without completion of the disputes process:

        • (ix) the disputant and the Commissioner agree in writing to suspend proceedings in the dispute pending a decision in a test case referred to in section 89O.

      (2) If this section applies, the Commissioner may not amend an assessment under section 113 before one of the following occurs:

      • (a) the Commissioner or the disputant accepts a notice of proposed adjustment, notice of response, or statement of position issued by the other:

      • (b) the Commissioner considers a statement of position issued by the disputant.

      (3) Despite subsection (2), the Commissioner may apply to the High Court for an order that allows more time for the completion of the disputes process, or for an order that completion of the disputes process is not required.

      (4) The Commissioner must make an application under subsection (3) within the period of time during which the Commissioner would otherwise be required, under the Inland Revenue Acts, to make an amended assessment.

      (5) If the Commissioner makes an application under subsection (3), the period of time during which the Commissioner must make an amended assessment is the total of—

      • (a) the period of time within which the Commissioner, in the absence of the application, would be required under the Inland Revenue Acts to make the amended assessment:

      • (b) the period of time that starts on the date on which the Commissioner files the application in the High Court and ends on the earliest of—

        • (i) the date of the High Court's decision of the application:

        • (ii) the date on which the application is otherwise resolved:

        • (iii) the date on which the dispute is otherwise resolved:

      • (c) any further period of time that is allowed by an order of a court as a result of the application.

    89O Test cases
    • (1) This section applies if—

      • (a) a dispute between a disputant and the Commissioner has been identified; and

      • (b) the Commissioner has designated a separate challenge as a test case.

      (2) The disputant and the Commissioner may agree in writing to suspend the proceedings in the dispute because there is significant similarity between the facts and questions of law in the dispute and the facts and questions of law in the challenge that has been designated as a test case.

      (3) A suspension that is agreed under subsection (2) starts on the date of the agreement and ends on the earliest of—

      • (a) the date of the court's decision in the test case:

      • (b) the date on which the test case is otherwise resolved:

      • (c) the date on which the dispute is otherwise resolved.

      (4) The Commissioner may make an assessment or perform an action in relation to a suspended dispute that is consistent with the resolution of the test case.

      (5) If a suspension is agreed under subsection (2), the period of time during which the Commissioner must make an amended assessment, or perform an action, that is the subject of the suspended dispute is the total of—

      • (a) the period of time within which the Commissioner, in the absence of the suspension, would be required under the Inland Revenue Acts to make the amended assessment or perform the action:

      • (b) the period of the suspension that is described in subsection (3).

    (2) Subsection (1) applies to disputes that are commenced under Part 4A of the Tax Administration Act 1994 on or after 1 April 2005.

104 Determinations in relation to financial arrangements
  • (1) Section 90(6) is replaced by the following:

    • (6) The Commissioner may at any time—

      • (a) make a determination that varies, cancels, restricts or extends in scope an earlier determination made under this section:

      • (b) issue a notice that cancels a determination made under this section.

    • (6B) A person who acquires or issues a financial arrangement before the date of notification or publication of a determination, or notice, that is authorised by subsection (6) is not required to apply the determination to the financial arrangement, or treat the notice as affecting the financial arrangement, until the date that is 4 years after that date of notification or publication.

    (2) In section 90(7)

    • (a) and notices issued by the Commissioner under subsection (6)(b) is inserted after subsection (1):

    • (b) or notice is inserted after determination.

    (3) In section 90(8), or notice is inserted after determination.

105 Determinations relating to financial arrangements
  • Section 90AC(6) is replaced by the following:

    • (6) The Commissioner may at any time—

      • (a) make a determination that varies, cancels, restricts or extends in scope an earlier determination under this section:

      • (b) issue a notice that cancels a determination made under this section.

106 Notification of determinations
  • (1) In the heading to section 90AD, and notices is added after determinations.

    (2) In section 90AD(1), or notice is inserted after determination wherever it occurs.

    (3) In section 90AD(2), or notice is inserted after determination.

107 Section 90AE replaced
  • Section 90AE is replaced by the following:

    90AE Four-year period in which determination not required to be applied
    • A person who enters into a financial arrangement before the date of notification or publication of a determination, or notice, that is authorised by section 90AC(6) is not required to apply the determination to the financial arrangement, or treat the notice as affecting the financial arrangement, until the date that is 4 years after that date of notification or publication.

108 Determinations in relation to apportionment of interest costs
  • (1) Section 90A(6) is replaced by the following:

    • (6) The Commissioner may at any time—

      • (a) make a determination that varies, cancels, restricts or extends in scope an earlier determination under this section:

      • (b) issue a notice that cancels a determination under this section.

    • (6B) A person who enters into a financial arrangement before the date of notification or publication of a determination, or notice, that is authorised by subsection (6) is not required to apply the determination to the financial arrangement, or treat the notice as affecting the financial arrangement, until the first income year that commences after that date of notification or publication.

    (2) In section 90A(7)

    • (a) and notices issued by the Commissioner under subsection (6)(b) is inserted after subsection (1):

    • (b) or notice is inserted after determination

    (3) In section 90A(8), or notice is inserted after determination.

109 Determinations in relation to standard-cost household service
  • (1) In the words before section 91AA(2)(a), gross income is replaced by an amount.

    (2) In section 91AA(2)(a), section CB 9(h) is replaced by section CB 9(gb) and (h) of the Income Tax Act 1994.

    (3) In section 91AA(3), gross income is replaced by an amount.

    (4) Subsections (1) to (3) apply for the 2003-04 and subsequent income years.

110 New section 91AAB inserted
  • (1) After section 91AA, the following is inserted:

    91AAB Determinations relating to types and diminishing values of listed horticultural plants
    • (1) For the purpose of sections DO 4B, DO 4C, and DO 4D of the Income Tax Act 1994, the Commissioner may determine—

      • (a) that a type of horticultural plant, tree, vine, bush, cane, or other similar plant that is cultivated on land, is a type of listed horticultural plant:

      • (b) the banded rate set out in column 1 of Schedule 11 of the Income Tax Act 1994 that is to be used to calculate the diminishing value for a type of listed horticultural plant.

      (2) In making a determination, the Commissioner must take into account the estimated useful life of the type of plant, and may also take into account—

      • (a) the main purpose for which the type of plant is cultivated:

      • (b) the manner in which the type of plant is cultivated and managed.

      (3) 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 2003-04 income year.

      (4) The determination may provide for the extension, limitation, variation, cancellation or revocation of an earlier 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 a determination under this section, the Commissioner must publish a notice in the Gazette that—

      • (a) gives notice that the determination has been issued; and

      • (b) states where copies of the determination can be obtained.

    (2) Subsection (1) applies for the 2003-04 and subsequent income years.

111 Commissioner to make private rulings on request
112 Taxpayer assessment
  • (1) The heading to section 92 is replaced by Taxpayer assessment of income tax.

    (2) Section 92(2) is replaced by the following:

    • (2) An assessment under this section is made on the date on which the taxpayer's return of income is received at an office of the Department.

    (3) Section 92(3) is repealed.

    (4) Subsections (1) to (3) apply for the 2004-05 and subsequent income years.

113 New section 92B inserted
  • (1) After section 92A, the following is inserted:

    92B Taxpayer assessment of GST
    • (1) A taxpayer who is required under the Goods and Services Tax Act 1985 to provide a GST tax return for a GST return period must make an assessment of the amount of GST payable by the taxpayer for the return period.

      (2) An assessment under this section is made on the date on which the taxpayer's GST tax return is received at an office of the Department.

      (3) This section does not apply to a taxpayer for a GST return period if the Commissioner has made an assessment of the GST payable by the taxpayer for the return period.

    (2) Subsection (1) applies for GST return periods beginning on or after 1 April 2005.

114 Assessment where default made in furnishing returns
  • (1) After section 106(1C), the following is inserted:

    • (1D) If a person who is required to provide a GST tax return for a GST return period does not provide a GST tax return for the return period, or provides a GST tax return with which the Commissioner is not satisfied, the Commissioner may make an assessment of the GST payable by the person for the return period.

    • (1E) A person who is assessed under subsection (1D) is liable to pay the GST assessed unless the person establishes in proceedings challenging the assessment that the assessment is excessive, or that the person is not chargeable with GST.

    (2) Subsection (1) applies for GST return periods beginning on or after 1 April 2005.

115 Time bar for assessment of GST
  • (1) The heading to section 108A is replaced by Time bar for amending GST assessment.

    (2) Section 108A(1) is replaced by the following:

    • (1) Subject to this section and section 108B, if a taxpayer provides a GST tax return for a GST return period and an assessment has been made, the Commissioner may not amend the assessment to increase the amount assessed if 4 years have passed from the end of the GST return period in which the tax return was provided.

    (3) Section 108A(2) is repealed.

    (4) Section 108A(3) is replaced by the following:

    • (3) The Commissioner may, at any time, amend an assessment to increase the amount of the assessment if the Commissioner considers that the person assessed has knowingly or fraudulently failed to disclose to the Commissioner all of the material facts that are necessary for determining the amount of GST payable for a GST return period.

    (5) Subsections (1) to (4) apply for GST return periods beginning on or after 1 April 2005.

116 Extension of time bars
  • (1) Section 108B(1) is replaced by the following:

    • (1) The application of a time bar that is referred to in subsection (3) may be delayed for a taxpayer by a waiver—

      • (a) for not more than 12 months from the time at which the time bar would otherwise apply, by written agreement between the Commissioner and the taxpayer:

      • (b) for a further 6 months from the end of the 12-month period referred to in paragraph (a), by written notice given by the taxpayer.

    • (1B) A waiver under subsection (1) does not affect the application of a time bar to an assessment of the taxpayer by the Commissioner on a ground that was not identified and known to the taxpayer and the Commissioner before the time at which the time bar would have applied but for subsection (1).

    (2) In section 108B(3)(f), for which the GST return was provided or, as the case may be, the assessment made; and is replaced by in which the GST tax return was provided.

    (3) Section 108B(3)(g) is repealed.

    (4) Subsection (1) applies to disputes that are commenced under Part 4A of the Tax Administration Act 1994 on or after 1 April 2005.

    (5) Subsections (2) and (3) apply for GST return periods beginning on or after 1 April 2005.

117 Commissioner to give notice of assessment to taxpayer
  • (1) After section 111(7), the following is added:

    • (8) If the Commissioner makes an assessment in relation to goods that are treated under section 5(2) of the Goods and Services Tax Act 1985 as being supplied by a person, the Commissioner must send a copy of the notice referred to in subsection (1) to whichever of the person whose goods were sold and the person selling the goods is the person who is not assessed.

    (2) Subsection (1) applies to notices that are issued on or after 1 April 2005.

118 Commissioner may at any time amend assessments
  • (1) In section 113(1), The Commissioner may from time to time and at any time make all such alterations in or additions to is replaced by Subject to section 89N, the Commissioner may from time to time, and at any time, amend.

    (2) In section 113(2), alteration or addition is replaced by amendment.

    (3) Subsection (1) applies to amendments for which notices are issued on or after 1 April 2005.

119 Section 114 replaced
  • Section 114 is replaced by the following:

    114 Validity of assessments
    • An assessment made by the Commissioner is not invalidated—

      • (a) through a failure to comply with a provision of this Act or another Inland Revenue Act; or

      • (b) because the assessment is made wholly or partially in compliance with—

        • (i) a direction or recommendation made by an authorised officer on matters relating to the assessment:

        • (ii) a current policy or practice approved by the Commissioner that is applicable to matters relating to the assessment.

120 Variation to definitions for determining interest chargeable or payable to PAYE intermediaries
  • (1) In section 120OB(1)(a), section NBB 4(1)(b) is replaced by section NBB 4(1).

    (2) In section 120OB(1)(b), section NBB 4(1)(d) is replaced by section NBB 4(1B)(b).

    (3) Subsections (1) and (2) apply for pay periods beginning on or after 1 April 2004.

121 When disputant entitled to challenge assessment
  • In section 138B(3)(b), adjusted. is replaced by adjusted; and, and the following is added:

    • (c) for the purposes of paragraph (b), the written disputable decision from the Commissioner is not limited to the Commissioner's notice of response.

122 Certain rights of challenge not conferred
  • In section 138E(1)(e)(iv), Act,— is replaced by Act; or and the following is added:

    • (v) any of Parts 4, 6, 7 and 11 (other than section 76) of the Goods and Services Tax Act 1985—.

123 Challenging disputable decisions which are not assessments
  • In section 138F(1), under section 138B is inserted after challenge.

124 Late filing penalties
  • In section 139A(5), annual imputation return or is omitted.

125 Tax shortfalls
  • (1) In section 141(2), , subject to section 141AA(1) is inserted after penalty.

    (2) Subsection (1) applies for withholding payments made on or after 1 April 2005.

126 New section 141AA inserted
  • (1) After section 141, the following is inserted:

    141AA Shortfall penalty if non-resident contractor relieved from all liability to pay tax on contract payment
    • (1) If a person makes a withholding payment that is a contract payment to a person who is a non-resident contractor for the purposes of the Income Tax (Withholding Payments) Regulations 1979 and the non-resident contractor is not liable to pay income tax on the contract payment, whether because of a double tax agreement or otherwise, the person who makes the contract payment to the non-resident contractor is liable to pay a shortfall penalty of $250 for each return period—

      • (a) for which the person is required to deliver to the Commissioner an employer monthly schedule; and

      • (b) in which the person fails to make a required tax deduction from a contract payment to the non-resident contractor.

      (2) A person who is liable to pay a shortfall penalty under subsection (1) is not liable to pay a shortfall penalty based on the tax shortfall that, but for this section, would be calculated under section 141 in relation to the required tax deduction.

      (3) The liability under subsection (1) of a person is limited to a total of $1,000 for each return period for which the person is required to deliver to the Commissioner an employer monthly schedule.

    (2) Subsection (1) applies for withholding payments made on or after 1 April 2005.

127 Section 141FB replaced
  • Section 141FB is replaced by the following:

    141FB Reduction of penalties for previous behaviour
    • (1) A shortfall penalty (called the current penalty) for which a taxpayer is liable under section 141E is reduced, to 50% of the amount that would be payable by the taxpayer in the absence of this section, if the taxpayer is not—

      • (a) convicted of an offence that is a disqualifying offence:

      • (b) liable for another shortfall penalty that is a disqualifying penalty for the purpose of this subsection.

      (2) A shortfall penalty (called the current penalty) for which a taxpayer is liable under any of sections 141A to 141D is reduced, to 50% of the amount that would be payable by the taxpayer in the absence of this section, if the taxpayer is not—

      • (a) convicted of an offence that is a disqualifying offence:

      • (b) liable for another shortfall penalty that is a disqualifying penalty for the purpose of this subsection.

      (3) For the purpose of this section

      disqualifying offence means—

      • (a) an offence under section 143A, 143B, 143F, 143G, 143H or 145 for which a conviction is entered—

        • (i) on or after 26 March 2003; and

        • (ii) before the taxpayer takes the tax position to which the current penalty relates:

      • (b) an offence under section 143 or 144 that relates to the type of tax to which the current penalty relates and for which a conviction is entered—

        • (i) on or after 26 March 2003; and

        • (ii) after the date that precedes, by the period specified in subsection (4), the date on which the taxpayer takes the tax position to which the current penalty relates; and

        • (iii) before the taxpayer takes the tax position to which the current penalty relates

      disqualifying penalty means—

      • (a) for the purpose of subsection (1), a shortfall penalty that—

        • (i) relates to the type of tax to which the current penalty relates; and

        • (ii) is for evasion or a similar act; and

        • (iii) is not reduced for voluntary disclosure by the taxpayer; and

        • (iv) relates to a tax position that is taken on or after 26 March 2003 and before the date on which the taxpayer takes the tax position to which the current penalty relates:

      • (b) for the purpose of subsection (2), a shortfall penalty that—

        • (i) relates to the type of tax to which the current penalty relates; and

        • (ii) if the current penalty is—

          • (A) for gross carelessness or taking an abusive tax position, is a shortfall penalty for evasion or a similar act or for gross carelessness or taking an abusive tax position:

          • (B) for not taking reasonable care or taking an unacceptable tax position, is a shortfall penalty of any sort; and

        • (iii) is not reduced for voluntary disclosure by the taxpayer; and

        • (iv) relates to a tax position that is taken—

          • (A) on or after 26 March 2003; and

          • (B) after the date that precedes, by the period specified in subsection (4), the date on which the taxpayer takes the tax position to which the current penalty relates; and

          • (C) before the date on which the taxpayer takes the tax position to which the current penalty relates.

      (4) The period referred to in the definitions of disqualifying offence and disqualifying penalty, in subsection (3), and in subsection (5) is—

      • (a) 2 years, if the current penalty relates to—

        • (i) the taxpayer's application of the PAYE rules:

        • (ii) fringe benefit tax:

        • (iii) goods and services tax:

        • (iv) resident withholding tax:

      • (b) 4 years, if the period is not given by paragraph (a).

      (5) For the purpose of subsection (2), a shortfall penalty that relates to a tax shortfall arising from a tax position taken by a taxpayer is determined as if the taxpayer were not liable for a shortfall penalty that relates to a tax shortfall arising from another tax position taken by the taxpayer, if—

      • (a) the Commissioner becomes aware of both tax shortfalls as a consequence of a single investigation or voluntary disclosure; and

      • (b) the taxpayer—

        • (i) takes both tax positions on the same date:

        • (ii) is not liable for a shortfall penalty at any time in the period specified in subsection (4) that ends on the earliest date on which the taxpayer takes a tax position that gives rise to a tax shortfall of which the Commissioner becomes aware as a consequence of the investigation or disclosure to which paragraph (a) refers.

