Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010

Reprint
as at 1 May 2011

Coat of Arms of New Zealand

Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010

Public Act2010 No 109
Date of assent7 September 2010
Commencementsee section 2

Note

Changes authorised by section 17C of the Acts and Regulations Publication Act 1989 have been made in this reprint.

A general outline of these changes is set out in the notes at the end of this reprint, together with other explanatory material about this reprint.

This Act is administered by the Inland Revenue Department.


Contents

1 Title

2 Commencement

Part 1
Annual rates of income tax

3 Annual rates of income tax for 2010–11 tax year

Part 2
Amendments to Income Tax Act 2007

4 Income Tax Act 2007

5 Amounts derived by mutual associations

6 Disposal of emissions units

7 Distribution excluded from being dividend

8 Section CD 34 repealed

9 New section CD 34B inserted

10 Available subscribed capital (ASC) amount

11 Income for general insurance outstanding claims reserve

12 Subpart CS repealed

13 New section CW 29B inserted

14 Non-resident company involved in exploration and development activities

15 Voluntary activities

16 Employment-related loans

17 Benefits provided to employees who are shareholders or investors

18 New section CX 51C inserted

19 Available capital distribution amount

20 Acquisition of emissions units

21 Liabilities for emissions

22 Section DB 61 replaced

23 Film production expenditure

24 Distribution to member of co-operative company, excluded from being dividend

25 Association rebates

26 Deduction for general insurance outstanding claims reserve

27 Apportionment on disposal of business assets that include trading stock

28 Valuation of excepted financial arrangements

29 Valuation of emissions units issued for zero price

30 Economic rate for plant, equipment, or building, with high residual value

31 Total deductions in section EE 56

32 Expenditure incurred in acquiring film rights in feature films

33 Expenditure incurred in acquiring film rights in films other than feature films

34 Film production expenditure for New Zealand films having no government screen production payment

35 Film production expenditure for other films having no government screen production payment

36 Determination alternatives

37 Expected value method

38 Modified fair value method

39 Change of spreading method

40 Spreading method adjustment formula

41 Base price adjustment formula

42 Meaning of controlled foreign company

43 Attributable CFC amount

44 Non-attributing active CFC: default test

45 Part-year tax calculations

46 Outstanding claims reserving amount: non-participation policies not annuities

47 Premium smoothing reserving amount: non-participation policies not annuities

48 Unearned premium reserving amount: non-participation policies not annuities

49 Capital guarantee reserving amount: non-participation policies not annuities

50 Transitional adjustments: life risk

51 New sections EZ 52C and EZ 52D

52 Expenditure when deduction would be denied to consolidated group

53 Close company remuneration to shareholders, directors, or relatives

54 Disposals of trading stock at below market value

55 Disposals of timber rights or standing timber

56 New section GC 3B inserted

57 What this subpart does

58 Corporate requirements

59 When requirements no longer met

60 New section HA 11B inserted

61 Treatment of tax losses other than certain foreign losses

62 Attribution when balance dates differ

63 Trustees' obligations

64 Effect of failure to meet eligibility requirements for entities

65 Investor interest size requirement

66 Treatment of portfolio class taxable loss and portfolio class land loss for tax year

67 When entity no longer meets investment or investor requirements

68 When income cannot be attributed

69 New section HM 42B

70 Use of tax credits other than foreign tax credits by PIEs

71 Transition of rate for certain investors

72 Notified investor rates

73 Use of land losses of investor classes

74 When formation losses carried forward are 5% or more of formation investment value: 3-year spread

75 Transitional residents

76 Cross-heading replaced

77 RMBS special purpose vehicles

78 New section HR 9B inserted

79 What happens when vehicle stops being RMBS special purpose vehicle?

80 Transitional provisions for PIE rules

81 Restrictions relating to ring-fenced tax losses

82 Common ownership: group of companies

83 Bad debts or decline of value of shares

84 Breach in tax year in which loss balance is grouped

85 Treatment of remaining credits

86 Child's income

87 Tax credits for housekeeping

88 Tax credits for supplementary dividends

89 Limitation on deductions

90 Tax credits for certain investors in portfolio tax rate entities

91 Tax credits for investors in multi-rate PIEs

92 Tax credits for certain zero-rated portfolio investors

93 Tax credits for zero-rated investors

94 Treatment of tax credits on permanent emigration

95 ICA transfer from tax pooling account

96 ICA attribution for personal services

97 ICA refund of income tax

98 ICA refund from tax pooling account

99 ICA transfer within tax pooling account

100 Imputation additional tax on leaving wholly-owned group

101 Imputation additional tax on joining wholly-owned group

102 New section OB 72B inserted

103 New heading and section OE 11B inserted

104 Heading and section OE 16B repealed

105 When credits and debits arise only in consolidated imputation group accounts

106 Consolidated ICA transfer from tax pooling account

107 Consolidated ICA refund from tax pooling account

108 Consolidated ICA transfer to tax pooling account

109 New heading and section OP 104B inserted

110 Heading and section OP 108B repealed

111 Tax credits for non-resident investors

112 Payment dates for terminal tax

113 Alternate rate option

114 Heading and section RD 72 repealed

115 Interest

116 Payments made by RWT proxies

117 Definitions

118 General rules for currency conversion

119 New section YF 2 added

120 Schedule 1—Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits

121 Schedule 4––Rates of tax for schedular payments

122 Schedule 6—Prescribed rates: PIE investments and retirement scheme contributions

123 Schedule 29—Portfolio investment entities: listed investors

124 Schedule 32—Recipients of charitable or other public benefit gifts

Part 3
Amendments to Tax Administration Act 1994

125 Tax Administration Act 1994

126 Interpretation

127 Exemption certificates for schedular payments

128 Special tax rate certificates for schedular payments

129 Use of inconsistent RWT rates

130 RWT withholding certificates

131 Portfolio tax rate entity to give statement to investors and request information

132 Section 32B repealed

133 Section 32C repealed

134 Particulars furnished in electronic format

135 General requirements for returns

136 Returns by persons with tax credits for housekeeping payments and charitable or other public benefit gifts

137 RWT withholding reconciliation statements

138 Disclosure of interest payments when no requirement to withhold RWT

139 Determinations in relation to financial arrangements

140 Notification of determinations and notices

141 Determinations in relation to apportionment of interest costs

142 Determinations in relation to standard-cost household service

143 Determinations relating to types and diminishing values of listed horticultural plants

144 Publication and revocation of determinations relating to livestock

145 Commissioner may decline to issue special rate or provisional rate

146 Notice of setting of economic rate

147 Applications for determinations

148 Determinations on rates for diminishing value of environmental expenditure

149 Determination on type of interest in FIF and use of fair dividend rate method

150 Determination on insurer as non-attributing active CFC

151 Determination relating to eligible relocation expenses

152 Content and notification of a public ruling

153 Withdrawal of a public ruling

154 Commissioner to make private rulings on request

155 Effect of a private ruling

156 Application of a private ruling

157 Assumptions in making a private ruling

158 Content and notification of a private ruling

159 New section 91EJ inserted

160 Commissioner may make product rulings

161 Effect of a product ruling

162 Application of a product ruling

163 Applying for a product ruling

164 Disclosure requirements

165 Assumptions in making a product ruling

166 Content and notification of a product ruling

167 Withdrawal of a product ruling

168 New section 91FK inserted

169 New section 120W inserted

170 Transitional imputation penalty tax payable in some circumstances

171 Unacceptable tax position

172 Definition of promoter

173 Section 165AA repealed

174 Remission for GST transitional taxable periods

Part 4
Amendments to KiwiSaver Act 2006

175 KiwiSaver Act 2006

176 Interpretation

177 Employees must give information to employers

178 Eligibility to be exempt employer

179 How to apply to be exempt employer

180 How applications to be exempt employer must be dealt with

181 How to opt in

182 Opting in by persons under 18

183 Initial back-dated validation

184 What happens when initial back-dated validation ends, with no confirmed back-dated validation?

185 PAYE rules apply to deductions

186 Interest rate

187 Application of other provisions of Superannuation Schemes Act 1989

188 Regulations relating to mortgage diversion facility

189 Schedule 1––KiwiSaver scheme rules

Part 5
Amendments to other Acts and regulations

Goods and Services Tax Act 1985

190 Goods and Services Tax Act 1985

191 Zero-rating of services

192 Goods and services tax incurred in making certain supplies of financial services

193 New section 78AA inserted

194 Adjustments to tax payable for persons furnishing returns on payments basis following change in rate of tax

Estate and Gift Duties Act 1968

195 Exemption for gifts to charities and certain bodies

Income Tax Act 2004

196 Income Tax Act 2004

197 Foreign investment fund income

198 Benefits provided to employees who are shareholders or investors

199 Total deductions in section EE 47

200 Determination alternatives to IFRS

201 Expected value method and equity-free fair value method

202 Meaning of CFC

203 Codes: comparative value method, deemed rate of return method, fair dividend rate method, and cost method

204 Treatment of portfolio class taxable loss and portfolio class land loss for tax year

205 Credit for investor for tax paid by entity if portfolio investor allocated income not excluded income

206 Credit for zero-rated portfolio investor for tax paid by entity in relation to portfolio investor allocated income

207 Definitions

208 Schedule 22A—Identified policy changes

Taxation (Budget Measures) Act 2010

209 Section 4 repealed

210 Alternate rate option

Local Government Act 2002

211 Schedule 9—Council-controlled organisations and transfer of undertakings

Tax Administration (Binding Rulings) Regulations 1999

212 Waiver of fees

213 Fees inclusive of goods and services tax

Schedule 1
Amendments to Income Tax Act 2007, schedule 1

Schedule 2
Amendments to Income Tax Act 2007, schedule 6


The Parliament of New Zealand enacts as follows:

1 Title
  • This Act is the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010.

2 Commencement

Part 1
Annual rates of income tax

3 Annual rates of income tax for 2010–11 tax year
  • Income tax imposed by section BB 1 of the Income Tax Act 2007 must, for the 2010–11 tax year, be paid at the basic rates specified in schedule 1 of that Act.

Part 2
Amendments to Income Tax Act 2007

4 Income Tax Act 2007
5 Amounts derived by mutual associations
  • (1) Section CB 33(2) is replaced by the following:

    Income: other income provisions
    • (2) If the association derives from the transaction an amount that would, in the absence of this subsection, be income under a provision in this Part but for the mutual character of the transaction, the amount is income of the association.

    (2) Subsection (1) applies for the 2008–09 and later income years.

6 Disposal of emissions units
  • (1) After section CB 36(4), the following is inserted:

    Surrender of unit: under forest sink covenant
    • (4B) The person is treated as selling the unit for an amount of zero if the person transfers the emissions unit to the Crown under a forest sink covenant under section 67Y of the Forests Act 1949.

    (2) Section CB 36(6) is replaced by the following:

    Surrender of post-1989 forest land emissions unit or forest sink emissions unit: for other purposes
    • (6) The person is treated as selling a post-1989 forest land emissions unit or forest sink emissions unit for an amount equal to the unit's market value if the person surrenders the emissions unit other than—

      • (a) for emissions in relation to post-1989 forest land:

      • (b) by a transfer to the Crown under a forest sink covenant under section 67Y of the Forests Act 1949.

    (3) The heading to section CB 36(9) is replaced by Excluded income: pre-1990 forest land emissions unit.

    (4) After section CB 36(9), the following is added:

    Excluded income: fishing quota emissions unit
    • (10) Section CX 51C (Disposal of fishing quota emissions units) applies to the disposal to another person of a fishing quota emissions unit.

    (5) In section CB 36, in the list of defined terms,—

    • (a) fishing quota emissions unit is inserted:

    • (b) forest sink emissions unit is inserted.

7 Distribution excluded from being dividend
  • In section CD 2, section CD 34 is replaced by section CD 34B.

8 Section CD 34 repealed
9 New section CD 34B inserted
  • Before section CD 35, the following is inserted:

    CD 34B Distributions to members of co-operative companies
    • What this section applies to

      (1) This section applies to a distribution by a co-operative company, or by a company (a subsidiary) in which the co-operative company has a voting interest of 100%, if—

      • (a) the distribution is made after the Commissioner has received, from the co-operative company, an election in writing to apply this section; and

      • (b) the election has not been revoked.

      General rule: co-operative company distributions not dividends

      (2) If the requirements in subsection (4) are met, a distribution by a co-operative company, or by a subsidiary, to a member of the co-operative company is not a dividend, to the extent to which the distribution is for their––

      • (a) transaction shares:

      • (b) projected transactions shareholding:

      • (c) limited non-transaction shares.

      Exception: distributions for excess shareholdings

      (3) Subsection (2)(c) is ignored,––

      • (a) for a distribution to a member, if the member holds shares in the co-operative company that—

        • (i) are not transaction shares, are not their projected transactions shareholding, and are not limited non-transaction shares; and

        • (ii) may entitle members to enter trading transactions:

      • (b) for all distributions to all members, if the constitution of the co-operative company permits any member to hold shares that––

        • (i) are not transaction shares, are not their projected transaction shareholding, and are not limited non-transaction shares; and

        • (ii) may entitle members to enter trading transactions.

      Requirements

      (4) For the purposes of subsection (2), the requirements are––

      • (a) the co-operative company is resident in New Zealand for the period to which the distribution relates; and

      • (b) the company making the distribution is resident in New Zealand for the period to which the distribution relates; and

      • (c) the co-operative company believes on reasonable grounds that the member at the time of the distribution––

        • (i) is resident in New Zealand:

        • (ii) has a fixed establishment in New Zealand.

      Meaning of transaction shares

      (5) In this section, transaction shares means the number of shares in the co-operative company that the member holds for trading transactions that occurred in the period to which the distribution relates. The number of shares must determine the value of the trading transactions.

      Meaning of limited non-transaction shares

      (6) In this section, limited non-transaction shares means the member's shares that are not the member's transaction shares or their projected transactions shareholding, and that may entitle the member to enter trading transactions, if the number of those shares is less than or equal to the greater of the following:

      • (a) 20% of the member's transaction shares on the date of entitlement for the distribution under section 125 of the Companies Act 1993:

      • (b) 20% of the member's projected transactions shareholding on the date of entitlement for the distribution under section 125 of that Act.

      Meaning of projected transactions shareholding

      (7) In this section, projected transactions shareholding means the number of shares in the co-operative company that the member would have had to hold if the trading transactions actually had occurred that the member had projected, using reasonable assumptions, would occur in the period to which the distribution relates. The number of shares must determine the value of the trading transactions.

      Meaning of trading transactions

      (8) In this section, trading transactions means transactions between the member and the co-operative company or subsidiary that are––

      • (a) the sale and purchase of trading stock of the vendor that is not intangible property; and

      • (b) not subject to section CB 2 (Amounts received on disposal of business assets that include trading stock).

      Companies Act 1993

      (9) The 20 working day rule for fixing a date in section 125(2) of the Companies Act 1993 does not apply to members' entitlements to receive distributions that are for transaction shares, projected transaction shareholdings, limited non-transaction shares, or shares described in subsection (3), if––

      • (a) the co-operative company or the subsidiary, as the case may be, has given a copy of the election described in subsection (1) to the Registrar of Companies before the relevant distributions are paid; and

      • (b) for the purposes of section 125(1) of the Companies Act 1993, the co-operative company or the subsidiary, as the case may be, fixes a date in relation to members' entitlements to receive distributions before the entitlements arise, and that date is within the year or period to which the distributions relate.

      Defined in this Act: Commissioner, company, co-operative company, dividend, limited non-transaction shares, projected transaction shareholding, resident in New Zealand, share, trading stock, trading transactions, transaction shares.

10 Available subscribed capital (ASC) amount
  • (1) In section CD 43(9)(b), IC 3(3) and (4) is replaced by IC 3(3) to (5).

    (2) Subsection (1) applies for the 2008–09 and later income years.

11 Income for general insurance outstanding claims reserve
  • In section CR 4, in the list of defined terms,—

    • (a) premium is inserted:

    • (b) general insurance contract is omitted.

12 Subpart CS repealed
13 New section CW 29B inserted
  • After section CW 29, the following is inserted:

    CW 29B Amounts from Australian complying superannuation schemes reinvested in KiwiSaver schemes
    • An amount of income derived in an income year by a natural person from an Australian complying superannuation scheme is exempt income if, in the income year, it is contributed to a KiwiSaver scheme.

      Defined in this Act: amount, Australian complying superannuation scheme, exempt income, income, income year, KiwiSaver scheme.

14 Non-resident company involved in exploration and development activities
15 Voluntary activities
  • (1) In section CW 62B(5), and schedule 4, part B (Rates of tax for schedular payments), is omitted.

    (2) Subsection (1) applies for the 2009–10 and later income years.

16 Employment-related loans
17 Benefits provided to employees who are shareholders or investors
  • (1) In section CX 17(4)(a), shareholder: is replaced by shareholder; and.

    (2) Subsection (1)—

    • (a) applies for the 2008–09 and later income years, except if paragraph (b) applies:

    • (b) does not apply for a person and an income year in relation to a tax position taken for the income year by the person—

      • (i) in the period from 1 April 2008 to the date of the Royal assent of this Act; and

      • (ii) in a return of income, an FBT return, or a GST return filed before the date of the Royal assent of this Act; and

      • (iii) relying upon section CX 17(4) as it was before the amendment made by subsection (1).

18 New section CX 51C inserted
  • After section CX 51B, the following is inserted:

    CX 51C Disposal of fishing quota emissions units
    • Who this section applies to

      (1) This section applies to a person who disposes of a fishing quota emissions unit other than by surrender.

