CD 43 Available subscribed capital (ASC) amount
Formula for calculating amount of available subscribed capital

(1)

For a share (the share) in a company at any relevant time (the calculation time), the amount of available subscribed capital is calculated using the formula—

1 July 1994 balance + subscriptions − returns − look-through company returns.

Definition of items in formula

(2)

In the formula in subsection (1),—

(a)

1 July 1994 balance is,—

(i)

if the company existed before 1 July 1994, the amount calculated under subsection (3); and

(ii)

in any other case, zero:

(b)

subscriptions, subject to subsections (6) to (21), is the total amount of consideration that the company received, after 30 June 1994 and before the calculation time, for the issue of shares of the same class (the class) as the share, ignoring section HB 1 (Look-through companies are transparent):

(c)

returns, subject to subsections (22) and (23), is the total amount of consideration that the company paid, after 30 June 1994 and before the calculation time, on the cancellation of shares in the relevant class and that was not a dividend because of section CD 22, CD 23B, or CD 24 or a corresponding provision of an earlier Act:

(d)

look-through company returns is the total amount of consideration that the company paid, before the calculation time, on the cancellation or buyback of shares in the relevant class while the company was a look-through company, ignoring section HB 1.

1 July 1994 balance

(3)

The 1 July 1994 balance is calculated using the formula—

((paid-up capital + premiums) ÷ all shares issued) × 30 June 1994 shares.

Definition of items in formula

(4)

In the formula in subsection (3),—

(a)

paid-up capital, subject to subsection (5) relating to bonus issues, is the total amount of capital paid up before 1 July 1994 for shares in the class:

(b)

premiums is the total amount of qualifying share premium paid to the company before 1 July 1994 for shares in the class, but not including amounts applied before 1 July 1994 in paying up capital:

(c)

all shares issued is the number of shares in the class ever issued at the end of 30 June 1994:

(d)

30 June 1994 shares is the number of shares in the class on issue at the end of 30 June 1994.

1 July 1994 balance: bonus issues after 30 September 1988

(5)

The capital amount included in calculating the 1 July 1994 amount does not include an amount paid up by way of a bonus issue made after 30 September 1988, unless—

(a)

the bonus issue was a taxable bonus issue; or

(b)

the amount was paid up by application of an amount of qualifying share premium.

Subscriptions amount: taxable bonus issues and debt capitalisations

(6)

The subscriptions amount includes,—

(a)

in the case of a bonus issue in lieu, the amount offered as an alternative to the bonus issue; and

(ab)

in the case of a share issued under a profit distribution plan, the amount offered by the company for the repurchase of the share; and

(b)

in the case of a taxable bonus issue that is not a bonus issue in lieu or a share issued under a profit distribution plan, the amount of the dividend arising from the taxable bonus issue; and

(c)

in the case of shares issued on conversion of, or as consideration for the release of, a debt claim against the company, the amount of debt converted or released.

When subsection (6D) applies

(6B)

Subsection (6D) applies for a company (the calculation company) for which the calculation in subsection (1) is being performed if—

(a)

section EW 46C(1)(a) or (b) (Consideration when debt forgiven within economic group) applies to a creditor and debtor that are in the same wholly-owned group of companies as the calculation company; and

(b)

the creditor is a non-resident company; and

(c)

section EW 46C(3) does not apply; and

(d)

the calculation company is the debtor, or the calculation company holds, before section YC 4 (Look-through rule for corporate shareholders) is applied to the calculation company, voting interests or, if a market value exists for a company that is part of the wholly-owned group of companies, market value interests, in the debtor.

When subsection (6D) applies

(6C)

Subsection (6D) also applies if section EW 46C(1)(c) applies to a creditor or single creditor group under that section, and the company for which the calculation in subsection (1) is being performed (the calculation company)—

(a)

is the creditor’s debtor, to whom section EW 46C(1)(c) applies:

(b)

has, before the application of section YC 4, either voting interests in the creditor’s debtor, to whom section EW 46C(1)(c) applies, or market value interests in the creditor’s debtor, to whom section EW 46C(1)(c) applies, if a market value circumstance exists for the debtor.