128 Section 141FC repealed
  • (1) Section 141FC is repealed.

    (2) Subsection (1) applies with respect to a shortfall penalty that is imposed in relation to a return period beginning on or after 1 April 2005.

129 New section 141FD inserted
  • (1) After section 141FB, the following is inserted:

    141FD Shareholders of loss attributing qualifying companies
    • (1) This section applies to a shortfall penalty under Part 9 that arises because—

      • (a) a loss attributing qualifying company attributes a net loss to a person who, on any day in the income year for which the company had the net loss, is a shareholder of the loss attributing qualifying company; and

      • (b) the net loss is subsequently reduced because—

        • (i) deductions claimed by the loss attributing qualifying company for the income year are disallowed:

        • (ii) the gross income of the loss attributing qualifying company for the income year is increased.

      (2) The shortfall penalty that would be imposed on the loss attributing qualifying company in the absence of this section may not be imposed on the loss attributing qualifying company.

      (3) A shortfall penalty may be imposed on the shareholder in relation to the amount of a deduction that the shareholder claimed in respect of the attributed net loss.

      (4) No shortfall penalty under Part 9 relating to the reduction of the attributed net loss of the company may be imposed on the shareholder other than the shortfall penalty permitted by subsection (3).

    (2) Subsection (1) applies with respect to a shortfall penalty that is imposed in relation to a return period beginning on or after 1 April 2005.

130 Application of Part 9 to PAYE intermediaries
  • (1) In section 141JB(1)(a), section NBB 4(1)(b) is replaced by section NBB 4(1).

    (2) In section 141JB(1)(b), section NBB 4(1)(d) is replaced by section NBB 4(1B)(b).

    (3) Subsections (1) and (2) apply for pay periods beginning on or after 1 April 2004.

131 Recovery of tax deductions from employers or PAYE intermediaries
  • (1) In section 167(2B)(b)(i), section NBB 4(1)(b) is replaced by section NBB 4(1).

    (2) In section 167(2B)(b)(ii), section NBB 4(1)(d) is replaced by section NBB 4(1B)(b).

    (3) Subsections (1) and (2) apply for pay periods beginning on or after 1 April 2004.

132 Employer or PAYE intermediaries failing to make tax deductions
  • (1) In section 168(4)(a), section NBB 4(1)(b) is replaced by section NBB 4(1).

    (2) In section 168(4)(b), section NBB 4(1)(d) is replaced by section NBB 4(1B)(b).

    (3) Subsections (1) and (2) apply for pay periods beginning on or after 1 April 2004.

133 Unpaid tax deductions, etc, to constitute charge on employer's or PAYE intermediary's property
  • (1) In section 169(1B)(a), section NBB 4(1)(b) is replaced by section NBB 4(1).

    (2) In section 169(1B)(b), section NBB 4(1)(d) is replaced by section NBB 4(1B)(b).

    (3) Subsections (1) and (2) apply for pay periods beginning on or after 1 April 2004.

134 Transfer of excess tax within taxpayer's accounts
  • In section 173L(2)(a), taxable period is replaced by GST return period.

135 Write-off of tax by Commissioner
  • (1) Section 177C(6) is replaced by the following:

    • (6) For the purpose of subsection (5), the net loss that may be extinguished is the net loss of the taxpayer at the time at which the outstanding tax is written off and the Commissioner may use a figure for that net loss based on the most recent return of income furnished by the taxpayer.

    (2) Subsection (1) applies to tax that is written off on and after the date on which this Act receives the Royal assent.

136 Relief to taxpayers to whom new start grants payable
  • (1) In section 177D(2)(a), section EZ 9(3) is replaced by section EZ 9(3) and (4).

    (2) In section 177D(3), adverse event is replaced by event that is a qualifying event, as defined by section OB 1 of the Income Tax Act 1994.

    (3) Subsections (1) and (2) apply for the 2003-04 and subsequent income years.

137 New section 181D inserted
  • (1) After section 181C, the following section is inserted:

    181D Remission of late payment penalties and interest incurred due to obligation by Maori authority to pay further income tax
    • An amount that is interest under section 120D of the Tax Administration Act 1994, or a late payment penalty relating to further income tax, and that is paid or payable by a Maori authority and to which section MK 8(5) or (5B) of the Income Tax Act 1994 applies must be remitted by the Commissioner to the extent that the amount of further income tax charged in relation to an imputation year is equal to or less than the amount of unpaid income tax.

    (2) Subsection (1) applies for the 2004-05 and subsequent income years.

138 Remission for reasonable cause
  • Section 183A(1) is replaced by the following:

    • (1) This section applies to—

      • (a) a late filing penalty:

      • (b) a non-electronic filing penalty:

      • (c) a late payment penalty:

      • (d) imputation penalty tax imposed by section 140B:

      • (e) dividend withholding payment penalty tax imposed by section 140C:

      • (f) Maori authority distribution penalty tax imposed by section 140CB:

      • (g) a shortfall penalty imposed by section 141AA.

139 Remission consistent with collection of highest net revenue over time
  • After section 183D(1)(b), the following is inserted:

    • (bb) a shortfall penalty imposed by section 141AA; and.

140 Payment out of Crown Bank Account
  • In section 185(1)(a), or the Goods and Services Tax Act 1985 is added after Income Tax Act 1994.

141 Regulations—income tax related
  • (1) The heading to section 225 is replaced by Regulations.

    (2) In section 225(1), or Goods and Services Tax Act 1985 is added after Income Tax Act 1994 in all the places that it occurs.

142 Power to extend time for doing anything under Act
  • In section 226, or the Goods and Services Tax Act 1985 is inserted after Income Tax Act 1994 in both places that it occurs.

Part 3
Amendments to other Acts and Regulations

Amendments to Goods and Services Tax Act 1985

144 Interpretation
  • (1) In section 2(1), in the words before paragraph (a) of the proviso to the definition of resident, that section is replaced by those sections.

    (2) In section 2(1), in paragraph (a) of the definition of tax payable, section 27(6) is replaced by section 51B.

    (3) Subsection (2) applies for taxable periods beginning on or after 1 April 2005.

145 Zero-rating of services
146 Taxable period returns
  • (1) After section 16(2), the following is added:

    • (3) A return must contain a notice of the assessment that must be made under section 92B of the Tax Administration Act 1994.

    (2) Subsection (1) applies for taxable periods beginning on or after 1 April 2005.

147 Special returns
  • (1) After section 17(2), the following is added:

    • (3) A return must contain a notice of the assessment that must be made under section 92B of the Tax Administration Act 1994.

    (2) Subsection (1) applies for taxable periods beginning on or after 1 April 2005.

148 Particulars to be furnished and prepared where change in accounting basis
  • (1) After section 19B(2), the following is inserted:

    • (2B) The particulars required by subsection (1) must be furnished in a return that contains a notice of the assessment that must be made under section 92B of the Tax Administration Act 1994.

    (2) Subsection (1) applies for taxable periods beginning on or after 1 April 2005.

149 Calculation of tax payable
  • (1) The proviso that follows section 20(3)(i) is replaced by the following:

    Provided that a registered person who is entitled to deduct an amount from the output tax attributable to a taxable period may deduct that amount from the output tax attributable to a later taxable period if the amount has not previously been deducted from the output tax of the registered person and—

    • (a) the later tax period begins on or before the date that is the 2nd anniversary of the earlier of the following:

      • (i) the date on which the registered person makes the payment for the taxable supply to which the deduction relates:

      • (ii) the date on which a tax invoice is issued for the taxable supply to which the deduction relates:

    • (b) the failure of the registered person to make the deduction in the earlier taxable period arises from—

      • (i) an inability of the registered person to obtain a tax invoice:

      • (ii) a dispute over the proper amount of the payment for the taxable supply to which the deduction relates:

      • (iii) a mistaken understanding on the part of the registered person that the supply to which the deduction relates was not a taxable supply:

      • (iv) a clear mistake or simple oversight of the registered person.

    (2) Subsection (1) applies for taxable periods beginning on or after 1 April 2005.

150 Goods and services tax incurred relating to determination of liability to tax
  • (1) In section 20A(1)(b), in the definition of goods and services tax payable, section 27(6) is replaced by section 51B.

    (2) Subsection (1) applies for taxable periods beginning on or after 1 April 2005.

151 Goods and services tax incurred in making certain supplies of financial services
  • In section 20C, as inserted by section 155 of the Taxation (GST, Trans-Tasman Imputation and Miscellaneous Provisions) Act 2003, the definition of item a is replaced by the following:

    • a is the total amount in respect of the taxable period that the registered person—

      • (a) would not be able to deduct under section 20(3) in the absence of this section; and

      • (b) would be able to deduct under section 20(3), other than under section 20(3)(h), if all supplies of financial services by the registered person were taxable supplies:.

152 Application of section 21F
  • (1) In section 21E(4), in the words preceding paragraph (a), if— is replaced by to the extent that—.

    (2) In section 21E(4)(a), sections 21 and 21I are replaced by section 21 or 21I.

153 Payment of tax
  • (1) Section 23(3) is repealed.

    (2) Subsection (1) applies for taxable periods beginning on or after 1 April 2005.

154 Part 4 repealed
  • (1) Part 4 is repealed.

    (2) Subsection (1) applies for taxable periods beginning on or after 1 April 2005.

155 Section 45 replaced
  • (1) Section 45 is replaced by the following:

    45 Refund of excess tax
    • (1) Subject to this Part, and to Part 11 of the Tax Administration Act 1994, the Commissioner must refund an amount that a person has paid as tax if—

      • (a) the Commissioner is satisfied that the amount represents an excess over the amount properly assessed for a taxable period; and

      • (b) the 4-year period referred to in section 108A of the Tax Administration Act 1994 has not expired.

      (2) Despite section 20(5), the Commissioner must refund an amount that a person has paid as tax if—

      • (a) the Commissioner is satisfied that the person paid the amount as a result of an assessment that changed the amount of tax payable by the registered person; and

      • (b) the Commissioner is satisfied that the amount represents an excess over the amount properly assessed for a taxable period; and

      • (c) the 4-year period beginning from the end of the year in which the assessment was made has not expired.

      (3) Despite section 20(5), the Commissioner must refund an amount that a person has paid as tax if—

      • (a) the Commissioner is satisfied that the amount represents an excess over the amount properly assessed for a taxable period; and

      • (b) the person has received a refund under section 19C(8), 20(5) or 46; and

      • (c) the Commissioner is satisfied that the amount was properly refundable to the person at the time of the refund but was not refunded at that time; and

      • (d) the 4-year period beginning from the end of the year in which the refund was made has not expired.

      (4) The Commissioner may refund an overpayment of tax that is referred to in subsection (2) or (3) after the end of the 4-year period referred to in the subsection, if—

      • (a) the overpayment of tax is the result of a clear mistake or simple oversight of the person; and

      • (b) the refund is made—

        • (i) within the period of 4 years beginning from the end of the 4-year period referred to in the subsection:

        • (ii) as a result of an application by or on behalf of the person that the Commissioner receives before or within the period of 4 years beginning from the end of the 4-year period referred to in the subsection.

    (2) Subsection (1) applies for taxable periods beginning on or after 1 April 2005.

156 Relief from tax where new start grant made in respect of drought relief
  • (1) In the heading to section 48A, in respect of drought relief is omitted.

    (2) Section 48A(1) is replaced by the following:

    • (1) In this section, new start grant has the meaning given to the term by section OB 1 of the Income Tax Act 1994.

    (3) In section 48A(3), in the words after paragraph (c), section EZ 9(3) is replaced by section EZ 9(3) and (4).

    (4) Subsections (1) to (3) apply for the 2003-04 and subsequent income years.

157 Section 50 repealed
  • Section 50 is repealed.

158 New section 51B inserted
  • (1) After section 51, the following is inserted:

    51B Persons treated as registered
    • (1) For the purposes of Parts 3 and 6, and of Part 9 of the Tax Administration Act 1994, the following are treated as registered persons:

      • (a) a person who is not otherwise a registered person but who supplies goods or services, representing that tax is charged on the supply:

      • (b) if goods are treated by section 5(2) as being supplied by a person—

        • (i) the person selling the goods, if subparagraph (ii) does not apply; or

        • (ii) the person whose goods are sold, if the person supplies a written statement under section 5(2)(a) to the person selling the goods and the Commissioner considers that the written statement is incorrect:

      • (c) a person whose registration has been cancelled under section 52(5) with effect from the original date of registration.

      (2) If a person referred to in subsection (1) represents that tax is being charged on a supply that they make in a taxable period, the person is liable to pay the amount of the tax.

      (3) If a person is treated by subsection (1)(c) as being a registered person, the person is treated as being registered from the original date of registration to the date when the Commissioner cancels the registration.

    (2) Subsection (1) applies for taxable periods beginning on or after 1 April 2005.

159 Section 61B repealed
  • Section 61B is repealed.

160 Section 80 repealed
  • Section 80 is repealed.

161 Section 81 repealed
  • Section 81 is repealed.

162 Supplies of services made before insertion of section 8(4B)
  • (1) In section 84B(2), given by section 9 or sections 21 to 21H is replaced by the services are performed.

    (2) In section 84B(3), in the words preceding paragraph (a), the time given by is omitted.

    (3) In section 84B(3)(a), section 9 or sections 21 to 21H is replaced by the time the services are performed.

Amendment to Taxation Review Authorities Act 1994

163 Small claims jurisdiction of authorities

Amendment to Income Tax Act 1976

164 Interpretation-voting and market interests
  • (1) In section 8B of the Income Tax Act 1976, the definition of special corporate entity (as that definition was on 31 March 1994) is amended by adding the following:

    • (j) any body incorporated under the Incorporated Societies Act 1908, for an income year in which the body on no day in the income year has shares on issue to the members of the body:.

    (2) Subsection (1), other than in the application of sections 191 and 191A of the Income Tax Act 1976, applies for the 1992-93 to 1994-95 income years.

    (3) Subsection (1), in the application of sections 191 and 191A of the Income Tax Act 1976, applies for an incorporated body for an income year that is one of the 1992-93 to 1994-95 income years if—

    • (a) the incorporated body before 29 March 2004 makes a tax return for the income year; and

    • (b) the incorporated body adopts a tax position in the tax return that is consistent with the amendment made by subsection (1).

Amendments to Taxation Review Authorities Regulations 1998

165 Interpretation
  • In regulation 2 of the Taxation Review Authorities Regulations 1998, the definition of disputable decision is replaced by the following:

    disputable decision has the meaning given to it by section 3 of the Tax Administration Act 1994.

166 Decisions
  • (1) After regulation 18(5) of the Taxation Review Authorities Regulations 1998, the following is added:

    • (6) In subclause (5), precedent means a decision of the Authority that affects or may affect the outcome of a separate and unrelated dispute between the Commissioner and a taxpayer other than the disputant.

    (2) Subsection (1) applies to disputes that are commenced under Part 4A of the Tax Administration Act 1994 on or after 1 April 2005.

Part 4
Amendments to Income Tax Act 2004

167 Income Tax Act 2004
168 New sections CD 7B and CD 7C inserted
  • After section CD 7, the following is inserted:

    CD 7B Interests in money or property of foreign unit trust
    • Interest absolutely vested in unit holder

      (1) If a beneficial interest in money or property of a unit trust that is a foreign company vests absolutely in a unit holder, the money or property is a dividend for the unit holder.

      Amount of dividend

      (2) The amount of the dividend is the value of the money or property.

      Defined in this Act: dividend, foreign company, unit holder, unit trust,

    CD 7C Bonus issue by foreign unit trust instead of money or property
    • Interest absolutely vested in unit holder

      (1) A bonus issue made to a unit holder by a unit trust that is a foreign company is a dividend for the unit holder if the issue is made under an arrangement or decision that the unit trust will make the bonus issue instead of causing a beneficial interest in money or property of the unit trust to vest absolutely in the unit holder.

      Amount of dividend

      (2) The amount of the dividend is the value of the money or property in which a beneficial interest would have vested in the unit holder if the bonus issue had not been made.

      Defined in this Act: bonus issue, dividend, foreign company, unit holder, unit trust, .

169 New section CD 21B inserted
  • After section CD 21, the following is inserted:

    CD 21B Transfer by unit trust of legal interest after beneficial interest vests
    • Transfer of legal interest in money or property that is dividend

      If money or property of a unit trust is a dividend under section CD 7B for a unit holder, a transfer to the unit holder of the legal interest in the money or property is not a dividend.

      Defined in this Act: dividend, unit holder, unit trust, .

170 When attributed CFC income arises
  • In section CQ 2(1)(e), EX 16 is replaced by EX 17.

171 Calculation of FIF income
  • In section CQ 6, EX 42 is replaced by EX 38.

172 Withdrawals
  • (1) Section CS 1(2) is replaced by the following:

    Income of superannuation fund from withdrawal
    • (2) The superannuation fund derives from the withdrawal an amount of assessable income that is given by the following formula:

      .

    (2) In section CS 1(3), subsections (4) and (5) is replaced by subsections (4) to (5).

