Land and Income Tax Amendment Act (No 2) 1968
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Land and Income Tax Amendment Act (No 2) 1968
Public Act |
1968 No 48 |
|
Date of assent |
11 December 1968 |
|
Contents
An Act to amend the Land and Income Tax Act 1954
BE IT ENACTED by the General Assembly of New Zealand in Parliament assembled, and by the authority of the same, as follows:
1 Short Title
This Act may be cited as the Land and Income Tax Amendment Act (No. 2) 1968, and shall be read together with and deemed part of the Land and Income Tax Act 1954 (hereinafter referred to as the principal Act).
2 Application
Except where this Act otherwise provides, this Act shall apply with respect to the tax on income derived in the income year that commenced on the first day of April, nineteen hundred and sixty-eight, and in every subsequent year.
3 Meaning of expression “non-resident investment company”
(1)
The principal Act is hereby amended by inserting, after section 2, the following section:
“2a.
“(1)
For the purposes of this Act the expression ‘nonresident investment company’, in relation to any income year, means a company which is not deemed to be resident in New Zealand within the meaning or for the purposes of Part VI of this Act (not being a company of the kind referred to in subsection (1) of section 150 of this Act), and which—
“(a)
Derives no income from New Zealand except interest, and has no investments or other assets in New Zealand except the principal money from which the interest is derived; or
“(b)
Is a company of whose total assets in New Zealand at the end of the income year more than fifty percent in value consists of development investments.
“(2)
In paragraph (b) of subsection (1) of this section the expression ‘development investments’, in relation to a company, means investments—
“(a)
Which consist—
“(i)
Solely of principal money from which interest is derived by that company; or
“(ii)
Of such principal money and shares in the capital of another company; and
“(b)
Which are being or are to be used wholly for the purpose of any undertaking, scheme, or work that pursuant to an Order in Council made under subsection (3) of this section is a development project for the purposes of this section; and
“(c)
Of which more than fifty percent in value consists of principal money from which interest is derived by that first-mentioned company.
“(3)
Where the Governor-General is satisfied that any undertaking, scheme, or work (whether an industrial or commercial enterprise, the exploitation of natural resources, a building or construction project, an installation of equipment or machinery, or otherwise), or any class of undertaking, scheme, or work, is or is to be entered upon wholly or principally for the purpose of developing New Zealand or is or will be of importance in the development of New Zealand, he may, by Order in Council, declare that undertaking, scheme, or work, or, as the case may be, undertakings, schemes, or works of that class, to be a development project or, as the case may be, development projects for the purposes of this section.
“(4)
For the purposes of this section the value of any asset (other than money) in New Zealand of a company at the end of an income year shall be calculated by ascertaining the cost of that asset to the company and deducting therefrom the amount of any depreciation properly allowable thereon under this Act to the company in that income year or in any earlier income year or years:
“Provided that—
“(a)
Where the asset consists of trading stock within the meaning of section 98 of this Act, the value of that trading stock shall be calculated as the value thereof as taken into account at the end of that income year in calculating the assessable income of the company for that income year:
“(b)
Where the asset consists of a debt, the value of that debt shall be deemed to be the amount of the principal sum thereof owing to the company at the end of that income year:
“(c)
Where the asset consists of shares in the capital of another company, the value of those shares shall be deemed to be the amount paid up in respect thereof at the end of that income year.
“(5)
Every reference in this section to an income year shall, where the company furnishes a return of income under section 8 of this Act for an accounting year ending with an annual balance date other than the thirty-first day of March, be deemed to be a reference to the accounting year corresponding with that income year, and, in every such case, the provisions of this section shall, with any necessary modifications, apply accordingly.
“(6)
Every Order in Council made under subsection (3) of section 86a of this Act and in force at the commencement of this section declaring any undertaking, scheme, or work, or undertakings, schemes, or works of any specified class, to be development projects for the purposes of the said section 86a shall continue in force after the commencement of this section as if it had been made under this section, and that undertaking, scheme, or work, or, as the case may be, undertakings, schemes, or works of that class shall, so long as the Order in Council continues in force, be deemed to be development projects for the purposes of this section.”
(2)
The following enactments are hereby consequentially repealed:
(a)
Subsections (2) and (3) of section 86a of the principal Act (as inserted by section 83 of the Income Tax Assessment Act 1957 and amended by section 25(2) of the Land and Income Tax Amendment Act (No. 2) 1958 and by subsections (2) and (3) of section 9 of the Land and Income Tax Amendment Act 1960):
(b)
Subsection (2) of section 25 of the Land and Income Tax Amendment Act (No. 2) 1958:
(c)
Subsections (2) and (3) of section 9 of the Land and Income Tax Amendment Act 1960.
4 Defining when two companies consist substantially of the same shareholders
Section 3 of the principal Act is hereby amended by adding to subsection (3) the following proviso:
“Provided that for the purposes of paragraph (a) of subsection (1) of section 3a of this Act, in its application to section 138 of this Act, the foregoing provisions of this subsection shall have effect as if for the word ‘one-half’ wherever it occurs there were substituted in each case the word ‘one-quarter’.”
5 Defining when two persons are associated persons
The principal Act is hereby further amended by inserting, after section 3, the following section:
“3a.
“(1)
For the purposes of section 78b, paragraph (kkk) of subsection (1) of section 86, and sections 88c, 138, and 203z of this Act, associated persons or persons associated with each other are—
“(a)
Any two companies which consist substantially of the same shareholders or are under the control of the same persons; or
“(b)
Any company and any person (other than a company) who holds twenty-five percent or more of the paid-up capital of that company; or
“(c)
Any two persons who are relatives; or
“(d)
A partnership and any person, where that person and any partner in that partnership are, in accordance with the foregoing provisions of this subsection, associated persons.
“(2)
For the purposes of paragraph (b) of subsection (1) of this section—
“(a)
Paid-up capital of one company held by another company shall be deemed to be held by the shareholders in the last-mentioned company:
“(b)
Where a nominee of any person holds any paid-up capital of a company, that paid-up capital shall be deemed to be held by that person, and for this purpose the term ‘nominee’ means any other person who may be required to exercise his voting power in relation to the company in accordance with the direction of that person, or who holds shares directly or indirectly on behalf of that person; and includes any relative of that person.”
6 Arbitrary assessment where business controlled by nonresidents appears to produce insufficient taxable income
Section 20 of the principal Act is hereby amended by adding to subsection (1) the following proviso:
“Provided that where the Commissioner is satisfied that any amount that would, but for this proviso, be included in the taxable income of any person pursuant to the foregoing provisions of this subsection has been included in a return made by any other person who is assessable for and liable to pay income tax on that amount, the Commissioner shall not apply the said foregoing provisions in respect of the first-mentioned person in respect of that amount.”
7 Income tax payable by non-resident investment companies
(1)
The principal Act is hereby further amended by repealing section 78b (as inserted by section 4 of the Land and Income Tax Amendment Act 1959), and substituting the following section:
“78b.
“(1)
Where the Commissioner is satisfied that if this section had not been passed the amount of ordinary income tax payable by a non-resident investment company in respect of any income, being income from interest (other than interest to which section 150a of this Act applies), derived by it in any income year from development investments within the meaning of section 2a of this Act would, after taking into account any rebate in respect of that ordinary income tax under section 78C of this Act, exceed the amount of income tax that would be payable by the company in respect of that income if the company had derived that income from a source in the country or territory in which the company is resident, the Commissioner shall allow the amount of the excess as a rebate from the amount of ordinary income tax that would be payable by the company in respect of that income apart from the provisions of this section:
“Provided that in any case where—
“(a)
Any income from interest (other than interest to which section 150a of this Act applies) is derived by a non-resident investment company in any income year from development investments within the meaning of section 2a of this Act; and
“(b)
The company and the person by whom the interest is paid are not associated persons,—
the amount of ordinary income tax payable by the company in respect of that income from interest shall not exceed fifteen percent of the gross amount of that interest.
