This Act is administered by the Inland Revenue Department.
1 Title
2 Commencement
Part 1Amendments to Income Tax Act 2004
3 Income Tax Act 2004
4 New section CB 4B inserted
CB 4B Disposals of certain shares by portfolio investment entity after declaration of dividend
5 Foreign investment fund income
6 Meaning of share
7 New subpart CP inserted
Subpart CP—Income from portfolio investment entities
CP 1 Portfolio investor allocated income
8 When FIF income arises
9 Withdrawals
10 Dividend derived by company from overseas
11 Income for military service in operational area
CW 19 Income for military or police service in operational area
12 New section CW 23B inserted
CW 23B Reinvested amount from foreign superannuation scheme in Australia
13 Charities: business income
14 Refund from environmental restoration account
15 New heading and sections CX 44C and CX 44D inserted
Portfolio investment entities
CX 44C Proceeds from disposal of certain shares by portfolio investment entities
CX 44D Portfolio investor allocated income and distributions of income by portfolio tax rate entities
16 New section CZ 20 added
CZ 20 Geothermal wells between 31 March 2003 and 17 May 2006
17 Base price adjustment under old financial arrangements rules
18 Cost of revenue account property
19 Patent applications or patent rights acquired on or after 1 April 1993
20 Bribes paid to public officials
21 New heading and section DB 43B inserted
DB 43B Zero-rated portfolio investor and portfolio investor allocated loss
22 Section DB 45 replaced
DB 45 Expenditure incurred in operating motor vehicle under agreement or arrangement affected by section CX 6B
23 Deductions for business use
24 Foreign investment fund loss
25 When FIF loss arises
26 Ring-fencing cap on deduction: not branch equivalent method
27 New sections DZ 14 to DZ 17 added
DZ 14 Patent applications before 1 April 2005
DZ 15 Geothermal wells between 31 March 2003 and 17 May 2006
DZ 16 Expenditure on improvements to aquacultural business before 1995-96 income year
DZ 17 Expenditure on improvements to forestry land before 1995-96 income year
28 Meaning of trading stock
29 What is depreciable property?
30 Calculation rule: income year in which item disposed of
31 Depreciation methods
32 Amount resulting from standard calculation
33 New section EE 24B inserted
EE 24B Depreciation loss for plant variety rights application upon grant of rights in 2005–06 or later income year
34 Setting of economic depreciation rate
35 Economic rate for certain aircraft and motor vehicles
36 Economic rate for plant, equipment, or building, with high residual value
37 Annual rate for fixed life intangible property
38 Sections EE 27B to EE 27E replaced
EE 27B Annual rate for patent granted in 2005–06 or later income year
39 Items no longer used
40 Heading before section EE 33, section EE 33, and section EE 34 replaced
Transfers of depreciable property: associated persons and non-qualifying amalgamations
EE 33 Transfer of depreciable property on or after 24 September 1997
EE 34 Transfer of depreciable property in non-qualifying amalgamation on or after 14 May 2002
41 Transfer of depreciable property on or after 24 September 1997
42 Transfer of depreciable property in non-qualifying amalgamation on or after 14 May 2002
43 Application of sections EE 41 to EE 44
44 Consideration for purposes of section EE 37
45 Events for purposes of section EE 37
46 New section EE 44B
EE 44B Unused geothermal well brought into use
47 Base value in section EE 47 when no previous deduction
48 Total deductions in section EE 47
49 Meaning of annual rate
50 Other definitions
51 New section EG 3 inserted
EG 3 Allocation of income and deductions by portfolio tax rate entity
52 New section EI 3B inserted
EI 3B Spreading income from patent rights
53 Allocation of deductions for research, development, and resulting market development
54 Interest on payments to environmental restoration account
55 Refund
56 Transfer on death, bankruptcy, or liquidation
57 Environmental restoration account of member of consolidated group
58 Consideration for agreement for sale and purchase of property or services, hire purchase agreement, specified lease, or finance lease
59 Associates and 10% threshold
60 Unqualified grey list CFCs
61 Section EX 33 replaced
EX 33 Exemptions: direct income interests in FIF in grey list country
EX 33B Exemptions limited by income years: shares in certain grey list companies
EX 33C Exemption: shares in listed Australian company
EX 33D Exemption: units in certain Australian unit trusts
62 New section EX 33E inserted
EX 33E Australian superannuation fund exemption
63 New resident's accrued superannuation entitlement exemption
64 Four calculation methods