    (3) Section CS 1(4) is replaced by the following:

    Withdrawal
    • (4) Withdrawal is the total of—

      • (a) the amount of money that is withdrawn from the superannuation fund:

      • (b) the market value of the part of the withdrawal that is not an amount of money, on the date of the withdrawal.

    Other contributions
    • (4B) Other contributions is the part of the withdrawal that the trustee of the superannuation fund establishes is not employer's contributions to superannuation savings.

173 Exclusion of withdrawal when member ends employment
  • (1) Section CS 7(2) and (3) are replaced by the following:

    Ending employment after period of specified superannuation contributions
    • (2) Section CS 1 does not apply to a withdrawal from a superannuation fund of specified superannuation contributions that have been made for the member by the employer, or another employer, if—

      • (a) the member has been in employment throughout the period that—

        • (i) starts on the 1st day of the tax year that starts 2 tax years before the start of the tax year in which the member ends their employment; and

        • (ii) ends on the day on which the member ends their employment; and

      • (b) the specified superannuation contributions are made to the superannuation fund or to a superannuation fund that has transferred, whether directly or indirectly, the funds relating to its members to the superannuation fund; and

      • (c) the specified superannuation contributions have not been part of a withdrawal, other than a transfer between superannuation funds that is referred to in paragraph (b); and

      • (d) the withdrawal—

        • (i) satisfies subsections (3) and (4):

        • (ii) satisfies subsection (4B):

        • (iii) does not include employer contributions to superannuation savings of more than the amount found by multiplying $5,000 by the number of income years for which the specified superannuation contributions were made on behalf of the member; and

      • (e) the withdrawal is made at the time described in subsection (5).

    Limited increase in employer contributions between income years
    • (3) A withdrawal satisfies this subsection if, at the time of the withdrawal, specified superannuation contributions have been made for the member by the employer, or another employer, such that—

      • (a) the contributions relate to some or all of a period of employment that—

        • (i) starts on the 1st day of the tax year that starts 2 tax years before the tax year in which the member ends their employment; and

        • (ii) ends on the day on which the member ends their employment; and

      • (b) in each of the first 2 tax years in the period referred to in paragraph (a), the contributions—

        • (i) are in total less than 150% of the total of specified superannuation contributions made for the member in the previous tax year:

        • (ii) satisfy subparagraph (i) after the application of subsection (4); and

      • (c) in the tax year in which the member ends their employment, the contributions—

        • (i) have an annualised value that is less than 150% of the specified superannuation contributions made for the member in the previous tax year:

        • (ii) satisfy subparagraph (i) after the application of subsection (4).

    (2) The heading to section CS 7(4) is replaced by the following:

    Increases disregarded under subsection (3)(b)(i) or (c)(i).

    (3) After section CS 7(3), the following is inserted:

    Increases in employer contributions considered consistent by Commissioner
    • (4B) A withdrawal satisfies this subsection if, at the time of the withdrawal, specified superannuation contributions have been made for the member by the employer, or another employer, such that—

      • (a) the contributions relate to some or all of the period that—

        • (i) starts on the 1st day of the tax year that starts 2 tax years before the tax year in which the member ends their employment; and

        • (ii) ends on the day on which the member ends their employment; and

      • (b) the Commissioner considers that the contributions are consistent in size and frequency with the employer's specified superannuation contributions for other employees in comparable positions; and

      • (c) the Commissioner considers that the contributions are consistent in size and frequency during the period or periods to which the employer's specified superannuation contributions for the member relate.

174 New section CW 11B inserted
  • After section CW 11, the following is inserted:

    CW 11B Proceeds of share disposal by qualified foreign equity investor
    • (1) An amount that a person derives from the sale or other disposal by a qualifying foreign equity investor of a share, or option to buy a share, in a company (called the resident company) is exempt income if—

      • (a) the resident company is resident in New Zealand; and

      • (b) the share or option, or an option or convertible note relating to the share, is bought on a day that is 12 months or more before the day of the sale or other disposal; and

      • (c) the person who buys the share or option, or the option or convertible note relating to the share, and disposes of the share or option is a qualifying foreign equity investor from the time of the purchase to the time of the disposal; and

      • (d) at some time in the 12-month period that starts from the time of the purchase referred to in paragraph (b), the shares of the resident company are quoted on no official list of a recognised exchange; and

      • (e) the resident company satisfies either or both of subsections (2) and (3).

      Requirements relating to main activity of resident company

      (2) A resident company satisfies this subsection if, throughout the period referred to in subsection (1)(c), the resident company does not have as a main activity 1 or more of—

      • (a) land development:

      • (b) land ownership:

      • (c) mining:

      • (d) provision of financial services:

      • (e) insurance:

      • (f) construction of public infrastructure assets:

      • (g) acquisition of public infrastructure assets:

      • (h) investing with a main aim of deriving, from the investment, income in the form of interest, dividends, rent, or personal property lease payments that are not royalties.

      Requirements relating to resident company that provides capital to others

      (3) A resident company that has a main activity of providing capital in the form of debt or equity funding to other companies satisfies this subsection if—

      • (a) throughout the period referred to in subsection (1)(c), each other company that is resident in New Zealand—

        • (i) does not have, as a main activity, an activity that is referred to in subsection (2)(a) to (c) and (e) to (g); and

        • (ii) does not have, as a main activity, an activity that is referred to in subsection (2)(d) and (h) and is not the provision of capital to other companies; and

        • (iii) does not provide capital, directly or indirectly, to a company that is resident in New Zealand and has, as a main activity, an activity that is referred to in subsection (2)(a) to (c) and (e) to (g); and

        • (iv) does not provide capital, directly or indirectly, to a company that is resident in New Zealand and has, as a main activity, an activity that is referred to in subsection (2)(d) and (h) and is not the provision of capital to other companies; and

      • (b) throughout the period referred to in subsection (1)(c), each other company that is not resident in New Zealand does not provide capital, directly or indirectly, to a company that is resident in New Zealand and has, as a main activity, an activity that is referred to in subsection (2)(a) to (h); and

      • (c) for each other company there is a time in the period referred to in subsection (1)(c) at which—

        • (i) the shares of the other company are quoted on no official list of a recognised exchange; and

        • (ii) the shares of the resident company are quoted on no official list of a recognised exchange.

      Some definitions

      (4) In this section—

      foreign exempt entity means a person who—

      • (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 (called in this definition members) who hold interests in the capital of the legal entity and who are entitled to shares of the income of the legal entity; and

      • (c) is treated by the taxation laws of the territory referred to in paragraph (a), or by the taxation laws of the part of the territory, as not being 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 under section OD 8(1) (Further definitions of associated persons), 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 under section OD 8(1) (Further definitions of associated persons), has an interest of 10% or more in the capital of the legal entity and who—

        • (i) would be entitled to receive an amount derived from a disposal to which this section would apply; and

        • (ii) would 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) would in any circumstances, under the taxation laws of the territory in which the member is resident or under the taxation laws of part of the territory, be entitled to receive from the government of the territory or of the 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)

      foreign exempt partnership means an unincorporated body that—

      • (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 (called in this definition partners); and

      • (c) is treated by the taxation laws of the territory, or by the taxation laws of the part of the territory, as not being subject to a tax on income other than as a body that handles income of the partners; and

      • (d) has at least 1 partner (called in this definition a general partner) who is liable for all debts of the unincorporated body and who has significant involvement in, and control of, the business activities of the unincorporated body; and

      • (e) has at least 1 partner (called in this definition a special partner) whose liability for debts of the unincorporated body is limited and who has limited involvement in, and control of, the business activities of the unincorporated body; and

      • (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 under section OD 8(1) (Further definitions of associated persons), 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 under section OD 8(1) (Further definitions of associated persons), 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 taxation laws of the territory in which the partner is resident or under the taxation laws of part of the territory, be entitled to receive from the government of the territory or of the 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)

      foreign exempt person means a person who—

      • (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 part of an unincorporated body that satisfies paragraphs (a) to (c) of the definition of foreign exempt partnership ; and

      • (c) is not a legal entity that satisfies paragraphs (a) to (c) of the definition of foreign exempt entity ; and

      • (d) is treated by the taxation laws of the territory, or by the taxation laws of a part of the territory, as the person who 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 taxation laws of the territory in which the person is resident or under the taxation laws of part of the territory, be entitled to receive from the government of the territory or of the 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)

      qualifying foreign equity investor means a person who is not resident in New Zealand and who is 1 or more of the following

      • (a) a foreign exempt entity:

      • (b) a person who is part of a foreign exempt partnership:

      • (c) a foreign exempt person.

      Residency of territory

      (5) For the purpose of this section, whether a person is resident in a territory other than New Zealand is determined—

      • (a) in the presence of a double tax agreement between New Zealand and the territory that is in force under the terms of the double tax agreement, under the double tax agreement:

      • (b) in the absence of a double tax agreement between New Zealand and the territory that is in force under the terms of the double tax agreement, under the laws of the territory.

      Approval and withdrawal of approval for territory

      (6) The Governor-General may, from time to time by Order in Council—

      • (a) approve a territory for the purpose of this section:

      • (b) withdraw the approval of a territory for the purpose of this section.

      Defined in this Act: amount, business, company, dividend, double tax agreement, exempt income, foreign exempt entity, foreign exempt partnership, foreign exempt person, income, insurance, interest, land, payment, personal property lease payment, qualifying foreign equity investor, recognised exchange, resident in New Zealand, royalty, share, tax, .

175 Section CW 49 replaced
  • Section CW 49 is replaced by the following:

    CW 49 Providing standard-cost household service
    • An amount of income derived in an income year by a natural person from providing a standard-cost household service is exempt income if—

      • (a) the amount is exempt income under a determination made under section 91AA(2)(a) of the Tax Administration Act 1994:

      • (b) the person—

        • (i) may be treated, under a determination made under section 91AA of the Tax Administration Act 1994, as incurring an amount of costs that is greater than or equal to the amount of income; and

        • (ii) in calculating the person's income tax liability for the income year, elects to include in the taxpayer's annual total deduction no amount that, in the absence of this paragraph, would be a deduction incurred by the taxpayer in providing the standard-cost household service.

      Defined in this Act: amount, annual total deduction, exempt income, income, income tax liability, income year, standard-cost household service, .

176 New section CX 41B inserted
  • After section CX 41, the following is inserted:

    CX 41B Amounts remitted as condition of new start grant
    • When this section applies

      (1) This section applies if 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 a qualifying event; and

      • (c) the person in carrying on the business—

        • (i) incurs a liability for expenditure or loss before the declaration of the state of emergency that relates to the qualifying event; and

        • (ii) before the date that is 3 months after the end of the state of emergency, 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) 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 state of emergency; and

      • (e) the amount of the remitted liability is income of the person under section CG 2 (Remitted amounts).

      Excluded income

      (2) The remitted liability is excluded income of the person to the extent that is the greater of zero and the amount calculated under the formula—

      remitted amount -- current loss -- available loss -- other loss

      Definition of items in formula

      (3) In the formula—

      • (a) remitted amount is the amount of the remitted liability:

      • (b) current loss is the net loss that the person would have for the income year in which the liability is remitted in the absence of this section:

      • (c) available loss is the available net losses that are available to the person for offset against net income for the income year in which the liability is remitted:

      • (d) other loss is a loss that—

        • (i) is incurred by a person associated with the person who receives the new start grant; and

        • (ii) satisfies subsection (4).

      Loss incurred by associated person from business or land

      (4) The loss referred to in subsection (3)(d)—

      • (a) is incurred by a person who—

        • (i) carries on or has carried on the business for which the new start grant is paid or owns or has owned an estate in fee simple or leasehold estate in land used in the business; and

        • (ii) in the opinion of the Commissioner, is under a substantial degree of control by the person; and

        • (iii) in the opinion of the Commissioner, has a substantial identity of interests with the person; and

      • (b) is incurred from—

        • (i) the business referred to in paragraph (a)(i):

        • (ii) land that is used in the business; and

      • (c) is, for the income year in which the liability is remitted,—

        • (i) a net loss of the associated person:

        • (ii) an available net loss for the associated person; and

      • (d) is included in the calculation in subsection (3) to an extent that the Commissioner determines, having regard to the interests of the associated person that are separate from those of the person.

      Notice to associated person

      (5) The Commissioner must give to the associated person written notice of a determination under subsection (4)(d).

      Defined in this Act: business, capital limitation, deduction, diminished value, general limitation, general permission, income, income year, qualifying event, .

177 Determining tax liabilities
  • In the definition of GST payable in section DB 3(3), paragraph (b)(ii) is replaced by the following:

    • (ii) an amount referred to in section 17(2) or 51B of the Goods and Services Tax Act 1985.

178 New section DB 13B inserted
  • After section DB 13, the following is inserted:

    DB 13B Expenses of failed or withdrawn application for resource consent
    • Deduction

      (1) A person who applies for the grant of a resource consent under the Resource Management Act 1991 and is refused the grant or withdraws the application is allowed a deduction for expenditure—

      • (a) that the person incurs in relation to the application; and

      • (b) that would have been part of the cost of a resource consent that is depreciable property if the application had been granted; and

      • (c) for which the person is not allowed a deduction under another provision.

      Timing of deduction

      (2) The deduction is allocated to the income year in which the grant is refused or the application is withdrawn.

      Link with subpart DA

      (3) This section overrides the capital limitation. The general permission and other general limitations still apply.

      Defined in this Act: accounting year, capital limitation, deduction, general limitation, general permission, income year, .

179 New section DB 28B inserted
  • After section DB 28, the following is inserted:

    DB 28B Expenses of failed or withdrawn patent application
    • Deduction

      (1) A person who applies for the grant of a patent and is refused the grant or withdraws the application is allowed a deduction for expenditure—

      • (a) that the person incurs in relation to the application; and

      • (b) that would have been part of the cost of fixed life intangible property if the application had been granted; and

      • (c) for which the person is not allowed a deduction under another provision.

      Timing of deduction

      (2) The deduction is allocated to the income year in which the grant is refused or the application is withdrawn.

      Link with subpart DA

      (3) This section overrides the capital limitation. The general permission and other general limitations still apply.

      Defined in this Act: capital limitation, deduction, fixed life intangible property, general limitation, general permission, income year, .

180 New heading and new section DB 44 inserted
  • After section DB 43, the following is inserted:

    Exempt income

    DB 44 Expenditure incurred in deriving exempt dividend
    • Deduction

      (1) A company that derives a dividend that is exempt income of the company under section CW 9 is allowed a deduction of—

      • (a) the amount of the expenditure incurred by the company in deriving the dividend, if the company is not a conduit tax relief company:

      • (b) the amount calculated using the following formula, if the company is a conduit tax relief company:

        expenditure x (1 -- non-resident shareholding)

      Definition of items in formula

      (2) In the formula,—

      • (a) expenditure is the amount of the expenditure incurred by the company in deriving the dividend:

      • (b) non-resident shareholding is the fraction of the company's shareholders that are non-residents, calculated under section NH 7(2) and (4).

      Link with subpart DA

      (3) This section overrides the exempt income limitation. The general permission must still be satisfied and the other general limitations still apply.

      Defined in this Act: company, conduit tax relief company, deduction, dividend, exempt income, exempt income limitation, general limitation, general permission, non-resident, shareholder, .

181 Calculation of FIF loss
  • In section DN 7, EX 42 is replaced by EX 38.

182 Improvements to farm land
  • (1) In section DO 4(1)(b), land. is replaced by land; and and the following is added:

    • (c) the expenditure on the improvement is not expenditure to which sections DO 4B to DO 4D apply.

    (2) In section DO 4(6), vines or trees is replaced by non-listed horticultural plants.

183 New sections DO 4B to DO 4E inserted
  • After section DO 4, the following is inserted:

    DO 4B Expenditure on land: planting of listed horticultural plants
    • Application of section

      (1) This section applies if—

      • (a) a person carries on a farming or agricultural business (including a horticultural business) on land in New Zealand; and

      • (b) the land has been developed by the planting of listed horticultural plants on the land.

      Deduction and timing

      (2) For an income year in which the planting benefits the business and for which subsection (3) does not apply, the person is allowed a deduction relating to expenditure incurred by the person, or by another person, in developing the land.

      Income year in which no deduction

      (3) The person is not allowed a deduction under subsection (2) for an income year in which—

      • (a) if the person owns the land, the person disposes of the land:

      • (b) if the person does not own the land, the person ceases carrying on the business on the land.

      Amount of deduction other than under subsections (6) and (7)

      (4) For expenditure to which subsections (6) and (7) do not apply for the income year, the amount of the deduction under subsection (2) is calculated using the formula:

      1.2 x rate x diminished value.

      Definition of items in formula

      (5) In the formula—

      • (a) rate is the percentage rate determined for the type of listed horticultural plant by the Commissioner under section 91AAB of the Tax Administration Act 1994:

      • (b) diminished value is the diminished value of the expenditure.

      Deduction: expenditure on replaced plant if no deduction under section DO 4C

      (6) If a listed horticultural plant in a planting of the person ceases in an income year to exist or to be used in deriving assessable income and the person has no deduction under section DO 4C for the income year for the expenditure incurred in replacing the listed horticultural plant—

      • (a) the person is allowed a deduction:

      • (b) the amount of the deduction is the diminished value of the expenditure on the listed horticultural plant at the time that the listed horticultural plant ceases to exist or to be used in deriving assessable income:

      • (c) the deduction is allocated to the income year in which the listed horticultural plant ceases to exist or to be used in deriving income.