Subscriptions amount: debt forgiven within economic group

(6D)

For the calculation company, the subscriptions amount is treated as including the amount of debt to which section EW 46C(5) applies for the creditor, for the class of shares that the creditor has the most voting interests for, or, if the creditor is the single creditor group under section EW 46C(1)(c), for the class of shares for which a member has the most voting interests. The maximum subscriptions amount included for an amount of debt for a calculation company is—

(a)

if the calculation company is the debtor, the amount of debt:

(b)

if the calculation company is not the debtor, the amount of debt multiplied by 1 of the following interests, determined before the application of section YC 4:

(i)

the calculation company’s voting interests in the creditor’s debtor; or

(ii)

the calculation company’s market value interest in the creditor’s debtor, if there is a market value circumstance.

Subscriptions amount: exclusions for bonus issues

(7)

The subscriptions amount does not include—

(a)

an amount for a bonus issue if none of subsection (6)(a), (ab), or (b) applies:

(ab)

an amount for an imputation credit attached to the dividend arising from a taxable bonus issue if subsection (6)(b) applies:

(b)

an amount for a taxable bonus issue made to a shareholder to whom the bonus issue was exempt income under section CW 9 (Dividend derived by company from overseas) or CW 10 (Dividend within New Zealand wholly-owned group), or under a corresponding repealed provision, except to the extent to which the taxable bonus issue is fully credited.

Subscriptions amount: reinvested exempt dividends

(8)

The subscriptions amount does not include—

(a)

an amount received by the company that is mainly attributable, directly or indirectly, to the company paying a dividend to a shareholder,—

(i)

if the dividend was exempt income of the shareholder under section CW 9 or CW 10, or a corresponding provision of an earlier Act; and

(ii)
[Repealed]

(iii)

to the extent to which the dividend is not fully credited; or

(b)

an amount received by the company if the amount is mainly attributable, directly or indirectly, to the payment by the company of a dividend to a controlled foreign company at a time when the company is also a controlled foreign company, regardless of whether either company is a grey list company or non-attributing Australian CFC.

Subscriptions amount: share-for-share exchanges

(9)

Subsection (10) applies if—

(a)

the company receives an amount, directly or indirectly, for the issue of shares in the class that is in the form of shares in another company; and

(b)

immediately after the issue there are 1 or more persons whose common voting interests (or common market value interests), as measured in section IC 3(3) to (5) (Common ownership: group of companies), in the company and the other company total 10% or greater; and

(c)

the receipt is not on an amalgamation.

Subscriptions amount: no uplift for share-for-share exchanges

(10)

If subsection (9) applies, the subscriptions amount does not include the amount received to the extent to which it is more than the total available subscribed capital per share, calculated under the slice rule and calculated after deducting any ineligible capital amount described in subsections (13) and (14) of the shares in the other company at the date on which the amount is received.

Subscriptions amount: company share capital reorganisation

(11)

Subsection (12) applies if a company receives an amount for the issue of shares in the class in the form of—

(a)

a shareholder giving up rights of membership in the company; or

(b)

a shareholder giving up rights of membership in a company associated with the company or that is in substance the same company.

Subscriptions amount: no uplift for share capital reorganisation

(12)

If subsection (11) applies, the subscriptions amount does not include the amount received to the extent to which it is more than the total available subscribed capital per share of the rights given up at the date they are given up, calculated—

(a)

under the slice rule; and

(b)

after deducting any ineligible capital amount described in subsections (13) and (14); and

(c)

as if the rights given up were shares, if they are not shares.

Subscriptions amount: when ineligible capital arises

(13)

For the purposes of subsections (10) and (12), an ineligible capital amount arises if—

(a)

a company (the acquiring company) issues shares in consideration for acquiring, directly or indirectly, shares in another company (the acquired company); and

(b)

the acquired company has issued shares in anticipation of the shares being acquired by the acquiring company; and

(c)

those shares issued in anticipation are not a fully credited taxable bonus issue; and

(d)

the acquiring company pays an amount in consideration for acquiring the shares in the acquired company in addition to issuing shares in the acquiring company.

Subscriptions amount: amount of ineligible capital

(14)

The ineligible capital amount is the lesser of—

(a)

the total of the available subscribed capital per share calculated under the slice rule of the shares in the acquired company that is attributable to the shares issued in anticipation, except to the extent to which the shares issued in anticipation are a fully credited taxable bonus issue; and

(b)

the total additional amount paid by the acquiring company referred to in subsection (13)(d).

Subscriptions amount: amalgamated company

(15)

The subscriptions amount for a company that is an amalgamated company resulting from an amalgamation—

(a)

includes an amount, as if it were consideration received at the time of the amalgamation for the issue of the amalgamated company’s shares, equal to the available subscribed capital, at the time of the amalgamation, of all shares in the amalgamating companies that are—

(i)

of an equivalent class to the class; and

(ii)

not held directly or indirectly by an amalgamating company; and

(iii)

not shares in the amalgamated company:

(b)

does not include any other amount for the agreement of shareholders of an amalgamating company to the amalgamation and the resulting property acquisitions by the amalgamated company.

Subscriptions amount: emigrating company

(16)

If a company has been treated under section FL 2 (Treatment of emigrating companies and their shareholders) as paying a distribution to shareholders, the subscriptions amount includes the amount of the distribution that is a dividend.

Subscriptions amount: Maori authority

(17)

If the company is a Maori authority, the subscriptions amount includes the taxable income derived by the Maori authority in the 2003–04 tax year or an earlier tax year.

Subscriptions amount: no double counting

(18)

The subscriptions amount does not include amounts included in calculating the 1 July 1994 balance.

Subscriptions amount: treasury stock disposals excluded

(19)

The subscriptions amount does not include the amount of consideration received by a company for disposing of a share if the disposal is taken into account under section CD 25 to determine that the amount paid by the company on a previous share acquisition is not subject to section CD 25(4) to (6).

Subscriptions amount: superannuation fund’s interest in GIF

(20)

The subscriptions amount of a company that is a group investment fund includes the value of the interest of a superannuation fund in the group investment fund at the end of 31 March 1999.

1 July 1994 and subscriptions amount: foreign currency conversions

(21)

If an amount of consideration that a company receives for the issue of shares is payable in a foreign currency, the amount paid is treated, for the purposes of this section, as if it were converted into New Zealand currency at the calculation time.

Returns amount: on-market cancellations by associate

(22)

If the acquisition of a share by an associate of the company is within the meaning of an acquisition under paragraph (d) of the definition of on-market cancellation, it is treated in the same way for the purposes of calculating the returns amount.

Returns amount: recovered amounts

(23)

The returns amount does not include any amount recovered by the company before the calculation time under section 56 of the Companies Act 1993 or an equivalent provision of foreign law.

Returns amount: shares cancelled on amalgamation

(24)

If shares in an amalgamated company held by an amalgamating company are cancelled on the amalgamation, the returns amount included in calculating the available subscribed capital amount of a share in the amalgamated company that is of the same class as the cancelled shares is increased by the amount calculated using the formula—

cancelled shares × asc per share.

Definition of items in formula

(25)

In the formula in subsection (24),—

(a)

cancelled shares is the number of cancelled shares:

(b)

asc per share is the available subscribed capital per share calculated under the slice rule of each cancelled share immediately before the amalgamation.

Meaning of fully credited

(26)

In this section, the part of a dividend that is fully credited is the part that is calculated using the formula—

dividend excluding credits × actual ratio ÷ maximum ratio.

Definition of items in formula

(27)

In the formula in subsection (26),—

(a)

dividend excluding credits is the dividend excluding any attached imputation credit:

(b)

actual ratio is the imputation ratio of the dividend (section OZ 13 (Fully credited dividends: modifying actual ratio) may apply to modify this paragraph):

(c)

maximum ratio is the maximum imputation ratio specified in section OA 18 (Calculation of maximum permitted ratios).