65 Limits on choice of calculation methods
66 New section EX 40B inserted
EX 40B Use of particular calculation methods required
67 Default calculation method
68 Accounting profits method
69 Comparative value method
70 New sections EX 44B to EX 44E inserted
EX 44B Fair dividend rate method
EX 44C Fair dividend rate method: usual method
EX 44D Fair dividend rate method: method for entities that value investors' units
EX 44E Fair dividend rate method and cost method: calculating items in formulas for periods affected by share reorganisations
71 Deemed rate of return method
72 New section EX 45B inserted
EX 45B Cost method
73 Additional FIF income or loss if CFC owns FIF
74 Codes: comparative value and deemed rate methods
75 Limits on changes of method
76 Consequences of changes in method
77 Migration of persons holding FIF interests
78 Changes in application of FIF exemptions
79 New section EX 54B inserted
EX 54B FIF rules first applying to interest for income year beginning on or after 1 April 2007
80 Measurement of cost
81 Non-market transactions in FIF interests
82 Meaning of life insurance
83 Section EZ 7 repealed
84 Depreciation: partial income-producing use
85 Amounts derived by non-residents from renting films
86 General requirements for being transitional resident
87 Section FC 24 replaced
FC 24 Transitional resident
88 Transfer of property or obligations under financial arrangements deemed to be at market value
89 New Zealand net equity of New Zealand banking group
90 Disposal and resulting acquisition of property by spouse or de facto partner on death of person
91 Section F1 6 replaced
FI 6 Disposal and resulting acquisition of timber
92 Relationship of section F1 2(2) to subpart CB
93 Attributing interests in FIFs
94 Taxable income to be calculated generally as if group were single company
95 Source of beneficiary income
96 Distributions by Maori authority
97 New subpart HL inserted
Subpart HL—Portfolio investment entities
Introductory provisions
HL 1 Intended effect on portfolio tax rate entities and investors
HL 2 Scheme of subpart
Eligibility requirements: portfolio investment entities and foreign investment vehicles
HL 3 Eligibility requirements for entities
HL 4 Effect of failure to meet eligibility requirements for entities
HL 5 Foreign investment vehicles
HL 6 Investor membership requirement
HL 7 Investor return adjustment requirement: portfolio tax rate entity
HL 8 Imputation credit distribution requirement: imputation credit account company
HL 9 Investor interest size requirement
HL 10 Further eligibility requirements relating to investments
Becoming and ceasing to be portfolio investment entity
HL 11 Election to become portfolio investment entity and cancellation of election
HL 12 Becoming portfolio investment entity
HL 13 Tax consequences from transition
HL 14 Ceasing to be portfolio investment entity
Periods relevant to calculation of portfolio entity tax liability
HL 15 Portfolio allocation period and portfolio calculation period
Allocation of income in some cases
HL 16 Treatment of income not allocated to investor, allocated but not vested in investor
HL 17 Certain new investors treated as part of existing portfolio investor class
Calculating portfolio entity tax liability
HL 18 Portfolio class net income and portfolio class net loss for portfolio allocation period
HL 19 Portfolio class taxable income and portfolio class taxable loss for portfolio allocation period
HL 20 Portfolio entity tax liability and rebates of portfolio tax rate entity for period
Payment by portfolio tax rate entity of tax for tax year
HL 21 Payments of tax by portfolio tax rate entity making no election
HL 22 Payments of tax by portfolio tax rate entity choosing to pay provisional tax
HL 23 Payments of tax by portfolio tax rate entity choosing to make payments when investor leaves
Results for investors
HL 24 Portfolio investor allocated income and portfolio investor allocated loss
HL 25 Treatment of portfolio investor allocated loss for zero-rated portfolio investors and investors with portfolio investor exit period
Rebate for entity
HL 26 Treatment of portfolio investor allocated loss for other investors
Treatment of credits received by entity
HL 27 Credits received by portfolio tax rate entity or portfolio investor proxy
Treatment of losses for entity
HL 28 Portfolio entity formation loss
HL 29 Portfolio class taxable income and portfolio class taxable loss for tax year
HL 30 Treatment of portfolio class taxable loss and portfolio class land loss for tax year
Portfolio investor proxies
HL 31 Portfolio investor proxies
97B Application under section HL 11
98 Net losses may be offset against future net income