      Treatment of expenditure on replaced plant if deduction under section DO 4C

      (7) If a listed horticultural plant in a planting of the person ceases in an income year to exist or to be used in deriving assessable income and the person has a deduction under section DO 4C for the income year for all or some of the expenditure incurred in replacing the listed horticultural plant—

      • (a) the person is not allowed a deduction under this section; and

      • (b) the person may add the diminished value, immediately before the replacement, of the expenditure on the listed horticultural plant to the diminished values, at the end of the income year, of the expenditure on listed horticultural plants that are in the planting at the end of the income year; and

      • (c) the person may elect the method of making the addition by applying the method in a return of income for the income year.

      Link with subpart DA

      (8) This section overrides the general permission and the capital limitation. The other general limitations still apply.

      Defined in this Act: assessable income, business, capital limitation, deduction, diminished value, general limitation, general permission, income year, listed horticultural plant, planting, return of income,

    DO 4C Expenditure on land: horticultural replacement planting
    • Application of section

      (1) This section applies to a person who carries on a horticultural business on land in New Zealand and who, in an income year (called the current income year)—

      • (a) plants, or causes to be planted, on the land a listed horticultural plant as a replacement plant:

      • (b) regrafts, or causes to be regrafted, a listed horticultural plant on the land as a replacement plant.

      Deduction

      (2) The person is allowed a deduction of an amount given by 1 of subsections (3) and (5) if, in the current income year—

      • (a) the person incurs expenditure in replacing a listed horticultural plant; and

      • (b) the replacement plant benefits the business; and

      • (c) the person does not dispose of the land on which the listed horticultural plant is cultivated; and

      • (d) the person elects that this section apply to the expenditure by making a return of income for the current income year on that basis.

      Amount of deduction if no deduction in 1 or both of 2 preceding income years

      (3) If the person has had no deduction under this section for 1 or both of the 2 income years preceding the current income year, the amount of the deduction under subsection (2) is calculated using the formula—

      .
      Definition of items in formula

      (4) In the formula—

      • (a) replacement expenditure is the amount of the expenditure incurred by the person in replacing the listed horticultural plant:

      • (b) fraction is the greater of 7.5% and the replaced area fraction for the planting for the current income year.

      Amount of deduction if deduction in both of 2 preceding income years

      (5) If the person has had a deduction under this section for a planting for both of the 2 income years preceding the current income year, the amount of the deduction under subsection (2) is the lesser of—

      • (a) the amount that is calculated using the formula in subsection (6):

      • (b) the amount that is calculated using the formula in subsection (8).

      Formula for first amount

      (6) The first amount is calculated using the formula

      .
      Definition of items in formula

      (7) In the formula—

      • (a) replacement expenditure is the amount of the expenditure incurred by the person:

      • (b) fraction is the greater of 7.5% and the replaced area fraction for the planting for the current income year.

      Formula for second amount

      (8) The second amount is calculated using the formula—

      .
      Definition of items in formula

      (9) In the formula—

      • (a) replacement expenditure is the amount of the expenditure incurred by the person:

      • (b) earlier fraction is the lesser of 7.5% and the replaced area fraction for the planting for the earlier of the 2 income years preceding the current income year:

      • (c) later fraction is the lesser of 7.5% and the replaced area fraction for the planting for the later of the 2 income years preceding the current income year:

      • (d) replaced area fraction is the replaced area fraction for the planting for the current income year.

      Timing of deduction

      (10) The deduction is allocated to the current income year.

      Link with subpart DA

      (11) This section overrides the general permission and the capital limitation. The other general limitations still apply.

      Defined in this Act: assessable income, business, capital limitation, deduction, diminished value, general limitation, general permission, income year, listed horticultural plant, planting, replaced area fraction, replacement plant, return of income,

    DO 4D Accounting for expenditure on listed horticultural plants under sections DO 4B and DO 4C
    • Separate accounting for additional listed horticultural plants if deduction under section DO 4C

      (1) A person to whom section DO 4B applies must, for an income year and for later income years for which subsection (2) does not apply, account separately under sections DO 4B and DO 4C for listed horticultural plants if—

      • (a) the person has had a deduction under section DO 4C for 1 or both of the 2 income years preceding the income year; and

      • (b) the person acquires the listed horticultural plants in the income year; and

      • (c) the listed horticultural plants benefit the business of the person in the income year; and

      • (d) the listed horticultural plants are not replacement plants.

      Combined accounting for listed horticultural plants if no deduction under section DO 4C

      (2) A person may, despite subsection (1), account under sections DO 4B and DO 4C for listed horticultural plants as 1 planting for an income year and later income years if the person has had no deduction under section DO 4C for both of the 2 income years preceding the income year.

      Defined in this Act: deduction, income year, listed horticultural plant, planting, replacement plant,

    DO 4E Some definitions
    • In this section and sections DO 4B to DO 4D—

      planting for a person and an income year means 1 or more listed horticultural plants—

      • (a) that are involved in the business of the person during the income year; and

      • (b) for which the person must account under sections DO 4B and DO 4C, for the income year, separately from any other listed horticultural plants that are involved in the business of the person

      plot means the land occupied by the listed horticultural plants in a planting

      replaced area fraction for a planting and an income year means the amount calculated using the formula—

      .

      where—

      • replacement area is the area, at the end of the income year, of the part of the plot on which listed horticultural plants in the planting are planted or regrafted during the income year as replacement plants

      • plot area is the total area, at the end of the income year, of the plot.

      Defined in this Act: business, deduction, income year, listed horticultural plant, planting, plot, replaced area fraction, replacement plant, .

184 Farming expenditure of lessor or sublessor
  • (1) In the heading to section DO 5, or horticulture is inserted after Farming.

    (2) In section DO 5(1)(c)(i), or DO 4B or DO 4C is inserted after DO 4.

    (3) In section DO 5(1)(c)(ii), or DO 4B(2) or DO 4C is inserted after DO 4(2).

    (4) In the heading to section DO 5(2), or DO 4B or DO 4C is inserted after DO 4

    (5) In section DO 5(2), or DO 4B or DO 4C is inserted after DO 4.

185 New section DO 5B inserted
  • After section DO 5, the following is inserted:

    DO 5B Improvement destroyed or made useless by qualifying event
    • When this section applies

      (1) This section applies if in an income year of a person—

      • (a) the person owns land, or operates a farming or agricultural business on land, to which there has been made an improvement; and

      • (b) the improvement is destroyed or made useless for the purpose of deriving income as a result of an event that is a qualifying event under paragraph (a) or (b) of the definition of that term; and

      • (c) the person would be entitled for the income year to a deduction under section DO 4 or DO 5 for expenditure on the improvement if the improvement had not been destroyed or made useless.

      Deduction: diminished value of expenditure

      (2) The person is allowed a deduction of the amount of the diminished value, for the income year, of the expenditure on the improvement.

      Link with subpart DA

      (3) This section overrides the general permission and the capital limitation. The other general limitations still apply.

      Defined in this Act: business, capital limitation, deduction, diminished value, general limitation, general permission, income, income year, qualifying event, .

186 New section DP 3B inserted
  • After section DP 3, the following is inserted:

    DP 3B Improvement destroyed or made useless by qualifying event
    • When this section applies

      (1) This section applies if, in an income year of a person,—

      • (a) the person operates a forestry business on land, to which there has been made an improvement; and

      • (b) the improvement is destroyed or made useless for the purpose of deriving income as a result of an event that is a qualifying event under paragraph (a) or (b) of the definition of that term; and

      • (c) the person would be entitled for the income year to a deduction under section DP 3 for expenditure on the improvement if the improvement had not been destroyed or made useless.

      Deduction: diminished value of expenditure

      (2) The person is allowed a deduction of the amount of the diminished value, for the income year, of the expenditure on the improvement.

      Link with subpart DA

      (3) This section overrides the general permission and the capital limitation. The other general limitations still apply.

      Defined in this Act: business, capital limitation, deduction, diminished value, general limitation, general permission, income, income year, qualifying event, .

187 Cost of acquiring timber: forestry business on land bought from Crown, Maori owners, or holding company
  • In section DP 8(3)(a), cost of timber is replaced by cost of the timber.

188 Amalgamated company: expenditure on improvements for farming, aquacultural, and forestry businesses
  • (1) In the heading to section DV 13, horticultural, is inserted after farming,.

    (2) In section DV 13(1), DO 4B (Expenditure on land: planting of listed horticultural plants), DO 4C (Expenditure on land: horticultural replacement planting), is inserted before or DO 6.

    (3) In section DV 13(2), DO 4B (Expenditure on land: planting of listed horticultural plants), DO 4C (Expenditure on land: horticultural replacement planting), is inserted before or DO 6.

189 Partnership interests and disposal of part of asset before 16 December 1991
  • In the words before section DZ 6(a), DZ 2 is replaced by DZ 3.

190 Petroleum mining operations outside New Zealand before 16 December 1991
  • In section DZ 7, DZ 2 is replaced by DZ 3.

191 Prepayments
  • Section EA 3(4), except for the heading, is replaced by the following:

    • (4) An amount of expenditure on goods is unexpired at the end of an income year if, by the end of the income year,—

      • (a) the person has not used up the goods in deriving income; and

      • (b) the goods are not destroyed or rendered useless for the purpose of deriving income.

192 Calculation rule: income year in which item disposed of
  • In section EE 11(5), EE 42 is replaced by FB 7(6) (Depreciation: partial income-producing use).

193 Effect of disposal or event
  • (1) In section EE 41(2), the second sentence is replaced by This subsection does not apply if the item is a building unless the item has been destroyed or rendered useless for the purpose of deriving income as a result of an event that is a qualifying event for the purpose of paragraph (a) or (b) of the definition of that term.

    (2) In the list of defined words in section EE 41, income year is replaced by income, income year, qualifying event.

194 New section EW 47B inserted
  • After section EW 47, the following is inserted:

    EW 47B Consideration when debtor released as condition of new start grant
    • When this section applies

      (1) This section applies if, 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 a qualifying 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 state of emergency that relates to the qualifying event; and

      • (d) the liability referred to in paragraph (c)(i) 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 state of emergency; and

      • (e) in the absence of this section, the amount of the remitted liability would be income of the person.

      Consideration

      (2) The person is treated as having paid, on the date on which the liability is forgiven or remitted, the part of the amount owing that is the greater of zero and the amount calculated under the formula—

      remitted amount -- current loss -- available loss -- other loss.

      Definition of items in formula

      (3) In the formula—

      • (a) remitted amount is the amount of the remitted liability:

      • (b) current loss is the net loss that the person would have for the income year in which the liability is remitted in the absence of this section:

      • (c) available loss is the available net losses that are available to the person for offset against net income for the income year in which the liability is remitted:

      • (d) other loss is a loss that—

        • (i) is incurred by a person associated with the person who receives the new start grant; and

        • (ii) satisfies subsection (4).

      Loss incurred by associated person from business or land

      (4) The loss referred to in subsection (3)(d)—

      • (a) is incurred by a person who—

        • (i) carries on or has carried on the business in respect of which the new start grant is paid or owns or has owned an estate in fee simple or leasehold estate in land used in the business; and

        • (ii) in the opinion of the Commissioner, is under a substantial degree of control by the person; and

        • (iii) in the opinion of the Commissioner, has a substantial identity of interests with the person; and

      • (b) is incurred in respect of—

        • (i) the business referred to in paragraph (a)(i):

        • (ii) land that is used in the business; and

      • (c) is, for the income year in which the liability is remitted,—

        • (i) a net loss of the associated person:

        • (ii) an available net loss for the associated person; and

      • (d) is included in the calculation in subsection (3) to an extent that the Commissioner determines, having regard to the interests of the associated person that are separate from those of the person.

      Notice to associated person

      (5) The Commissioner must give to the associated person a written notice of a determination under subsection (4)(d).

      Defined in this Act: business, deduction, diminished value, income, income year, qualifying event., .

195 Direct control interests
  • In section EX 5(4), of shareholder decision-making rights is inserted after definition.

196 Associates and 10% threshold
  • In section EX 15(1), EX 46(1)(b) is replaced by EX 46(1)(a).

197 Branch equivalent income or loss: calculation rules
  • In section EX 21(14)(b), to DO 4D, is inserted after DO 4.

198 Rules for personal property lease asset during term of finance lease
  • (1) In section FC 8B(2), on the date that the term of the lease ends or terminates is replaced by by the date on which the lease term ends.

    (2) In section FC 8B(3)

    • (a) at the end of the term of the lease is replaced by by the date on which the lease term ends:

    • (b) that is replaced by on which.

199 Taxation of hire purchase agreements
  • In section FC 10(8)(a), consideration paid to the lessee for the hire purchase agreement is replaced by consideration provided to the lessee under the hire purchase agreement.

200 Premiums derived by non-resident general insurers treated as being derived from New Zealand
  • In the definition of premium in section FC 13(9), paragraphs (a) to (c) are replaced by the following:

    • (a) in relation to insurance of the kind described in subsection (2), an amount payable in respect of a contract of insurance entered by an insured person:

    • (b) in relation to insurance of the kinds described in subsections (3) and (4), an amount payable in respect of a guarantee of a contract of insurance entered by an insured person.

201 Special provisions relating to dispositions of property
  • In section FD 10(3)(b), DO 4B, DO 4C, is inserted after DO 4,.

202 Companies that may constitute imputation group
  • (1) Section FDA 1(1)(e) is repealed.

    (2) After section FDA 1(2)(a), the following is inserted:

    • (ab) all members of the consolidated group are or would be members of the imputation group; and.

    (3) In section FDA 1(2)(b), the words before subparagraph (i) are replaced by for an imputation group that contains or will contain members of more than 1 consolidated group, all the members of the consolidated groups have been members of a single wholly-owned group of companies throughout the period that—.

203 Amalgamation not to result in deemed income or remission of liabilities
  • In section FE 9, IE 1(4) is replaced by DB 38.

204 Application of sections GC 29 to GC 31
  • (1) In section GC 29(1)(b)

    • (a) in the words before subparagraph (i)(A), or losses is omitted:

    • (b) subparagraph (i)(B) is replaced by the following:

      • (B) net losses of a loss attributing qualifying company, to the extent that shareholders with effective interests in the company are deemed under section HG 16 to incur amounts of loss that correspond to the net losses; and:

    • (c) in subparagraph (ii), and losses is omitted.

    (2) In section GC 29(1)(b)(ii), assessable is inserted before income in both places that it occurs.

    (3) In section GC 29(1)(e)(i), date: is replaced by date; and.

    (4) In section GC 29(1)(e)(ii)(F), CE 4. is replaced by CE 4: and the following is added:

    • (G) shares in a foreign company, if the proceeds of a disposal of the shares would not be assessable income of the holder other than under the FIF rules.

    (5) In section GC 29(2), income, deductions, and losses is replaced by assessable income and deductions.

    (6) In section GC 29(3), income, deductions, and losses is replaced by assessable income and deductions.

205 Defined terms for sections GC 29 to GC 31
  • (1) In section GC 30(3)(c), in the words before subparagraph (i), a purpose or effect of achieving is omitted.

    (2) Section GC 30(3)(d) is replaced by the following:

    • (d) involves money that is provided by—

      • (i) a lender who is not an associated person of the borrower under a provision of section OD 7 or OD 8(3) and who does not provide the money on arm's-length terms and who—

        • (A) is not a person who regularly provides money to persons on arm's-length terms under arrangements that do not satisfy paragraphs (a) to (c):

        • (B) is not resident in New Zealand under section OE 1 or OE 2 and does not carry on business in New Zealand through a fixed establishment in New Zealand; or

      • (ii) a lender who is an associated person of the borrower under a provision of section OD 7 or OD 8(3) and who obtains the money under an arrangement that satisfies paragraphs (a) to (c).

206 Deferral of surplus deductions from arrangement
  • (1) In section GC 31(1)

    • (a) paragraph (a)(i) is replaced by the following:

      • (i) deductions, including any deduction under subsection (3) or section HG 16; and.

    • (b) in paragraph (a)(ii)

      • (i) assessable is inserted before income:

      • (ii) and losses is omitted:

    • (c) paragraph (b)(i) is replaced by the following:

      • (i) deductions, including any deduction under subsection (3) or section HG 16; and:

    • (d) in paragraph (b)(ii)

      • (i) assessable is inserted before income:

      • (ii) and losses is omitted.

    (2) In section GC 31(2)

    • (a) in the words before the formula, assessable is inserted before income:

    • (b) the definitions of items a and b are replaced by the following:

      • a is the amount for the income year by which the deductions, including any deduction under subsection (3) or section HG 16, of the participant from the arrangement exceed the assessable income, other than under this section, of the participant from the arrangement

      • b is the total amount for the income year by which the deductions, including any deduction under subsection (3) or section HG 16, from the arrangement exceed the assessable income, other than under this section, from the arrangement for the group that consists of—

        • (a) the participant; and

        • (b) the affected associates of the participant who are not a loss attributing qualifying company and who each have for the income year allowable deductions, including any allowable deduction under subsection (3) or section HG 16, from the arrangement that in total exceed the assessable income, other than under this section, from the arrangement

    • (c) paragraph (a) of the definition of item c is replaced by the following:

      • (a) the total amount for the income year by which the deductions, including any deduction under subsection (3) or section HG 16, from the arrangement exceed the assessable income, other than under this section, from the arrangement for the group that consists of—

        • (i) the participant; and

        • (ii) the affected associates of the participant who are not a loss attributing qualifying company that has incurred a net loss from the arrangement for the income year; and.