“(2)
Where the Commissioner is satisfied that if this section had not been passed the amount of income tax, as determined by the provisions of section 203z of this Act, payable by a non-resident investment company in respect of any dividends derived by it from development investments within the meaning of section 2a of this Act would, after taking into account any rebate in respect of that income tax under section 78e of this Act, exceed the amount of income tax that would be payable by the company in respect of those dividends if the company had derived those dividends from a source in the country or territory in which the company is resident, the Commissioner shall allow the amount of the excess as a rebate from the amount of income tax that would be payable by the company in respect of those dividends apart from the provisions of this section.
“(3)
For the purposes of this section—
“‘Dividend’ means a dividend other than an investment society dividend:
“‘Income tax’ means, in respect of any country outside New Zealand, any tax which, in the opinion of the Commissioner, is substantially of the same nature as—
“(a)
In relation to interest, ordinary income tax under this Act:
“(b)
In relation to dividends, income tax as determined by the provisions of section 203z of this Act:
“‘Paid’, in relation to interest, includes credited or dealt with in the interest of or on behalf of a person.”
(2)
The following enactments are hereby consequentially repealed:
(a)
Section 4 of the Land and Income Tax Amendment Act 1959:
(b)
Subsections (1) and (4) of section 9 of the Land and Income Tax Amendment Act 1960:
(c)
Paragraph (b) of subsection (1) and subsections (2) and (3) of section 6 of the Land and Income Tax Amendment Act 1964:
(d)
Subsection (2) of section 32 of the Land and Income Tax Amendment Act 1966.
Compare:
In subs. (1), the words “income tax”
are substituted (as from 1 April 1969) in the new s. 78b for the words “ordinary income tax”
wherever they occur by s. 3(1) of the Land and Income Tax Amendment Act (No. 3) 1968.
8 Rebate from tax payable by non-resident investment companies
The principal Act is hereby further amended by repealing section 78c (as inserted by section 5(1) of the Land and Income Tax Amendment Act 1964), and substituting the following section:
“78c.
“(1)
In the assessment of every non-resident investment company, there shall be allowed from the amount of ordinary income tax that would, apart from the provisions of section 78b of this Act, be payable by the company in respect of the income derived by it in the income year, a rebate of a sum equal to five percent of so much of the taxable income of the company as consists of income from interest derived from development investments within the meaning of section 2a of this Act.”
Compare:
In the new s. 78c the words “income tax”
are substituted (as from 1 April 1969) for the words “ordinary income tax”
by s. 3(1) of the Land and Income Tax Amendment Act (No. 3) 1968.
9 Rebate from tax payable by non-resident companies in respect of income from special development projects
(1)
The principal Act is hereby further amended by inserting, after section 78e (as inserted by section 5(1) of the Land and Income Tax Amendment Act 1964), the following section:
“78f.
“(1)
For the purposes of this section—
“‘Accounting year’, in relation to the income of a company, means a year ending with the date of the annual balance of the company’s accounts in which that income has been derived by the company:
“‘Branch’, in relation to a company which is not resident in New Zealand, means where an agreement as defined in subsection (1) of section 203c of this Act has been made between the Government of New Zealand and the Government of the country or territory in which that company is resident, a branch which is a permanent establishment (as defined in that agreement) of that company:
“‘Effective rate of domestic income tax’, in relation to a company that is not resident in New Zealand and to an accounting year, means the rate ascertained in accordance with the following formula:
_eqn1.JPG)
where—
a
is the total amount of income tax (expressed in terms of New Zealand currency at the rate of exchange in force on the last day of the accounting year of the company) payable by that company in the country or territory in which it is resident, in respect of the total amount of income derived by it in that accounting year, being the total amount of income upon which the total amount of income tax is levied; and
b
is that total amount of income (expressed in terms of New Zealand currency at the rate of exchange aforesaid):
“‘Income tax’ means,—
“(a)
In respect of any country or territory outside New Zealand, any tax—
“(i)
Which is payable to the central Government of that country or territory; and
“(ii)
Which is, in the opinion of the Commissioner, substantially of the same nature as income tax imposed under this Part of this Act; and
“(iii)
The amount of which is as calculated before the allowance of any rebates in respect of any income or of any class or classes of income and before the allowance of any credits, including credits in respect of tax paid or payable in any other country or territory;—
but does not include any additional tax for late payment of tax, or any interest or any penalty or additional tax imposed under the penal provisions of the laws of the first-mentioned country or territory:
“(b)
In respect of New Zealand, income tax imposed under this Part of this Act; but does not include any additional tax for late payment of tax, or any interest or any penalty or additional tax imposed under this Act:
“‘Minerals’ means—
“(a)
Any of the minerals referred to in section 152 of this Act (including any mineral declared by the Minister of Finance pursuant to that section to be a qualifying mineral for the purposes of that section); and
“(b)
Bauxite and alumina; and
“(c)
Any other mineral from time to time declared by the Governor-General, by Order in Council, to be a mineral for the purposes of this section:
“‘The first specified period’, in relation to an Order in Council made under subsection (4) of this section and to a company, means the period specified in that Order in Council as the first specified period, being a period—
“(a)
Commencing with the accounting year of the company in respect of which that Order in Council first applies; and
“(b)
Comprising such number of accounting years of the company, not exceeding fifteen, as are specified in that behalf in that Order in Council:
“Provided that where an undertaking which, pursuant to subsection (4) of this section, is declared to be a special development project for the purposes of this section is commenced during an accounting year and later than six months after the commencement of that accounting year, the reference to fifteen accounting years in paragraph (b) of this definition shall be deemed to be years additional to that accounting year in which the undertaking is commenced:
“‘The second specified period’, in relation to an Order in Council made under subsection (4) of this section and to a company, means the period specified in that Order in Council as the second specified period, being a period—
“(a)
Commencing with the accounting year of the company next succeeding the last accounting year of the company comprised in the first specified period in relation to that Order in Council; and
“(b)
Comprising such number of accounting years of the company, not exceeding ten, as are specified in that behalf in that Order in Council.
“(2)
Where the Commissioner is satisfied that, if this section had not been passed, the amount of income tax payable by a company that is not resident in New Zealand in respect of any taxable income derived by it from any industrial undertaking (being an undertaking that, pursuant to an Order in Council made under subsection (4) of this section, is a special development project for the purposes of this section) during any accounting year that is comprised in the first specified period in relation to that Order in Council, would, after taking into account any rebate in respect of that income tax under section 78e of this Act, exceed the sum of—
“(a)
An amount ascertained in accordance with the following formula:
a × b
where—
a
is the amount of that taxable income; and
b
is the company’s effective rate of domestic income tax relating to that accounting year; and
“(b)
An amount equal to seven and one-half percent of that taxable income,—
the Commissioner shall allow, from the amount of income tax that would be payable by the company in respect of that taxable income apart from the provisions of this section, a rebate of—
“(c)
The amount of that excess; or
“(d)
The amount by which that last-mentioned amount of income tax exceeds forty-two and one-half percent of that taxable income,—
whichever is the less.
“(3)
Where the Commissioner is satisfied that, if this section had not been passed, the amount of income tax payable by a company that is not resident in New Zealand in respect of any taxable income derived by it from any industrial undertaking (being an undertaking that, pursuant to an Order in Council made under subsection (4) of this section, is a special development project for the purposes of this section) during any accounting year that is comprised in the second specified period in relation to that Order in Council would, after taking into account any rebate in respect of that income tax under section 78e of this Act, exceed the amount of income tax that would be payable by the company in respect of that taxable income if the company were resident in New Zealand, the Commissioner shall allow the amount of that excess as a rebate from the amount of income tax that would be payable by the company in respect of that taxable income apart from the provisions of this section.
“(4)
Where the Governor-General is satisfied that any industrial undertaking (being an undertaking that consists of the processing of any minerals to the primary metal stage) carried on, or to be carried on, in New Zealand by a company that is not resident in New Zealand, through a branch of that company situated therein, is, or will be, of major importance in the development of New Zealand, he may, subject to subsection (5) of this section and upon such terms and conditions as he thinks fit, by Order in Council, declare that undertaking to be a special development project for the purposes of this section in respect of such accounting years of the company as he shall specify in that Order in Council, being—
“(a)
Such accounting years, not exceeding fifteen, as he so specifies as comprising the first specified period in relation to that Order in Council; and
“(b)
Such accounting years, if any, but in no case exceeding ten, as he so specifies as comprising the second specified period in relation to that Order in Council.
“(5)
For the purpose of exercising his discretion under subsection (4) of this section in respect of any undertaking, the Governor-General shall have regard especially to—
“(a)
The magnitude or projected magnitude of that undertaking:
“(b)
The extent to which he is satisfied that—
“(i)
There are, or will be, assured long-term export markets for the products of that undertaking:
“(ii)
Substantial overseas exchange earnings or savings are being, or will be, effected through that undertaking:
“(iii)
Substantial New Zealand resources are being, or will be, utilised in that undertaking:
“(iv)
Substantial contribution to the economic and social welfare of New Zealand through desired regional development will be made by that undertaking:
“(v)
A substantial source of long-term capital will be provided from outside New Zealand by that undertaking.”
10 Rebate from tax payable in respect of retrospective pay
The principal Act is hereby further amended by inserting, after section 78f (as inserted by section 9 of this Act), the following section:
“78g.
“(1)
In this section the expression ‘retrospective pay’, in relation to a taxpayer and to the income derived by a taxpayer in any income year, means income of any of the kinds referred to in paragraph (b) of section 88 of this Act which—
“(a)
Was paid in respect of the employment or service of the taxpayer during any period or periods within any income year or years preceding the income year in which it was derived; and
“(b)
Results from—
“(i)
A determination made by the Court of Arbitration, the Government Service Tribunal, the Government Railways Industrial Tribunal, the Post and Telegraph Staff Tribunal, the Police Staff Tribunal, or any other similar body; or
“(ii)
A recommendation of the Advisory Committee on Higher Salaries in the State Services; or
“(iii)
A decision made by the Government or any Minister of the Crown in respect of any taxpayer in the service of the Crown to whom a determination or recommendation referred to in subparagraph (i) or subparagraph (ii) of this paragraph does not apply; or
“(iv)
The provisions of any other enactment relating to any taxpayer whose remuneration is fixed by that enactment; or
“(v)
The renegotiation of any award by any union registered under the Industrial Conciliation and Arbitration Act 1954 or the Labour Disputes Investigation Act 1913.
“(2)
Subject to the provisions of this section, where the income derived by a taxpayer in any income year includes retrospective pay, there shall be allowed from the income tax payable (apart from the provisions of this section) in respect of that income a rebate of six cents for every complete dollar of either the retrospective pay or the taxable income of the taxpayer for that year, whichever is the less.
“(3)
Where the taxpayer so elects, instead of the rebate calculated in accordance with subsection (2) of this section, there shall be allowed a rebate equal to—
“(a)
The aggregate amount of income tax payable by the taxpayer (apart from the provisions of this section) in respect of the income derived by him in the income year in which the retrospective pay was derived and the income year or years to which that retrospective payment relates,—
less—
“(b)
The aggregate amount of income tax that would be payable by the taxpayer (apart from the provisions of this section) in respect of the income derived by him in those income years if the retrospective pay had been derived in the income year or years to which it relates:
“Provided that the amount of the rebate allowed under this subsection shall in no case be less than the amount of the rebate allowed under subsection (2) of this section.
“(4)
For the purposes of subsection (3) of this section—
“(a)
Any retrospective pay relating to any income year earlier than the two income years immediately preceding the income year in which the retrospective pay was derived shall be deemed to relate to the said two income years, and shall be apportioned equally between those two income years:
“(b)
The income tax payable or that would be payable shall be calculated as if it had been assessed under this Part of this Act.”
11 Special exemption in respect of gifts of money and payment of school fees
Section 84b of the principal Act (as inserted by section 4 of the Land and Income Tax Amendment Act (No. 2) 1962 and amended by section 6 of the Land and Income Tax Amendment Act (No. 2) 1967) is hereby further amended by adding to subsection (2) the following paragraph:
“(k)
The Sir Walter Nash Vietnam Appeal.”
12 Exemption of first $60 of interest and investment society dividends
(1)
Section 86 of the principal Act is hereby amended by repealing paragraph (ii) of subsection (1) (as substituted by section 5(1) of the Land and Income Tax Amendment Act 1961), and substituting the following paragraph:
“(ii)
Income derived by any person (not being an absentee, or a company, or a public authority, or a Maori authority, or an unincorporated body, or a trustee assessable and liable for income tax under section 155a or section 155b or section 155c or section 155d of this Act) from interest (not being interest that is exempt from income tax under any other provision of this section) or investment society dividends:
“Provided that the amount of the exemption under this paragraph in any income year shall not exceed sixty dollars of the aggregate of that income:”.
(2)
Section 5 of the Land and Income Tax Amendment Act 1961 is hereby consequentially repealed.
(3)
This section shall apply with respect to the tax on income derived in the income year commencing on the first day of April, nineteen hundred and sixty-nine, and in every subsequent year.
13 Certain income of overseas pension fund exempt from taxation
(1)
Section 86 of the principal Act is hereby further amended by inserting in subsection (1), after paragraph (kk), the following paragraph:
“(kkk)
Income derived by a non-resident pension fund which is exempt from income tax (being any tax which, in the opinion of the Commissioner, is substantially of the same nature as income tax imposed under this Part of this Act) in the country in which the persons managing or controlling the fund are resident, being income which is derived from interest:
“Provided that the exemption under this paragraph shall not apply to income derived from money lent (as defined in subsection (2) of section 167 of this Act), if the money is used for the purposes of a business which is owned or controlled by—
“(i)
The persons or any of the persons managing or controlling that non-resident pension fund; or
“(ii)
Any other person or persons, where that other person or, as the case may be, any of those other persons is associated with any of the persons managing or controlling that fund:”.
(2)
Section 86 of the principal Act is hereby further amended by adding to subsection (3) the following definition:
“‘Non-resident pension fund’ means a provident, benefit, superannuation, or retirement fund which—
“(a)
Was established and is maintained in a country or territory outside New Zealand for the sole purpose of providing superannuation benefits wholly or principally for persons who are not resident in New Zealand; and
“(b)
Is managed and controlled outside New Zealand by persons who are not resident in New Zealand.”
14 Benefit from share option or purchase schemes
(1)
The principal Act is hereby further amended by inserting, after section 88b (as inserted by section 9 of the Land and Income Tax Amendment Act 1968), the following section:
“88c.
“(1)
Without limiting the meaning of the term ‘allowances’ as used in paragraph (b) of section 88 of this Act, the said term shall include any benefit (determined in accordance with this section) conferred on any taxpayer in respect of, or in relation to, or in the course of, or by virtue of, his employment or service, or future employment or service, under any agreement to sell or issue shares in any company to the taxpayer:
“Provided that the said term shall not include the benefit conferred on a taxpayer under any agreement to the extent to which the agreement requires the taxpayer, on his ceasing that employment or service, to transfer the shares to his employer or to the person from whom the taxpayer acquired them, either without consideration or for a consideration not exceeding that paid by the taxpayer for those shares.
“(2)
For the purposes of this section, that benefit—
“(a)
Shall, where the taxpayer has acquired shares under the agreement, be the amount by which the value of the shares on the date on which he acquired them exceeds the amount paid or to be paid therefor, and shall be deemed to have been received by him in the income year in which he acquired the shares:
“(b)
Shall, where the taxpayer has transferred or otherwise disposed of rights under the agreement in respect of any or all of the shares to any person, the taxpayer and that person not being associated persons be the value of the consideration for the disposition, and shall be deemed to have been received by him in the income year in which he made the disposition:
“(c)
Shall, where rights of the taxpayer under the agreement have, by one or more transactions between associated persons, become vested in a person who has acquired shares under the agreement, be the amount by which the value of the shares on the date on which that person acquired them exceeds the amount paid or to be paid therefor, and shall be deemed to have been received by the taxpayer in the income year in which that person acquired the shares:
“(d)
Shall, where rights of the taxpayer under the agreement have, by one or more transactions between associated persons, become vested in a person (hereinafter referred to as the transferor) who has transferred or otherwise disposed of rights under the agreement to any other person, the transferor and that other person not being associated persons, be the value of the consideration for the disposition, and shall be deemed to have been received by the taxpayer in the income year in which the transferor made the disposition.
“(3)
The value of the benefits determined in accordance with this section shall be ascertained by the Commissioner in such manner as he thinks fit:
“Provided that no account shall be taken by the Commissioner in ascertaining that value of the effect of any restrictive provisions, contained in the agreement under which the benefit is conferred, as to the alienation or transfer of any shares, unless those restrictive provisions apply for a period ending not earlier than eight years from the end of the income year in which the benefit is deemed to have been received by the taxpayer.
“(4)
Where—
“(a)
The Commissioner has ascertained the value of the benefit determined in accordance with this section without taking into account any restrictive provisions referred to in the proviso to subsection (3) of this section; and
“(b)
The taxpayer subsequently disposes of any of those shares at a time when those restrictive provisions still apply; and
“(c)
The taxpayer is adversely affected thereby,—
the Commissioner may make such adjustment to the value of the benefit as, having regard to all the circumstances, he considers equitable, and may, notwithstanding anything to the contrary in section 24 of this Act, alter any assessment accordingly.
“(5)
For the purposes of this section the term ‘shares’ includes any convertible note as defined in subsection (1) of section 143a of this Act.
“(6)
For the purposes of this section, where any shares are held by a trustee for the benefit of a taxpayer or any relative of the taxpayer, whether absolutely or contingently, the taxpayer shall be deemed to have acquired the shares at the time when the trustee commenced to hold them.
“(7)
This section shall apply whether or not the taxpayer is in the employment or service in respect of, or in the course of, or by virtue of which, the benefit was conferred, on the date on which the benefit is deemed to have been received by him.”
(2)
This section shall apply with respect to every benefit conferred on any taxpayer under an agreement entered into on or after the nineteenth day of July, nineteen hundred and sixty-eight.
15 Valuation of trading stock acquired from another company in the same group
Section 98 of the principal Act is hereby amended by adding to subsection (4) the following proviso:
“Provided that where the taxpayer is a company included in a group of companies, the value of the trading stock of the taxpayer to be taken into account at the end of any income year shall be, at the option of the taxpayer, the value which could have been adopted pursuant to this subsection if the group of companies were one company.”
16 Agreements purporting to alter incidence of taxation to be void for income tax purposes
(1)
Section 108 of the principal Act is hereby amended by omitting the words “absolutely void”
, and substituting the words “absolutely void as against the Commissioner for income tax purposes”
.
(2)
This section shall apply with respect to every contract, agreement, or arrangement made or entered into after the passing of this Act.
17 No deductions unless expressly provided
(1)
Section 110 of the principal Act is hereby amended by inserting, after the words “the assessable income”
the words “or the non-assessable income”
.
(2)
The principal Act is hereby further amended by inserting in the heading preceding section 110, after the word “Assessable”
, the words “or Non-assessable”
.
18 Apportionment of expenditure or loss
The principal Act is hereby further amended by inserting, after section 110, the following section:
“110a.
“(1)
Subject to this section, any expenditure or loss which is deductible under this Act and is incurred in gaining or producing assessable income shall be deducted in calculating the assessable income, and shall not be deducted in calculating non-assessable income.
“(2)
Any expenditure or loss which is deductible under this Act and is incurred in gaining or producing non-assessable income shall be deducted in calculating the non-assessable income, and shall not be deducted in calculating assessable income.
“(3)
For the purposes of subsection (4) of this section, assessable income shall be divided into the following classes:
“(a)
Dividends:
“(b)
Assessable income other than dividends.
“(4)
Where in any income year a taxpayer has incurred any expenditure or loss which is deductible under this Act and is incurred in gaining or producing assessable income of either of the classes referred to in subsection (3) of this section, that expenditure or loss shall first be deducted in calculating the assessable income of that class derived in that income year, so far as that income extends, and any balance shall be deducted in calculating the assessable income of the other class derived in that income year.”
19 Expenditure or loss incurred in the production of non-assessable income
The principal Act is hereby further amended by inserting, after section 111, the following section:
“111a.
Any expenditure or loss which is incurred in gaining or producing non-assessable income shall be deducted in calculating the non-assessable income, so far as that non-assessable income extends, in the same manner and to the same extent as expenditure or loss which is incurred in gaining or producing assessable income is deducted in calculating assessable income.”
20 Certain deductions not permitted
Section 112 of the principal Act (as amended by section 14 of the Land and Income Tax Amendment Act 1966) is hereby further amended by adding the following paragraphs:
“(i)
Any expenditure or loss to the extent to which it is of a private or domestic nature:
“(j)
Any expenditure or loss to the extent to which it is incurred in gaining or producing income which is exempt from income tax:”.
21 Loss on disposal of buildings
(1)
Section 112 of the principal Act (as amended by section 20 of this Act) is hereby further amended by adding the following paragraph:
“(k)
Any loss incurred on the demolition, destruction, or disposal of any premises other than a temporary building:
“Provided that, in the case of the disposal of premises (other than a temporary building) Where, if a profit had been made from that disposal, the amount of the profit would have been assessable income pursuant to paragraph (c) of section 88 of this Act, this paragraph shall not apply to any loss in respect of that disposal.”
(2)
Section 2 of the principal Act is hereby amended by inserting, after the definition of the term “taxpayer”
, the following definition:
“‘Temporary building’ means any building which—
“(a)
Has been erected pursuant to a permit issued by a local authority or a public authority subject to its demolition or removal at the pleasure of the local authority or the public authority; or
“(b)
Has been erected at a construction site, and is to be demolished or removed on or before the completion of the construction:”.
22 Deductions for repair, maintenance, and depreciation
(1)
Section 113 of the principal Act is hereby amended by omitting from subsection (1) the words “the repair, alteration, or supply”
, and substituting the words “the repair”
.
(2)
Section 113 of the principal Act is hereby further amended by repealing the first proviso to subsection (1), and substituting the following proviso:
“Provided that in cases where—
“(a)
Depreciation of any such asset, not being plant, machinery, or equipment, or a temporary building, is caused by fair wear and tear:
“(b)
Depreciation of any such asset, being plant, machinery, or equipment, or a temporary building, is caused by fair wear and tear or by the fact of the asset becoming obsolete or useless,—
and, in either case, the depreciation cannot be made good by repair, the Commissioner may, subject to section 113a and also to section 117 of this Act, allow such deduction as he thinks just:”.