99 FIF net losses
100 Companies included in group of companies
101 Group of companies FIF net losses
102 Rebate in respect of gifts of money
103 Determination of net income
104 Calculation of subpart KD credit
105 In-work payment
106 Rules for subpart KD credit
107 Calculation of family tax credit
108 Allowance of credit of tax in end of year assessment
109 Credit of tax by instalments
110 Adjustment of family support amounts, abatement threshold amounts, amounts of in-work payment and parental tax credit, and amount of family tax credit
111 Commissioner to deliver credit of tax by instalments
112 New subpart KI inserted
Subpart KI—Rebates for portfolio tax rate entities
KI 1 Rebate for portfolio tax rate entity relating to certain investors
113 Credit of tax for imputation credit
114 Credits in respect of tax paid in country or territory outside New Zealand
115 Resident withholding tax payments to be credited against income tax assessed
116 Credit of tax for dividend withholding payment credit in hands of shareholder
117 Refund to non-resident or exempt shareholders
118 New sections LD 10 and LD 11 added
LD 10 Credit for investor for tax paid by entity if portfolio investor allocated income not excluded income
LD 11 Credit for investor for payment under section HL 21(5) by entity for portfolio investor exit period
119 Amount of underlying foreign tax credit
120 Provisional tax payable in instalments
121 Example: Section MB 13
122 Example: Section MB 14
123 Choosing to use GST ratio
124 Changing determination method
125 Calculating residual income tax in transitional years
126 Example: Sections MB 20 to MB 24
127 Examples: Sections MB 26 and MB 27 (using March balance dates)
128 Application of provisions of Tax Administration Act 1994
129 Limit on refunds and allocations of tax
130 Limits on refunds of tax for certain qualifying unit trusts and group investment funds
131 Companies required to maintain imputation credit account
132 Debits arising to imputation credit account
133 Company may elect to maintain dividend withholding payment account
134 Qualifying unit trust or group investment fund may elect to maintain supplementary available subscribed capital amount
135 Revocation of listing
136 Listed PAYE intermediary claim form
137 Private use of a motor vehicle: value of benefit
138 Subsidised transport: value of benefit
139 Meaning of prescribed interest
140 Private use of motor vehicle: when schedular value not used
141 Private use of motor vehicle: when schedular value used
142 Specified superannuation contribution withholding tax imposed
143 Sections NE 2AA and NE 2AB repealed
144 New section NE 2B inserted
NE 2B Employer election that progressive rates of specified superannuation contribution withholding tax apply
145 Specified superannuation contribution withholding tax to be deducted
146 New section NE 3B
NE 3B Calculation amounts in relation to current specified superannuation contribution for complying superannuation fund
147 Application of RWT rules
148 Liability to pay resident withholding tax
149 Payment of deductions of resident withholding tax to Commissioner
150 Certificates of exemption
151 Amount of resident withholding tax deduction deemed to have been received
152 Application of NRWT rules
153 Payment of deductions of non-resident withholding tax to Commissioner
154 Liability to make deduction in respect of foreign withholding payment dividend
155 Definitions
156 Modifications to measurement of voting and market value interests in case of continuity provisions
157 Modifications to voting and market value interests for application of continuity provisions to reverse takeover
158 Further definitions of associated persons
159 Determination of residence of person other than company
160 Schedule 1—Basic rates of income tax and specified superannuation contribution withholding tax
6 Portfolio tax rate entity
161 Schedule 2—Fringe benefit values
7
162 Schedule 4—Foreign investment funds
163 Schedule 6B—Expenditure in avoiding, remedying, or mitigating detrimental effects of discharge of contaminant
164 Schedule 11—Banded rates of depreciation
165 Schedule 13—Months for payment of provisional tax and terminal tax
166 Schedule 22A—Identified policy changes
167 Schedule 23—Comparative tables of old and new provisions
Part 2Amendments to Tax Administration Act 1994
168 Tax Administration Act 1994
169 Interpretation
170 Giving of notices by Commissioner
171 Giving of notices to Commissioner
172 Giving of notices to other persons
173 New section 16C inserted
16C Power to remove and retain documents for inspection
174 Claim that book or document is tax advice document
175 Person must disclose tax contextual information from tax advice document