      Excluded income: disposal

      (2) An amount of income that the person derives from the disposal is excluded income if, at the time of the disposal, the person would not derive income, other than exempt income or excluded income, from a disposal of the individual transferable quota to which the emissions unit relates.

      Defined in this Act: amount, emissions unit, excluded income, exempt income, fishing quota emissions unit.

19 Available capital distribution amount
  • In section CZ 9B(2)(c), not on the liquidation of the company is replaced by on the liquidation of the company.

20 Acquisition of emissions units
  • Section DB 60(1), other than the heading, is replaced by the following:

    • (1) This section applies when an emissions unit is transferred to a person for a price of zero—

      • (a) under section 64, or Part 4, subpart 2, of the Climate Change Response Act 2002:

      • (b) in relation to a forest sink covenant under section 67Y of the Forests Act 1949 entered by the person.

21 Liabilities for emissions
  • (1) Section DB 60B(1), other than the heading, is replaced by the following:

    • (1) This section applies when a person incurs a liability—

      • (a) under the Climate Change Response Act 2002 for emissions relating to post-1989 forest land or pre-1990 forest land:

      • (b) to transfer emissions units to the Crown under a forest sink covenant under section 67Y of the Forests Act 1949 entered by the person.

    (2) In section DB 60B, in the list of defined terms, emissions unit is inserted.

22 Section DB 61 replaced
  • Section DB 61 is replaced by the following:

    DB 61 Surrender of certain emissions units for post-1989 forest land emissions
    • When this section applies

      (1) This section applies when a person surrenders a pre-1990 forest land emissions unit or fishing quota emissions unit to meet a liability under the Climate Change Response Act 2002 to surrender units in relation to post-1989 forest land.

      Treated as disposal and reacquisition

      (2) The person is treated as having disposed of the emissions unit to an unrelated person and as having then reacquired it, in each case immediately before the surrender and for an amount equal to the unit's market value at the time.

      Defined in this Act: amount, emissions unit, fishing quota emissions unit, pre-1990 forest land emissions unit, surrender.

23 Film production expenditure
  • (1) In section DS 2(4),—

    • (a) in paragraph (a), government screen production payment is replaced by large budget film grant:

    • (b) in paragraph (b), government screen production payment is replaced by large budget film grant.

    (2) In section DS 2, in the list of defined terms,—

    • (a) government screen production payment is omitted:

    • (b) large budget film grant is inserted.

24 Distribution to member of co-operative company, excluded from being dividend
  • (1) In section DV 11(1), section CD 34 (Distribution to member of co-operative company based on member's transactions) is replaced by CD 34B (Distributions to members of co-operative companies).

    (2) In section DV 11(2), section CD 34 is replaced by section CD 34B.

    (3) In section DV 11(3), for which the distribution is made is replaced by to which the distribution relates.

25 Association rebates
  • (1) Section DV 19(1), other than the heading, is replaced by the following:

    • (1) This section applies when an association—

      • (a) enters into a mutual transaction; and

      • (b) in relation to the transaction, pays an association rebate to a member.

    (2) Section DV 19(3), other than the heading, is replaced by the following:

    • (3) The deduction is allowed in the income year corresponding to the accounting year for which the association rebate is paid.

    (3) In section DV 19, in the list of defined terms, accounting year is inserted.

    (4) Subsections (1) to (3) apply for the 2008–09 and later income years.

26 Deduction for general insurance outstanding claims reserve
  • In section DW 4, in the list of defined terms,—

    • (a) pay is inserted:

    • (b) general insurance contract is omitted.

27 Apportionment on disposal of business assets that include trading stock
  • (1) In section EB 24(1), the second sentence is replaced by This section also applies if a person disposes of an interest in trading stock together with other assets of a business or an interest in those other assets, whether or not the disposal of the partial interest is to another person.

    (2) Subsection (1)—

    • (a) applies for the 2008–09 and later income years, except if paragraph (b) applies:

    • (b) does not apply for a person and an income year in relation to a tax position taken by the person—

      • (i) in a return of income filed before 28 October 2009; and

      • (ii) relating to an apportionment of an amount on a disposal of trading stock and other assets; and

      • (iii) relying on section EB 24(1) as it was before the amendment made by subsection (1).

28 Valuation of excepted financial arrangements
  • (1) After section ED 1(5B)(b), the following is inserted:

    • (bb) forest sink emissions units:.

    (2) After section ED 1(5B)(c), the following is inserted:

    • (cb) fishing quota emissions units, if the holder of the units would derive income, other than exempt income and excluded income, from a disposal of the individual transferable quota to which the units relate:.

    (3) After section ED 1(5B)(d), the following is inserted:

    • (db) fishing quota emissions units, if the holder of the units would derive no income, other than exempt income and excluded income, from a disposal of the individual transferable quota to which the units relate:.

    (4) Section ED 1(5C), other than the heading, is replaced by the following:

    • (5C) Despite subsection (5B), for the purposes of subsection (5),—

      • (a) emissions units described in paragraphs (a) to (cb) may be pooled together:

      • (b) emissions units described in paragraphs (d) and (db) may be pooled together.

    (5) In section ED 1, in the list of defined terms,—

    • (a) fishing quota emissions unit is inserted:

    • (b) forest sink emissions unit is inserted.

29 Valuation of emissions units issued for zero price
  • (1) After section ED 1B(1)(e), the following is inserted:

    • (eb) are not fishing quota emissions units; and.

    (2) In section ED 1B, in the list of defined terms, fishing quota emissions unit is inserted.

30 Economic rate for plant, equipment, or building, with high residual value
  • (1) Section EE 30(3)(b) is replaced by the following:

    • (b) rounds the figure up or down to the nearest rate specified in schedule 11, column 1 (New banded rates of depreciation); and.

    (2) Subsection (1) applies for the 2008–09 and later income years.

31 Total deductions in section EE 56
  • (1) After section EE 60(3), the following is inserted:

    Treatment of mothballed assets
    • (3B) Subsection (3)(b) does not apply in relation to an amount of depreciation loss for an item that has been withdrawn from use in deriving assessable income or carrying on a business for the purpose of deriving assessable income. However, this exclusion does not apply to an amount of depreciation loss for which the person has a deduction under section EE 39.

    (2) Subsection (1) applies for the 2008–09 and later income years.

32 Expenditure incurred in acquiring film rights in feature films
  • (1) In section EJ 4(1)(b), government screen production payment is replaced by large budget film grant.

    (2) In section EJ 4, in the list of defined terms,—

    • (a) government screen production payment is omitted:

    • (b) large budget film grant is inserted.

33 Expenditure incurred in acquiring film rights in films other than feature films
  • (1) In section EJ 5(1)(b), government screen production payment is replaced by large budget film grant.

    (2) In section EJ 5, in the list of defined terms,—

    • (a) government screen production payment is omitted:

    • (b) large budget film grant is inserted.

34 Film production expenditure for New Zealand films having no government screen production payment
  • (1) In the heading to section EJ 7, government screen production payment is replaced by large budget film grant.

    (2) In section EJ 7(1)(a), government screen production payment is replaced by large budget film grant.

    (3) In section EJ 7, in the list of defined terms,—

    • (a) government screen production payment is omitted:

    • (b) large budget film grant is inserted.

35 Film production expenditure for other films having no government screen production payment
  • (1) In the heading to section EJ 8, government screen production payment is replaced by large budget film grant.

    (2) In section EJ 8(1)(a), government screen production payment is replaced by large budget film grant.

    (3) In section EJ 8, in the list of defined terms,—

    • (a) government screen production payment is omitted:

    • (b) large budget film grant is inserted.

36 Determination alternatives
  • In section EW 15E(1)(c)(ii), fair value method. is replaced by fair value method; or and the following is added:

    • (iii) is treated under IFRSs by the person as a hedge of something that is not a financial arrangement.

37 Expected value method
  • In section EW 15F(1)(c)(ii), fair value method; and is replaced by fair value method; or and the following is added:

    • (iii) is treated under IFRSs by the person as a hedge of something that is not a financial arrangement; and.

38 Modified fair value method
  • In section EW 15G(1)(c)(ii), fair value method; and is replaced by fair value method; or and the following is added:

    • (iii) is treated under IFRSs by the person as a hedge of something that is not a financial arrangement; and.

39 Change of spreading method
  • After section EW 26(7), the following is added:

    Modification
    • (8) Section EZ 52C (Change of spreading method: Determination G22 to Determination G22A) modifies this section.

40 Spreading method adjustment formula
  • After section EW 27(8), the following is added:

    Modification
    • (9) Section EZ 52C (Change of spreading method: Determination G22 to Determination G22A) modifies this section.

41 Base price adjustment formula
42 Meaning of controlled foreign company
  • (1) Section EX 1(1)(b)(i) is replaced by the following:

    • (i) the person's control interest is less than or equal to a control interest in the same category held by another person; and.

    (2) Subsection (1)—

    • (a) applies for the 2008–09 and later income years, except if paragraph (b) applies:

    • (b) does not apply for a person in relation to a tax position taken by the person—

      • (i) before 19 November 2009; and

      • (ii) relying on the provision amended by this section as it was immediately before the amendment made by this section.

43 Attributable CFC amount
  • (1) In section EX 20B(11)(b)(i), market circumstance is replaced by market value circumstance.

    (2) Subsection (1) applies for income years beginning on or after 1 July 2009.

44 Non-attributing active CFC: default test
45 Part-year tax calculations
  • (1) In the heading to section EY 5(3), First year part-year is replaced by Part-year.

    (2) In section EY 5(4), The transferee's relevant opening part-year reserve amounts under sections EY 23 to EY 27 equal the transferor's relevant closing part-year reserve amounts is replaced by The transferee's relevant opening part-year reserve amounts under sections EY 23 to EY 27 equal the transferor's relevant closing part-year reserve amounts, and if the life reinsurance associated with a class of policies is not assigned by the transferor to the transferee, those reserve amounts are calculated without subtracting relevant life reinsurance amounts.

    (3) Section EY 5(6) and (7) are replaced by the following:

    Part-year calculations: end of transitional adjustments
    • (6) If, for a life insurance policy, the transitional adjustment under section EY 30(7) is calculated for part of an income year, because section EY 30 ceases to apply to the policy before the end of the income year, the life insurer does part-year tax calculations for the policy for the income year, as described in subsection (2), but the income year is divided by the day that section EY 30 ceases to apply. The effect of the part-year calculations is described in subsection (3).

    (4) Subsections (1) to (3) apply––

    • (a) on and after 1 July 2010, except if paragraph (b) applies:

46 Outstanding claims reserving amount: non-participation policies not annuities
  • (1) In section EY 24(2)(a)(ii), the amount of the life insurer's outstanding claims reserve under subsections (3) and (4) for the class of policies, calculated at the beginning of the current year, but excluding is replaced by the amount that would be the outstanding claims reserve for the class of policies, using subsections (3) and (4) with necessary modifications, calculated at the end of the prior year, but including.

    (2) Subsection (1) applies––

    • (a) on and after 1 July 2010, except if paragraph (b) applies:

47 Premium smoothing reserving amount: non-participation policies not annuities
  • (1) In section EY 25(2)(a)(ii), the amount of the life insurer's premium smoothing reserve calculated under the principles in subsection (3) for the class of policies, calculated at the beginning of the current year is replaced by the amount that would be the premium smoothing reserve for the class of policies, using the principles in subsection (3) with necessary modifications, calculated at the end of the prior year.

    (2) Subsection (1) applies––

    • (a) on and after 1 July 2010, except if paragraph (b) applies:

48 Unearned premium reserving amount: non-participation policies not annuities
  • (1) In section EY 26(2)(a)(ii), the amount of the life insurer's unearned premium reserve under subsection (3) for the class of policies, calculated at the beginning of the current year is replaced by the amount that would be the unearned premium reserve for the class of policies, using subsection (3) with necessary modifications, calculated at the end of the prior year.

    (2) Subsection (1) applies––

    • (a) on and after 1 July 2010, except if paragraph (b) applies:

49 Capital guarantee reserving amount: non-participation policies not annuities
  • (1) In section EY 27(2)(a)(ii), the amount of the life insurer's capital guarantee reserve under subsection (3) for the class of policies, calculated at the beginning of the current year is replaced by the amount that would be the capital guarantee reserve for the class of policies, using subsection (3) with necessary modifications, calculated at the end of the income year before the current year.

    (2) Subsection (1) applies––

    • (a) on and after 1 July 2010, except if paragraph (b) applies:

50 Transitional adjustments: life risk
  • (1) After section EY 30(1), the following is inserted:

    Separation of products into separate policies for purposes of transitional adjustment
    • (1B) If a life insurance policy is comprised of 2 or more life insurance product types that are capable of being sold separately, and the life insurance cover amounts for each product type are separately identified in the policy, then each of the product types may be treated as a separate life insurance policy for the purposes of this section.

    (2) In section EY 30(2), a group life master policy, credit card repayment insurance, and an workplace group policy is replaced by a multiple life policy through which the life insurer can look to the individual lives covered, credit card repayment insurance, and a workplace group policy.

    (3) Section EY 30(2)(c) is replaced by the following:

    • (c) the amount of life insurance cover at the finish of a cover review period, or at the finish of any shorter period, if the life insurer chooses to measure within the cover review period, has not increased by more than the greater of 10% and the percentage change in the consumer price index for the relevant period, as compared to the amount of life insurance cover at the beginning of the relevant cover review period; and

    • (d) no new or replacement individual life is covered for a period beginning after the grandparenting start day.

    (4) In section EY 30(3),—

    • (a) the heading is replaced by Multiple life policies:

    • (b) group life master policy is replaced by multiple life policy through which the life insurer can look to the individual lives covered:

    • (c) in paragraph (b), subsection (5)(a) is replaced by subsection (5)(a) or (b).

    (5) Section EY 30(3)(e) is replaced by the following:

    • (e) to the extent to which, looking through to the individual lives covered, the amount of life insurance cover at the finish of a cover review period, or at the finish of any shorter period, if the life insurer chooses to measure within the cover review period, has not increased by more than the greater of 10% and the percentage change in the consumer price index for the relevant period, as compared to the amount of life insurance cover at the beginning of the relevant cover review period.

    (6) In section EY 30(4), an workplace group policy is replaced by a workplace group policy.

    (7) In section EY 30(5)(b), and the premium does not go up in the period (the continuous rate period) is replaced by and for which the premium does not go up in that period (the continuous rate period) ignoring any increase directly linked to the percentage change in the consumer price index if that increase was the subject of agreement before the grandparenting start day.

    (8) After section EY 30(5), the following is inserted:

    When this section does not apply: life insurance cover increase for whole cover review period
    • (5B) This section does not apply for a policy for the whole of an income year if a cover review period finishes in the year and, for that cover review period, there has been an increase in the amount of life insurance cover as described in subsection (2)(c) or (3)(e) and the life insurer has not made an election for measuring within the cover review period under those subsections.

    When this section does not apply: continuity
    • (5C) This section does not apply for a policy for any period after this section has ceased to apply for the policy.

    (9) In section EY 30(7), For the income year, a life insurer has an amount of shareholder base allowable deduction calculated for a class of policies using the formula is replaced by A life insurer has an amount of shareholder base allowable deduction for a policy calculated using the following formula, to the extent to which this section applies for the relevant income year for the policy.

    (10) In section EY 30(8)(a), income year for the policies is replaced by income year or part of the income year, as applicable, for the policy.

    (11) In section EY 30(8)(b), income year is replaced by income year or part of the income year, as applicable, for the policy,.

    (12) In section EY 30(8)(c), income year is replaced by income year or part of the income year, as applicable, for the policy.

    (13) In section EY 30(11), credit card. is replaced by credit card, or life reinsurance to the extent to which it reinsures such a life insurance policy.

    (14) Section EY 30(14) is replaced by the following:

    Meaning of multiple life policy
    • (14) Multiple life policy

      • (a) means a life insurance policy with multiple individuals' life insurance cover grouped under it, if the group of individuals is identified in the policy:

      • (b) does not include—

        • (i) a workplace group policy:

        • (ii) credit card repayment insurance:

        • (iii) life reinsurance to the extent to which it reinsures a workplace group policy or credit card repayment insurance.

    (15) Section EY 30(15), other than its heading, is replaced by the following:

    • (15) Workplace group policy means a life insurance policy with multiple individuals' life insurance cover grouped under it, or life reinsurance to the extent to which it reinsures such a life insurance policy, if—

      • (a) the individuals under the policy are—

        • (i) a group that includes, or consists of, a class of employees of an employer or group of employers, and may include 1 or more of the employers or directors of the employers, and the policy is sponsored by the employers or by the trustees of a superannuation scheme:

        • (ii) members of a union registered under the Employment Relations Act 2000 or members of an industry association, and the union or association is the sponsor of the policy:

        • (iii) the spouses, civil union partners, and de facto partners of employees or members described in subparagraphs (i) and (ii); and

      • (b) in the case of the sponsor being the employer,—

        • (i) the employer is required to offer an employee who is a member of the relevant class the opportunity to join the life insurance policy; and

        • (ii) the life insurer and the employer have entered an agreement about who pays the premium.

    (16) In section EY 30, in the list of defined terms, pay is inserted.

    (17) Subsections (1) to (15) apply––

    • (a) on and after 1 July 2010, except if paragraph (b) applies:

51 New sections EZ 52C and EZ 52D
  • After section EZ 52B, the following is inserted:

    EZ 52C Change of spreading method: Determination G22 to Determination G22A
    • How and when this section applies

      (1) This section does not alter or affect a person's tax position in relation to Determination G22: Optional convertible notes denominated in New Zealand dollars convertible at the option of the holder or the person's litigation of their tax position in relation to Determination G22. It does not alter or affect the Commissioner's assessment of, or litigation of, that tax position. It applies after Determination G22 has applied for a person's financial arrangement, and only if, for the financial arrangement,––

      • (a) Determination G22A: Optional convertible notes denominated in New Zealand dollars did not apply while Determination G22 applied, because of the application of section 90AE of the Tax Administration Act 1994, or the application of Determination G22A, clause 3(1)(b); and

      • (b) Determination G22A starts applying immediately after––

        • (i) section 90AE of the Tax Administration Act 1994 stops applying; or

        • (ii) Determination G22A, clause 3(1)(b) stops applying.

      Spreading method adjustment

      (2) Despite sections EW 26 and EW 27 (which relate to changes of spreading method), the person must not calculate a spreading method adjustment under section EW 27 for the change of spreading method, for the financial arrangement, from Determination G22 to Determination G22A.

      Part years under Determinations instead of spreading method adjustment

      (3) In the income year in which subsection (2) applies, for the financial arrangement, Determination G22 applies for the part-year before the change to Determination G22A, and Determination G22A applies for the part-year after the change from Determination G22.

      Defined in this Act: amount, assessment, financial arrangement, spreading method

    EZ 52D Base price adjustment: financial arrangements to which Determination G22 and Determination G22A applied
    • How and when this section applies

      (1) This section does not alter or affect a person's tax position in relation to Determination G22 or the person's litigation of their tax position in relation to Determination G22. It does not alter or affect the Commissioner's assessment of, or litigation of, that tax position. It applies after Determination G22 has applied for a person's financial arrangement, and only if, for the financial arrangement,––

      • (a) section EZ 52C applied; and

      • (b) Determination G22A applies when the person is required to calculate a base price adjustment for the financial arrangement.

      Consideration adjustment

      (2) For the financial arrangement, the consideration referred to in section EW 31(7) (Base price adjustment formula) is adjusted in accordance with subsections (3) to (6).

      Issuer

      (3) If the person is the issuer of the financial arrangement, an amount calculated under subsections (5) and (6) is added to all consideration that has been paid, and all consideration that is or will be payable, by the issuer for or under the financial arrangement.

      Holder

      (4) If the person is a holder of the financial arrangement, an amount, referrable to the person's holding, calculated under subsections (5) and (6) is added to all consideration that has been paid, and all consideration that is or will be payable, to the holder for or under the financial arrangement.

      Calculation

      (5) For the purposes of subsections (3) and (4) the amount is calculated using the following formula:

      X − Z.
      Definition of items in formula

      (6) In the formula,––

      • (a) X is, for the financial arrangement, an amount equal to the item s in Determination G22, clause 6(1), if that item were calculated in accordance with that Determination at the time immediately before the change of spreading method described in section EZ 52C(2):

      • (b) Z is, for the financial arrangement, an amount equal to the item s in Determination G22, clause 6(1), if that item were calculated in accordance with that Determination at the time when it first applied.

      Defined in this Act: amount, consideration, financial arrangement.

52 Expenditure when deduction would be denied to consolidated group
  • (1) In section FM 12(2), borrowed from a person that is part of the consolidated group is replaced by borrowed from a person that is not part of the consolidated group.

    (2) Subsection (1) applies for the 2008–09 and later income years.

53 Close company remuneration to shareholders, directors, or relatives
  • (1) In section GB 25(3)(b), management is replaced by management or administration.

    (2) Subsection (1) applies for the 2008–09 and later income years.

54 Disposals of trading stock at below market value
  • (1) Section GC 1 is replaced by the following:

    GC 1 Disposals of trading stock at below market value
    • When this section applies

      (1) This section applies when a person disposes of trading stock for—

      • (a) no consideration:

      • (b) an amount that is less than the market value of the trading stock at the time of disposal.

      Market value consideration

      (2) The person is treated as deriving an amount equal to the market value of the trading stock at the time of disposal.

      Market value expenditure

      (3) If the person disposes of the trading stock to another person, an amount equal to the market value of the trading stock at the time of disposal is treated as expenditure incurred by the other person in acquiring the trading stock.

      Shares in trading stock

      (4) In this section, trading stock includes an interest in trading stock.

      Exclusions

      (5) This section does not apply to a disposal of trading stock—

      • (a) under a relationship agreement:

      • (b) by the person to another person who is not associated with them, for use by the other person in a farming, agricultural, or fishing business that is affected by a self-assessed adverse event:

      • (c) under a share-lending arrangement, by a share user to a share supplier or by a share supplier to a share user.

      Defined in this Act: amount, associated person, business, relationship agreement, self-assessed adverse event, share, share-lending arrangement, share supplier, share user, trading stock.

    (2) Subsection (1)—

    • (a) applies for the 2008–09 and later income years, except if paragraph (b) applies:

    • (b) does not apply for a person and an income year in relation to a tax position taken by the person—

      • (i) in a return of income filed before 28 October 2009; and

      • (ii) relating to a disposal of trading stock; and

      • (iii) relying on section GC 1 as it was before the replacement made by subsection (1).

55 Disposals of timber rights or standing timber
  • (1) In section GC 2(3), Section GC 1(3) is replaced by Section GC 1(4).

    (2) Subsection (1) applies for the 2008–09 and later income years.

56 New section GC 3B inserted
  • After section GC 3, the following is inserted:

    GC 3B Disposals of emissions units
    • When section GC 1 applies

      (1) Section GC 1 applies to a disposal of an emissions unit as if the emissions unit were trading stock.

      Exclusions

      (2) Section GC 1 does not apply to a disposal of an emissions unit if the disposal is—

      • (a) the surrender of the unit under the Climate Change Response Act 2002:

      • (b) the transfer of the unit to the Crown under a forest sink covenant under section 67Y of the Forests Act 1949:

      • (c) the transfer of a forest land emissions unit—

        • (i) from the person (the transferor) who receives the unit from the Crown; and

        • (ii) to a person (the transferee) as a party to a forestry rights agreement as defined in the Forestry Rights Registration Act 1983; and

        • (iii) as required by a provision of the forestry rights agreement relating to the allocation of income or emissions units between the transferor and the transferee.

      Defined in this Act: disposal, emissions unit, trading stock.

57 What this subpart does
  • (1) Section HA 1(1)(a) is replaced by the following:

    • (a) to have a distribution of profits to shareholders imputed or, to the extent not imputed, distributed as exempt income; and.

    (2) In section HA 1, in the list of defined terms, exempt income is inserted.

    (3) Subsection (1) applies for the 2008–09 and later income years.

58 Corporate requirements
  • (1) In section HA 6(2)(c), HA 11(4) is replaced by HA 11B(1).

    (2) Subsection (1) applies for the 2008–09 and later income years.

59 When requirements no longer met
  • (1) In section HA 11, the section heading is replaced by When requirements no longer met: qualifying companies.

    (2) Section HA 11(4) is repealed.

    (3) Subsection (2) applies for the 2008–09 and later income years.

60 New section HA 11B inserted
  • (1) After section HA 11, the following is inserted:

    HA 11B When requirements no longer met: LAQCs
    • When status lost

      (1) If a company is an LAQC in an income year, but does not meet the requirements of sections HA 1(3) and HA 5 to HA 10 for the next income year, its status as a qualifying company is treated as ended from the start of that next income year.

      Regaining status

      (2) The company may become a qualifying company again if it subsequently meets the requirements set out in sections HA 5 to HA 9.

      Defined in this Act: company, income year, LAQC, qualifying company.

    (2) Subsection (1) applies for the 2008–09 and later income years.

61 Treatment of tax losses other than certain foreign losses
  • (1) Section HA 24(5) is replaced by the following:

    Treatment of losses incurred before company has LAQC status
    • (5) Despite subsection (2), a company that has a tax loss component arising in an income year in which it is a qualifying company but before it acquires LAQC status, may include the amount in a loss balance (the pre-LAQC loss balance) for the tax year corresponding to the income year, but only to the extent to which the tax loss component remains unused at the end of the tax year.

    Using pre-LAQC loss balance
    • (5B) For the tax year referred to in subsection (1), a pre-LAQC loss balance carried forward from the previous tax year is used in the following order:

      • (a) first, the LAQC must use the amount under section IA 4 (Using loss balances carried forward to tax year); and

      • (b) secondly, for a remaining unused amount of the loss balance, the LAQC may choose to use the amount under section IA 3 (Using tax losses in tax year); and

      • (c) thirdly, for a remaining unused amount of the loss balance, the LAQC must include the amount in the company's loss balance under section IA 3(4) at the end of the tax year.

    Continuity requirements and ordering rules
    • (5C) The uses referred to in subsection (5B) are subject to the continuity requirements set out in section IA 5 (Restrictions on companies' loss balances carried forward) and the ordering rules set out in section IA 9 (Ordering rules).

    (2) In section HA 24, in the list of defined terms, company, qualifying company, and tax loss component are inserted.

    (3) Subsection (1) applies for the 2008–09 and later income years.

62 Attribution when balance dates differ
  • (1) Section HA 26(2), other than the heading, is replaced by the following:

    • (2) Despite section 38 of the Tax Administration Act 1994, the LAQC may choose to treat the amount of the shareholder's tax loss as having been incurred on the first day of the next income year.

    (2) Subsection (1) applies for the 2008–09 and later income years.

63 Trustees' obligations
  • (1) Section HC 24(2)(a) is replaced by the following:

    • (a) have a tax credit under subparts LC and LD (which relate to tax credits for natural persons and for certain gifts):.

    (2) Subsection (1) applies for the 2008–09 and later income years.

64 Effect of failure to meet eligibility requirements for entities
  • (1) Section HL 4(2) is replaced by the following:

    Failure to meet other requirements
    • (2) An entity ceases under this section to be eligible to be a portfolio investment entity if it fails in either of the circumstances set out in subsection (3) and the entity's failure—

      • (a) is significant and would not have occurred but for an event or circumstance within the control of the entity:

      • (b) is repeated on the last day of the quarter following the quarter referred to in subsection (3)(a) and ending more than 3 months before the announcement referred to in subsection (3)(a)(ii) and (b)(ii).

    Particular circumstances
    • (3) The circumstances are that either—

      • (a) the portfolio investor class of the entity fails to meet a requirement under section HL 6 or HL 9 on the last day of a quarter—

        • (i) beginning 6 months or more after the date on which the portfolio investor class is formed; and

        • (ii) ending more than 3 months before an announcement by the entity to its investors that the portfolio investor class is winding up within 12 months of the announcement; or

      • (b) the entity fails to meet a requirement under section HL 10 on the last day of a quarter—

        • (i) beginning 6 months or more after the date on which the entity becomes a portfolio investment entity; and

        • (ii) ending more than 3 months before an announcement by the entity to its investors that the entity is winding up within 12 months of the announcement.

    (2) Subsection (1) applies for the 2008–09 and later income years.

65 Investor interest size requirement
  • (1) In section HL 9(2), investor membership requirement is replaced by investor interest size requirement.

    (2) Subsection (1) applies for the 2008–09 and later income years.

66 Treatment of portfolio class taxable loss and portfolio class land loss for tax year
  • (1) Section HL 32(3)(a)(i) is replaced by the following:

    • (i) are an investment of the type listed in subsection (4); and.

    (2) After section HL 32(3), the following is added:

    Investment types
    • (4) For the purposes of subsection (3)(a)(i), the investment must be—

      • (a) an investment in land:

      • (b) an investment in a portfolio land company that is resident in New Zealand:

      • (c) an investment in a non-resident portfolio land company in which the portfolio investor class has a voting interest of more than 20%.

    (3) In section HL 32, in the list of defined terms, non-resident, resident in New Zealand, and voting interest are inserted.

    (4) Subsections (1) and (2) apply for the 2008–09 and later income years.

67 When entity no longer meets investment or investor requirements
  • (1) In section HM 25(3)(b), the first quarter ends more than 3 months is replaced by the first quarter ends within 3 months.

    (2) Subsection (1) applies for the 2010–11 and later income years.

68 When income cannot be attributed
69 New section HM 42B
  • After section HM 42, the following is inserted:

    HM 42B Part-year tax calculations for PIEs under the exit calculation option for the 2010–11 tax year
    • When this section applies

      (1) This section applies to a PIE for the 2010–11 tax year if section HM 42 applies to the PIE for that year and the PIE chooses to apply this section by filing a return under section 57B(5) or (7) of the Tax Administration Act 1994 in accordance with this section.

      Part-year tax calculations: description

      (2) For calculating their income tax liability for the 2010–11 tax year, the PIE treats references to an income year or a tax year as if they are references to 2 separate tax years and corresponding income years within that tax year, divided by 1 October 2010 (for example: an amount of income attributed to a date before 1 October 2010 is included in the first part-year and taxed using the notified investor rate advised before 1 October 2010. A notified investor rate advised on or after 1 October 2010 is applied only to the amount of income attributed to the second part-year).

      Part-year tax calculations: effect

      (3) The part-year calculations may give rise to income and deductions for the income year and they do create part-year tax return obligations, except that the requirement for returns under section 57B(7)(a) of the Tax Administration Act 1994 and for notice in relation to investors or proxies under section 31C(4) of that Act can be met by sending returns or notices on a full-year or part-year basis. The 2 part-year calculations create 2 income tax liabilities for 2 part-years.

      Foreign tax credits: special rule

      (4) Despite subsections (2) and (3), tax credits under subpart LJ (Tax credits for foreign income tax) may be used in accordance with section HM 51 in either part-year, if they are attributable to the first part-year.

      Defined in this Act: deduction, income, income tax liability, income year, notified investor rate, PIE, tax credit, tax year.

70 Use of tax credits other than foreign tax credits by PIEs
  • (1) In section HM 53(2), section HM 52 is replaced by section HM 51.

    (2) Subsection (1) applies for the 2010–11 and later income years.

71 Transition of rate for certain investors
72 Notified investor rates
  • (1) In section HM 60(3),––

    • (a) in the first sentence, in every period for the income year is replaced by in the period:

    • (b) in the third sentence, must apply the notified investor rate that would have applied ignoring the Taxation (Budget Measures) Act 2010 is replaced by may apply a notified investor rate corresponding to the most recent notified investor rate, ignoring the Taxation (Budget Measures) Act 2010 (for example: a notified investor rate of 12.5% may be applied before 1 October 2010, if the most recent notified investor rate on or after 1 October 2010 is 10.5%).

    (2) After section HM 60(3), the following is inserted:

    Exception
    • (3B) Subsection (3) does not apply if the PIE has made a voluntary payment of tax under section HM 45 that is intended to satisfy its income tax liability for the period in relation to the investor unless the rate last notified applies to the voluntary payment.

    (3) In section HM 60(4), sections CX 56 and CX 56B (which relate to attributed income of and distributions to certain investors in multi-rate PIEs) is replaced by section CX 56 (Attributed income of certain investors in multi-rate PIEs).

    (4) Subsection (3) applies for the 2010–11 and later income years.

73 Use of land losses of investor classes
  • (1) Section HM 65(3)(a) is replaced by the following:

    • (a) are an investment of the type listed in subsection (4); and.

    (2) After section HM 65(3), the following is added:

    Investment types
    • (4) For the purposes of subsection (3)(a), the investment must be—

      • (a) an investment in land:

      • (b) an investment in a land investment company that is resident in New Zealand:

      • (c) an investment in a non-resident land investment company in which the investor class has a voting interest of more than 20%.

    (3) In section HM 65, in the list of defined terms, non-resident, resident in New Zealand, and voting interest are inserted.

    (4) Subsections (1) and (2) apply for the 2010–11 and later income years.

74 When formation losses carried forward are 5% or more of formation investment value: 3-year spread
  • (1) Section HM 69(5), other than the heading, is replaced by the following:

    • (5) After the end of the period of 3 years referred to in subsection (1), any residual formation loss may be allocated to an attribution period when a calculation is made under section HM 35(5) of the taxable amount for an investor class.

    (2) Subsection (1) applies for the 2010–11 and later income years.

75 Transitional residents
  • (1) In section HR 8(2)(b), section YD 1(2) and (3) is replaced by section YD 1(2) or (3).

    (2) In section HR 8(3)(b)(ii), section YD 1(2) and (3) is replaced by section YD 1(2) or (3).

76 Cross-heading replaced
  • In the cross-heading after section HR 8, RMBS is replaced by Financial institution.

77 RMBS special purpose vehicles
  • (1) In the heading to section HR 9, RMBS is replaced by Financial institution.

    (2) In section HR 9, in the words before the paragraphs,––

    • (a) registered bank is replaced by financial institution:

    • (b) RMBS is replaced by financial institution:

    • (c) RMBS is replaced by financial institution.

    (3) In section HR 9, in paragraphs (a), (b), (c), and (d),—

    • (a) registered bank is replaced in each place where it appears by financial institution:

    • (b) RMBS is replaced in each place where it appears by financial institution.

    (4) In section HR 9, in the list of defined terms,—

    • (a) registered bank and RMBS special purpose vehicle are omitted:

    • (b) financial institution and financial institution special purpose vehicle are inserted.

78 New section HR 9B inserted
  • After section HR 9, the following is inserted:

    HR 9B Bankruptcy-remote property during application of section HR 9
    • Despite section HR 9, property that a financial institution holds because of the application of section HR 9 cannot be attached, charged, disposed of, or otherwise used in the payment of its tax debt, except to the extent that––

      • (a) such tax debt—

        • (i) does not relate to income tax or provisional tax; and

        • (ii) would have been the relevant financial institution special purpose vehicle's tax debt in the absence of section HR 9:

      • (b) such property could have been attached, charged, disposed of, or otherwise used in payment of the tax debt in the absence of section HR 9.

      Defined in this Act: dispose, financial institution, financial institution special purpose vehicle, income tax, provisional tax, tax.

79 What happens when vehicle stops being RMBS special purpose vehicle?
  • (1) In section HR 10, in the heading to section HR 10, RMBS is replaced by financial institution.

    (2) In section HR 10(1),—

    • (a) in the words before the paragraphs, RMBS is replaced by financial institution:

    • (b) in paragraphs (a) and (c), registered bank is replaced in each place where it appears by financial institution:

    • (c) in paragraphs (a), (b), (c) and (d), RMBS is replaced in each place where it appears by financial institution.

    (3) In section HR 10(3), registered bank is replaced in each place where it appears by financial institution.

    (4) Section HR 10(4), other than its heading, is replaced by the following:

    • (4) In this section, unwind means a process, ignoring section HR 9, by which—

      • (a) guarantees and residential mortgage backed securities, as the case may be, described in the definition of financial institution special purpose vehicle, paragraph (d) are cancelled; and

      • (b) interests described in the definition of financial institution special purpose vehicle, paragraph (b) are transferred to the financial institution; and

      • (c) the vehicle is terminated, by liquidation or otherwise.

    (5) In section HR 10, in the list of defined terms,—

    • (a) registered bank and RMBS special purpose vehicle are omitted:

    • (b) financial institution and financial institution special purpose vehicle are inserted.

80 Transitional provisions for PIE rules
  • (1) In section HZ 5(3)(b), section 292(2) of this Act is replaced by section 292(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009.

    (2) Subsection (1) applies for the 2010–11 and later income years.

81 Restrictions relating to ring-fenced tax losses
  • (1) Section IA 7(2), other than the heading, is replaced by the following:

    • (2) The general rules do not apply in relation to a loss-attributing qualifying company (LAQC) to an amount that would have been a loss balance carried forward under section IA 3(4) if section HA 21 (Loss balances not carried forward) did not exist. The provisions that deal generally with these losses are sections HA 24 to HA 27. But this subsection does not apply to a pre-LAQC loss balance dealt with under section HA 24(5) to (5C) (Treatment of tax losses other than certain foreign losses).

    (2) Subsection (1) applies for the 2008–09 and later income years.

82 Common ownership: group of companies
  • (1) Section IC 3(3) and (4) are replaced by the following:

    Measuring common voting interests
    • (3) In subsection (1)(a), a person's common voting interest in the relevant companies at a particular time is the percentage of their voting interests under section YC 2 (Voting interests) in each of the companies at the time.

    Measuring common market value interests
    • (4) In subsection (1)(b), a person's common market value interest in the relevant companies at a particular time is the percentage of their market value interests under section YC 3 (Market value interests) in each of the companies at the time.

    Common interest percentages
    • (5) For the purposes of this section, in measuring a person's common voting interest or common market value interest in 2 or more companies at a particular time,—

      • (a) for percentages that are the same in relation to each company, the person's percentage interest at the time:

      • (b) for percentages that differ as between the companies, the lowest percentage interest in each company at the time.

    (2) Subsection (1) applies for the 2008–09 and later income years.

83 Bad debts or decline of value of shares
  • (1) Section IC 12(1), other than the heading, is replaced by the following:

    • (1) This section applies to companies that are part of a group of companies in a tax year when—

      • (a) a company (company C) in the group has in the tax year a deduction—

        • (i) under section DB 31 (Bad debts) for a loan to another company in the group:

        • (ii) for a decline in the value of shares in another company in the group; and

      • (b) a company (company A) in the group, other than company C, has a tax loss for the tax year that includes a tax loss component arising from a deduction—

        • (i) for expenditure funded by the loan referred to in paragraph (a)(i) or by the issue to company A of the shares referred to in paragraph (a)(ii); and

        • (ii) taken into account in calculating company A's tax loss for the 1993–94 tax year or a later tax year.

    (2) Section IC 12(2) is replaced by the following:

    Limitation on loss grouping
    • (2) The amount of company A's tax loss cannot be made available to another company in the group to use except to the extent to which the amount of the tax loss is more than the total amount of the deductions referred to in subsection (1)(a). To that extent, company A may choose to make the excess amount available to a group company to use under section IA 3(2) and IA 5 (which relate to using and carrying forward tax losses) if the requirements for grouping tax losses are met.

    (3) In section IC 12, in the list of defined terms, loan is inserted.

    (4) Subsections (1) and (2) apply for the 2008–09 and later income years.

84 Breach in tax year in which loss balance is grouped
  • (1) Section IP 5(2)(a) is replaced by the following:

    • (a) the amount of company A's loss balance carried forward to the tax year in which the breach occurred is not more than the amount of—

      • (i) company B's net income for the common span, if no company in the group other than company B has net income for the common span of more than zero; or

      • (ii) the total of the amounts of net income for the common span of companies in the group; and.

    (2) Subsection (1) applies for the 2008–09 and later income years.

85 Treatment of remaining credits
  • In section LA 5(4), section LE 2 is replaced by section LE 2, LE 2B,.

86 Child's income
  • (1) In section LC 3(1), in the words before paragraph (a), a person is replaced by a person other than an absentee.

    (2) In section LC 3, in the list of defined terms, absentee is inserted.

    (3) Subsection (1) applies for the 2008–09 and later income years.

87 Tax credits for housekeeping
  • (1) In section LC 6(1), in the words before paragraph (a), A person is replaced by A person, other than an absentee,.

    (2) In section LC 6, in the list of defined terms, absentee is inserted.

    (3) Subsection (1) applies for the 2008–09 and later income years.

88 Tax credits for supplementary dividends
  • (1) In section LP 2(2), in the formula, 24/53 is replaced by 54/119.

    (2) Subsection (1) applies for the 2011–12 and later income years.

89 Limitation on deductions
  • (1) In section LP 10(1), in the words before the formula, that is allocated to a tax year is replaced by for a tax year.

    (2) The formula in section LP 10(1) is replaced by the following:

     company's income    total credits + supplementary dividends 
     tax rate. 

    (3) In section LP 10(2),—

    • (a) in paragraph (b), company's total credits is replaced by total credits:

    • (b) in paragraph (c), supplementary amount is replaced by supplementary dividends.

    (4) Subsections (2) and (3)—

    • (a) apply for the 2008–09 and later income years, except if paragraph (b) applies:

    • (b) do not apply for a person and an income year after the 2007–08 income year in relation to a tax position for the income year taken by the person—

      • (i) before 19 November 2009; and

      • (ii) relying on the provision amended by this section as it was immediately before the amendment made by this section.

90 Tax credits for certain investors in portfolio tax rate entities
  • (1) In section LS 2(2), income tax paid is replaced by income tax liability satisfied.

    (2) In section LS 2, in the list of defined terms, pay is omitted.

    (3) Subsection (1) applies for the 2008–09 and later income years.

91 Tax credits for investors in multi-rate PIEs
  • (1) In section LS 2(2), income tax paid is replaced by income tax liability satisfied.

    (2) In section LS 2, in the list of defined terms, pay is omitted.

    (3) Subsection (1) applies for the 2010–11 and later income years.

92 Tax credits for certain zero-rated portfolio investors
  • (1) In section LS 3(2), income tax paid is replaced by income tax liability satisfied.

    (2) Subsection (1) applies for the 2008–09 and later income years.

93 Tax credits for zero-rated investors
  • (1) In section LS 3(2), income tax paid is replaced by income tax liability satisfied.

    (2) Subsection (1) applies for the 2010–11 and later income years.

94 Treatment of tax credits on permanent emigration
  • (1) In the heading to section MK 8, permanent emigration is replaced by permanent emigration other than to Australia.

    (2) In section MK 8(1), from New Zealand is replaced by from New Zealand to a place other than Australia.

    (3) In section MK 8(1), or an equivalent provision is replaced by for a KiwiSaver scheme or under a provision equivalent to that one for a complying superannuation fund.

95 ICA transfer from tax pooling account
  • (1) Section OB 6(1), other than the heading, is replaced by the following:

    • (1) An ICA company has an imputation credit for an amount representing an entitlement to funds held in a tax pooling account if the intermediary transfers the entitlement from another person to the company.

    (2) Section OB 6(3), other than the heading, is replaced by the following:

    • (3) The credit date is,—

      • (a) for an entitlement to funds that are transferred by the intermediary from the tax pooling account to the company's tax account with the Commissioner, the credit date under section RP 19 (Transfers from tax pooling accounts) for the amount transferred; or

      • (b) for an entitlement to funds that are refunded by the intermediary from the tax pooling account to the company, the date of the refund; or

      • (c) for an entitlement that is transferred by the intermediary from the company to another person, the date of the transfer.

    (3) Subsections (1) and (2) apply for the 2008–09 and later income years.

96 ICA attribution for personal services
97 ICA refund of income tax
  • (1) In section OB 32(2)(b), less than is replaced by less than or equal to.

    (2) Subsection (1) applies for the 2008–09 and later income years.

98 ICA refund from tax pooling account
  • (1) Section OB 34(1), other than the heading, is replaced by the following:

    • (1) This section applies for an ICA company when—

      • (a) the company has an entitlement to an amount in a tax pooling account and has an imputation credit for the entitlement under—

        • (i) section OB 5 (table O1: imputation credits, row 3 (deposit in tax pooling account)); or

        • (ii) section OB 6 (table O1: imputation credits, row 4 (transfer from tax pooling account)); and

      • (b) the intermediary refunds the amount from the tax pooling account to the company.

    (2) In section OB 34(4)(b), refund or transfer is replaced by refund in both places that it occurs.

    (3) In section OB 34(5), refund or transfer is replaced by refund.

    (4) In section OB 34, in the list of defined terms, tax pooling account is inserted.

    (5) Subsections (1) to (3) apply for the 2008–09 and later income years.

99 ICA transfer within tax pooling account
  • (1) Section OB 35(1), other than the heading, is replaced by the following:

    • (1) This section applies for an ICA company when—

      • (a) the company has an entitlement to an amount in a tax pooling account and has an imputation credit for the entitlement under—

        • (i) section OB 5 (table O1: imputation credits, row 3 (deposit in tax pooling account)); or

        • (ii) section OB 6 (table O1: imputation credits, row 4 (transfer from tax pooling account)); and

      • (b) the intermediary transfers the entitlement from the company to another person.

    (2) In section OB 35(5), refund is replaced by transfer.

    (3) Subsections (1) and (2) apply for the 2008–09 and later income years.

100 Imputation additional tax on leaving wholly-owned group
  • (1) After section OB 71(1), the following is inserted:

    Sources of liability
    • (1B) Company A is liable for imputation additional tax under—

      • (a) subsection (2), if the company has a debit balance in the imputation credit account when the ultimate owner of the company changes:

      • (b) subsection (4), if the company has an amount of excess entitlement under subsection (5) when the ultimate owner of the company changes.

    (2) The heading to section OB 71(2) is replaced by the following: Liability arising from debit balance.

    (3) Section OB 71(4) is replaced by the following:

    Liability arising from excess entitlement
    • (4) Company A is liable for an amount of imputation additional tax equal to the amount of the excess entitlement described in subsection (5) reduced, to no less than zero, by the amount of any payment that Company A—

      • (a) made as provisional tax or income tax; and

      • (b) chooses to treat as having been paid by company B.

    (4) In section OB 71(6), subsection (2) is replaced by subsections (2) and (4).

101 Imputation additional tax on joining wholly-owned group
  • (1) In section OB 72(1)(a), ; or is replaced by :.

    (2) Section OB 72(5), other than the heading, is replaced by the following:

    • (5) The company is liable for an amount of imputation additional tax, equal to the excess entitlement determined under subsection (6), if a group of people hold common voting interests in the new group that exceed by 67% or more the common voting interests in the former group that are held by the same people immediately before the company joins the new group.

    Possible liability under section OB 72B
    • (5B) The company is liable for an amount of imputation additional tax given by section OB 72B(8) if the requirements of that provision are met.

    (3) Section OB 72(6)(a) to (c) are replaced by the following:

    • (a) zero, if the credit balance of the company's imputation credit account at the time is equal to or more than the amount (the total refundable amount) that is the total of the following:

      • (i) the amount in the tax pooling account provided by or for the benefit of the company that is more than the company's liability to pay income tax or provisional tax at the time:

      • (ii) the amount of the refund to which the company is entitled under sections RM 2 and RM 4 to RM 6 (which relate to refunds of excess tax), other than an amount affected by a restriction under section OB 72B(5); or

    • (b) the total refundable amount, if there is no credit balance in the company's imputation credit account at the time; or

    • (c) the excess of the total refundable amount over the credit balance in the company's imputation credit account at the time, if paragraph (b) does not apply.

102 New section OB 72B inserted
  • After section OB 72, the following is inserted:

    OB 72B Limit on using entitlement to refund after joining wholly-owned group
    • When this section applies

      (1) This section applies when—

      • (a) an ICA company joins a wholly-owned group of companies (the new group) from another wholly-owned group of companies (the former group); and

      • (b) the ICA company is not liable for imputation additional tax under section OB 72(5).

      Restricted refund amount for company and new group

      (2) Subsections (3) to (8) apply to an amount (the restricted refund amount) for the ICA company and the new group that is greater than zero and calculated using the formula—

       refund amountICA credit balance. 
      Definition of items in formula

      (3) In the formula,—

      • (a) refund amount is the total of the following amounts, determined immediately before the ICA company joins the new group:

        • (i) the amount in the tax pooling account provided by or for the benefit of the ICA company that is more than the company's liability to pay income tax or provisional tax at the time:

        • (ii) the amount of the refund to which the ICA company is entitled under sections RM 2 and RM 4 to RM 6 (which relate to refunds of excess tax) other than an amount affected by a restriction under subsection (5) for the company and another group:

      • (b) ICA credit balance is the credit balance of the ICA company's imputation credit account immediately before the company joins the new group.

      Payment to Commissioner

      (4) If the restricted refund amount is greater than the amount referred to in subsection (3)(a)(ii), the ICA company must pay to the Commissioner an amount equal to the excess and the Commissioner must hold the amount with the balance of the restricted refund amount as if the excess were a refund to which the company were entitled under section RM 2 (Refunds for overpaid tax).

      Use of restricted refund amount

      (5) The Commissioner must hold the restricted refund amount for the ICA company and the new group subject to the restriction that the amount—

      • (a) may be refunded for an imputation credit only if the ICA company satisfies the Commissioner that the credit—

        • (i) arises from taxation paid by the ICA company or by a company that is in the same wholly-owned group as the ICA company and was in the former group immediately before the ICA company joined the new group:

        • (ii) is attached to a dividend received in relation to a shareholding by the ICA company or by a company that is in the same wholly-owned group as the ICA company and was in the former group immediately before the ICA company joined the new group and had the shareholding then; and

      • (b) may be used to satisfy a tax liability of—

        • (i) the ICA company:

        • (ii) a company that is in the same wholly-owned group as the ICA company (the member), if the ICA company satisfies the Commissioner that the member was in the former group immediately before the ICA company joined the new group.

      Restriction additional to other requirements

      (6) The restriction imposed by subsection (5) on the use of a restricted refund amount is in addition to the requirements under other provisions of the Act for a refund or the satisfaction of a tax liability from an amount to which the ICA company is entitled under sections RM 2 and RM 4 to RM 6.

      Reducing restricted refund amount

      (7) The restricted refund amount for the ICA company and a group is reduced by the amount of—

      • (a) a refund permitted under subsection (5)(a) relating to the restricted refund amount:

      • (b) a satisfaction of a tax liability permitted by subsection (5)(b) relating to the restricted refund amount:

      • (c) a payment of imputation additional tax under subsection (8) relating to the restricted refund amount:

      • (d) a payment of imputation additional tax under section OB 71(4) relating to the restricted refund amount.

      Liability for imputation additional tax

      (8) The ICA company is liable for an amount of imputation additional tax equal to the restricted refund amount for the company and a wholly-owned group of companies (the old group) determined immediately after a change in the holding of voting interests in the ICA company if, immediately after the change, a group of people hold common voting interests in the ICA company that exceed, by 67% or more, the common voting interests—

      • (a) in the wholly-owned group of companies to which the company belonged immediately before the company joined the old group; and

      • (b) that were held by the same people immediately before the company joined the old group.

      Defined in this Act: Commissioner, common voting interest, company, dividend, ICA company, imputation additional tax, imputation credit, income tax, provisional tax, tax pooling account, wholly-owned group of companies.

103 New heading and section OE 11B inserted
  • (1) After section OE 11, the following is inserted:

    Treatment of debits from conduit relief

    OE 11B Company with debit balance, including debits from conduit relief, in some income years
    • When this section applies

      (1) This section applies when a BETA company, in an income year beginning on or after 1 July 2009 (an affected year), has a debit balance—

      • (a) in its branch equivalent tax account; and

      • (b) that includes an amount (the CTR-relief amount) equal to the total of amounts that—

        • (i) relate to branch equivalent tax debits in the branch equivalent tax account that each arose under section OE 12 in relation to a foreign dividend; and

        • (ii) equal, for each branch equivalent tax debit, the reduction under section RG 7 (Reduction of payments for conduit tax relief) of the company's liability to pay FDP to the Commissioner for the foreign dividend.

      Use of CTR-relief amount

      (2) The BETA company may not choose under section OE 7 to apply the CTR-relief amount to satisfy an income tax liability except by an election—

      • (a) relating to attributed CFC income that the company allocates to an income year beginning before 1 July 2009; and

      • (b) made before the earlier of—

        • (i) the first election under section OE 7 relating to attributed CFC income that the company allocates to an affected year:

        • (ii) the end of the first affected year.

      Determination of CTR-relief amount

      (3) The CTR-relief amount in a branch equivalent tax account is found by—

      • (a) treating a branch equivalent tax debit that arises partly from a reduction of FDP under section RG 7 and partly from a payment of FDP as being 2 debits, one equal to the reduction of FDP and the other equal to the amount of the payment of FDP; and

      • (b) if a branch equivalent tax credit arises before the first affected year other than from an election relating to attributed CFC income allocated to an affected year or arises in an affected year from an election meeting the requirements of the exception to subsection (2), treating the credit as—

        • (i) reducing branch equivalent tax debits in the order in which the debits arise; and

        • (ii) for branch equivalent tax debits arising at the same time and not reduced to zero by the credit, reducing each debit in proportion to the contribution of the debit to the total of the debits; and

      • (c) if the treatment of a branch equivalent tax credit is not given by paragraph (b), treating the credit as—

        • (i) reducing branch equivalent tax debits arising from the payment of FDP in the order in which the debits arise; and

        • (ii) after all branch equivalent tax debits arising from the payment of FDP are reduced to zero, reducing debits arising from a reduction of FDP under section RG 7 in the order in which the debits arise; and

        • (iii) for branch equivalent tax debits subject to the same subparagraph and arising at the same time and not reduced to zero by the credit, reducing each debit in proportion to the contribution of the debit to the total of the debits; and

      • (d) counting an amount of a branch equivalent tax credit only once in the reduction of some or all of a branch equivalent tax debit.

      Defined in this Act: attributed CFC income, BETA company, branch equivalent tax account, branch equivalent tax credit, branch equivalent tax debit, Commissioner, company, FDP, foreign dividend, income tax liability, income year.

    (2) Subsection (1) applies for income years beginning on or after 1 July 2009.

104 Heading and section OE 16B repealed
105 When credits and debits arise only in consolidated imputation group accounts
  • In section OP 5(4)(d), transfer to tax pooling account is replaced by transfer within tax pooling account.

106 Consolidated ICA transfer from tax pooling account
  • (1) Section OP 9(1), other than the heading, is replaced by the following:

    • (1) A consolidated imputation group has an imputation credit for an amount representing an entitlement to funds held in a tax pooling account if the intermediary transfers the entitlement from another person to the group.

    (2) Section OP 9(3), other than the heading, is replaced by the following:

    • (3) The credit date is,—

      • (a) for an entitlement to funds that are transferred by the intermediary from the tax pooling account to the group's tax account with the Commissioner, the credit date under section RP 19 (Transfers from tax pooling accounts) for the amount transferred; or

      • (b) for an entitlement to funds that are refunded by the intermediary from the tax pooling account to the group, the date of the refund; or

      • (c) for an entitlement that is transferred by the intermediary from the group to another person, the date of the transfer.

    (3) Subsections (1) and (2) apply for the 2008–09 and later income years.

107 Consolidated ICA refund from tax pooling account
  • (1) Section OP 32(1), other than the heading, is replaced by the following:

    • (1) This section applies for a consolidated imputation group when—

      • (a) the group has an entitlement to an amount in a tax pooling account and has an imputation credit for the entitlement under sections OP 8 and OP 9; and

      • (b) the intermediary refunds the amount from the tax pooling account to the group.

    (2) Subsection (1) applies for the 2008–09 and later income years.

108 Consolidated ICA transfer to tax pooling account
  • (1) The heading to section OP 33 is replaced by Consolidated ICA transfer within tax pooling account.

    (2) Section OP 33(1), other than the heading, is replaced by the following:

    • (1) This section applies for a consolidated imputation group when—

      • (a) the group has an entitlement to an amount in a tax pooling account and has an imputation credit for the entitlement under sections OP 8 and OP 9; and

      • (b) the intermediary transfers the entitlement from the group to another person.

    (3) In section OP 33(4)(b), refund is replaced by transfer in both places that it occurs.

    (4) Subsections (2) and (3) apply for the 2008–09 and later income years.

109 New heading and section OP 104B inserted
  • (1) After section OP 104, the following is inserted:

    Treatment by consolidated BETA groups of BETA debits from conduit relief

    OP 104B Consolidated BETA group with debit balance, including debits from conduit relief, in certain income years
    • When this section applies

      (1) This section applies when a consolidated BETA group, in an income year beginning on or after 1 July 2009 (an affected year), has a debit balance—

      • (a) in its branch equivalent tax account; and

      • (b) that includes an amount (the CTR-relief amount) equal to the total of amounts that—

        • (i) relate to branch equivalent tax debits in the branch equivalent tax account that each arose under section OP 105 in relation to a foreign dividend; and

        • (ii) equal, for each branch equivalent tax debit, the reduction under section RG 7 (Reduction of payments for conduit tax relief) of a company's liability to pay FDP to the Commissioner for the foreign dividend.

      Use of CTR-relief amount

      (2) The consolidated BETA group may not choose under section OP 101 to apply the CTR-relief amount to satisfy an income tax liability except by an election—

      • (a) relating to attributed CFC income that the consolidated BETA group allocates to an income year beginning before 1 July 2009; and

      • (b) made before the earlier of—

        • (i) the first election under section OP 101 relating to attributed CFC income that the group allocates to an affected year:

        • (ii) the end of the first affected year.

      Determination of CTR-relief amount

      (3) The CTR-relief amount in a branch equivalent tax account is found by—

      • (a) treating a branch equivalent tax debit that arises partly from a reduction of FDP under section RG 7 and partly from a payment of FDP as being 2 debits, one equal to the reduction of FDP and the other equal to the amount of the payment of FDP; and

      • (b) if a branch equivalent tax credit arises before the first affected year other than from an election relating to attributed CFC income allocated to an affected year or arises in an affected year from an election meeting the requirements of the exception to subsection (2), treating the credit as—

        • (i) reducing branch equivalent tax debits in the order in which the debits arise; and

        • (ii) for branch equivalent tax debits arising at the same time and not reduced to zero by the credit, reducing each debit in proportion to the contribution of the debit to the total of the debits; and

      • (c) if the treatment of a branch equivalent tax credit is not given by paragraph (b), treating the credit as—

        • (i) reducing branch equivalent tax debits arising from the payment of FDP in the order in which the debits arise; and

        • (ii) after all branch equivalent tax debits arising from the payment of FDP are reduced to zero, reducing debits arising from a reduction of FDP under section RG 7 in the order in which the debits arise; and

        • (iii) for branch equivalent tax debits subject to the same subparagraph and arising at the same time and not reduced to zero by the credit, reducing each debit in proportion to the contribution of the debit to the total of the debits; and

      • (d) counting an amount of a branch equivalent tax credit only once in the reduction of some or all of a branch equivalent tax debit.

      Defined in this Act: attributed CFC income, branch equivalent tax account, branch equivalent tax credit, branch equivalent tax debit, Commissioner, company, consolidated BETA group, FDP, foreign dividend, income tax liability, income year.

    (2) Subsection (1) applies for income years beginning on or after 1 July 2009.

110 Heading and section OP 108B repealed
111 Tax credits for non-resident investors
112 Payment dates for terminal tax
  • (1) In section RA 13(2)(a)(i), subsection (3) is replaced by subsection (4).

    (2) Subsection (1) applies for the 2008–09 and later income years.

113 Alternate rate option
114 Heading and section RD 72 repealed
115 Interest
  • (1) In section RE 12(5), in the subsection heading, income year is replaced by tax year.

    (2) Section RE 12(5)(a) is replaced by the following:

    • (a) the payment of resident passive income that consists of interest is made in the 2010–11 tax year to—

      • (i) a portfolio investment entity; or

      • (ii) a company that is not a trustee or a Maori authority; and.

    (3) In section RE 12, in the list of defined terms, Maori authority and trustee are inserted.

116 Payments made by RWT proxies
  • (1) In section RE 18(2)(a), schedule 1, part D, clause 2 is replaced by schedule 1, part D, clause 3.

    (2) Subsection (1) applies for the 2008–09 and later income years.

117 Definitions
  • (1) This section amends section YA 1.

    (2) In the definition of amount of tax, means is replaced by includes.

    (3) After the definition of Australian approved deposit fund, the following is inserted:

    Australian complying superannuation scheme means an entity that is a complying superannuation fund for the purposes of Part 5, Division 2 of the Superannuation Industry (Supervision) Act 1993 (Aust) and that is regulated by the Australian Prudential Regulation Authority.

    (4) In the definition of charitable or other public benefit gift, for the purposes of sections LD 1 to LD 3 (which relate to tax credits for charitable or other public benefit gifts) is omitted.

    (5) In the definition of child, in the words before paragraph (a), between a man and a woman is omitted.

    (6) After the definition of financial assistance, the following is inserted:

    financial institution means a registered bank or an entity subject to the Deposit Takers (Credit Ratings) Regulations 2009 that must use IFRSs to prepare financial statements and to which section 15 of the Financial Reporting Act 1993 applies

    financial institution special purpose vehicle means a company or a trustee of a trust that, ignoring section HR 9,––

    • (a) derives no exempt income; and

    • (b) has all of its financial arrangements that are its assets treated as a financial institution's financial arrangements for financial reporting purposes, but ignoring any current account balance that is incidental to the company's or trustees' sole purpose described in paragraph (e); and

    • (c) receives only funds that are–––

      • (i) in respect of financial arrangements described in paragraph (b):

      • (ii) incidental to the company's or trustees' sole purpose described in paragraph (e); and

    • (d) either––

      • (i) operates to guarantee liabilities of the financial institution or of a company, incorporated in and resident in New Zealand, that is a member of a wholly-owned group of companies which includes the financial institution; or

      • (ii) operates in respect of the company's or trustees' issue of residential mortgage backed securities; and

    • (e) has interests in financial arrangements only for the sole purpose of carrying out the company's or trustees' operations described in paragraph (d)(i) or (ii); and

    • (f) has financial statements that are prepared using IFRSs and are audited.

    (7) After the definition of fishing business, the following is inserted:

    fishing quota emissions unit means an emissions unit—

    • (a) transferred, under an allocation plan made under section 74 of the Climate Change Response Act 2002, to a person as an owner of individual transferable quota as defined in section 2 of the Fisheries Act 1996; and

    • (b) held continuously by the person since the issue.

    (8) In the definition of foreign non-dividend income, in paragraph (b), dividends is replaced by dividends; and, and the following is added:

    • (c) not FIF income calculated under the fair dividend rate method.

    (9) The definition of forest land emissions unit is replaced by the following:

    forest land emissions unit means a pre-1990 forest land emissions unit, a post-1989 forest land emissions unit, or a forest sink emissions unit

    forest sink emissions unit means an emissions unit issued to a person in relation to a forest sink covenant under section 67Y of the Forests Act 1949 entered by the person.

    (10) The definition of general insurance contract is repealed.

    (11) The definition of government screen production payment is repealed.

    (12) In the definition of honorarium, and schedule 4, part B (Rates of tax for schedular payments) is omitted.

    (13) In the definition of land investment company, in paragraph (a), portfolio investment entity: is replaced by portfolio investment entity; and.

    (14) After the definition of LAQC, the following is inserted:

    large budget film grant means a payment that—

    • (a) is in the nature of a large budget screen production grant or post-production digital and visual effects grant; and

    • (b) is made in relation to a film or television production; and

    • (c) is authorised by the New Zealand Film Commission in relation to a company that—

      • (i) is resident in New Zealand:

      • (ii) has a permanent establishment in New Zealand.

    (15) After the definition of limited attribution company, the following is inserted:

    limited non-transaction shares is defined in section CD 34B (Distributions to members of co-operative companies).

    (16) In the definition of member, paragraph (b) is repealed.

    (17) In the definition of member credit contribution, after paragraph (a)(iii), the following is added:

    • (iv) a superannuation contribution that was transferred from an Australian complying superannuation scheme and contributed to a KiwiSaver scheme:.

    (18) In the definition of non-Kyoto greenhouse gas unit, in paragraph (a), human induced is replaced by human-induced.

    (19) The definition of post-1989 forest land emissions unit is replaced by the following:

    post-1989 forest land emissions unit, for a person, means an emissions unit transferred under section 64 of the Climate Change Response Act 2002 for growing trees on post-1989 forest land—

    • (a) to the person and held continuously by the person from the transfer:

    • (b) to another person (the recipient), who at the time of the transfer is a party to a forestry rights agreement as defined in the Forestry Rights Registration Act 1983 with the person, and—

      • (i) transferred by the recipient to the person, under a provision of the forestry rights agreement relating to the allocation of income or emissions units between the recipient and the person; and

      • (ii) held continuously by the person from the transfer by the recipient.

    (20) The definition of pre-1990 forest land emissions unit is replaced by the following:

    pre-1990 forest land emissions unit, for a person, means an emissions unit transferred under Part 4, subpart 2 of the Climate Change Response Act 2002 in relation to pre-1990 forest land—

    • (a) to the person and held continuously by the person from the transfer:

    • (b) to another person (the appointee), as a person appointed under section 73 of that Act, and—

      • (i) transferred by the appointee to the person, as a future owner of the pre-1990 forest land at the time of the transfer to the appointee; and

      • (ii) held continuously by the person from the transfer by the appointee:

    • (c) to another person (the recipient), who at the time of the transfer is a party to a forestry rights agreement as defined in the Forestry Rights Registration Act 1983 with the person, and—

      • (i) transferred by the recipient to the person, under a provision of the forestry rights agreement relating to the allocation of income or emissions units between the recipient and the person; and

      • (ii) held continuously by the person from the transfer by the recipient.

    (21) After the definition of profit-sharing arrangement, the following is inserted:

    projected transactions shareholding is defined in section CD 34B (Distributions to members of co-operative companies).

    (22) In the definition of replacement forest land emissions unit,—

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

      • (a) the person has previously disposed of a post-1989 forest land emissions unit or forest sink emissions unit other than by—

        • (i) surrender under the Climate Change Response Act 2002:

        • (ii) transfer to the Crown under a forest sink covenant under section 67Y of the Forests Act 1949; and:

    • (b) in paragraph (b), post-1989 forest land emissions unit is replaced by post-1989 forest land emissions unit or forest sink emissions unit.

    (23) In the definition of revenue account property, in paragraph (b), property that would produce income for the person if they disposed of it is replaced by property for which an amount derived by the person from its disposal would be income.

    (24) In the definition of revenue account property, in paragraph (b), if disposed of is replaced by if disposed of for valuable consideration.

    (25) The definition of RMBS special purpose vehicle is repealed.

    (26) In the definition of savings product policy, in paragraph (b), portion of a policyholder's premiums is replaced by some or all of a policyholder's premiums relating to life risk.

    (27) The definition of significant financial hardship is repealed.

    (28) In the definition of trading stock,—

    • (a) in paragraph (b), EB 24 (Apportionment on disposal of business assets that include trading stock), is inserted after CG 6 (Receipts from insurance, indemnity, or compensation for trading stock),:

    • (b) in paragraph (c), GC 1(3) is replaced by GC 1(4).

    (29) After the definition of trading stock, the following is inserted:

    trading transactions is defined in section CD 34B (Distributions to members of co-operative companies)

    transaction shares is defined in section CD 34B (Distributions to members of co-operative companies).

    (30) In the definition of trust rules, paragraph (a) is repealed.

    (31) In the definition of unwind, RMBS is replaced by financial institution.

    (32) The definition of withdrawal is repealed.

    (33) Subsections (2), (5), (8), (23), and (28) apply for the 2008–09 and later income years.

    (34) Subsection (13) applies for the 2010–11 and later income years.

    (35) Subsection (26) applies––

    • (a) on and after 1 July 2010, except if paragraph (b) applies:

    • (b) for an income year that includes 1 July 2010 and later income years, if the life insurer chooses to apply the new life insurance rules in the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 in a return of income for the tax year corresponding to the first relevant income year.

118 General rules for currency conversion
  • (1) After section YF 1(3), the following is added:

    General conversion rates and calculation methods approved by Commissioner
    • (5) Despite subsection (2), the amount may be converted into New Zealand currency by applying a rate—

      • (a) set by the Commissioner for general use for the purposes of this section:

      • (b) calculated using a method approved by the Commissioner for general use for the purposes of this section.

    Specific conversion rates and calculation methods approved by Commissioner
    • (6) Despite subsection (2), a person may convert the amount into New Zealand currency by applying a rate—

      • (a) approved by the Commissioner for use in the circumstances of the person:

      • (b) calculated using a method approved by the Commissioner for use in the circumstances of the person.

    (2) Subsection (1) applies for the 2008–09 and later income years.

119 New section YF 2 added
  • (1) After section YF 1, the following is added:

    YF 2 Other rules for currency conversion: approved alternatives
    • When this section applies

      (1) This section applies when—

      • (a) a provision other than section YF 1 provides a rate or method for currency conversion; and

      • (b) for the purposes of the provision, a person is required to convert an amount expressed in a currency other than New Zealand currency.

      Representative rates

      (2) The Commissioner may set a representative conversion rate that the person may use, instead of the rate or method referred to in subsection (1)(a), in converting the amount into New Zealand currency.

      Defined in this Act: amount, Commissioner, New Zealand.

    (2) Subsection (1) applies for the 2008–09 and later income years.

120 Schedule 1—Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits
  • (1) In schedule 1, part D, table 2, the row set out in schedule 1, part 1 of this Act is inserted after row 3.

    (2) Schedule 1, part D, clause 4 is replaced by the following:

    4 Interest: most companies
    • The payment rate for a payment of resident passive income that consists of interest is set out in table 3 if the recipient of the payment is a company that is not a trustee or a Maori authority. However, this restriction does not apply if the trustee is a portfolio investment entity.

    (3) Schedule 1, part D, table 3 is replaced by the table set out in schedule 1, part 2 of this Act.

121 Schedule 4––Rates of tax for schedular payments
  • (1) In the heading to schedule 4, part B, or honoraria is replaced by honoraria, and other payments.

    (2) After schedule 4, part B, clause 1, the following is inserted:

    • 1B A payment has a 0.33 rate of tax for each dollar of the payment, if it is for work or services performed by––

      • (a) a local government elected representative:

      • (b) an official of a community organisation, society, or club:

      • (c) a chair or member of a committee, board, or council:

      • (d) an official, chair, or member of a body or organisation similar to one described in paragraph (b) or (c).

    (3) In schedule 4, part C, clause 2, the definition of cultivation contract work is replaced by the following:

    cultivation contract work—

    • (a) means work or services provided under a contract or arrangement—

      • (i) for the supply of labour, or substantially for the supply of labour; and

      • (ii) on or in connection with land that is used or intended to be used for the cultivation of fruit crops, vegetables, orchards, or vineyards:

    • (b) excludes work or services provided by—

      • (i) a post-harvest facility:

      • (ii) a management entity under a formal management agreement under which the entity is responsible for payment for the work or services provided.

    (4) Subsection (2) applies to a payment for work and services made in the 2008–09 and later income years, other than a payment––

    • (a) for work or services performed before the day that this Act receives the Royal assent; and

    • (b) from which the payer is not obliged to withhold an amount of tax, ignoring subsection (2).

122 Schedule 6—Prescribed rates: PIE investments and retirement scheme contributions
123 Schedule 29—Portfolio investment entities: listed investors
  • (1) After schedule 29, part A, item 8, the following is added:

    • 9 A community trust.

    (2) Schedule 29, part B, item 4 is repealed.

    (3) Subsections (1) and (2) apply for the 2010–11 and later income years.

124 Schedule 32—Recipients of charitable or other public benefit gifts
  • (1) In schedule 32, Cure Kids is inserted before the entry for Cyclone Ofa Relief Fund.

    (2) Subsection (1) applies for the 2010–11 and later tax years.

Part 3
Amendments to Tax Administration Act 1994

125 Tax Administration Act 1994
126 Interpretation
  • (1) This section amends section 3(1) of the Tax Administration Act 1994.

    (2) After the definition of Commissioner-set instalment date, the following is inserted:

    Commissioner's official opinion

    • (a) means, for a taxpayer,––

      • (i) an opinion of the Commissioner concerning the tax affairs of the taxpayer, given by the Commissioner, either orally or in writing, after all information relevant to forming the opinion has been provided to the Commissioner, if that information is correct:

      • (ii) a finalised official statement of the Commissioner, in writing, if it specifically applies to the taxpayer's situation:

    • (b) does not include a private binding ruling.

    (3) After the definition of government agency, the following is inserted:

    government screen production payment means a payment that—

    • (a) is in the nature of a large budget screen production grant, post-production digital and visual effects grant, or New Zealand screen production incentive; and

    • (b) is authorised by the New Zealand Film Commission in relation to a company that—

      • (i) is resident in New Zealand:

      • (ii) has a permanent establishment in New Zealand.

    (4) After the definition of proceedings, the following is inserted:

    promoter is defined in section 141EC.

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

    proscribed question means—

    • (a) whether a fact is correct or exists:

    • (b) what is a person’s purpose or intention, for the purpose of any provision of the Income Tax Act 2007 that expressly refers to a person's purpose or intention:

    • (c) what is the value of a thing:

    • (d) what is commercially acceptable practice, for the purposes of any provision of that Act that expressly refers to commercially acceptable practice.

    (6) After the definition of RWT exemption certificate, the following is inserted:

    RWT rate, for a person and resident passive income, means the basic rate for RWT given by the Income Tax Act 2007, in schedule 1, part D, for the person and the resident passive income.

127 Exemption certificates for schedular payments
  • (1) Section 24M(5) is replaced by the following:

    • (5) A person must not alter an exemption certificate.

    • (6) A person must not use an exemption certificate that is not in force, or has been altered, to cause a person to refrain from withholding an amount of tax from a schedular payment.

    (2) Subsection (1) applies for the 2008–09 and later income years.

128 Special tax rate certificates for schedular payments
  • (1) Section 24N(5) is replaced by the following:

    • (5) A person must not alter a special tax rate certificate.

    • (6) A person must not use a special tax rate certificate that is not in force, or has been altered, to cause a person to refrain from withholding an amount of tax from a schedular payment.

    (2) Subsection (1) applies for the 2008–09 and later income years.

129 Use of inconsistent RWT rates
  • (1) Section 25A(1) is replaced by the following:

    • (1) This section applies when the Commissioner considers that a person who receives a payment of resident passive income consisting of interest has had tax withheld at an RWT rate that is inconsistent with their marginal tax rate.

    (2) Subsection (1) applies for the 2010–11 income year.

130 RWT withholding certificates
  • (1) In section 25(6)(a), applies: is replaced by applies; and.

    (2) In section 25(6)(b), withheld: is replaced by withheld; and.

    (3) In section 25(6)(c), withheld: is replaced by withheld; and.

    (4) Section 25(6)(d) is replaced by the following:

    • (d) the rate for the resident passive income—

      • (i) found by dividing the total amount of RWT withheld by the amount of resident passive income:

      • (ii) at which RWT would have been withheld if the resident passive income had been paid or derived at the end of the relevant tax year:

      • (iii) at which RWT was withheld during the relevant tax year, together with, if more than 1 RWT rate applied for the resident passive income, the amount to which each rate applied and the amount withheld at each rate.

    (5) Subsection (4) applies for the 2010–11 and later tax years.

131 Portfolio tax rate entity to give statement to investors and request information
  • In section 31B(2B)(a), portfolio exit period is replaced by portfolio investor exit period.

132 Section 32B repealed
133 Section 32C repealed
134 Particulars furnished in electronic format
  • In section 36C(1), sections 35, 36, 36A, 36B, 36BB, or 36BC is replaced by section 35, 36, 36A, 36AB, 36B, 36BB, or 36BC.

135 General requirements for returns
  • In section 40(2)(a), either sections 36, 36A, or 36B is replaced by section 35, 36, 36A, 36AB, 36B, 36BB, 36BC, or 36E.

136 Returns by persons with tax credits for housekeeping payments and charitable or other public benefit gifts
  • (1) In section 41A(5)(a), section LC 7 is replaced by section LC 6.

    (2) Subsection (1) applies for the 2008–09 and later income years.

137 RWT withholding reconciliation statements
  • (1) Section 51(2)(g) is repealed.

    (2) Subsection (1) applies for the 2010–11 and later tax years.

138 Disclosure of interest payments when no requirement to withhold RWT
  • (1) In section 52(a), for which RWT is required is replaced by for which RWT is not required.

    (2) Subsection (1) applies for the 2008–09 and later income years.

139 Determinations in relation to financial arrangements
  • In section 90(7),—

    • (a) in the Gazette is omitted:

    • (b) determination or notice, is replaced by determination or notice, in a publication chosen by the Commissioner and.

140 Notification of determinations and notices
  • In section 90AD(1),—

    • (a) in the Gazette is omitted:

    • (b) determination or notice is made is replaced by determination or notice is made, in a publication chosen by the Commissioner.

141 Determinations in relation to apportionment of interest costs
  • In section 90A(7),—

    • (a) in the Gazette is omitted:

    • (b) determination or notice, is replaced by determination or notice, in a publication chosen by the Commissioner and.

142 Determinations in relation to standard-cost household service
  • In section 91AA(6),—

    • (a) in the Gazette is omitted:

    • (b) making of the determination is replaced by making of the determination, in a publication chosen by the Commissioner.

143 Determinations relating to types and diminishing values of listed horticultural plants
  • In section 91AAB(6), the Gazette is replaced by a publication chosen by the Commissioner.

144 Publication and revocation of determinations relating to livestock
  • (1) In section 91AAE(1),—

    • (a) in the Gazette is omitted:

    • (b) the Commissioner is replaced by the Commissioner, in a publication chosen by the Commissioner.

    (2) In section 91AAE(2), in the Gazette is omitted.

145 Commissioner may decline to issue special rate or provisional rate
  • (1) Section 91AAH(2)(a) is replaced by the following:

    • (a) the difference between the economic rate already applicable to the item and an appropriate special rate would be less than 50% of the difference between the already applicable economic rate and the next higher or lower rate, as applicable, in—

      • (i) schedule 11 of the Income Tax Act 2007, if the item is acquired on or after 1 April 2005; or

      • (ii) schedule 12 of that Act, if the item is acquired before 1 April 2005; or.

    (2) Section 91AAH(3)(ab) is replaced by the following:

    • (ab) if a default rate applies to the item, the difference between the default rate and the provisional rate would be less than 50% of the difference between the default rate and the next higher or lower rate, as applicable, in—

      • (i) schedule 11 of the Income Tax Act 2007, if the item is acquired on or after 1 April 2005; or

      • (ii) schedule 12 of that Act, if the item is acquired before 1 April 2005; or.

    (3) Subsections (1) and (2) apply for the 2008–09 and later income years.

146 Notice of setting of economic rate
  • In section 91AAK, the Gazette is replaced by a publication chosen by the Commissioner.

147 Applications for determinations
  • In section 91AAM(4), the Gazette is replaced by a publication chosen by the Commissioner.

148 Determinations on rates for diminishing value of environmental expenditure
  • In section 91AAN(9),the Gazette is replaced by a publication chosen by the Commissioner.

149 Determination on type of interest in FIF and use of fair dividend rate method
  • (1) In section 91AAO(2)(b)(i), fixed-return foreign equity is replaced by fixed-rate foreign equity.

    (2) In section 91AAO(5)(a),—

    • (a) in the Gazette is omitted:

    • (b) date of the determination is replaced by date of the determination, in a publication chosen by the Commissioner.

150 Determination on insurer as non-attributing active CFC
  • In section 91AAQ(8), the Gazette is replaced by a publication chosen by the Commissioner.

151 Determination relating to eligible relocation expenses
  • In section 91AAR(6), the Gazette is replaced by a publication chosen by the Commissioner.

152 Content and notification of a public ruling
  • In section 91DA(2), the Gazette is replaced by a publication chosen by the Commissioner.

153 Withdrawal of a public ruling
  • In section 91DE(2), the Gazette is replaced by a publication chosen by the Commissioner.

154 Commissioner to make private rulings on request
  • (1) In section 91E(3)(b), matter on which the ruling is sought is is replaced by arrangement on which the ruling is sought, or a separately identifiable part of that arrangement, is substantially the same as an arrangement which is.

    (2) In section 91E(4)(a), questions of fact is replaced by a proscribed question.

    (3) Section 91E(4)(ga) is replaced by the following:

    • (ga) the application is for a ruling in respect of a tax type or a separately identifiable issue, for an arrangement, that is the subject of a notice of proposed adjustment for the arrangement; or.

    (4) In section 91E(4)(j), or to form an opinion as to a commercially acceptable practice is omitted.

155 Effect of a private ruling
  • (1) In section 91EA(1)(a), an arrangement is replaced by an arrangement and a tax type for an arrangement.

    (2) In section 91EA(1)(b), taxation law is replaced by taxation law for the tax type.

    (3) In section 91EA(1), in the words after the paragraphs, the person and the arrangement is replaced by the person, the tax type, and the arrangement.

156 Application of a private ruling
  • (1) In section 91EB(1), in the words before the paragraphs, taxation law is replaced by taxation law for a tax type.

    (2) In section 91EB(2), in the words before the paragraphs an arrangement if is replaced by a tax type for an arrangement, to the extent to which, in relation to the tax type.

157 Assumptions in making a private ruling
  • After section 91EF(2), the following is added:

    • (3) The Commissioner may make assumptions about the answer to a proscribed question, and making those assumptions is treated as not determining the proscribed question for the purposes of section 91E(4)(a).

158 Content and notification of a private ruling
  • After section 91EH(1), the following is inserted:

    • (1B) The Commissioner may stipulate conditions about the answer to a proscribed question, and stipulating those conditions is treated as not determining the proscribed question for the purposes of section 91E(4)(a).

159 New section 91EJ inserted
  • After section 91EI, the following is inserted:

    91EJ Treatment of information
    • (1) Information supplied to the Commissioner by the applicant for a private ruling is the factual basis on which the Commissioner makes a private ruling.

      (2) Despite subsection (1), the Commissioner,—

      • (a) as part of the process of making a private ruling, may, but does not have to, inquire into the correctness or existence of the facts contained in the information supplied before making the private ruling:

      • (b) is not stopped by the process of making the private ruling or by the use of the information as the basis of the private ruling from denying, outside the process of making the ruling or subsequent to making the ruling, the correctness or existence of the facts contained in the information supplied.

160 Commissioner may make product rulings
  • (1) Section 91F(3)(b) is replaced by the following:

    • (b) the arrangement on which the ruling is sought, or a separately identifiable part of that arrangement, is substantially the same as an arrangement which is subject to an objection, challenge, or appeal, whether in relation to the applicant or any other person; or

    • (bb) the applicant is a promoter who, in the Commissioner's opinion, did not comply with section 91FD in relation to an earlier binding ruling application; or.

    (2) In section 91F(4)(a), questions of fact is replaced by a proscribed question.

    (3) In section 91F(4)(h), or to form an opinion as to a commercially acceptable practice is omitted.

161 Effect of a product ruling
  • (1) In section 91FA(1)(a), an arrangement is replaced by an arrangement and a tax type for an arrangement.

    (2) In section 91FA(1)(b), taxation law is replaced by taxation law for the tax type.

    (3) In section 91FA(1), in the words after the paragraphs, the arrangement is replaced by the person, the tax type, and the arrangement.

162 Application of a product ruling
  • (1) In section 91FB(1), in the words before the paragraphs, taxation law is replaced by taxation law for a tax type.

    (2) In section 91FB(2), in the words before the paragraphs an arrangement if is replaced by a tax type for an arrangement, to the extent to which, in relation to the tax type.

163 Applying for a product ruling
  • In section 91FC(1A), proposed arrangement is replaced by proposed arrangement or a promoter of the proposed arrangement.

164 Disclosure requirements
  • After section 91FD(1)(b), the following is inserted:

    • (bb) if the person making the application is the promoter of the arrangement, make a statutory declaration that paragraph (b) has been complied with and that all relevant facts are correct.

165 Assumptions in making a product ruling
  • After section 91FF(2), the following is added:

    • (3) The Commissioner may make assumptions about the answer to a proscribed question, and making those assumptions is treated as not determining the proscribed question for the purposes of section 91F(4)(a).

166 Content and notification of a product ruling
  • (1) After section 91FH(1), the following is inserted:

    • (1B) The Commissioner may stipulate conditions about the answer to a proscribed question, and stipulating those conditions is treated as not determining the proscribed question for the purposes of section 91F(4)(a).

    (2) In section 91FH(4)(a), the Gazette is replaced by a publication chosen by the Commissioner.

    (3) In section 91FH(5)(a), the Gazette is replaced by a publication chosen by the Commissioner.

167 Withdrawal of a product ruling
  • In section 91FJ(2), the Gazette is replaced by a publication chosen by the Commissioner.

168 New section 91FK inserted
  • After section 91FJ, the following is inserted:

    91FK Treatment of information
    • (1) Information supplied to the Commissioner by the applicant for a product ruling is the basis on which the Commissioner makes a product ruling.

      (2) Despite subsection (1), the Commissioner,—

      • (a) as part of the process of making a product ruling, may, but does not have to, inquire into the existence or correctness of facts contained in the information supplied before making the product ruling:

      • (b) is not stopped by the process of making the product ruling or by the use of the information as the basis of the product ruling from inquiring, outside the process of making the ruling or subsequent to making the ruling, into the existence or correctness of facts contained in the information supplied.

169 New section 120W inserted
  • After section 120V, the following is inserted:

    120W Commissioner's official opinions
    • (1) A taxpayer that, but for this section, is liable to pay interest on unpaid tax to the Commissioner, is not liable to pay that interest to the extent to which it arises because they relied on a Commissioner's official opinion.

      (2) Subsection (1) applies if the relevant Commissioner's official opinion was given by the Commissioner on or after the day on which the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 receives the Royal assent.

170 Transitional imputation penalty tax payable in some circumstances
  • Section 140BB(1C) is replaced by the following:

    • (1C) For the purposes of subsection (1), the company must include in its ICA balance the ICA credits and debits for transactions occurring after the end of the company's 2007–08 income year to the extent to which those credits and debits relate to memorandum account debits, credits, and balances dealt with, arising, or calculated using an old company tax rate, but excluding any amount taken into account under subsection (1B).

171 Unacceptable tax position
  • (1) After section 141B(1C), the following is inserted:

    • (1D) A taxpayer does not take an unacceptable tax position to the extent to which they have taken their position because they have relied on a Commissioner's official opinion.

    (2) Subsection (1) applies if the relevant Commissioner's official opinion was given by the Commissioner on or after the day on which this Act receives the Royal assent.

172 Definition of promoter
  • In section 141EC(1), section 141EB is replaced by sections 91FC, 91FD, and 141EB.

173 Section 165AA repealed
174 Remission for GST transitional taxable periods
  • In section 183AA(4)(b), 31 December 2010. is replaced by 31 December 2010: and the following is added:

    • (c) a GST taxable period for which the taxpayer is required to make a return that includes an adjustment under section 78B of the Goods and Services Tax Act 1985 because of the change in the rate of goods and services tax on 1 October 2010.

Part 4
Amendments to KiwiSaver Act 2006

175 KiwiSaver Act 2006
176 Interpretation
  • (1) In section 4, after the definition of address, the following is inserted:

    Australian complying superannuation scheme means an entity that is a complying superannuation fund for the purposes of Part 5, Division 2 of the Superannuation Industry (Supervision) Act 1993 (Aust) and that is regulated by the Australian Prudential Regulation Authority.

    (2) In section 4, after the definition of gross salary or wages, the following is inserted:

    guardian has the same meaning as in the Care of Children Act 2004.

    (3) In section 4, in the definition of member's accumulation, after paragraph (a), the following is inserted:

    • (ab) an amount that was transferred from an Australian complying superannuation scheme and contributed to a KiwiSaver scheme; and.

177 Employees must give information to employers
  • (1) In the heading before section 22, people who start new employment is replaced by employees and employers.

    (2) In the heading to section 22, must give is replaced by giving.

    (3) After section 22(2), the following is added:

    • (3) A person who is in temporary employment and who is a member of a KiwiSaver scheme may give their temporary employer a KiwiSaver deduction notice.

178 Eligibility to be exempt employer
  • (1) In section 25(1)(b), the day after the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 receives the Royal assent is replaced by 7 October 2009.

    (2) Section 25(1)(bb) is repealed.

179 How to apply to be exempt employer
  • (1) Section 29(1) is replaced by the following:

    • (1) A person may make an application to the Government Actuary for approval of an employer (the current employer) as an exempt employer if,––

      • (a) an application (the old application) was received by the Government Actuary on or before 19 November 2009; and

      • (b) as a result of the Government Actuary's consideration of that old application under section 30 an employer was approved as an exempt employer; and

      • (c) either that exempt employer is the current employer, or the current employer is a succeeding employer for that exempt employer.

    (2) After section 29(2), the following is added:

    • (3) In this section succeeding employer means, for an exempt employer,––

      • (a) an employer who succeeds the exempt employer due to a merger or acquisition of the exempt employer; and

      • (b) another employer who succeeds a succeeding employer for the exempt employer due to a merger or acquisition of that succeeding employer.

180 How applications to be exempt employer must be dealt with
  • In section 30(1), in the words before the paragraphs, receiving an application under section 29 and the documents required is replaced by receiving an application that may be made under section 29(1) and the documents required under section 29(2).

181 How to opt in
  • (1) In the heading to section 34, How to opt in is replaced by Opting in by person 18 years or more.

    (2) In section 34(1), in the words before the paragraphs, A person who is replaced by A person who is 18 years or more and who.

182 Opting in by persons under 18
  • Section 35, other than the heading, is replaced by the following:

    • (1) A person who is less than 18 years may only opt in in accordance with this section.

    • (2) A person who is less than 16 years may opt in if all their guardians contract directly with a provider, in the name of the person. If the provider accepts the person, then the person is treated as––

      • (a) contracting directly with the provider; and

      • (b) 18 years for the purposes of the Minors' Contracts Act 1969; and

      • (c) opting in under section 34(1)(a).

    • (3) A person who is 16 or 17 years old with a guardian may opt in if the person and 1 of their guardians jointly contract directly with a provider, in the name of the person. If the provider accepts the person, then the person is treated as––

      • (a) contracting directly with the provider; and

      • (b) 18 years for the purposes of the Minors' Contracts Act 1969; and

      • (c) opting in under section 34(1)(a).

    • (4) A person who is 16 or 17 years old with no guardian may opt in if the person contracts directly with a provider. If the provider accepts the person, then the person is treated as––

      • (a) 18 years for the purposes of the Minors' Contracts Act 1969:

      • (b) opting in under section 34(1)(a).

183 Initial back-dated validation
  • In section 59B(2)(b)(iii), the member's accumulation is replaced by the amount of the member's accumulation, less the amount that was transferred from an Australian complying superannuation scheme.

184 What happens when initial back-dated validation ends, with no confirmed back-dated validation?
  • (1) In section 59D(2)(a)(i), and when they were received is replaced by , when they were received, and (if available) who they were paid by.

    (2) Section 59D(2)(b) is replaced by the following:

    • (b) pay the amount of the member's accumulation, less the amount that was transferred from an Australian complying superannuation scheme, for the person to the Commissioner, if the provider has not already done so; and

    • (c) pay the amount that was transferred from an Australian complying superannuation scheme (the transferor scheme) or the amount of the member's accumulation (whichever amount is smaller), for the person to––

      • (i) the transferor scheme; or

      • (ii) an Australian complying superannuation scheme chosen by the person; or

      • (iii) an Australian complying superannuation scheme chosen by the Commissioner, if the person does not choose one and it is not appropriate to pay to the transferor scheme.

    (3) After section 59D(3)(a)(iii), the following is added:

    • (iv) the amount that was transferred from an Australian complying superannuation scheme:.

    (4) In section 59D(3)(c), paragraph (a)(i) to (iii) is replaced by paragraph (a)(i) to (iv).

    (5) In section 59D(4), subsection (3)(a)(i) and (ii) is replaced by subsection (3)(a)(i) to (iv).

185 PAYE rules apply to deductions
186 Interest rate
  • (1) In section 86(1), in the definition of item lowest tax rate, part A, table 1, row 1, column 3 is replaced by part D, table 2, row 7, column 3.

    (2) Subsection (1) applies for the 2010–11 and later tax years.

187 Application of other provisions of Superannuation Schemes Act 1989
  • After section 122(5)(a), the following is inserted:

    • (ab) the requirement in section 17(1)(a) is treated as met in respect of a member, if––

      • (i) the member has consented, in writing, to receive a world wide web uniform resource locator for access to an electronic copy of the annual report (the annual report URL); and

      • (ii) the provider gives the annual report URL to the member within 6 months of the close of the relevant financial year; and.

188 Regulations relating to mortgage diversion facility
  • After section 229(2)(j), the following is inserted:

    • (jb) an amount that was transferred from an Australian complying superannuation scheme may not be diverted:.

189 Schedule 1––KiwiSaver scheme rules
  • (1) After schedule 1, clause 4, the following is inserted:

    4B Amounts from Australian complying superannuation schemes
    • A member may withdraw the amount that was transferred from an Australian complying superannuation scheme (disregarding any positive or negative returns for the purpose of calculating that amount), if the member is 60 years or more and the member's retirement (as that term is defined in regulation 6.01(7) of the Superannuation Industry (Supervision) Regulations 1994 (Aust), with necessary modification for KiwiSaver scheme trustees (in the case of a restricted KiwiSaver scheme) or the manager (in the case of any other KiwiSaver scheme)) is taken to have occurred.

    (2) Schedule 1, clause 8(4) is replaced by the following:

    • (4) A member may not make a withdrawal under this clause of more than an amount equal to the member's accumulation, at the time of the withdrawal, less the total of the following 2 amounts:

      • (a) the amount of the Crown contribution (disregarding any positive or negative returns for the purpose of calculating the amount of the Crown contribution):

      • (b) the amount that was transferred from an Australian complying superannuation scheme (disregarding any positive or negative returns for the purpose of calculating that amount).

    (3) In schedule 1, clause 8(6), , a leasehold estate, is omitted.

    (4) In schedule 1, clause 14(1) and (2) are replaced by the following:

    • (1) Subject to clause 14B, a member may, on application to the trustees (in the case of a restricted KiwiSaver scheme) or the manager (in the case of any other KiwiSaver scheme), and no earlier than 1 year after the member's permanent emigration from New Zealand, withdraw an amount equal to the member's accumulation, at the time of the withdrawal, less the total of the following 2 amounts:

      • (a) the amount of the Crown contribution arising from a tax credit under section MK 1 of the Income Tax Act 2007 (disregarding any positive or negative returns for the purpose of calculating the amount of the Crown contribution):

      • (b) the amount that was transferred from an Australian complying superannuation scheme (disregarding any positive or negative returns for the purpose of calculating that amount).

    • (2) Subject to clause 14B, a member may, on application to the trustees (in the case of a restricted KiwiSaver scheme) or the manager (in the case of any other KiwiSaver scheme), at any time after the member's permanent emigration from New Zealand, have the trustees or the manager (as the case may be) transfer to a foreign superannuation scheme authorised for that purpose under regulations made under section 228 the member's accumulation, less the total of the following 2 amounts:

      • (a) the amount of the Crown contribution arising from a tax credit under section MK 1 of the Income Tax Act 2007 (disregarding any positive or negative returns for the purpose of calculating the amount of the Crown contribution):

      • (b) the amount that was transferred from an Australian complying superannuation scheme (disregarding any positive or negative returns for the purpose of calculating that amount).

    (5) After schedule 1, clause 14, the following is inserted:

    14B Exceptions to clause 14 for Australian permanent emigration
    • (1) For a KiwiSaver scheme (but not for a complying superannuation fund) a member may not withdraw any amount, or have the trustees or the manager (as the case may be) transfer any amount, after the member's permanent emigration to Australia, except as provided by this clause.

      (2) At any time after the member's permanent emigration to Australia, a member may, on application to the trustees (in the case of a restricted KiwiSaver scheme) or the manager (in the case of any other KiwiSaver scheme), have the trustees or the manager (as the case may be) transfer the member's accumulation to an Australian complying superannuation scheme.

      (3) As soon as practicable after receiving a satisfactory application, the trustees or the manager (as the case may be) must transfer the whole of the member's accumulation to the relevant Australian complying superannuation scheme and provide that scheme with any necessary information it reasonably requires.

      (4) An application under subclause (2) must be in the form required by the trustees or the manager (as the case may be) and must include––

      • (a) a completed statutory declaration in respect of the member to the effect that the member has permanently emigrated to Australia; and

      • (b) proof to the satisfaction of the trustees or the manager (as the case may be)––

        • (i) of the member's departure from New Zealand (see, for examples of proof: clause 14(3)(b)(i)); and

        • (ii) that the member has resided at an Australian address at some time following the member's departure from New Zealand.

      (5) The trustees or the manager (as the case may be) may require that any other documents, things, or information produced in an application under subclause (2) be verified by oath, statutory declaration, or otherwise.

      Section 189(1) new clause 4B: amended, on 1 May 2011, by section 56 of the KiwiSaver Amendment Act 2011 (2011 No 8).

      Section 189(4) new clause 14(1): amended, on 1 May 2011, by section 56 of the KiwiSaver Amendment Act 2011 (2011 No 8).

      Section 189(4) new clause 14(2): amended, on 1 May 2011, by section 56 of the KiwiSaver Amendment Act 2011 (2011 No 8).

      Section 189(5) new clause 14B(1): amended, on 1 May 2011, by section 56 of the KiwiSaver Amendment Act 2011 (2011 No 8).

      Section 189(5) new clause 14B(2): amended, on 1 May 2011, by section 56 of the KiwiSaver Amendment Act 2011 (2011 No 8).

      Section 189(5) new clause 14B(3): amended, on 1 May 2011, by section 56 of the KiwiSaver Amendment Act 2011 (2011 No 8).

      Section 189(5) new clause 14B(4): amended, on 1 May 2011, by section 56 of the KiwiSaver Amendment Act 2011 (2011 No 8).

      Section 189(5) new clause 14B(4)(b): amended, on 1 May 2011, by section 56 of the KiwiSaver Amendment Act 2011 (2011 No 8).

      Section 189(5) new clause 14B(5): amended, on 1 May 2011, by section 56 of the KiwiSaver Amendment Act 2011 (2011 No 8).

Part 5
Amendments to other Acts and regulations

Goods and Services Tax Act 1985

190 Goods and Services Tax Act 1985
191 Zero-rating of services
  • (1) Section 11A(1)(s) is replaced by the following:

    • (s) the services are an emissions unit and the supply is the transfer of the emissions unit, other than a transfer by the Crown under—

      • (i) an agreement relating to a project to reduce emissions:

      • (ii) a negotiated greenhouse agreement, to a person because the person exceeds the milestone targets under the agreement.

    (2) Section 11A(1)(v) is repealed.

192 Goods and services tax incurred in making certain supplies of financial services
  • (1) In section 20C, the definition of item c is replaced by the following:

    • c is the total value of exempt supplies of financial services by the registered person in respect of the taxable period:.

    (2) Subsection (1) applies for taxable periods beginning on or after 1 January 2005.

193 New section 78AA inserted
  • After section 78, the following is inserted:

    78AA Exceptions to effect of increase of tax
    • (1) For the purposes of this section,—

      • (a) rate change day is the day on which an increase in the rate of tax imposed by section 8 comes into force:

      • (b) original rate is the rate of tax imposed by section 8 immediately before the rate change day.

      (2) Despite section 8(1), subsection (3) applies to an insurer who is deemed under section 5(13B) to receive a recovered amount as consideration for a supply—

      • (a) to the extent that the insurer, before the rate change day, accepts the claim to which the recovery relates and—

        • (i) pays the claim:

        • (ii) agrees the recovered amount unconditionally; and

      • (b) if the amount recovered is received by the insurer on or after the rate change day; and

      • (c) if the insurer elects that subsection (3) apply to the recovery by treating the recovery in that way in a return provided to the Commissioner.

      (3) The deemed supply by the insurer is charged with tax at the original rate.

      (4) Despite section 8(1), subsection (5) applies to a supply of goods that are personal property by a registered person under an agreement if—

      • (a) section 9(3)(a) applies to the supply; and

      • (b) the recipient of the supply makes periodic payments to the registered person during the term of the agreement; and

      • (c) part of the amount payable to the registered person under the agreement is consideration for a supply that is the provision of credit under a credit contract; and

      • (d) if the agreement were to end early, the amount of tax imposed by section 8 on the supply of the goods would be calculated on the basis that a periodic payment included an amount of payment for the supply referred to in paragraph (c) that decreased for each successive periodic payment; and

      • (e) the term of the agreement—

        • (i) begins before the rate change day; and

        • (ii) ends on or after the rate change day; and

        • (iii) is less than or equal to 5 years; and

      • (f) the registered person elects that subsection (5) apply to supplies made under the agreement by treating each supply in that way in a return provided to the Commissioner; and

      • (g) within 30 days after the rate change day, the registered person gives notice to the recipient of the supplies, if the recipient is a registered person, that payments by the recipient made after the rate change day include goods and services tax charged at the original rate.

      (5) Each successive supply under the agreement that is deemed to take place after the rate change day is charged with tax at the original rate.

      (6) Despite section 5(5), subsection (7) applies to a supply of goods under an agreement that is a layby sale to which the Layby Sales Act 1971 applies if—

      • (a) the agreement is made before the day on which the increase in the rate of tax is announced; and

      • (b) after the rate change day, the goods are delivered to the buyer and the property in the goods is transferred to the buyer; and

      • (c) the registered person elects that subsection (7) apply to supplies made under the agreement by treating each supply in that way in a return provided to the Commissioner.

      (7) Goods and services tax is charged on the supply of the goods under the agreement (the agreed supply) as if there were 2 supplies consisting of—

      • (a) a supply on the day before the rate change day, for which the consideration is the payment for the agreed supply that the registered person receives before the rate change day; and

      • (b) a supply on the day that the agreed supply would have occurred in the absence of this subsection, for which the consideration is the payment for the agreed supply that the registered person receives on or after the rate change day.

      (8) Subsection (9) applies to a supply of goods or services if—

      • (a) the invoice for the supply is dated before the rate change day; and

      • (b) the invoice is issued—

        • (i) on or before the second Monday after the rate change day; and

        • (ii) consistently with the registered person's practice of issuing invoices for such supplies; and

      • (c) payment for the supply is due on or before the day that is 60 days after the date of the invoice; and

      • (d) the registered person elects that subsection (9) apply to the supply by treating the supply in that way in a return provided to the Commissioner.

      (9) The supply is treated as being made on the day of the date of the invoice, despite section 9(3)(a) if that provision would otherwise apply.

      (10) Despite section 9(1), (2)(a), and (3), subsection (11) applies to a supply by a registered person under an agreement if—

      • (a) section 9(3)(a) would apply to the supply in the absence of this subsection; and

      • (b) the term of the agreement begins before the rate change day and ends after the rate change day; and

      • (c) under the agreement, the consideration for a supply is set or reviewed for periods of 396 days or less during the term of the agreement; and

      • (d) the registered person elects that subsection (11) apply to supplies made under the agreement during a period in which the day before the rate change day occurs (the rate change period) by including on that basis each supply in a return provided to the Commissioner; and

      • (e) within 30 days after the rate change day, the registered person gives notice to the recipient of the supplies, if the recipient is a registered person, that payments made after the rate change day by the recipient for supplies made in the rate change period include goods and services tax charged at the original rate.

      (11) If this subsection applies to a supply for a rate change period and, in the absence of this subsection, the supply would be made on or after the rate change day,—

      • (a) the supply is treated as being made on the day before the rate change day; and

      • (b) the registered person is treated as issuing a tax invoice as required by section 24 for the supply on the day before the rate change day.