(3)
Section 14 of the Land and Income Tax Amendment Act 1959 is hereby consequentially amended by repealing subsection (2).
23 Special depreciation allowance on buildings providing tourist accommodation
The principal Act is hereby further amended by inserting, after section 114c (as inserted by section 14 of the Land and Income Tax Amendment Act (No. 2) 1967), the following section:
“114d.
“(1)
Subject to the provisions of this section and to section 117 of this Act, in calculating the assessable income of any taxpayer, being the owner of a new hotel erected or constructed pursuant to an approved project, the Commissioner may allow, in addition to the depreciation allowed as a deduction under section 113 of this Act, such deduction by way of special depreciation in accordance with this section as he thinks fit.
“(2)
The amount of any deduction allowed under this section in respect of any new hotel shall not exceed in the aggregate twenty percent of the cost of the new hotel.
“(3)
For the purposes of this section, the cost of a new hotel shall not include any costs incurred in the acquisition, preparation, or development of land, or in the construction of access roads, or any other costs in respect of which a deduction by way of depreciation is not allowed under section 113 of this Act.
“(4)
Unless in any case the Commissioner otherwise determines, the amount of the deduction under this section in respect of the cost of a new hotel shall be allowed in respect of the income derived by the taxpayer during the income year in which the new hotel is first used to provide accommodation for the travelling public and the three income years next succeeding that income year, and shall be allowed at the following rates:
“(a)
Ten percent of the cost in respect of the first year:
“(b)
Five percent of the cost in respect of the second year:
“(c)
Three percent of the cost in respect of the third year:
“(d)
Two percent of the cost in respect of the fourth year.
“(5)
Any expenditure in respect of which the taxpayer elects to receive a special depreciation allowance under section 114a of this Act shall not form part of the cost of a new hotel for the purposes of this section.
“(6)
Without limiting the discretion of the Commissioner under this section, he may refuse to allow, in whole or in part, any deduction under this section in any case where he is not satisfied that complete and satisfactory accounts have been kept by or on behalf of the taxpayer.
“(7)
Every reference in this section to an income year shall, where the taxpayer furnishes a return of income under section 8 of this Act for an accounting year ending with an annual balance date other than the thirty-first day of March, be deemed to be a reference to the accounting year corresponding with that income year, and, in every such case, the provisions of this section shall, with any necessary modifications, apply accordingly.
“(8)
For the purposes of this section—
“‘Approved project’ means any project, plan, or scheme involving the erection or construction of a new hotel, for which the approval of the Minister of Finance has been granted for the time being for the purposes of this section, that approval having been granted—
“(a)
On or after the nineteenth day of July, nineteen hundred and sixty-eight, and before the first day of April, nineteen hundred and seventy-two; and
“(b)
Before any contract was let for the erection or construction of the new hotel:
“‘Hotel’ means a building, or an extension, alteration, or improvement of a capital nature to an existing building, erected or constructed for the purpose of providing accommodation for the travelling public:
“‘New’ means not having previously been either used by any person or acquired or held by any person for use by that person.”
24 Revised assessments where assets sold after deduction of depreciation allowances
(1)
Section 117 of the principal Act is hereby amended by repealing subsection (1), and substituting the following subsection:
“(1)
Where the Commissioner has, for any year of assessment (whether before or after the commencement of this subsection), allowed a deduction in respect of the depreciation of any asset (including a building), and the taxpayer at any time afterwards sells or otherwise disposes of that asset at a price or for a consideration in excess of the amount to which the value of the asset has been reduced by that allowance, the Commissioner may make a revised assessment for that or any subsequent year without allowing that deduction or without allowing such portion thereof as he thinks fit, and may recover the additional amount of income tax accordingly:
“Provided that in any case where the asset comprises a building (other than a temporary building) the foregoing provisions of this subsection shall not apply in respect of any deduction allowed by way of depreciation under section 113 of this Act or the corresponding provisions of any former Act.”
(2)
Section 15 of the Land and Income Tax Amendment Act 1959 is hereby consequentially repealed.
25 Deduction in respect of amounts paid on shares in certain mining companies
(1)
Section 129c of the principal Act (as inserted by section 26 of the Land and Income Tax Amendment Act 1965) is hereby amended by repealing subsection (1), and substituting the following subsections:
“(1)
Where a taxpayer has, on or after the first day of April, nineteen hundred and sixty-five, made any payment in respect of the whole or part of the amount unpaid on any shares owned by the taxpayer in a company which at the time of the payment is a company—
“(a)
To which section 152 or section 153 of this Act applies; or
“(b)
Whose undertaking is, or is to be, in New Zealand and comprises, or is to comprise, solely or principally the activities of exploring or searching for, or mining—
“(i)
Any of the minerals referred to in section 152 of this Act, (including any mineral declared by the Minister of Finance pursuant to that section to be a qualifying mineral for the purposes of that section); or
“(ii)
Where the company is a New Zealand company, petroleum,—
and the Commissioner is satisfied that the payment will be used for and is necessary for the purposes of that company, a deduction shall be allowed, subject to this section, of one-third of the amount of that payment in calculating the assessable income derived by the taxpayer in the income year in which the payment is made.
“(1a)
Where, in any case, a deduction has been allowed under subsection (1) of this section in respect of any amount paid on shares in any company to which, at the date the amount was paid, paragraph (b) of subsection (1) of this section applied and, in the opinion of the Commissioner the company has not within a reasonable time after that date used the payment for the purposes of the company, the Commissioner may disallow the deduction and, notwithstanding anything to the contrary in section 24 of this Act, may alter any assessment accordingly.”
(2)
Subsection (1) of this section shall be deemed to have come into force on the seventeenth day of September, nineteen hundred and sixty-five (being the date of the passing of the Land and Income Tax Amendment Act 1965), and shall apply with respect to the tax on income derived in the income year that commenced on the first day of April, nineteen hundred and sixty-five, and in every subsequent year.
26 Assessment of income of proprietary companies
(1)
Section 138 of the principal Act is hereby amended by repealing paragraph (f) of subsection (1), and substituting the following paragraph:
“(f)
The term ‘residual taxable income’, in relation to any proprietary company and to any income year, means the amount of the taxable income (including taxable proprietary income, but excluding any taxable income to which section 150 or section 150a of this Act applies) of that proprietary company for that income year:
“Provided that in the case of a proprietary company which is not resident in New Zealand, the residual taxable income of that proprietary company for any income year shall, for the purpose of calculating the proprietary income derived in that income year by any shareholder who is resident in New Zealand, be the amount which would have been the taxable income (including taxable proprietary income, but excluding any taxable income to which section 150 or section 150a of this Act applies) of that proprietary company if all the income derived in that income year by that proprietary company and by any other proprietary company of which that proprietary company is a shareholder had been derived from New Zealand:”.
(2)
Section 138 of the principal Act is hereby further amended by repealing paragraph (b) of subsection (3).