176 New section 28B inserted
28B Investor advising portfolio tax rate entity of portfolio investor rate
177 Shareholder dividend statement to be provided by company
178 Statement to share supplier when share user makes replacement payment under share-lending arrangement
179 Maori authority to give notice of amounts distributed
180 New section 31B inserted
31B Portfolio tax rate entity to give statement to investors and request information
181 Certification requirements for withdrawals subject to section CS 1 of Income Tax Act 2004
182 Annual returns of income
183 Annual returns of income not required
184 New section 36AB inserted
36AB Electronic format of returns by portfolio investment entity
185 Returns to annual balance date
186 Non-resident withholding tax deduction certificates and annual reconciliations
187 Resident withholding tax deduction reconciliation statements
188 New section 57B inserted
57B Portfolio tax rate entities and portfolio investor proxies to make returns, file annual reconciliation statement
189 Officers to maintain secrecy
190 Notices of proposed adjustment required to be issued by Commissioner
191 Taxpayers and others with standing may issue notices of proposed adjustment
192 Determination on economic rate
193 New heading and section 91AAO inserted
Determinations relating to calculation of FIF income using fair dividend rate method
91AAO Determination on type of interest in FIF and use of fair dividend rate method
194 Extension of time bars
195 Definitions
196 Example: Section 120KC
197 Example: Section 120KD
198 Late filing penalties
199 Non-electronic filing penalty
Part 3Amendments to other Acts and regulations
Income Tax Act 1994
200 Income Tax Act 1994
201 What constitutes an interest in a foreign investment fund
202 New section CZ 7 added
CZ 7 Geothermal wells between 31 March 2003 and 17 May 2006
203 Expenditure to prevent or combat pollution of environment
204 New section DZ 7 added
DZ 7 Geothermal wells between 31 March 2003 and 17 May 2006
205 Distributions by Maori authority
206 Limit on refunds and allocations of tax
207 Definitions
208 Modifications to voting and market value interests for application of continuity provisions to reverse takeover
Income Tax Act 1976
209 What constitutes an interest in a foreign investment fund
Goods and Services Tax Act 1985
210 Goods and Services Tax Act 1985
211 Meaning of associated persons
212 Meaning of term financial services
213 Value of supply of goods and services
214 Changes in taxable periods
215 When change in taxable period takes effect
216 Taxable period returns
217 Election that sections 11A(1)(q) and (r) and 20C apply
218 Group of companies
Companies Act 1993
219 Dividends
KiwiSaver Act 2006
220 KiwiSaver Act 2006
221 Interpretation
222 Heading to Part 2, subpart 3
223 Application
54 Application
224 People may transfer between KiwiSaver schemes
225 Notification of transfers and requirement to transfer funds and information
226 Involuntary transfers
227 Schedule 1—KiwiSaver scheme rules
Public Trust Act 2001
228 Public Trust Act 2001
229 Interpretation
230 New section 72B inserted
72B Powers to adjust interest in trust property of Fund that is portfolio investment entity
Securities Act 1978
231 Securities Act 1978
232 Interpretation
233 Exemptions from this Act
Superannuation Schemes Act 1989
234 Superannuation Schemes Act 1989
235 Interpretation
236 Disclosure of information to Government Actuary
237 New sections 34 to 36 added
34 Complying superannuation funds
35 Dealing with applications for complying superannuation funds
36 Revocation of approval
238 Schedule 2—Matters to be specified in annual report
Trustee Act 1956
239 Trustee Act 1956
240 Interpretation and application
241 New heading and new section 42E inserted
Special powers in respect of portfolio investment entities
42E Power to adjust interests in trust property of portfolio investment entity
Trustee Companies Act 1967
242 Trustee Companies Act 1967
243 Interpretation
244 New section 33B inserted
33B Powers of trustee company or manager to adjust interest in trust property of Fund that is portfolio investment entity
Unit Trusts Act 1960
245 Unit Trusts Act 1960
246 Interpretation
247 New section 12A inserted
12A Implied provision in trust deed of portfolio investment entity
Tax Administration (Form of Warrant) Regulations 2003
248 Tax Administration (Form of Warrant) Regulations 2003
249 Warrant to enter private dwelling
250 New regulation 4B
4B Warrant to remove and retain books or documents
251 New schedule 2 inserted
ScheduleNew Schedule 2 inserted in principal regulations
Legislative history
The Parliament of New Zealand enacts as follows: