Income Tax Act 2007

RD 51 Calculation of all-inclusive pay
  • When this section applies

    (1) This section applies to determine the amount of an employee’s all-inclusive pay for the purposes of section RD 50.

    Calculation

    (2) The amount of an employee’s all-inclusive pay is calculated using the formula—

    cash pay – tax on cash pay
    + taxable value of all fringe benefits.

    Definition of items in formula for major shareholder

    (3) If the employee is a major shareholder, the items in the formula are—

    • (a) cash pay is the cash pay of the employee for the income year in which the fringe benefit is attributed that is paid to the employee by the employer or a related employer, and includes—

      • (i) a dividend and interest derived by the employee from their employer; and

      • (ii) a dividend and interest derived by the employee from a related employer:

    • (b) tax on cash pay is the tax on the cash pay of the employee calculated using the basic rate of income tax set out in schedule 1, part A, clause 1 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits),—

      • (i) treating the cash pay as if it were the only taxable income of the employee:

      • (ii) [Repealed]

    • (c) taxable value of all fringe benefits is—

      • (i) the taxable value of all fringe benefits attributed to the employee in the tax year; and

      • (ii) the taxable value of all fringe benefits attributed to a person associated with the employee in the income year if the person does not receive the fringe benefits as an employee of the employer.

    Definition of items in formula for person who is not major shareholder

    (4) If the employee is not a major shareholder, the items in the formula are—

    • (a) cash pay is the cash pay of the employee for the tax year in which the fringe benefit is attributed that is paid to the employee by the employer or a related employer:

    • (b) tax on cash pay is the tax on the cash pay of the employee calculated using the basic rate of income tax set out in schedule 1, part A, clause 1,—

      • (i) treating the cash pay as if it were the only taxable income of the employee:

      • (ii) [Repealed]

    • (c) taxable value of all fringe benefits is the taxable value of all fringe benefits attributed to the employee in the tax year.

    Timing of amounts

    (5) In this section, the cash pay of a shareholder-employee who derives an amount of pay referred to in paragraph (b) or (c) of the definition of pay in subsection (6) is treated as derived in the income year following the income year in which it was received or attributed.

    Some definitions

    (6) In this section,—

    pay means—

    • (a) salary or wages; and

    • (c) an amount attributed under section GB 29 (Attribution rule: calculation); and

    • (d) an extra pay; and

    • (e) a schedular payment

    related employer means a branch or division of an employer, or a person associated with the employer.

    Defined in this Act: amount, associated person, dividend, employee, employer, extra pay, FBT, fringe benefit, income, income tax, income year, interest, major shareholder, pay, related employer, resident in New Zealand, salary or wages, schedular payment, shareholder-employee, tax, tax credit, tax year, taxable income,

    Compare: 2004 No 35 ss ND 5(1), (2), ND 7, ND 7A

    Section RD 51(3)(a): amended (with effect on 1 April 2008), on 6 October 2009, by section 515 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

    Section RD 51(3)(b): amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

    Section RD 51(3)(b)(i): amended (with effect from 1 April 2008), on 29 May 2008, by section 43(1) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).

    Section RD 51(3)(b)(ii): repealed, on 1 April 2008, by section 43(1) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).

    Section RD 51(4)(b)(i): amended (with effect from 1 April 2008), on 29 May 2008, by section 43(2) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).

    Section RD 51(4)(b)(ii): repealed, on 1 April 2008, by section 43(2) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).