    (3) In section GC 31(3), amount of income is replaced by amount of assessable income.

    (4) In section GC 31(4)(b), assessable is inserted before income.

207 Sale of trading stock for inadequate consideration
  • (1) In the heading to section GD 1, Sale is replaced by Sale or other disposal.

    (2) Section GD 1(4) is replaced by the following:

    • (4) This section does not apply in respect of any trading stock that—

      • (a) is transferred to a person under a relationship agreement; or

      • (b) is donated, or supplied for consideration worth less than the market value of the trading stock, to a person as a result of an event that is a qualifying event under paragraph (a) or (b) of the definition of that term.

208 Subpart HC repealed
  • Subpart HC is repealed.

209 Election to become Maori authority
  • Section HI 3(3) is replaced by the following:

    • (3) A person who elects to become a Maori authority becomes a Maori authority—

      • (a) on the first day of the income year in which the person gives notice of the election to the Commissioner, if paragraph (b) does not apply:

      • (b) on the first day of the income year immediately succeeding the income year in which the person gives notice of the election to the Commissioner, if the person nominates that date in the notice of the election.

210 Distributions by Maori authority
  • In section HI 4(1)(e), consideration: is replaced by consideration: and the following is added:

    • (f) a taxable bonus issue.

211 Amount distributed to member by Maori authority
  • After section HI 5(3), the following is added:

    • (4) A taxable bonus issue that is made by a Maori authority to a member is a taxable Maori authority distribution.

212 Treatment of companies and trusts that elect to apply this subpart
  • In section HI 8, row 4 of Table HI 8 is replaced by the following:

    4a Maori authoritya trust that is not a Maori authoritytaxable income derived by the Maori authority is treated as trustee income
213 No offset in calculating some income tax liabilities
214 Net losses may be offset against future net income
  • After section IE 1(2), the following is inserted:

    • (2B) A taxpayer who is a partner in a special partnership may not under this section carry forward a net loss if—

      • (a) the taxpayer has a deduction in an income year that arises from the activities of the special partnership; and

      • (b) the net loss arises from the deduction; and

      • (c) during the income year, the taxpayer derives no assessable income, whether from the activities of the special partnership or otherwise.

    • (2C) A taxpayer may not carry forward under this section a net loss to the extent that the net loss is offset against a remitted amount of an associated person as determined by the Commissioner under section CX 41B or EW 47B.

215 Net loss offset between group companies
  • Section IG 2(2)(a)(i) is replaced by the following:

    • (i) a net loss for the year of offset that does not consist of a mining outgoing excess and is not prevented by section IE 1(2B) or (2C) from being carried forward under sections IE 1 and IF 1:.

216 Calculations of rebates producing negative amounts
  • In section KB 3, subpart is replaced by Part.

217 Rebate in respect of gifts of money
  • In section KC 5(1)(cl), Zealand. is replaced by Zealand: and the following is added:

    • (cm) Medicine Mondiale:

    • (cn) New Zealand Jesuits in India Trust:

    • (co) Operation Vanuatu Charitable Trust.

218 Determination of net income
  • (1) In section KD 1(1)(e)(ii), EI 3, EI 7, and EJ 1 is replaced by EI 1, EI 3, and EI 7.

    (2) In section KD 1(3)(c)(ii), counted income is replaced by assessable income.

219 Parental tax credit
220 Ascertainment of New Zealand income tax liability
  • In section LC 14(1), in the definition of item b, counted income is replaced by assessable income.

221 Granting of underlying foreign tax credit
  • After section LF 2(2)(d), the following is inserted:

    • (db) if the company, as a result of the payment of the dividend, is liable to pay no income tax in relation to an amount, or part of an amount, from which the dividend is sourced; or.

222 Estimated provisional tax
  • After section MB 3(6), the following is added:

    • (7) This section is subject to section MB 3B.

223 New section MB 3B inserted
  • After section MB 3, the following is inserted:

    MB 3B Provisional taxpayer affected by qualifying event
    • (1) This section applies to a taxpayer who is significantly affected by a qualifying event.

      (2) A taxpayer to whom this section applies may, despite section MB 3(1), request the Commissioner to accept an estimate or a revised estimate of the residual income tax payable by the taxpayer in respect of an income year.

      (3) The Commissioner may, despite section MB 3(1), accept an estimate or a revised estimate of residual income tax payable by a taxpayer to which this section applies in respect of an income year if the Commissioner is satisfied that—

      • (a) the taxpayer is significantly affected by a qualifying event; and

      • (b) an effect on the taxpayer of the occurrence of a qualifying event is that—

        • (i) it is not reasonable to require the taxpayer to deliver an estimate or a revised estimate of residual income tax payable by the taxpayer in respect of the income year in accordance with section MB 3(1):

        • (ii) the basis on which the taxpayer has chosen to pay provisional tax is now inappropriate; and

      • (c) the taxpayer's request that the Commissioner accept the estimate or revised estimate was made as soon as was practicable.

      (4) If a revised estimate is accepted under subsection (3), the revised estimate is treated as applying on the third instalment date.

224 New subpart MBB inserted
  • After subpart MBA, the following is inserted:

    Subpart MBBEarly-payment discount of income tax

    MBB 1 Purpose
    • The purpose of this subpart is to encourage, by means of a discount of income tax, payments of amounts as income tax by small-business taxpayers in the income year preceding the income year in which the taxpayers are first required to pay provisional tax.

    MBB 2 Availability of early-payment discount
    • (1) This section applies to a small-business taxpayer for an income year if the small-business taxpayer—

      • (a) is not required to make payments of provisional tax in the income year; and

      • (b) on or before the taxpayer's balance date for the income year, makes payments as income tax for the income year; and

      • (c) throughout the period from the taxpayer's balance date for the income year to the taxpayer's terminal tax date for the income year, has a credit in an account with the Commissioner that is greater than or equal to the lesser of the following:

        • (i) the amount that, on or before the small-business taxpayer's balance date for the income year, the small-business taxpayer pays as income tax for the income year:

        • (ii) the amount of terminal tax for the income year for which the taxpayer would be liable in the absence of this section; and

      • (d) has, for earlier income years—

        • (i) never been required to make payments of provisional tax and—

          • (A) never received an early-payment discount; or

          • (B) derived assessable income from a business at no time in a period of 4 income years that began after the latest income year for which the small-business taxpayer received an early-payment discount; or

        • (ii) derived assessable income from a business at no time in a period of 4 income years that began after the latest income year for which the small-business taxpayer was required to make payments of provisional tax.

      (2) If a small-business taxpayer to whom this section applies makes a return of income for the income year and applies for an early-payment discount, the Commissioner must credit the income tax account of the small-business taxpayer with an early-payment discount found by multiplying the discount rate referred to in subsection (4) by the lesser of the following:

      • (a) the amount that, on or before the small-business taxpayer's balance date for the income year, the small-business taxpayer paid as income tax for the income year:

      • (b) 105% of the small-business taxpayer's residual income tax for the income year.

      (3) The small-business taxpayer must make the application required by subsection (2) on or before the date given by section 37(5) of the Tax Administration Act 1994 as the last date for filing a return of income for the income year to which the application relates.

      (4) The discount rate is—

      • (a) 6.7% if no rate is prescribed under paragraph (b):

      • (b) the rate prescribed by the Governor-General by Order in Council.

    MBB 3 Credit treated as being payment as income tax
    • A credit of an early-payment discount for a small-business taxpayer for an income year is treated as being a payment made on the day after the last day of the income year by the small-business taxpayer as income tax for the income year.

    MBB 4 Some definitions
    • In this subpart—

      early-payment discount means a discount of income tax under this subpart

      small-business taxpayer means a taxpayer who—

      • (a) conducts a business on the taxpayer's own account, acting alone or as a partner in a partnership; and

      • (b) does not use a company or a trust in the conduct of the business; and

      • (c) derives assessable income that is predominantly—

        • (i) from the business; and

        • (ii) not interest, dividends, royalties, rents or beneficiary income.

225 Refund of excess tax
  • (1) Section MD 1(1) is replaced by the following:

    • (1) Subject to sections MD 2, MD 2A, MD 2B, MD 3 and NH 4, and subsection (2), the Commissioner must refund an amount that a taxpayer has paid as tax if—

      • (a) the Commissioner is satisfied that the amount represents an excess over the tax properly payable by the taxpayer; and

      • (b) the 4-year period referred to in section 108 of the Tax Administration Act 1994 has not ended.

    (2) Section MD 1(2) is replaced by the following:

    • (2) Subject to sections MD 2, MD 2A, MD 2B, MD 3, and NH 4, the Commissioner must refund an amount that a taxpayer has paid as tax if—

      • (a) the taxpayer paid the amount as a result of an amendment to an assessment that increased the amount of tax payable by the taxpayer; and

      • (b) the Commissioner is satisfied that the amount represents an excess over the tax properly payable by the taxpayer; and

      • (c) the 4-year period beginning at the end of the income year in which the assessment was amended has not ended.

    • (2B) The Commissioner may refund an amount that is referred to in subsection (1) or (2) after the end of the 4-year period referred to in the subsection, if—

      • (a) the refund arises from—

        • (i) a clear mistake or simple oversight of the taxpayer:

        • (ii) an entitlement of the taxpayer to a rebate of income tax under subpart KD; and

      • (b) the refund is made—

        • (i) within the period of 4 years beginning from the end of the 4-year period referred to in the subsection:

        • (ii) as a result of an application by or on behalf of the taxpayer that the Commissioner receives before or within the period of 4 years beginning from the end of the 4-year period referred to in the subsection.

226 Limits on refunds of tax in relation to Maori authorities
  • (1) In section MD 2B(1)(a), the end is replaced by unless subsection (1B) applies, the end.

    (2) After section MD 2B(1), the following is inserted:

    • (1B) Despite subsection (1)(a), a Maori authority that furnishes its Maori authority credit account return for an imputation year before the end of the next imputation year may be refunded income tax in accordance with section MD 1 if—

      • (a) the Maori authority has furnished the Maori authority credit account return within an extension of time given by the Commissioner; and

      • (b) the amount of the refund does not exceed the credit balance in the Maori authority's Maori authority credit account on the last day of the imputation year for which the Maori authority credit account return was furnished.

    (3) In section MD 2B(4), If income is replaced by Unless subsection (4B) applies, if income.

    (4) After section MD 2B(4), the following is inserted:

    • (4B) Despite subsection (4), the income tax not refunded may be credited on a provisional tax instalment date if residual income tax is treated as being payable on the date specified in Part 7 of the Tax Administration Act 1994.

227 Companies required to maintain imputation credit account
  • Section ME 1(2)(a) is replaced by the following:

    • (a) resident in a country other than New Zealand; or.

228 Companies electing to maintain imputation credit account
  • Section ME 1A(4)(a) is replaced by the following:

    • (a) for the purpose of section ME 6, from—

      • (i) the date that is 30 days after the date on which the Commissioner receives the notice, if none of subparagraphs (ii) to (iv) apply; or

      • (ii) 1 October 2003, if the Commissioner receives the notice before 1 April 2004 and notifies the company that the notice is effective from 1 October 2003; or

      • (iii) 1 April 2004, if the Commissioner receives the notice before 1 April 2005 and notifies the company that the notice is effective from 1 April 2004; or

      • (iv) the beginning of the imputation year in which the Commissioner receives the notice, if the company is formed in the imputation year or becomes eligible under this section in the imputation year and the Commissioner notifies the company that the notice is effective from the beginning of the imputation year:.

229 Amount of dividend for imputation rules if paid in Australian currency
  • In section ME 1B, the formula is replaced by the following:

    a × b

230 Consolidated imputation group to maintain separate imputation credit account
  • Section ME 10(1C)(b) is replaced by the following:

    • (b) arise in relation to a company that, at the time the debit or credit arises—

      • (i) will be a member of the resident imputation sub-group, if the debit or credit arises before the formation of the resident imputation subgroup:

      • (ii) is a member of the resident imputation subgroup, if the debit or credit arises at or after the formation of the resident imputation subgroup.

231 Credits arising to imputation credit account of group
  • (1) After section ME 11(1)(f), the following is inserted:

    • (fb) an amount forming all or part of a credit balance in the dividend withholding payment account of a company that is a member of the consolidated imputation group, if the company elects under section MG 11 that the amount be a credit to the imputation credit account of the consolidated imputation group:.

    (2) After section ME 11(1)(j), the following is inserted:

    • (jb) an amount forming all or part of a credit balance in the policyholder credit account of a company, if the company elects under section ME 19(3)(a) during the imputation year that the amount be a credit to the imputation credit account of the consolidated imputation group:.

    (3) In section ME 11(2)(d), subsection (1)(g) and (k) is replaced by subsection (1)(fb), (g) and (k).

    (4) After section ME 11(2)(e), the following is inserted:

    • (eb) in the case of the credit referred to in subsection (1)(jb), on the date the relevant debit arose under section ME 18(4)(b):.

232 Debits arising to imputation credit account of group
  • Section ME 12(1)(b) is replaced by the following:

    • (b) an amount forming all or part of a credit balance in the imputation credit account of the consolidated imputation group, if the nominated company of the consolidated imputation group elects under section ME 14(1) during the imputation year that the amount be a credit to the policyholder credit account of the consolidated imputation group or of a member of the consolidated imputation group:.

233 Credits and debits arising to policyholder credit account of company
  • (1) In section ME 18(1)(a)

    • (a) under section ME 7 by is omitted:

    • (b) in subparagraph (i), under section ME 14 by is inserted before the nominated company:

    • (c) in subparagraph (ii), under section ME 7 by is inserted before the company,.

    (2) After section ME 18(1)(b), the following is inserted:

    • (bb) an amount equal to any allocation deficit debit that arises in the company's dividend withholding payment account under section MG 8B, if the amount of the allocation deficit debit is given by section MG 8B(3)(a):

    • (bc) an amount equal to the credit balance in the company's dividend withholding payment account immediately before an allocation deficit debit arises in the company's dividend withholding payment account under section MG 8B, if the amount of the allocation deficit debit is given by section MG 8B(3)(b):.

    (3) After section ME 18(2)(b), the following is inserted:

    • (bb) in the case of a credit referred to in paragraph (bb) or (bc) of that subsection, at the end of the imputation year in respect of which the credit arises:.

    (4) In section ME 18(3)(b)

    • (a) in subparagraph (i), and not a member of a consolidated group is omitted:

    • (b) in subparagraph (ii), or of a consolidated group that is a consolidated imputation group is omitted.

    (5) In section ME 18(4)(b), company's imputation credit account is replaced by imputation credit account of the company or imputation group.

234 Election to use credit balance as credit against policyholder base income tax liability or as credit in imputation credit account
  • (1) In section ME 19(3)(a), and not a member of a consolidated group is omitted.

    (2) In section ME 19(3)(b), or of a consolidated group that is a consolidated imputation group is omitted.

    (3) In section ME 19(4)(b)(i), and not a member of a consolidated group is omitted.

    (4) In section ME 19(4)(b)(ii), , if the company is not a member of an imputation group or of a consolidated group that is a consolidated imputation group is omitted.

235 Credits and debits arising to group policyholder credit account
  • (1) After section ME 26(2)(c), the following is added:

    • (d) an amount equal to any allocation deficit debit that arises in the consolidated group's dividend withholding payment account under section MG 8B, if the amount of the allocation deficit debit is given by section MG 8B(3)(a):

    • (e) an amount equal to the credit balance in the consolidated group's dividend withholding payment account immediately before an allocation deficit debit arises in the consolidated group's dividend withholding payment account under section MG 8B, if the amount of the allocation deficit debit is given by section MG 8B(3)(b):.

    (2) After section ME 26(3)(c), the following is inserted:

    • (d) in the case of a credit referred to in paragraph (d) or (e) of that subsection, at the end of the imputation year in respect of which the credit arises:.

236 Credits and debits arising to branch equivalent tax account of company
  • In section MF 4(2)(a), or paragraph (b) is omitted.

237 Use of credit to reduce dividend withholding payment, or use of debit to satisfy income tax liability
  • (1) Section MF 5(2) is repealed.

    (2) Section MF 5(6B) is replaced by the following:

    • (6B) If an election under subsection (4) relates to an amount that exceeds the income tax liability, for the income year, of the company that receives the offset under subsection (6), the excess amount is treated as giving rise to a net loss of the company for the purpose of subparts IF and IG of an amount given by the following formula:

      .

      where—

      • a is the amount of the excess

      • b is the basic rate of income tax, expressed as a percentage, stated in—

        • (a) schedule 1, part A, clause 5, if the company is not a Maori authority; or

        • (b) schedule 1, part A, clause 2, if the company is a Maori authority.

238 Debits and credits arising to group branch equivalent tax account
  • (1) In section MF 8(2)(a)

    • (a) in the definition of item d, or LC 5 is replaced by , LC 5 or LC 16:

    • (b) in the definition of item e, companies that are members of the consolidated group is replaced by other companies.

    (2) In section MF 8(3)(a)

    • (a) the credits referred to in subsection (2)(a) and (b) is replaced by a credit referred to in subsection (2)(a):

    • (b) those paragraphs is replaced by that paragraph.

239 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(2) is repealed.