Meaning of qualifying share premium

(28)

In this section, qualifying share premium means an amount of premium paid to a company for the issue of a share by the company if—

(a)

the amount was credited to a share premium account in the company’s books; and

(b)

the issue of shares was not in consideration for the acquisition, directly or indirectly, of shares in another company.

Defined in this Act: amalgamated company, amalgamating company, amalgamation, amount, associated person, available subscribed capital, bonus issue, bonus issue in lieu, cancellation, common market value interest, common voting interest, company, consideration, controlled foreign company, dividend, exempt income, fully credited, grey list company, group investment fund, imputation credit, imputation ratio, look-through company, market value circumstance, market value interest, Maori authority, New Zealand, non-attributing Australian CFC, non-resident company, on-market cancellation, pay, profit distribution plan, qualifying share premium, share, shareholder, shares of the same class, slice rule, superannuation fund, tax year, taxable bonus issue, taxable income, voting interest

Compare: 2004 No 35 s CD 32

Section CD 43(1) formula: amended, on 1 April 2011 (applying for income years beginning on or after 1 April 2011), by section 29(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section CD 43(2)(b): amended, on 1 April 2011 (applying for income years beginning on or after 1 April 2011), by section 29(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section CD 43(2)(c): amended (with effect on 1 October 2012), on 2 November 2012, by section 10(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).

Section CD 43(2)(c): amended, on 1 April 2011 (applying for income years beginning on or after 1 April 2011), by section 29(3) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section CD 43(2)(d): added, on 1 April 2011 (applying for income years beginning on or after 1 April 2011), by section 29(3) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section CD 43(6)(ab): inserted (with effect on 1 October 2012), on 2 November 2012, by section 10(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).

Section CD 43(6)(b): amended (with effect on 1 October 2012), on 2 November 2012, by section 10(3) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).

Section CD 43(6B) heading: inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(1) (and see section 22(10)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43(6B): inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(1) (and see section 22(10)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43(6C) heading: inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(1) (and see section 22(10)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43(6C): inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(1) (and see section 22(10)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43(6D) heading: inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(1) (and see section 22(10)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43(6D): inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(1) (and see section 22(10)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43(7) heading: replaced, on 30 March 2017, by section 22(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43(7)(a): amended, on 30 March 2017, by section 22(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43(7)(a): amended (with effect on 1 October 2012), on 2 November 2012, by section 10(4) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).

Section CD 43(7)(ab): inserted, on 30 March 2017, by section 22(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43(8)(a)(ii): repealed, on 1 April 2017, by section 22(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43(8)(b): substituted (with effect on 30 June 2009), on 6 October 2009, by section 20(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section CD 43(9)(b): amended (with effect on 1 April 2008), on 7 September 2010 (applying for the 2008–09 and later income years), by section 10(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).

Section CD 43(19) heading: amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).

Section CD 43(27)(a): amended, on 1 April 2017, by section 22(6) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43(27)(b): replaced, on 1 April 2017, by section 22(7) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43 list of defined terms consideration: inserted (with effect on 1 April 2008), on 6 October 2009, by section 20(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section CD 43 list of defined terms FDP: repealed, on 1 April 2017, by section 22(8) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43 list of defined terms FDP credit: repealed, on 1 April 2017, by section 22(8) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43 list of defined terms FDP ratio: repealed, on 1 April 2017, by section 22(8) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43 list of defined terms look-through company: inserted, on 1 April 2011, by section 29(4) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section CD 43 list of defined terms market value circumstance: inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(9) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43 list of defined terms market value interest: inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(9) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43 list of defined terms non-attributing Australian CFC: inserted (with effect on 30 June 2009), on 6 October 2009, by section 20(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section CD 43 list of defined terms non-resident company: inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(9) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section CD 43 list of defined terms profit distribution plan: inserted (with effect on 1 October 2012), on 2 November 2012, by section 10(5) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).

Section CD 43 list of defined terms voting interest: inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(9) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).