      (12) Despite sections 25(3) and (3C) and 143A(1)(f), subsection (13) applies to a supply by a registered person who has provided a tax invoice in relation to the supply if—

      • (a) the rate change day occurs after the registered person provides the tax invoice for the supply; and

      • (b) in the absence of this subsection and subsection (13), the registered person would be required to provide after the rate change day a credit note or debit note for the supply; and

      • (c) the registered person elects that subsection (13) apply to the supply by including on that basis the supply in a return provided to the Commissioner.

      (13) If, in the absence of this subsection, the registered person would be required to provide a—

      • (a) credit note for a supply,—

        • (i) the registered person may provide a replacement tax invoice for the supply; and

        • (ii) goods and services tax is charged on the supply under that invoice at the original rate:

      • (b) debit note for a supply, the registered person may provide a replacement tax invoice for the supply.

      (14) Despite section 5(13)(a), a supply of services under section 5(13) by a registered person who receives a payment under a contract of insurance on or after the rate change day is treated as being made on the day before the rate change day if—

      • (a) the payment is made before the rate change day; and

      • (b) the registered person receives the payment on or before the second Monday after the rate change day.

194 Adjustments to tax payable for persons furnishing returns on payments basis following change in rate of tax
  • (1) In the heading to section 78B, on payments basis is omitted.

    (2) Before section 78B(2A)(aa)(i), the following is inserted:

    • (ia) any supply that is made by the registered person as a private training establishment granted registration by the Qualifications Authority under section 236 of the Education Act 1989 and for which consideration is held in trust on the day before that date, if the registered person includes such supplies in the form referred to in subsection (2); or.

    (3) Section 78B(2A)(b) is replaced by the following:

    • (b) in relation to a person who, as at the date on which the new rate of tax comes into force, is required to account for tax payable on an invoice basis,—

      • (i) any supply made by the registered person as a private training establishment granted registration by the Qualifications Authority under section 236 of the Education Act 1989 and for which consideration is held in trust on the day before that date, if the registered person includes such supplies in the form referred to in subsection (2); or

      • (ii) any supply made to the registered person that is a supply of secondhand goods to which section 3A(1)(c) applies,—.

    (4) Section 78B(2A)(e) is replaced by the following:

    • (e) the supply is not charged with tax at—

      • (i) the rate of zero percent; or

      • (ii) a rate that is unaffected by the change to section 8; and.

    (5) After section 78B(2A), the following is inserted:

    • (2B) For the purposes of this section, a taxable supply made by a registered person on or after the date on which the new rate of tax comes into force is treated as being made before that date if—

      • (a) the registered person makes the supply as a private training establishment granted registration by the Qualifications Authority under section 236 of the Education Act 1989; and

      • (b) the consideration for the supply is held in trust on the day before that date; and

      • (c) the registered person includes such supplies in the form referred to in subsection (2).

Estate and Gift Duties Act 1968

195 Exemption for gifts to charities and certain bodies
  • (1) This section amends the Estate and Gift Duties Act 1968.

    (2) Before section 73(2)(a), the following is inserted:

    • (aa) any gift required by an order of a court under the Law Reform (Testamentary Promises) Act 1949 or the Family Protection Act 1955:.

    (3) After section 73(2)(jc), the following is inserted:

    • (jd) any gift to an organisation that is—

      • (i) part of the State Services as defined in section 2 of the State Sector Act 1988; and

      • (ii) not an educational institution; and

      • (iii) not carried on for the private pecuniary profit of any individual:.

    (4) After section 73(2)(ka), the following is inserted:

    • (kb) any gift to an organisation that is a local authority, or a council-controlled organisation as defined in section 6 of the Local Government Act 2002, or a subsidiary of such a council-controlled organisation and is not carried on for the private pecuniary profit of any individual:.

    (5) In section 73(2)(n), that trust. is replaced by that trust: and the following is added:

    • (o) any gift to an organisation that is a donee organisation as defined in section YA 1 of the Income Tax Act 2007.

Income Tax Act 2004

196 Income Tax Act 2004
197 Foreign investment fund income
  • Section CD 26(1) is replaced by the following:

    Amount not dividend
    • (1) An amount paid by a company to a person is not a dividend if,—

      • (a) at the time the person derives the amount, the person's interest in the company is an attributing interest or would have been an attributing interest if the company had not been liquidated; and

      • (b) the person calculates their FIF income or loss in relation to the interest and the period in which the amount is paid under—

        • (i) the comparative value method:

        • (ii) the deemed rate of return method:

        • (iii) the cost method:

        • (iv) the fair dividend rate method.

198 Benefits provided to employees who are shareholders or investors
  • (1) In section CX 16(4)(a), shareholder: is replaced by shareholder; and.

    (2) Subsection (1)—

    • (a) applies for the 2005–06 and later income years, except if paragraph (b) applies:

    • (b) does not apply for a person or an income year in relation to a tax position taken by the person for their 2005–06 or later income year—

      • (i) in the period from 12 December 2004 to the date of the Royal assent of this Act; and

      • (ii) relating to a return of income, an FBT return, or a GST return filed before the date of the Royal assent of this Act; and

      • (iii) relying upon section CX 16(4) as it was before the amendment made by subsection (1).

199 Total deductions in section EE 47
  • (1) After section EE 51(3), the following is inserted:

    Treatment of mothballed assets
    • (3B) Subsection (3)(b) does not apply in relation to an amount of depreciation loss for an item that has been withdrawn from use in deriving assessable income or carrying on a business for the purpose of deriving assessable income. However, this exclusion does not apply to an amount of depreciation loss for which the person has a deduction under section EE 32.

    (2) Subsection (1) applies for the 2005–06 and later income years.

200 Determination alternatives to IFRS
  • (1) In section EW 15D(1)(d)(ii), fair value method. is replaced by fair value method; or and the following is added:

    • (iii) is treated under IFRSs by the person as a hedge of something that is not a financial arrangement.

    (2) Subsection (1) applies for—

    • (a) the 2007–08 and later income years, except if paragraph (b) or (c) applies; or

    • (b) the first income year for which the person adopts IFRSs for the purposes of financial reporting and later income years, if that first income year is before the 2007–08 income year and the person chooses to apply the IFRS taxpayer method in a return of income for that first year; or

    • (c) the 2008–09 and later income years, if a person's 2008–09 income year starts before 1 January 2008 and the person has not adopted IFRSs for the purposes of financial reporting before 1 January 2007.

201 Expected value method and equity-free fair value method
  • (1) In section EW 15E(1)(c)(ii), fair value method; and is replaced by fair value method; or and the following is added:

    • (iii) is treated under IFRSs by the person as a hedge of something that is not a financial arrangement; and.

    (2) Subsection (1) applies for—

    • (a) the 2007–08 and later income years, except if paragraph (b) or (c) applies; or

    • (b) the first income year for which the person adopts IFRSs for the purposes of financial reporting and later income years, if that first income year is before the 2007–08 income year and the person chooses to apply the IFRS taxpayer method in a return of income for that first year; or

    • (c) the 2008–09 and later income years, if a person's 2008–09 income year starts before 1 January 2008 and the person has not adopted IFRSs for the purposes of financial reporting before 1 January 2007.

202 Meaning of CFC
  • (1) Section EX 1(1)(b)(i) is replaced by the following:

    • (i) the person's control interest is less than or equal to a control interest in the same category held by another person; and.

    (2) Subsection (1)—

    • (a) applies for the 2005–06 and later income years, except if paragraph (b) applies:

    • (b) does not apply for a person in relation to a tax position taken by the person—

      • (i) before 19 November 2009; and

      • (ii) relying on the provision amended by this section as it was immediately before the amendment made by this section.

203 Codes: comparative value method, deemed rate of return method, fair dividend rate method, and cost method
204 Treatment of portfolio class taxable loss and portfolio class land loss for tax year
  • (1) Section HL 30(3)(a)(i) is replaced by the following:

    • (i) are an investment of the type listed in subsection (4); and.

    (2) After section HL 30(3), the following is added:

    Investment types
    • (4) For the purposes of subsection (3)(a)(i), the investment must be—

      • (a) an investment in land:

      • (b) an investment in a portfolio land company that is resident in New Zealand:

      • (c) an investment in a non-resident portfolio land company in which the portfolio investor class has a voting interest of more than 20%.

205 Credit for investor for tax paid by entity if portfolio investor allocated income not excluded income
  • In section LD 10(2), income tax paid is replaced by income tax liability satisfied.

206 Credit for zero-rated portfolio investor for tax paid by entity in relation to portfolio investor allocated income
  • In section LD 10B(2), income tax paid is replaced by income tax liability satisfied.

207 Definitions
  • (1) In section OB 1, in the definition of revenue account property, in paragraph (b), property that would produce income for the person if they disposed of it is replaced by property for which an amount derived by the person from its disposal would be income.

    (2) In section OB 1, in the definition of fair value method, 15B is replaced by 15C.

    (3) Subsection (1) applies for the 2005–06 and later income years.

208 Schedule 22A—Identified policy changes
  • (1) In schedule 22A, after the entry for CW 15(1), the following is inserted:

    CW 31(3)The amounts excepted from the exemption are amounts that a public authority receives as trustee.
      

    (2) Subsection (1) applies for the 2005–06 and later income years.

Taxation (Budget Measures) Act 2010

209 Section 4 repealed
  • Section 4 of the Taxation (Budget Measures) Act 2010 is repealed.

210 Alternate rate option
  • In section 68(2)(b) of the Taxation (Budget Measures) Act 2010, in section RD 59(3), 49% is replaced by 49.25%.

Local Government Act 2002

211 Schedule 9—Council-controlled organisations and transfer of undertakings
  • (1) In the Local Government Act 2002, schedule 9, clause 6(3), sections EG 17(1) is replaced by sections EE 33(1) to (3).

    (2) In the Local Government Act 2002, schedule 9, clause 6(3), sections EE 33(1) to (3) is replaced by sections EE 40(1) to (3).

    (3) Subsection (1) applies for the 2005–06 and later income years.

    (4) Subsection (2) applies for the 2008–09 and later income years.

Tax Administration (Binding Rulings) Regulations 1999

212 Waiver of fees
  • In the Tax Administration (Binding Rulings) Regulations 1999, regulation 6 is replaced by the following:

    6 Waiver of fees
    • (1) The Commissioner may waive all or part of a fee payable under these regulations if the Commissioner considers it is fair and reasonable in the circumstances to do so, having regard to the nature of the issue that is the subject of the application, the level of skill and experience required in the consideration of the application, and any other relevant factors.

      (2) Subclause (1) applies if a person's application for the relevant binding ruling was received by the Commissioner on or after the day on which the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 receives the Royal assent.

213 Fees inclusive of goods and services tax
  • In the Tax Administration (Binding Rulings) Regulations 1999, regulation 7 is replaced by the following:

    7 Goods and services tax
    • (1) The fees prescribed by these regulations include goods and services tax. However, for a supply that is zero-rated under the Goods and Services Tax Act 1985, the amount of a fee prescribed by these regulations is reduced by an amount equal to the tax fraction of the fee under that Act.

      (2) Subclause (1) applies if a person's application for the relevant binding ruling was received by the Commissioner on or after the day on which the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 receives the Royal assent.


Schedule 1
Amendments to Income Tax Act 2007, schedule 1

s 120

Part 1 Part D, table 2, row 3B

RowConditionsPayment rate
3BFor a person who chooses the payment rate of 0.390 before 1 April 2010, the payer of the interest— 
 (a)has been supplied with the tax file number of the person; and 
 (b)has received a payment rate election from the person.0.380

Part 2 Part D, table 3

Table 3
RowConditionsPayment rate
1The payer of the interest— 
 (a)has been supplied with the tax file number of a person who is paid the interest; and 
 (b)has not received a payment rate election from the recipient of the interest.0.33
2The payer of the interest— 
 (a)has been supplied with the tax file number of a person who is paid the interest; and 
 (b)has received a payment rate election from the recipient of the interest, choosing the 0.33 payment rate.0.33
3The payer of the interest— 
 (a)has been supplied with the tax file number of a person who is paid the interest; and 
 (b)either— 
  (i)has received a payment rate election from the recipient of the interest, choosing the 0.38 payment rate; or 
  (ii)has received a payment rate election from the recipient of the interest, choosing the 0.39 payment rate before 1 April 2010.0.38
4The payer of the interest has not been supplied with the tax file number of a person who is paid the interest.0.38
How to use this table
Find the applicable condition, in the second column, in order to find the relevant rate to apply, in the third column.
     

Schedule 2
Amendments to Income Tax Act 2007, schedule 6

s 122

Table 1
RowConditionsPrescribed rate
1For a natural person who is resident in New Zealand, other than a person described in row 4 or 6.0.300
2 For a non-resident person.0.300
3For a person who— 
 (a)is resident in New Zealand and who derives income for the relevant tax year as a trustee of a trust other than a trust with income that is exempt income under section CW 41 or CW 42; and 
 (b)notifies this rate for the relevant tax year.0.300
4For a natural person who is resident in New Zealand and is not a person described in row 6 and who, in either of the 2 income years before the relevant tax year, derives— 
 (a)$48,000 or less in taxable income; and 
 (b)$70,000 or less in the sum of their taxable income and attributed PIE income after subtracting any attributable PIE loss.0.210
5For a person who— 
 (a)is resident in New Zealand and derives income for the relevant tax year as a trustee of a trust other than a trust with income that is exempt income under section CW 41 or CW 42; and  
 (b)notifies this rate for the relevant tax year.0.210
6For a natural person who is resident in New Zealand and who, in either of the 2 income years before the relevant tax year, derives— 
 (a)$14,000 or less in taxable income; and 
 (b)$48,000 or less in the sum of their taxable income and attributed PIE income after subtracting any attributable PIE loss.0.125
7For a person who— 
 (a)is resident in New Zealand and derives income for the relevant tax year as a trustee of a testamentary trust to which section HC 37 applies other than a trust with income that is exempt income under section CW 41 or CW 42; and  
 (b)notifies this rate for the relevant tax year.0.125
8For a person who is a zero-rated investor.0.000
How to use this table
Find the applicable condition, in the second column, in order to find the relevant rate to apply, in the third column.

Contents

  • 1General

  • 2Status of reprints

  • 3How reprints are prepared

  • 4Changes made under section 17C of the Acts and Regulations Publication Act 1989

  • 5List of amendments incorporated in this reprint (most recent first)


Notes
1 General
  • This is a reprint of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010. The reprint incorporates all the amendments to the Act as at 1 May 2011, as specified in the list of amendments at the end of these notes.

    Relevant provisions of any amending enactments that contain transitional, savings, or application provisions that cannot be compiled in the reprint are also included, after the principal enactment, in chronological order. For more information, see http://www.pco.parliament.govt.nz/reprints/ .

2 Status of reprints
  • Under section 16D of the Acts and Regulations Publication Act 1989, reprints are presumed to correctly state, as at the date of the reprint, the law enacted by the principal enactment and by the amendments to that enactment. This presumption applies even though editorial changes authorised by section 17C of the Acts and Regulations Publication Act 1989 have been made in the reprint.

    This presumption may be rebutted by producing the official volumes of statutes or statutory regulations in which the principal enactment and its amendments are contained.

3 How reprints are prepared
  • A number of editorial conventions are followed in the preparation of reprints. For example, the enacting words are not included in Acts, and provisions that are repealed or revoked are omitted. For a detailed list of the editorial conventions, see http://www.pco.parliament.govt.nz/editorial-conventions/ or Part 8 of the Tables of New Zealand Acts and Ordinances and Statutory Regulations and Deemed Regulations in Force.

4 Changes made under section 17C of the Acts and Regulations Publication Act 1989
  • Section 17C of the Acts and Regulations Publication Act 1989 authorises the making of editorial changes in a reprint as set out in sections 17D and 17E of that Act so that, to the extent permitted, the format and style of the reprinted enactment is consistent with current legislative drafting practice. Changes that would alter the effect of the legislation are not permitted.

    A new format of legislation was introduced on 1 January 2000. Changes to legislative drafting style have also been made since 1997, and are ongoing. To the extent permitted by section 17C of the Acts and Regulations Publication Act 1989, all legislation reprinted after 1 January 2000 is in the new format for legislation and reflects current drafting practice at the time of the reprint.

    In outline, the editorial changes made in reprints under the authority of section 17C of the Acts and Regulations Publication Act 1989 are set out below, and they have been applied, where relevant, in the preparation of this reprint:

    • omission of unnecessary referential words (such as of this section and of this Act)

    • typeface and type size (Times Roman, generally in 11.5 point)

    • layout of provisions, including:

      • indentation

      • position of section headings (eg, the number and heading now appear above the section)

    • format of definitions (eg, the defined term now appears in bold type, without quotation marks)

    • format of dates (eg, a date formerly expressed as the 1st day of January 1999 is now expressed as 1 January 1999)

    • position of the date of assent (it now appears on the front page of each Act)

    • punctuation (eg, colons are not used after definitions)

    • Parts numbered with roman numerals are replaced with arabic numerals, and all cross-references are changed accordingly

    • case and appearance of letters and words, including:

      • format of headings (eg, headings where each word formerly appeared with an initial capital letter followed by small capital letters are amended so that the heading appears in bold, with only the first word (and any proper nouns) appearing with an initial capital letter)

      • small capital letters in section and subsection references are now capital letters

    • schedules are renumbered (eg, Schedule 1 replaces First Schedule), and all cross-references are changed accordingly

    • running heads (the information that appears at the top of each page)

    • format of two-column schedules of consequential amendments, and schedules of repeals (eg, they are rearranged into alphabetical order, rather than chronological).

5 List of amendments incorporated in this reprint (most recent first)
  • KiwiSaver Amendment Act 2011 (2011 No 8): section 56