    (2) Section MF 10(6) is replaced by the following:

    • (6) If an election under subsection (3) or (4) relates to an amount that exceeds the income tax liability, for the income year, of the company or group that receives the offset under subsection (5), the excess amount is treated as giving rise to a net loss of the company or group for the purpose of subparts IF and IG of an amount given by the following formula:

      .

      where—

      • a is the amount of the excess

      • b is the basic rate of income tax, expressed as a percentage, stated in—

        • (a) schedule 1, part A, clause 5, if the company is not a Maori authority or the group does not consist of Maori authorities; or

        • (b) schedule 1, part A, clause 2, if the company is a Maori authority or the group consists of Maori authorities.

240 Debits arising to dividend withholding payment account
  • (1) In section MG 5(1)(c), company's imputation credit account is replaced by imputation credit account of the company or of an imputation group to which the company belongs.

    (2) In section MG 5(1)(f), section MG 8 is replaced by section MG 8(4).

    (3) In section MG 5(1)(g), section MG 8(5) is replaced by section MG 8B.

241 Allocation rules for dividend withholding payment credits
242 New section MG 8B inserted
  • After section MG 8, the following is inserted:

    MG 8B Policyholder credit account companies and dividend withholding payment credits
    • (1) This section applies to a policyholder credit account company (called the company) that is not a conduit tax relief company and an imputation year (called the dividend year) in which the company pays a dividend with a dividend withholding payment credit attached.

      (2) An allocation deficit debit of an amount given by subsection (3) arises at the end of the dividend year in the company's dividend withholding payment account if—

      • (a) the total of the amounts of the company's policyholder income and policyholder net loss for the DWP reference period, found using the policyholder base calculation for each imputation year, is greater than zero:

      • (b) the shareholder DWP ratio for the DWP reference period exceeds the policyholder DWP ratio for the DWP reference period.

      (3) The amount of the allocation deficit debit that arises under subsection (2) is—

      • (a) equal to the maximum deficit debit, if the maximum deficit debit is less than or equal to the credit balance that is in the company's dividend withholding payment account immediately before any allocation deficit debit arises under this section:

      • (b) equal to the reduced deficit debit, if paragraph (a) does not apply.

      (4) In this section—

      DWP reference period means the period that consists of—

      • (a) the dividend year:

      • (b) the longest period of consecutive imputation years—

        • (i) that begins on or after the date on which this section applies for the company; and

        • (ii) that ends immediately before the dividend year; and

        • (iii) in which the company paid no dividend that had a dividend withholding payment credit attached

      maximum deficit debit means the quantity that is given by the following formula

      (a -- b) x d x (1 -- r)

      where—

      • a is the company's shareholder DWP ratio for the DWP reference period:

      • b is the company's policyholder DWP ratio for the DWP reference period:

      • d is the total of the amounts of the company's policy-holder income and policyholder net loss found for the DWP reference period using the policyholder base calculation:

      • r is the basic rate of income tax, expressed as a percentage, stated in—

        • (a) schedule 1, part A, clause 5, if the company is not a Maori authority:

        • (b) schedule 1, part A, clause 2, if the company is a Maori authority

      policyholder DWP ratio means the quantity that is given by the following formula

      .

      where—

      • c is the total for the DWP reference period of all the credits that have arisen in the company's policyholder credit account as a result of an election by the company under section MG 7 in relation to a credit balance in the company's dividend withholding payment credit account

      • d is the total of the amounts of the company's policy-holder income and policyholder net loss found for the DWP reference period using the policyholder base calculation

      • r is the basic rate of income tax, expressed as a percentage, stated in—

        • (a) schedule 1, part A, clause 5, if the company is not a Maori authority:

        • (b) schedule 1, part A, clause 2, if the company is a Maori authority

      reduced deficit debit means the quantity that is given by the following formula

      .

      where—

      • c is the total for the DWP reference period of all the credits that have arisen in the company's policyholder credit account as a result of an election by the company under section MG 7 in relation to a credit balance in the company's imputation credit account

      • d is the total of the amounts of the company's policy-holder income and policyholder net loss found for the DWP reference period using the policyholder base calculation

      • e is the credit balance in the company's dividend withholding payment account at the end of the dividend year immediately before any allocation deficit debit arises under this section

      • f is the total amount of DWP credits that the company has attached to dividends paid by the company in the DWP reference period

      • g is the total amount of dividends paid by the company in the DWP reference period

      • r is the basic rate of income tax, expressed as a percentage, stated in—

        • (a) schedule 1, part A, clause 5, if the company is not a Maori authority:

        • (b) schedule 1, part A, clause 2, if the company is a Maori authority

      shareholder DWP ratio means the quantity given by the following formula

      .

      where—

      • f is the total amount of DWP credits that the company has attached to dividends paid by the company in the DWP reference period

      • g is the total amount of dividends paid by the company in the DWP reference period.

      (5) This section does not apply to a dividend that is the subject of a determination made by a statutory producer board or a co-operative company under section ME 30 or section ME 35.

243 Further dividend withholding payment payable by company
  • In section MG 9(5A)(b), payment of income tax is replaced by dividend withholding payment.

244 Transfer of credit balance to imputation credit account
  • Section MG 11(1) is replaced by the following:

    • (1) A company that is not a conduit tax relief company and has a credit balance in the dividend withholding payment account of the company at the end of an imputation year, or immediately before a debit arises in the account under section MG 5(1)(j), may elect that all or part of the credit balance be, for the imputation year in which the credit balance occurs—

      • (a) a debit to the dividend withholding payment account of the company; and

      • (b) a credit to the imputation credit account of the company, or of an imputation group of which the company is a member at the time the credit balance occurs.

245 Debits arising to group dividend withholding payment account
  • (1) In section MG 15(1)(f), section MG 8 is replaced by section MG 8(4).

    (2) In section MG 15(1)(g), section MG 8(5) is replaced by section MG 8B.

246 Application of specific dividend withholding provisions to consolidated groups
  • Section MG 16A(1) is replaced by the following:

    • (1) Section MG 8 applies with any necessary modifications to a consolidated group—

      • (a) as if the consolidated group were a company; and

      • (b) for the purpose of section MG 8(2) to (4), without taking into account any dividend that is paid by a member of the consolidated group to another member of the consolidated group.

    • (1B) Section MG 8B applies with any necessary modifications to a consolidated group that has a policyholder credit account—

      • (a) as if the consolidated group were a company; and

      • (b) as if a reference to section MG 7 were a reference to section NH 6(2); and

      • (c) without taking into account any dividend that is paid by a member of the consolidated group to another member of the consolidated group.

247 Allocation rules for Maori authority credit account credits
  • In section MK 7(5), distributions, where it appears after where—, is replaced by the following:

    distributions is the total of all taxable Maori authority distributions made by the Maori authority during the imputation year, exclusive of any Maori authority credit attached to the distributions.

248 Further tax payable for end of year debit balance or when Maori authority ceases to exist
  • Section MK 8(5) is replaced by the following:

    • (5) A Maori authority that pays an amount of further income tax for which the authority is liable may elect, with effect from the date on which the Commissioner receives the payment, that the amount paid be also credited in payment of a liability of the authority to pay income tax or provisional tax in relation to an income year that corresponds to an imputation year in which the authority was required to establish and maintain a Maori authority credit account.

    • (5B) A Maori authority that pays an amount of income tax in relation to an income year in which the authority was required to establish and maintain a Maori authority credit account and that is liable to pay further income tax in relation to an imputation year may elect, with effect from the date on which the Commissioner receives the payment, that the amount of the payment of tax be also credited in payment of the liability of the authority to pay the further income tax.

249 Section MZ 7 repealed
  • Section MZ 7 is repealed.

250 Accreditation requirements of PAYE intermediaries
  • (1) In section NBA 2(1)(c), the words before subparagraph (i) are replaced by the applicant, if a natural person or corporation sole, or each member of the applicant, if the applicant is an unincorporated body, or each of the persons acting as a director, secretary or statutory officer of the applicant, if the applicant is a body corporate, and any principal of the applicant.

    (2) In section NBA 2(4)(b), the words before subparagraph (i) are replaced by the person, if a natural person or corporation sole, or a member of the person, if the person is an unincorporated body, or a person acting as a director, secretary or statutory officer of the person, if the person is a body corporate, or a principal of the person.

251 Employer having PAYE intermediary: responsibilities and status under PAYE rules and SSCWT rules
  • (1) Section NBA 4(1) is replaced by the following:

    • (1) An employer who is in an arrangement with a PAYE intermediary that applies to an employee and a pay period must—

      • (a) if the employer has authorised the PAYE intermediary to direct the transfer of amounts from a bank account of the employer in satisfaction of the obligations under the arrangement of the PAYE intermediary to make payments on behalf of the employer, ensure that, at a time specified by the PAYE intermediary, the funds in the bank account of the employer that are available for transfer are sufficient to satisfy the obligations of the PAYE intermediary that relate to the employee and the pay period; or

      • (b) if the employer has not authorised the PAYE intermediary as described in paragraph (a), pay into the trust account established by the PAYE intermediary and identified in the employer's notice to the Commissioner under section NBA 3—

        • (i) if subparagraph (ii) does not apply, the employee's gross salary or wages for the pay period after deduction of any amount that is owed by the employee to the employer and may be lawfully withheld by the employer from the salary or wages:

        • (ii) if the employer has paid salary or wages to the employee in the way authorised by subsection (4), the amount that the employer is required by subsection (4)(d) to make available to the PAYE intermediary:

        • (iii) if the PAYE intermediary has agreed to assume obligations of the employer under the SSCWT rules, the specified superannuation contributions that are made in the pay period by the employer on behalf of the employee.

    • (1B) An employer who is in an arrangement with a PAYE intermediary that applies to an employee and a pay period must—

      • (a) keep records of the gross salary or wages of the employee for the pay period and the amounts withheld by the employer for the pay period; and

      • (b) provide information requested by the PAYE intermediary within the time agreed by the employer and the PAYE intermediary.

    (2) In section NBA 4(2), subsection (1) is replaced by subsections (1) and (1B).

    (3) In section NBA 4(3), subsection (1) is replaced by subsections (1) and (1B).

    (4) Section NBA 4(4)(c) and (d) are replaced by the following:

    • (c) the employer makes from the gross salary or wages of the employee the deduction that the PAYE rules and SSCWT rules would require of an employer who did not have a PAYE intermediary; and

    • (d) the employer makes available to the PAYE intermediary, in the way required by subsection (1), the amount of the deduction referred to in paragraph (c).

252 PAYE intermediary: responsibilities and status under PAYE rules and SSCWT rules
  • (1) In section NBA 5(1), and (1B) is inserted after section NBA 4(1) in both places that it occurs.

    (2) After section NBA 5(1), the following is inserted:

    • (1B) If a PAYE intermediary has been authorised by an employer to direct the transfer of amounts from a bank account of the employer as described in section NBA 4(1)(a), the PAYE intermediary must direct that, at or before the time of the transfer of the amount of salary or wages owing to the employee, an amount representing the deductions from the gross salary or wages of the employee that are required by the PAYE rules and SSCWT rules be transferred to—

      • (a) the Commissioner:

      • (b) the trust account established by the PAYE intermediary and identified in the employer's notice to the Commissioner under section NBA 3.

    (3) In section NBA 5(2A), and (1B) is inserted after section NBA 4(1) in both places that it occurs.

253 Operation of trust account
  • (1) In section NBA 6(2), paragraphs (aa) and (ab) are replaced by the following:

    • (ab) deductions from gross salary or wages that are required by the PAYE rules and SSCWT rules:

    • (ac) specified superannuation contributions paid by employers:

    • (ad) deductions under section NBA 4(4) made by employers from salary or wages:.

    (2) In section NBA 6(3), paragraphs (aa) and (ab) are replaced by the following:

    • (ab) specified superannuation contributions paid by employers:

    • (ac) deductions under section NBA 4(4) made by employers from salary or wages:.

254 Amounts of tax deductions
  • (1) Section NC 6(1) is repealed.

    (2) In section NC 6(1A), For a period for which the amount of a tax deduction is not fixed by an annual taxing Act, the is replaced by A.

    (3) In section NC 6(1B), by an annual taxing Act or is omitted.

    (4) In section NC 6(1C), by an annual taxing Act or is omitted.

    (5) Section NC 6(2) is repealed.

255 Delivery of withholding declaration
  • Section NC 7(2) is replaced by the following:

    • (2) If a person who is making a withholding payment has not received the withholding declaration required by subsection (1), the person must make from the withholding payment a tax deduction that is equal to the sum of the amount of the tax deduction that would, apart from this subsection, be made from the withholding payment and an amount equal to—

      • (a) 15% of the amount of the withholding payment, if neither of paragraphs (b) and (c) applies; or

      • (b) 5% of the amount of the withholding payment, if—

        • (i) the person receiving the withholding payment is a company that is a non-resident contractor for the purposes of the Income Tax (Withholding Payments) Regulations 1979; and

        • (ii) the person referred to in subparagraph (i) receives the withholding payment other than directly or indirectly as a result of a choice that is made for purposes that include a purpose of defeating the intent and application of paragraph (a); and

        • (iii) paragraph (c) does not apply; or

      • (c) zero, if the withholding payment is a payment of the class specified in clause 4(b) of part B of the Schedule to the Income Tax (Withholding Payments) Regulations 1979.

256 Amount of tax deductions for pay period current when tax deductions altered
  • In section NC 12(1), by an annual taxing Act or is omitted.

257 Special filing rule for employer who stops employing staff during year
  • In section ND 12, section ND 10(4) and (5) is replaced by section ND 10(3) to (5).

258 Application of RWT rules
  • (1) After section NF 1(2)(a)(x), the following is added:

    • (xi) interest payable on overpaid tax in accordance with section 120D of the Tax Administration Act 1994:.

    (2) Section NF 1(3) and (3A) are repealed.

259 Liability to make deduction in respect of foreign withholding payment dividend
  • (1) Section NH 1(2)(a) is replaced by the following:

    • (a) a dividend that is paid by a foreign company and that—

      • (i) is derived by a company that is resident in New Zealand; and

      • (ii) is exempt income under section CW 9 or CW 11 for the company that is resident in New Zealand; and

      • (iii) is not exempt income under 1 or more of sections CW 29 to CW 33 and CW 35 to CW 40 for the company that is resident in New Zealand:.

    (2) Section NH 1(3) is repealed.

260 Application of specific dividend withholding payment provisions to consolidated groups
  • (1) Section NH 6(3) and (4) are repealed.

    (2) In section NH 6(6)(a)(ii), payment is inserted after dividend withholding.

261 Definitions
  • (1) This section amends section OB 1.

    (2) In the definition of allocation deficit debit, or (5) is replaced by or MG 8B.

    (3) In the definition of community trust, section 2 is replaced by section 4.

    (4) After the definition of cost, the following is inserted:

    cost of timber, for some timber, means the amount given for the timber by section DP 10(1) (Cost of timber) that is a deduction under section DP 10(2).

    (5) In the definition of diminished value

    • (a) in the introductory words, DO 4B (Expenditure on land: planting of listed horticultural plants), DO 4C (Expenditure on land: horticultural replacement planting), is inserted before DO 6:

    • (b) in paragraph (b), DO 4B (Expenditure on land: planting of listed horticultural plants), DO 4C (Expenditure on land: horticultural replacement planting), is inserted before DO 6.

    (6) After the definition of dual resident company, the following is inserted:

    DWP reference period is defined in section MG 8B(4) (Policyholder credit account companies and dividend withholding payment credits) for the purposes of that section.

    (7) After the definition of early balance date, the following is inserted:

    early-payment discount is defined in section MBB 4 (Some definitions) for the purpose of subpart MBB.

    (8) In paragraph (e) of the definition of eligible period, changes is replaced by does not change.

    (9) In the definition of estimated useful life, the following is added:

    • (c) for a listed horticultural plant, means the period of time over which the listed horticultural plant might reasonably be expected to be useful to a person in deriving income or in carrying on a business in New Zealand, with the expectation based on an assumption of normal and reasonable maintenance.

    (10) In the definition of finance lease, paragraph (b) is replaced by the following:

    • (b) involves or is part of an arrangement that involves—

      • (i) the transfer of the ownership of the lease asset to the lessee or an associate of the lessee during or at the end of the lease term:

      • (ii) the lessee or an associate of the lessee having the option of acquiring the asset for an amount that is likely to be substantially lower than the asset's market value on the date of acquisition:

      • (iii) a lease term that is more than 75% of the asset's estimated useful life as that term is defined in section EE 53 (Meaning of estimated useful life):

      • (iv) a right of an associate of the lessee to acquire the lease asset, or a right of the lessor to require an associate of the lessee to acquire the lease asset, during the lease term under an arrangement that does not entitle the associate to receive all of the lease payments that may fall due after the acquisition.

    (11) After the definition of foreign dividend, the following is inserted:

    foreign exempt entity is defined in section CW 11B(3) (Proceeds of share disposition by qualified foreign equity investor) for the purposes of that section

    foreign exempt partnership is defined in section CW 11B(3) (Proceeds of share disposition by qualified foreign equity investor) for the purposes of that section

    foreign exempt person is defined in section CW 11B(3) (Proceeds of share disposition by qualified foreign equity investor) for the purposes of that section.

    (12) The definition of insurer is replaced by the following:

    insurer

    • (a) means a person who assumes liability under a contract of insurance:

    • (b) is defined in section FC 13(9) (Premiums derived by non-resident general insurers treated as being derived from New Zealand) for the purposes of sections FC 13 to FC 17 (which relate to non-resident general insurers).

    (13) In paragraph (d) of the definition of lease

    • (a) in the words preceding subparagraph (i)

      • (i) FC 8G is replaced by FC 8I:

      • (ii) operating lease, is inserted before outstanding balance,:

    • (b) after subparagraph (ii), the following is inserted:

      • (iib) includes a licence to use intangible property; and.

    (14) In paragraph (b)(i) of the definition of lessee, , hires, or bails is omitted.

    (15) In paragraph (a) of the definition of lessee's acquisition cost, means the consideration provided to the lessee for a finance lease asset (as determined under the definition of consideration) is replaced by for a finance lease asset, means the consideration provided to the lessee under the finance lease, as determined under the definition of consideration,.

    (16) After the definition of listed company, the following is inserted:

    listed horticultural plant, in sections DO 4B to DO 4E—

    • (a) means a horticultural plant, tree, vine, bush, cane, or similar plant that is cultivated on land, that is of a type that is listed in a determination made by the Commissioner under section 91AAB of the Tax Administration Act 1994:

    • (b) does not include—

      • (i) a tree planted mainly for the purpose of timber production:

      • (ii) a tree or other similar plant planted mainly for the purpose of ornament:

      • (iii) a vine planted mainly for the purpose of producing grapes for wine production.

    (17) In paragraph (b)(viii) of the definition of local authority, section CW 32(4)(c) is replaced by section CW 32(4) (Local authorities).

    (18) After the definition of maturity, the following is inserted:

    maximum deficit debit is defined in section MG 8B(4) (Policyholder credit account companies and dividend withholding payment credits) for the purposes of that section.

    (19) In paragraph (a) of the definition of net loss, section 177C(4) is replaced by section 177C(5).

    (20) After the definition of new provisional taxpayer, the following is inserted:

    new start grant means a grant of money that is designated by the Minister of Agriculture as a new start grant and is paid by the Government of New Zealand to a person in respect of—

    • (a) an adverse event:

    • (b) an event that is a qualifying event.

    (21) After the definition of non-filing taxpayer, the following is inserted:

    non-listed horticultural plant, in section DO 4 and schedule 7, part A, item 8—

    • (a) means—

      • (i) a horticultural plant, tree, vine, bush, cane, or similar plant that is cultivated on land, that is not a listed horticultural plant:

      • (ii) a tree or other similar plant planted mainly for the purpose of ornament:

    • (b) does not include a tree planted mainly for the purpose of timber production.

    (22) In paragraph (a)(ii) of the definition of PAYE intermediary, PAYE intermediary); or is replaced by PAYE intermediary); and and the following is added:

    • (iii) has entered agreements that have been approved by the Commissioner under section NBA 3 (Approval by Commissioner of employer arrangements with PAYE intermediary) with not less than 10 employers:.

    (23) After the definition of physical cost of production, the following is inserted:

    planting is defined in section DO 4E (Some definitions) for the purposes of sections DO 4B to DO 4E.

    (24) After the definition of pleasure craft, the following is inserted:

    plot is defined in section DO 4E (Some definitions) for the purposes of sections DO 4B to DO 4E.

    (25) After the definition of policyholder credit account person, the following is inserted:

    policyholder DWP ratio is defined in section MG 8B(4) (Policyholder credit account companies and dividend withholding payment credits) for the purposes of that section.

    (26) After the definition of qualifying debenture, the following is inserted:

    qualifying event means—

    • (a) the extreme climatic conditions that occurred during the month of February 2004 in New Zealand:

    • (b) the storm event that occurred during the month of July 2004 in the Bay of Plenty area:

    • (c) any naturally-occurring event that occurs in a subsequent year and—

      • (i) for which a state of emergency is declared under the Civil Defence Act 1983 or Part 4 of the Civil Defence Emergency Management Act 2002; and

      • (ii) that the Governor-General by Order in Council declares to be a qualifying event

    qualifying foreign equity investor is defined in section CW 11B(3) (Proceeds of share disposition by qualified foreign equity investor) for the purposes of that section.

    (27) After the definition of reduced deduction, the following is inserted:

    reduced deficit debit is defined in section MG 8B(4) (Policyholder credit account companies and dividend withholding payment credits) for the purposes of that section.

    (28) After the definition of repairs, the following is inserted:

    replaced area fraction is defined in section DO 4E (Some definitions) for the purposes of sections DO 4B to DO 4E.

    (29) After the definition of replacement permit, the following is inserted:

    replacement plant, in sections DO 4 and DO 4B to DO 4E, means a listed horticultural plant that replaces a listed horticultural plant, whether or not it is of the same type of listed horticultural plant.

    (30) In the definition of resident in Australia, paragraph (a) is omitted.

    (31) In the definition of schedular income, paragraph (i) is omitted.

    (32) After the definition of shareholder dividend statement, the following is inserted:

    shareholder DWP ratio is defined in section MG 8B(4) (Policyholder credit account companies and dividend withholding payment credits) for the purposes of that section.

    (33) After the definition of slice rule, the following is inserted:

    small-business taxpayer is defined in section MBB 4 (Some definitions) for the purposes of subpart MBB.

    (34) In the definition of special corporate entity, after paragraph (i), the following is added:

    • (j) any body incorporated under the Incorporated Societies Act 1908, for an income year in which the body on no day in the income year has shares on issue to the members of the body.

    (35) The definition of taxable bonus issue is replaced by the following:

    taxable bonus issue means—

    • (a) a bonus issue in lieu:

    • (b) a bonus issue that a company chooses to treat as a dividend under section CD 7 (Elections to make bonus issue into dividend):

    • (c) in the case of a bonus issue made before the enactment of this Act, a bonus issue that a company chose to treat as a dividend under a provision of an earlier Act corresponding to section CD 7 (Elections to make bonus issue into dividend):

    • (d) a bonus issue that is a dividend under section CD 7C (Bonus issue by foreign unit trust instead of money or property).

    (36) In the definition of timber, paragraph (e) is omitted.

262 Meaning of income tax
  • In section OB 6(1)(b), CW 11B, is inserted after CD 11,.

263 Further definitions of associated persons
  • In section OD 8(1), CW 11B, is inserted after sections.

264 Schedule 7—Expenditure on farming, aquacultural, and forestry improvements
  • (1) In the heading to schedule 7, horticultural, is inserted after farming,.

    (2) In schedule 7, part A, item 8, vines or trees on the land other than trees planted mainly for the purposes of timber production is replaced by non-listed horticultural plants on the land.

265 Schedule 9—Categories of livestock for which national standard costs to be declared
  • In schedule 9, column 2, in the entry that corresponds to the item Pigs, Growing pigs 10 to 18 weeks of age is replaced by Growing pigs 10 to 17 weeks of age.

266 Schedule 21—Enactments amended
  • (1) This section amends schedule 21.

    (2) The amendment to section 48A of the Goods and Services Tax Act 1985 is replaced by the following:

    In section 48A(3)(a), replace section EZ 9(3) of the Income Tax Act 1994 by section CX 41B(4) or EW 47B(4) of the Income Tax Act 2004.

    In the words after section 48A(3)(c), replace section EZ 9(3) and (4) of the Income Tax Act 1994 by section CX 41B(4) and (5) or section EW 47B(4) and (5) of the Income Tax Act 2004.

    (3) The amendment to section 49(2) of the Student Loan Scheme Act 1992 is replaced by the following:

    In section 49(2), replace an income year by a tax year. In section 49(2), replace that income year by that tax year.

    (4) In the heading to the amendments to the Taxation Review Authorities Act 1994, 1994 No 156 is replaced by 1994 No 165.

    (5) The amendment to the Financial Reporting Order 1994 is replaced by the following:

    In clause 4, replace rates permitted under the Income Tax Act 1976 in all places in which it appears by rates permitted under the Income Tax Act 2004.

    In clause 4, replace section 222A of the Income Tax Act 1976 by section OB 1 of the Income Tax Act 2004.

267 Schedule 22—Amendments to Tax Administration Act 1994
  • (1) In the amendment to section 2(4), that are not in Part 6 (which relates to assessments) and is inserted after provisions of this Act.

    (2) In the definition of notice that is inserted in section 3(1), 14A or 14B is replaced by 14B or 14C.

    (3) In the heading to the 2nd of the sections that replace section 14, 14A is replaced by 14B.

    (4) In the heading to the 3rd of the sections that replace section 14, 14B is replaced by 14C.

    (5) In the subsection that is inserted after section 33A(2), (2A) is replaced by (2B).

    (6) In the first amendment to section 33A(3), (2A) is replaced by (2B).

    (7) In the amendment to section 33A(5), (2A) is replaced by (2B).

    (8) The amendments to section 33B are omitted.

    (9) In subsection (3) of the section that is inserted after section 44B, the definitions of listed horticultural plant and non-listed horticultural plant in section OB 1 of the Income Tax Act 2004 and under is inserted after arises under.

    (10) The amendment to section 90A(6) is replaced by the following:

    In section 90A(6B), replace income year by tax year.

    (11) In the subsection that is inserted after section 91(1), (1A) is replaced by (1B).

    (12) In the amendment to section 91AA(2)(a), CB 9(h) is replaced by CB 9(gb) or (h) of the Income Tax Act 1994.

    (13) In the amendment that follows the amendment to section 91AA(7), section 91AA is replaced by section 91AAB.

    (14) After the amendment to section 91AA(7), the following are inserted:

    In section 91AAB(1), replace sections DO 4B, DO 4C, and DO 4D of the Income Tax Act 1994 by sections DO 4B to DO 4E of the Income Tax Act 2004.

    In section 91AAB(1)(b), replace column 1 of Schedule 11 of the Income Tax Act 1994 by schedule 11, column 1 of the Income Tax Act 2004.

    (15) In the heading to the 1st of the sections that are inserted by the amendment referred to in subsection (13), 91AAA is replaced by 91AAC.

    (16) In the heading to the 2nd of the sections that are inserted by the amendment referred to in subsection (13), 91AB is replaced by 91AAD.

    (17) In the heading to the 3rd of the sections that are inserted by the amendment referred to in subsection (13), 91AC is replaced by 91AAE.

    (18) In the heading to the 4th of the sections that are inserted by the amendment referred to in subsection (13), 91AD is replaced by 91AAF.

    (19) In the 5th of the sections that are inserted by the amendment referred to in subsection (13)

    • (a) in the heading, 91AE is replaced by 91AAG:

    • (b) in subsection (1)(a), 91AD is replaced by 91AAF:

    • (c) in subsection (1)(b), 91AD is replaced by 91AAF:

    • (d) in subsection (6), 91AD is replaced by 91AAF.

    (20) In the 6th of the sections that are inserted by the amendment referred to in subsection (13)

    • (a) in the heading, 91AF is replaced by 91AAH:

    • (b) in subsection (1), 91AE is replaced by 91AAG.

    (21) In the 7th of the sections that are inserted by the amendment referred to in subsection (13)

    • (a) in the heading, 91AG is replaced by 91AAI:

    • (b) in subsection (4)(a), 91AK(5) is replaced by 91AAM(5).

    (22) In the 8th of the sections that are inserted by the amendment referred to in subsection (13)

    • (a) in the heading, 91AH is replaced by 91AAJ:

    • (b) in subsection (1)(a), 91AE is replaced by 91AAG:

    • (c) in subsection (1)(b)—

      • (i) 91AE is replaced by 91AAG:

      • (ii) 91AE(5)(b) is replaced by 91AAG(5)(b).

    (23) In the 9th of the sections that are inserted by the amendment referred to in subsection (13)

    • (a) in the heading, 91AI is replaced by 91AAK:

    • (b) in the words before paragraph (a), 91AD is replaced by 91AAF.

    (24) In the heading to the 10th of the sections that are inserted by the amendment referred to in subsection (13), 91AJ is replaced by 91AAL.

    (25) In the 11th of the sections that are inserted by the amendment referred to in subsection (13)

    • (a) in the heading, 91AK is replaced by 91AAM:

    • (b) in the words before subsection (1)(a), 91AE is replaced by 91AAG:

    • (c) in the words before subsection (4)(a), 91AE(4) is replaced by 91AAG(4):

    • (d) in the words before subsection (5)(a), 91AG(2) is replaced by 91AAI(2).

    (26) In the paragraph that is inserted after section 91C(1)(e)

    • (a) (ea) is replaced by (eb):

    • (b) in subparagraph (iv), 91AB or 91AC is replaced by 91AAD or 91AAE:

    • (c) in subparagraph (v), 91AD to 91AK is replaced by 91AAF to 91AAM.

    (27) In the subsection that is inserted after section 108(3), (3A) is replaced by (3B).

    (28) In the heading to the 1st of the sections that are inserted after section 113, 113A is replaced by 113B.

    (29) In the heading to the 2nd of the sections that are inserted after section 113, 113B is replaced by 113C.

    (30) The amendments to section 120OB are replaced by the following:

    In section 120OB(1)(a), replace section NBB 4(1) of the Income Tax Act 1994 by section NBA 4(1) of the Income Tax Act 2004.

    In section 120OB(1)(b), replace section NBB 4(1B)(b) of the Income Tax Act 1994 by section NBA 4(1B)(b) of the Income Tax Act 2004.

    (31) The amendments to section 141FC are omitted.

    (32) The amendments to section 141JB are replaced by the following:

    In section 141JB(1)(a), replace section NBB 4(1) of the Income Tax Act 1994 by section NBA 4(1) of the Income Tax Act 2004.

    In section 141JB(1)(b), replace section NBB 4(1B)(b) of the Income Tax Act 1994 by section NBA 4(1B)(b) of the Income Tax Act 2004.

    (33) The amendments to section 167 are replaced by the following:

    In section 167(2B)(b)(i), replace section NBB 4(1) of the Income Tax Act 1994 by section NBA 4(1) of the Income Tax Act 2004.

    In section 167(2B)(b)(ii), replace section NBB 4(1B)(b) of the Income Tax Act 1994 by section NBA 4(1B)(b) of the Income Tax Act 2004.

    (34) The amendments to section 168(4) are replaced by the following:

    In section 168(4)(a), replace section NBB 4(1) of the Income Tax Act 1994 by section NBA 4(1) of the Income Tax Act 2004.

    In section 168(4)(b), replace section NBB 4(1B)(b) of the Income Tax Act 1994 by section NBA 4(1B)(b) of the Income Tax Act 2004.

    (35) The amendments to section 169 are replaced by the following:

    In section 169(1B)(a), replace section NBB 4(1) of the Income Tax Act 1994 by section NBA 4(1) of the Income Tax Act 2004.

    In section 169(1B)(b), replace section NBB 4(1B)(b) of the Income Tax Act 1994 by section NBA 4(1B)(b) of the Income Tax Act 2004.

    (36) The amendment to section 177C(6) is omitted.

    (37) The amendment to section 177D is replaced by the following:

    In section 177D(2)(a), replace section EZ 9(3) and (4) of the Income Tax Act 1994 with section CX 41B(4) and (5) or section EW 47B(4) and (5) of the Income Tax Act 2004.

    (38) After the amendment to section 181C, the following is inserted:

    In section 181D, replace Income Tax Act 1994 by Income Tax Act 2004.

268 Schedule 22A—Identified policy changes
  • (1) In schedule 22A, in the heading to column 1, Income Tax Act 2002 wherever it appears is replaced by Income Tax Act 2004.

    (2) In schedule 22A in column 1, CB 7(2), is inserted after CB 6,.

269 Schedule 23—Comparative tables of old and new provisions
  • (1) In schedule 23, part A, column 3—

    • (a) in the entry that corresponds to section CB 5(1)(a), CW 23(1)(a) is replaced by CW 23(1)(a), (b):

    • (b) in the entry that corresponds to section CD 2, CC 10(1) is replaced by CC 9(1):

    • (c) in the entry that corresponds to section DK 2, DT 16(1), (2) is replaced by DT 15:

    • (d) in the entry that corresponds to section DM 1(2)(b), DT 5 is replaced by DT 5(2):

    • (e) in the entry that corresponds to section DM 7(1), CT 5 is replaced by CT 5, DT 20:

    • (f) in the entry that corresponds to section EB 1(1), BD 3(3) is replaced by BD 3(4):

    • (g) in the entry that corresponds to section ED 5, CC 9 is replaced by CC 8:

    • (h) in the entry that corresponds to section EG 3(2), EE 12(1) is replaced by EE 12(2)(b):

    • (i) in the entry that corresponds to section EG 3(3), EE 12(3) is replaced by EE 12(3), (4):

    • (j) in the entry that corresponds to section EG 3(4), EE 12(4), (5) is replaced by EE 12(5), (6):

    • (k) in the entry that corresponds to section EG 3(5), EE 12(6) is replaced by EE 12(2)(c).

    (2) In schedule 23, part A, column 3

    • (a) in the entry that corresponds to section EF 1(3), 91AAA is replaced by 91AAC:

    • (b) in the entry that corresponds to section EF 1(4), 91AAA is replaced by 91AAC:

    • (c) in the entry that corresponds to section EG 4(2), 91AD is replaced by 91AAF:

    • (d) in the entry that corresponds to section EG 4(6), 91AD is replaced by 91AAF:

    • (e) in the entry that corresponds to section EG 4(7), 91AD is replaced by 91AAF:

    • (f) in the entry that corresponds to section EG 10(1), 91AE is replaced by 91AAG:

    • (g) in the entry that corresponds to section EG 10(2), 91AE is replaced by 91AAG:

    • (h) in the entry that corresponds to section EG 10(3), 91AE is replaced by 91AAG:

    • (i) in the entry that corresponds to section EG 10(4), 91AF is replaced by 91AAH:

    • (j) in the entry that corresponds to section EG 10(5), 91AE is replaced by 91AAG:

    • (k) in the entry that corresponds to section EG 10(6), 91 AG is replaced by 91AAI:

    • (l) in the entry that corresponds to section EG 10(7), 91AG is replaced by 91AAI:

    • (m) in the entry that corresponds to section EG 10(8), 91 AH is replaced by 91AAJ:

    • (n) in the entry that corresponds to section EG 10(9), 91AH is replaced by 91AAJ:

    • (o) in the entry that corresponds to section EG 11(6), 91AJ is replaced by 91AAL:

    • (p) in the entry that corresponds to section EG 11(7), 91AJ is replaced by 91AAL:

    • (q) in the entry that corresponds to section EG 13, 91AK is replaced by 91AAM:

    • (r) in the entry that corresponds to section EG 14(1), 91AK is replaced by 91AAM:

    • (s) in the entry that corresponds to section EG 14(2), 91AK is replaced by 91AAM:

    • (t) in the entry that corresponds to section EG 14(2)(b), 91AI is replaced by 91AAK:

    • (u) in the entry that corresponds to section EL 3A(2), 91AC is replaced by 91AAE:

    • (v) in the entry that corresponds to section EL 3A(3), 91AC is replaced by 91AAE:

    • (w) in the entry that corresponds to section EL 4(6), 91AB is replaced by 91AAD:

    • (x) in the entry that corresponds to section EL 4(7), 91AC is replaced by 91AAE:

    • (y) in the entry that corresponds to section EL 4(8), 91AC is replaced by 91AAE:

    • (z) in the entry that corresponds to section EL 8(2), 91AC is replaced by 91AAE:

    • (zb) in the entry that corresponds to section EL 8(3), 91AC is replaced by 91AAE.

    (3) In schedule 23, part A—

    • (a) after the entry that corresponds to section EG 19(2), the following entry is inserted:

       2Aomitted
    • (b) after the entry that corresponds to section EO 4(1), the following entry is inserted:

       1BDS 2(3)
    • (c) in the 3rd column, in the entry that corresponds to section EO 4B, DS 3(3) is replaced by DS 3(6):

    • (d) after the entry that corresponds to section GC 27, the following entry is inserted:

      GC 27B GC 27A
    • (e) after the entry that corresponds to section HI 5, the following entries are inserted:

      HI 6 HI 6
      HI 7 HI 7
      HI 8 HI 8
      HI 9 HI 9
    • (f) after the entry that corresponds to section LD 3, the following entry is inserted:

      LD 3B LD 3A
    • (g) the entry that corresponds to section MB 2AB is omitted:

    • (h) after the entry that corresponds to section MB 12, the following entries are inserted:

      Subpart MBB  
      MBB 1 MBA 1
      MBB 2 MBA 2
      MBB 3 MBA 3
      MBB 4 MBA 4
      MBB 5 MBA 5
      MBB 6 MBA 6
      MBB 7 MBA 7
      MBB 8 MBA 8
      MBB 9 MBA 9
    • (i) after the entry that corresponds to section MD 2A, the following entry is inserted:

      MD 2B MD 2B
    • (j) after the entry that corresponds to section MJ 8, the following entries are inserted:

      Subpart MK  
      MK 1 MK 1
      MK 2 MK 2
      MK 3 MK 3
      MK 4 MK 4
      MK 5 MK 5
      MK 6 MK 6
      MK 7 MK 7
      MK 8 MK 8
      MK 9 MK 9
    • (k) in the 3rd column, in the entry that corresponds to section MZ 7, MZ 7 is replaced by omitted:

    • (l) after the entry that corresponds to section NB 1, the following entries are inserted:

      Subpart NBB  
      NBB 1 NBA 1
      NBB 2 NBA 2
      NBB 3 NBA 3
      NBB 4 NBA 4
      NBB 5 NBA 5
      NBB 6 NBA 6
      NBB 7 NBA 7
      NBB 8 NBA 8
      NBB 9 NBA 9
    • (m) after the entry that corresponds to section NF 8, the following entry is inserted:

      NF 8B NF 8A
    • (n) after the entry that corresponds to section OB 3, the following entry is inserted:

      OB 3B OB 3A
    • (o) in the 3rd column, in the entry that corresponds to section OB 7, EW 40 is replaced by EW 34.

    (4) In schedule 23, part B—

    • (a) after the entry that corresponds to section HI 5, the following entries are inserted:

      HI 6HI 6
      HI 7HI 7
      HI 8HI 8
      HI 9HI 9
    • (b) after the entry that corresponds to section MB 12, the following entries are inserted:

      Subpart MBA 
      MBA 1MBB 1
      MBA 2MBB 2
      MBA 3MBB 3
      MBA 4MBB 4
      MBA 5MBB 5
      MBA 6MBB 6
      MBA 7MBB 7
      MBA 8MBB 8
      MBA 9MBB 9
    • (c) after the entry that corresponds to section MJ 8, the following entries are inserted:

      Subpart MK 
      MK 1MK 1
      MK 2MK 2
      MK 3MK 3
      MK 4MK 4
      MK 5MK 5
      MK 6MK 6
      MK 7MK 7
      MK 8MK 8
      MK 9MK 9
    • (d) the entry that corresponds to section MZ 7 is omitted:

    • (e) after the entry that corresponds to section NB 1, the following entries are inserted:

      Subpart NBA 
      NBA 1NBB 1
      NBA 2NBB 2
      NBA 3NBB 3
      NBA 4NBB 4
      NBA 5NBB 5
      NBA 6NBB 6
      NBA 7NBB 7
      NBA 8NBB 8
    • (f) after the entry that corresponds to section NF 8, the following entry is inserted:

      NF 8A NF 8B
    • (g) after the entry that corresponds to section OB 3, the following entry is inserted:

      OB 3A OB 3B

    (5) In schedule 23, part C, column 1—

    • (a) 14A is replaced by 14B:

    • (b) 14B is replaced by 14C:

    • (c) 91(1A) is replaced by 91(1B):

    • (d) 91AAA is replaced by 91AAC:

    • (e) 91AB is replaced by 91AAD:

    • (f) 91AC is replaced by 91AAE:

    • (g) 91AD is replaced by 91AAF:

    • (h) 91AE is replaced by 91AAG:

    • (i) 91AF is replaced by 91AAH:

    • (j) 91AG is replaced by 91AAI:

    • (k) 91AH is replaced by 91AAJ:

    • (l) 91AI is replaced by 91AAK:

    • (m) 91AJ is replaced by 91 AAL:

    • (n) 91AK is replaced by 91AAM:

    • (o) 108(3A) is replaced by 108(3B):

    • (p) 113A is replaced by 113B:

    • (q) 113B is replaced by 113C.

270 Amendments contained in schedule
  • The provisions of the Income Tax Act 2004 specified in the schedule are amended in the manner indicated in the schedule.


Schedule
Other amendments to Income Tax Act 2004

s 270

Provision in Income Tax Act 2004Amendment to provision
  ItemItem
  omittedsubstituted
AA 1(a) and (b); and:
BA 1(a) to (c); and:
BD 1(5)(a) and (b); or:
BF 1(a) to (d); and:
BH l(4)(a) and (b); or:
CB 5(1)(a); or:
CB 8(2)(a); or:
CB 12(2)(a) to (k); or:
CB 19(2)(a) to (d); and:
CB 24(a) and (b); or:
CC 1(2)(a) to (e); or:
CC 9(2)(a) to (h); or:
 (3)(a) to (c); or:
CC 10(2)(a) to (e); or:
 (3)(a)(i) to (iv); and:
CD 9(1)(a); and:
CD 14(3)(a) to (d); or:
CD 16(2)(a)(i) and (ii); and:
CD 28(11)(a); or:
CD 29(2)113A113B
CD 30(3)113A113B
CD 37(1)(a) to (c); and:
CD 39(12)(a)113B113C
CE 1(a) to (f); and:
CE 5(3)(a) to (h); or:
CF 1(1)(a) to (g); and:
CF 1(2)accident compensation payment (a), (b), (d), (e); or:
CG 2(4)(a) to (c); or:
CG 6(1)(a); or:
CH 1(1)(a) and (b); or:
CH 5(2)(a) and (b); or:
CQ 5(1)(c)(i) to (v); or:
CS 1(7)(a); or:
CS 2(9)(a); and:
CT 4(a); and:
CT 6(3)(a) to (d); or:
CT 7(1)(a) and (b)(ii); and:
 (3)(a) to (c); or:
CU 2(3)(a); and:
CU 3(3)(a); or:
 (6)(c)(i); or:
CU 11(3)(a); and:
CU 19(6)(a) to (c); and:
CU 23(2)(a) to (c), (d)(i) to (iv), (e), (f) and (g)(ii); or:
CU 24(2)(a) to (e); or:
 (3)(a); or:
CU 28(1)(a); and:
 (2)(a) and (b); or:
CW 1(2)(a); and:
CW 12(a); and:
CW 14(3)(a) to (e); or:
 (4)(a) and (b); and:
CW 18(1)(b)(i) to (iii); or:
 (2)(a)(i) to (iii); or:
CW 23(1)(a) to (d); and:
 (2)(a)(ii); and:
CW 25(a)(i) and (b)(i); or:
CW 26(a); and:
CW 27(1)(a), (b)(v), and (c) to (e); and:
 (1)(b)(i) to (iv); or:
CW 28(1)(a) to (f); or:
CW 28(2)payment relating to incapacity for work (a) to (c); or:
CW 31(5)(a) to (c); or:
CW 33(1)(a)(i); or:
 (2)(a); or:
CW 34(1)(a); and:
CW 35(8)(a),(b)(ix), and (c); and:
 (8)(b)(i) to (viii); or:
CW 38(a)(i) and (ii); and:
CW 40(1)(a) to (c); or:
CX 1(a); and:
CX 5(2)(a); or:
CX 9(2)(a) and (b); or:
CX 10(3)(a); and:
CX 16(4)(a); and:
CX 29(1)(a)(i); or:
 (2)(a) and (b); or:
CX 33(1)(a); and:
CZ 2(2)(a) and (b); and:
CZ 3(5)loan (a)(iii), (b)(ii) and (c)(ii); and:
CZ 11(1)(a) and (b); or:
CZ 14(3)(a); and:
 (2)(b)(i) to (iii); or:
DB 1(1)(a) and (b); and:
 (2)(a)(i) to (v); and:
 (2)(b)(i); or:
DB 2(5)(a); and:
DB 3(1)(a) to (c); and:
 (2)(a) to (d); or:
DB 4(4)(a); and:
DB 32(1)(a); and:
DB 40(1)(a) and (b); or:
DC 1(2)(a); or:
DC 9(4)(a); and:
DC 14(1)employee (a); or:
DC 14(1)normal retiring age (a) and (b); and: 
DD 2(2)(a)(i); or:
 (6)(a); or:
DD 4(3)(a); or:
DD 5(1)(b)(i) and (ii); or:
 (2)(a); or:
DD 9(a); or:
DD 10(a); and:
DD 11business contacts (a)(i) and (ii); and:
 business premises (a); and:
DE 1(2)(a) and (b); or:
DE 3(a) and (b); or:
DE 8(2)(a) to (c); or:
 (3)(a) to (c); or:
DN 6(1)(c)(i) to (v); or:
 (1)(a), (b), (c)(vi), (d), and (e); and:
DO 1(1)(a) to (e); or:
DP 1(1)(a) to (e), (f)(ii), (g) and (h)(ii); or:
DP 4(3)(a); or:
DP 8(2)(a); and:
DS 2(1)(b)(i) and (ii); or:
DS 4(2)(a) and (b)(i); or:
DT 19(a); and:
DU 2(2)(a) to (c); and:
DU 8(1)(a)(i); or:
DU 11(2)(a)(ii); and:
DV 2(10)(a)(i) to (iii); and:
DV 4(2)(a), (b), and (c)(ii); and:
 (8)(a); and:
DV 5(10)(a); and:
DV 9(3)(a); and:
DV 10(1)(a) and (b); and:
DV 11(1)(a); and:
DX 1(3)(a); and:
DZ 6(a); and:
EA 1(1)(a) and (b); and:
EA 2(1)(a) to (f); or:
EA 3(2)(a) to (g); or:
 (8)91AAA91AAC
EB 2(2)(a)(i) and (ii), (b) and (c); and:
 (3)(a) to (f); or:
EB 4(1)(a) to (c); and:
EB 11(3)(a) to (c); and:
EB 17(2)(a) to (f); and:
EC 1(2)(a) to (c); and:
EC 7(1)(a) to (c); and:
EC 24(2)(a) and (b); and:
 (3)91AB91AAD
EC 30(a) to (c); or:
EC 31(2)(a) and (b); and:
EC 34(3)(a); and:
EE 7(a) to (i); or:
EE 12(2)(a)(ii) and (b)(ii); and:
EE 16(4)(a); and:
EE 17(4)(a); and:
EE 25(2)(b)91AD91AAF
EE 26(2)(a) and (b)(iv); or:
EE 28 91 AE to 91AH91AAG to 91AAJ
EE 30(3)(a); and:
 (5)(a); or:
EE 34(2)(a) to (i); or:
 (4)(a)(ii) and (b); or:
 (5)(a); or:
EE 38(1)(a); and:
 (2)(a) and (b); and:
 (3)(a); and:
 (6)(a); and:
 (7)(a); and:
EE 46(a); or:
EE 48(3)(a) to (c) and (d)(i); and:
EE 50(5)(a) to (c); and:
EE 51(2)(a) and (b); or:
EE 56(1)(b)91AJ91AAL
EF 3(5)(a)(ii), (b)(ii), (c)(ii), (d)(ii), (e)(ii), (f), (g) and (h); or:
EH 1(2)(a) and (b); and:
 (3)(a) and (b); and:
EH 4(1)(a) and (b); and:
EH 12(1)(a) to (c); and:
EH 15(1)(a); or:
 (3)(a) and (b); or:
EH 18(4)(a); or:
EH 21(3)(a); or:
EH 22(5)(b)(i); or:
EH 34(2)(a); or:
EH 36(2)(a); or:
EH 37date the deposit ends (a) to (f); and:
 fishing business (a) and (b); and:
EH 45(1)(a) to (c); and:
EH 49(4)(a); or:
EH 52(3)(a); or:
EH 53(5)(b)(i); or:
EH 61(2)(a); and:
EH 63(2)(a); or:
EH 64date the deposit ends (a) to (f); and:
EH 72(1)(a); and:
EH 75(3)(a); or:
EH 80(3)(a); or:
EH 81date the deposit ends (a) and (b); and:
EI 2(3)(a) and (b); or:
EI 6(3)(a) and (b); and:
EI 7(4)(a) to (c); and:
 (5)(a); and:
EJ 3(5)(a) to (c); and:
EJ 6(2)(a); or:
EJ 14(1)(a) and (b); or:
EJ 15(a); and:
EJ 17(2)(a) to (c); or:
EJ 18(2)(a) to (c); or:
EW 2(2)(a) to (h); or:
EW 3(3)(a) to (c); and:
 (4)(a); and:
EW 5(1)(a); and:
 (2)(a); and:
 (3)(a) and (b); and:
EW 11(a) to (c); or:
EW 17(2)(b)(i) and (ii); or:
EW 26(4)(a); and:
EW 32(3)(a); and:
EW 46(2)(b)(i); or:
EW 54(1)(a); and:
EW 57(2)(a) and (b); or:
EW 62(9)(a); and:
EX 1(1)(a) and (b)(iii); or:
EX 2(2)(a) to (c); and:
EX 3(a) to (c); and:
EX 5(1)(a) to (c); or:
EX 8(a); and:
EX 9(1)(a) to (c); or:
EX 11(3)(a); or:
 (4)(a) and (b); or:
EX 17(4)(a); and:
EX 21(13)(a) to (j); or:
 (14)(a) to (c); and:
EX 24(1)(a) to (c); or:
EX 26(3)(a) to (c); and:
EX 29(a) to (c); or:
EX 31(1)(a) to (c); or:
EX 40(4)(b)(i); or:
EX 42(4)(a) and (b); and:
EX 43(4)(a) and (b); and:
EX 45(11)(b)(i); or:
 (14)(b)(i); or:
EX 50(2)(a) to (d); or:
 (6)(a)(ii); or:
EX 60(1)(a) and (b); or:
 (3)(a) to (e); or:
EY 2(a) to (f); and:
EY 7(1)(a) and (b); and:
 (2)(a) to (e); and:
EY 15(2)(a) and (b); and:
EY 16(2)(a) and (b); and:
EY 25(2)(a) to (c); and:
EY 26(2)(a) to (c); and:
EY 35(2)(a); and:
EZ 10(a) and (b); or:
EZ 15(1)(b)(i); or:
 (2)(a) to (e); or:
 (5)(a); and:
EZ 19(1)(a) and (b); and:

Legislative history

14 December 2004Divided from Taxation (Annual Rates, Venture Capital and Miscellaneous Provisions) Bill (Bill 110-2), third reading