(3)
Section 138 of the principal Act is hereby further amended by repealing paragraph (c) of subsection (3), and substituting the following paragraphs:
“(c)
Where the proprietary income of the shareholder or any portion thereof is taxable under this section and that income is also taxable (whether or not in New Zealand) as being income derived by a proprietary company, there shall be deducted from the ordinary income tax payable by the shareholder—
“(i)
The ordinary income tax payable in New Zealand by the proprietary company in respect of that income; and
“(ii)
The income tax payable by the proprietary company or by any other company in any other country or territory in respect of that income (not being income tax in respect of which a credit has been allowed or is allowable under section 170 of this Act); and
“(iii)
The income tax payable, whether by way of withholding tax or otherwise, by the shareholder in any other country or territory in respect of dividends derived in that income year by the shareholder from the proprietary company:
“Provided that part or all of the amount of the deduction provided for in this subparagraph may, at the option of the shareholder, instead of being deducted in respect of that income year be deducted from the ordinary income tax payable by the shareholder under a proprietary assessment made in respect of any one or more of the four income years immediately preceding that income year in respect of proprietary income derived by the shareholder from the proprietary company from which the dividends referred to in this subparagraph were derived, and to the extent that that amount is so deducted the deduction that would otherwise be made under this subparagraph shall be reduced accordingly:
“(d)
For the purposes of subparagraphs (ii) and (iii) of paragraph (c) of this subsection, the term ‘income tax’ has the same meaning as in subsection (1) of section 170 of this Act.”
(4)
Section 138 of the principal Act is hereby further amended by omitting from subsection (8) the words “or to the wife or husband of that taxpayer”
.
(5)
Section 138 of the principal Act is hereby further amended by adding the following subsection:
“(12)
This section shall not apply so as to impose upon any shareholder any liability for tax in respect of proprietary income derived in any income year from a proprietary company which is not resident in New Zealand, except where the Commissioner is satisfied—
“(a)
That more than one-quarter of the gross receipts or gross income of the proprietary company in that income year (being the gross receipts or gross income which would be taken into account in calculating the assessable income of that proprietary company if all the income for that income year of that proprietary company had been derived from New Zealand) arises directly or indirectly from, or is in any way based on or related to, purchases from or payments made or credits given to any person by—
“(i)
That shareholder; or
“(ii)
Any person (being a person who is resident in New Zealand) in any case where that person and that shareholder are associated persons; or
“(iii)
That shareholder and any one or more persons to whom subparagraph (ii) of this paragraph applies; or
“(b)
That more than one-quarter of the amount which would have constituted the assessable income of the proprietary company if all its income for that income year had been derived from New Zealand arises directly or indirectly (whether as proprietary income or otherwise) from, or is in any way based on or related to, purchases from or payments made or credits given to any person by—
“(i)
That shareholder; or
“(ii)
Any person (being a person who is resident in New Zealand) in any case where that person and that shareholder are associated persons; or
“(iii)
That shareholder and any one or more persons to whom subparagraph (ii) of this paragraph applies; or
“(c)
That any amount paid or credited to or otherwise dealt with in the interest or on behalf of the proprietary company is or is in the nature of, a discount, rebate, commission, share of profits, or other payment in respect of or calculated by reference to purchases or payments made or credits given at any time by—
“(i)
That shareholder; or
“(ii)
Any person (being a person who is resident in New Zealand) in any case where that person and that shareholder are associated persons,—
whether or not those purchases were made from, or those payments were made to, or those credits were given to that proprietary company; or
“(d)
That, by reason of transactions or arrangements entered into or made by the proprietary company and—
“(i)
That shareholder; or
“(ii)
Any person (being a person who is resident in New Zealand) in any case where that person and that shareholder are associated persons,—
the income derived in that income year by that shareholder or by any person (being a person who is resident in New Zealand), in any case where that person and that shareholder are associated persons, is less than the income which might be expected to be derived by that shareholder or, as the case may be, by that person if those transactions or arrangements had been entered into or made between independent parties; or
“(e)
That, where—
“(i)
Transactions or arrangements have been entered into or made between—
“(A)
That shareholder; or
“(B)
Any other person (being a person who is resident in New Zealand) in any case where that person and that shareholder are associated persons—
and any other party (that other party being referred to in this paragraph as the specified party); and
“(ii)
Further transactions or arrangements have been entered into or made between—
“(A)
The specified party (or any other person where such other person and the specified party are associated persons); and
“(B)
The proprietary company (or any other person where such other person and that proprietary company are associated persons),—
the transactions or arrangements referred to in subparagraph (ii) of this paragraph would not have been entered into or made if the transactions or arrangements referred to in subparagraph (i) of this paragraph had not been entered into or made, and, further, that by reason of the transactions or arrangements referred to in the said subparagraph (ii), the income derived in that income year by that shareholder (or by any other person who is resident in New Zealand where such other person and that shareholder are associated persons) is less than the income that might be expected to be derived in that income year by that shareholder (or, as the case may be, that last-mentioned person) if the transactions or arrangements referred to in the said subparagraph (ii) had been entered into or made with that shareholder (or, as the case may be, that last-mentioned person); or
“(f)
That the proprietary company derived in that income year, directly or through one or more proprietary companies, proprietary income from a proprietary company to which the provisions of any of the paragraphs (a) to (e) of this subsection apply.”
(6)
The Third Schedule to the Income Tax Assessment Act 1957 is hereby consequentially amended by repealing so much thereof as relates to paragraph (f) of subsection (1) and subsection (3) of section 138 of the principal Act.
(7)
Subsection (5) of this section shall apply with respect to the tax on income derived in any income year which commenced before or after the passing of this Act:
Provided that nothing in this subsection shall be construed as imposing any liability upon any taxpayer in respect of any income year which ended before the passing of this Act that would not have been imposed if subsections (1) to (6) of this section had not been enacted.
(8)
Any assessment made in respect of income derived in any income year which ended not later than the thirty-first day of March, nineteen hundred and sixty-eight, in so far as it excluded from the residual taxable income any taxable income to which section 150 or section 150a of this Act applies, shall in respect of that exclusion be deemed to have been validly and lawfully made.
(9)
Where any objection has been made, whether before or after the passing of this Act, to an assessment of income tax in respect of income derived in any income year which ended not later than the thirty-first day of March, nineteen hundred and sixty-eight, then, notwithstanding anything in any other enactment or in any rule of law relating to the interpretation of legislative enactments, nothing in subsections (1) to (7) of this section shall in determining that objection and every appeal against the determination thereof be construed as altering the law in force before the passing of this Act, and the objection and every appeal against the determination thereof shall be heard and determined as if subsections (1) to (7) of this section had not been enacted.
Compare:
In subs. (3), the words “income tax”
are substituted (as from 1 April 1969) in the new para. (c) for the words “ordinary income tax”
wherever they occur by s. 3(1) of the Land and Income Tax Amendment Act (No. 3) 1968.
27 Two or more companies consisting wholly or substantially of the same shareholders or under the same control
(1)
The principal Act is hereby further amended by repealing section 141, and substituting the following section:
“141.
“(1)
Subject to the provisions of this section, every company included in a group of companies shall be assessable and liable for income tax in the same manner as if it were a company not included in a group of companies.
“(2)
Where, in relation to two or more companies and to any income year,—
“(a)
At any time during that income year the aggregate of the prescribed proportions of the paid-up capital, or of the nominal value of the allotted shares, or of the voting power, in each of those companies which is held by the same persons is not less than two-thirds of the paid-up capital, or of the nominal value of the allotted shares, or of the voting power, as the case may be, in each of those companies; or
“(b)
The aggregate of the prescribed proportions of the profits for that income year of each of those companies to which the same persons would be entitled if the profits of each of those companies were distributed by way of dividend at the end of that income year is not less than two-thirds of those profits of each of those companies,—
those companies (in this Act referred to as a group of companies) shall, in respect of that income year, be assessed and liable for income tax in accordance with this section.
“(3)
For the purposes of this section—
“(a)
Where a nominee of any person holds any paid-up capital, or any allotted shares, or any voting power in a company, or is entitled to a share of profits distributed by a company, that paid-up capital, or those allotted shares, or that voting power, or that title to profits, as the case may be, shall be deemed to be held by that person:
“(b)
Shares in one company held by another company shall be deemed to be held by the shareholders in the last-mentioned company:
“(c)
In determining the amount of the proportion of the paid-up capital, or the nominal value of the allotted shares, or the title to profits, as the case may be, held by any person in any company, the Commissioner may disregard any shares held by that person which bear a fixed rate of dividend only:
“(d)
The term ‘nominee’, in relation to any person, includes—
“(i)
Any other person who may be required to exercise his voting power in relation to any company in accordance with the direction of the first-mentioned person, or who holds shares or debentures directly or indirectly on behalf of the first-mentioned person; and
“(ii)
The spouse and an unmarried infant child (including a step-child and a foster child) of that first-mentioned person, and a trustee for the spouse or for any such child;—
but does not include the spouse of that first-mentioned person in any case where the Commissioner is satisfied that, in relation to any company in which the spouse of that person holds any paid-up capital, or allotted shares, or voting power, or is entitled to a share of profits, that company is under the control of, and managed by, that spouse and not under the control of, or managed by, that person:
“(e)
The term ‘prescribed proportion’, in relation to the paid-up capital, or to the nominal value of the allotted shares, or to the voting power, or to the title to profits held by any person in each of two or more companies, means the lowest proportion of the paid-up capital, or of the nominal value of the allotted shares, or of the voting power, or of the title to profits, as the case may be, held by that person in any of those companies.
“(4)
The income tax payable in respect of the income derived in any income year by any company included in a group of companies shall be calculated on the taxable income of that company at the rate that would have been applicable if that company had a taxable income for that year equal in amount to the total of—
“(a)
The taxable income for that income year of all the companies included in the group; and
“(b)
The non-assessable income for that income year of all the companies included in the group, other than dividends received by one company included in the group from any other company included in the group.
“(5)
Where, by reason of any company being included in more than one group of companies, the income tax payable by any company included in any of those groups could be calculated at any of two or more different rates, it shall be calculated at the highest of those rates.
“(6)
Where in respect of any income year the same persons hold the whole of the paid-up capital in the same proportions in every company included in a group of companies (whether or not that group is part of another group of companies)—
“(a)
Any loss carried forward by any company included in the first-mentioned group, so far as that loss has not been deducted from or set off against the assessable income of that company for that income year pursuant to section 137 of this Act; and
“(b)
Any loss (which would, apart from the provisions of this section, be carried forward pursuant to the provisions of section 137 of this Act) incurred by any company included in the first-mentioned group in that income year,—
shall be deducted from the assessable income derived in that income year by each of the other companies included in the first-mentioned group, so far as the balance of that assessable income (after the deduction by each of those other companies of any loss which it is entitled to deduct under section 137 of this Act) extends, in the proportion that that balance bears to the balance of the assessable income of all of those companies (after the deduction as aforesaid), and the amount of the loss of any company so deducted from the assessable income derived by any other company shall not be carried forward in accordance with section 137 of this Act.
“(7)
For the purposes of subsection (6) of this section, the Commissioner shall be entitled, in his discretion, to disregard a small amount of paid-up capital held by any person in any company.
“(8)
Where—
“(a)
Any company makes a payment to another company under an agreement providing for the paying company to bear or share in losses or a particular loss of the payee company (being losses or a loss which are deductible under this Act); and
“(b)
The payment would not (otherwise than under this subsection) be taken into account in calculating the assessable income of either company; and
“(c)
Both companies are companies which are included in the same group of companies for the income year corresponding with the income year in respect of which the payment is made; and
“(d)
The payment is made not later than twelve months after the end of the accounting period of the payee company; and
“(e)
Both the payment and the receipt of the payment are fully disclosed in the accounts of both companies,—
the payment shall be deemed to be assessable income derived by the payee company on the last day of the accounting period in respect of which it is made, and to be deductible by the paying company as if it were expenditure necessarily incurred in the production of assessable income on that day.
“(9)
Notwithstanding anything in subsection (4) of this section, the Commissioner may, in his discretion, on application in writing by or on behalf of all the companies included in a group of companies, make a joint assessment of the income tax payable in respect of the income derived in any income year by every company included in that group of companies, and, in any such case, each company included in that group of companies shall be severally liable for an amount of income tax equal to the amount that would have been assessed if a separate assessment of income tax in respect of the income derived by that company in that income year had been made under that subsection.”
(2)
Section 138 of the principal Act is hereby amended by repealing paragraph (1) of subsection (1), and substituting the following paragraph:
“(1)
Where any one or more companies included in a group of companies hold shares in another company, the companies included in the group shall be deemed to be one shareholder of that other company and, for the purposes of paragraph (a) of this subsection, to be one person.”
(3)
Section 2 of the principal Act is hereby amended by inserting, after the definition of the term “gross”
(as inserted by section 3 of the Land and Income Tax Amendment Act 1964), the following definition:
“‘Group of companies’ has the meaning assigned to that term by subsection (2) of section 141 of this Act:”.
28 Partial exemption in respect of interest derived from certain debentures
(1)
The principal Act is hereby further amended by repealing section 150a (as inserted by section 32(1) of the Land and Income Tax Amendment Act 1966), and substituting the following section:
“150a.
“(1)
For the purposes of this section the term ‘amount’, in relation to a debenture, means the principal sum expressed to be secured by or owing under the debenture.
“(2)
Where any company which is not resident in New Zealand and which carries on the business of life insurance (not being a company that is assessable for ordinary income tax under section 149 of this Act) derives interest from any debenture, being a debenture—
“(a)
That was issued to the company before the twenty-sixth day of August, nineteen hundred and sixty-six; and
“(b)
The amount of which has been, and is being, used wholly or principally for the purposes of any undertaking, scheme, or work that, pursuant to the provisions of subsection (6) of section 2a of this Act, is deemed to be a development project for the purposes of that section; and
“(c)
The interest from which that was derived during any income year before the income year that commenced on the first day of April, nineteen hundred and sixty-six, has been assessed for income tax pursuant to the provisions of subsection (1) of section 150 of this Act (as in force before the commencement of the section for which this section was substituted by section 28 of the Land and Income Tax Amendment Act (No. 2) 1968),—
the amount of ordinary income tax payable by the company in respect of any interest derived by it from that debenture in any income year shall, unless otherwise provided in the annual taxing Act for any year, be nine-twentieths of the amount that would be payable by the company (after taking into account any rebate from ordinary income tax under section 78c or section 78e of this Act in respect of that interest) if this section had not been passed:
“Provided that the aggregate amount of ordinary income tax and social security income tax payable by the company in respect of that interest derived by the company in any income year shall not exceed fifteen percent of the gross amount of that interest.
“(3)
For the purposes of this section, the provisions of subsection (2) of section 150 of this Act shall apply, as far as they are applicable.”
(2)
Section 32 of the Land and Income Tax Amendment Act 1966 is hereby consequentially amended by repealing subsection (1).
Compare: In subs. (1), a new subs. (2) of s. 150a is substituted (as from 1 April 1969) by s. 3(1) of the Land and Income Tax Amendment Act (No. 3) 1968.
29 Companies engaged in mining for certain minerals or for petroleum
The principal Act is hereby further amended by inserting, after section 152, the following section:
“152a.
“(1)
In this section—
“‘Relevant period’, in relation to any income year, means the period commencing on the first day of the fifth income year immediately preceding the first-mentioned income year, and ending with the last day of the first-mentioned income year:
“‘Specified funds’, in relation to any company, means accumulated profits or accumulated income, or reserves created therefrom, other than profits, income, or reserves which—
“(a)
Are held on the last day of the relevant period for the purpose of repaying the paid-up capital of the company; or
“(b)
Are held on the last day of the relevant period for the purpose of being expended on exploring or searching for or mining in New Zealand (or any purposes incidental thereto) any of the minerals referred to in section 152 of this Act (including any mineral declared by the Minister of Finance pursuant to that section to be a qualifying mineral for the purposes of that section) or petroleum; or
“(c)
Have during the relevant period been advanced to any person for the purpose of carrying out any of the purposes referred to in paragraph (b) of this definition; or
“(d)
Have during the relevant period been expended by the company in—
“(i)
The purchase or acquisition of assets; or
“(ii)
The repayment of any loans or other liabilities; or
“(iii)
Any other manner—
in each case relating to the carrying out of any of the purposes referred to in paragraph (b) of this definition; or
“(e)
Have, during the relevant period or within six months after the end of that period, been expended by the company in the payment of dividends; or
“(f)
Have been used during the relevant period in the payment of income tax or are required to be used in the payment of any income tax liability arising under section 152, or, as the case may be, section 153 of this Act, as a result of the payment of dividends during the relevant period or within six months after the end of that period.
“(2)
Where the Commissioner is satisfied in respect of any income year that any company to which section 152 or section 153 of this Act applies had, on the first day of the relevant period, any specified funds, the Commissioner may, for the purposes of section 152 or, as the case may be, section 153 of this Act, deem the company to have paid on the last day of the relevant period a dividend to its shareholders of such amount as he considers reasonable not exceeding the amount of the specified funds; and the provisions of section 152, or, as the case may be, section 153 of this Act shall apply as if the first-mentioned amount were a dividend paid by the company to its shareholders on the last day of the relevant period.
“(3)
Where the Commissioner is satisfied that any dividend in fact paid by any company to which section 152 or section 153 of this Act applies represents any amount which he has deemed to be a dividend under subsection (2) of this section, the dividend in fact paid, to the extent that it does not exceed that amount, shall not be taken into account for the purposes of section 152 or, as the case may be, section 153 of this Act.”
30 Assessment of petroleum mining companies
(1)
Section 153 of the principal Act is hereby amended by repealing subsection (5), and substituting the following subsections:
“(5)
For the purposes of this section the aggregate amount expended by a company and deemed to be irrecoverable shall, on any date, be taken to be the aggregate amount theretofore expended by the company in development work in New Zealand, in relation to prospecting or mining for petroleum, reduced by the sum of—
“(a)
An amount equal to the selling value, as determined by the Commissioner, of assets (not including any petroleum that has not been recovered from the earth, but including any petroleum that has been recovered from the earth and not sold or otherwise disposed of at that date) directly resulting from the aggregate amount so expended; and
“(b)
An amount equal to the consideration received from the sale or other disposal of petroleum to the extent that that consideration exceeds the total amount of all dividends theretofore paid by the company and deemed to be taxable income, the amount of income tax paid or payable by the company in respect of such taxable income and any expenditure or loss (excluding any expenditure or loss incurred in connection with the development work) of the company which would have been deducted from that consideration if the assessable income of the company had been calculated otherwise than in accordance with this section.
“(5a)
For the purposes of subsection (5) of this section, if any difference arises between the Commissioner and any company as to whether any amount expended by the company was expended in development work in New Zealand, the difference shall be determined by the Commissioner.”
(2)
The Schedule to the Land and Income Tax Amendment Act 1960 is hereby consequentially amended by repealing so much thereof as relates to section 153 of the principal Act.
31 Assessment of companies holding shares in exploration companies
(1)
Section 153a of the principal Act (as inserted by section 33 of the Land and Income Tax Amendment Act (No. 2) 1958) is hereby amended by repealing the definition of the term “petroleum exploration company”
in subsection (1), and substituting the following definition:
“‘Exploration company’ means a New Zealand company engaged in exploring or searching for or mining in New Zealand any one or more of the minerals referred to in section 152 of this Act (including any mineral declared by the Minister of Finance pursuant to that section to be a qualifying mineral for the purposes of that section) or petroleum:”.
(2)
Section 153a of the principal Act (as so inserted) is hereby further amended—
(a)
By omitting the words “petroleum exploration company”
wherever they subsequently occur, and substituting in each case the words “exploration company”
:
(b)
By inserting in subsection (2), after the words “in relation to prospecting or mining”
, the words “for any one or more of the minerals referred to in section 152 of this Act (including any mineral declared by the Minister of Finance pursuant to that section to be a qualifying mineral for the purposes of that section) or”
:
(c)
By inserting in paragraph (a) of subsection (5), before the words “section 153,”
the words “section 152 or”
.
32 New sections (relating to trusts) substituted
The principal Act is hereby further amended by repealing section 155, and substituting the following sections:
“155 Meaning of expression ‘specified trust’
(1)
For the purposes of this Act, the expression ‘specified trust’ means a trust created on or after the nineteenth day of July, nineteen hundred and sixty-eight, not being a trust—
“(a)
Which is created—
“(i)
By any will or codicil or an order of Court varying or modifying the provisions of any will or codicil; or
“(ii)
On any intestacy (including any partial intestacy), or by order of Court varying or modifying, in relation to any estate, the application of the law relating to the distribution of intestate estates; or
“(iii)
By order of Court; or
“(iv)
By any enactment; or
“(v)
For the purpose of administering any funds, being compensation or other money arising from the death of or injury to any person; or
“(b)
Which is not carried on for the private pecuniary profit of any individual and whose funds are, in the opinion of the Commissioner, applied wholly or principally for benevolent, philanthropic, cultural, or public purposes within New Zealand.
“(2)
Notwithstanding the provisions of subsection (1) of this section, where in any case a trust is created on or after the nineteenth day of July, nineteen hundred and sixty-eight, by the transfer of property on trust to trustees of another trust created before that date, to be held on the same terms as that other trust, and both trusts are administered jointly as one trust, the first-mentioned trust shall not be a specified trust.
“155a Special provisions with respect to income derived by beneficiaries under a trust
(1)
If and so far as the income derived by a trustee is also income derived by a beneficiary entitled in possession to the receipt thereof under the trust during the same income year (whether such entitlement arises by virtue of the provisions of the trust or by virtue of the exercise by the trustee of a discretion which he is required or is empowered to exercise), the trustee shall in respect thereof be deemed to be the agent of that beneficiary, and shall be assessable and liable for income tax accordingly, and all the provisions of this Act as to agents shall, so far as applicable, apply accordingly.
“(2)
Where any income is derived by a beneficiary as aforesaid subject to a condition, obligation, or trust requiring him to maintain or support any other person (whether out of the income so derived or otherwise) and that beneficiary would, apart from that condition, obligation, or trust, be entitled to a special exemption in respect of the maintenance and support provided by him for that other person, that beneficiary shall be entitled to the same special exemptions as if he were beneficially entitled to that income free from any such condition, obligation, or trust.
“(3)
Where a trustee is required or empowered at his discretion to pay or apply income derived by him in any income year to or for the benefit of specified beneficiaries or to or for the benefit of some one or more of a number of specified beneficiaries or of a specified class of beneficiaries, a beneficiary in whose favour the trustee so pays or applies the whole or a part of that income during, or within six months after the end of, that income year (or the corresponding accounting year of the trustee) by a bona fide transaction which places the whole or, as the case may be, that part of that income beyond the possession and control of the trustee in his capacity as trustee of that trust, shall be deemed to be entitled in possession to the receipt, under the trust during that income year, of the amount of income so paid to him or applied for his benefit:
“Provided that where—
“(a)
The trustee is the trustee of a specified trust; and
“(b)
The beneficiary is an infant,—
then, to the extent that at any time while the beneficiary remains an infant that amount of income, whether directly or indirectly and in any form, comes within the possession or under the control of the trustee in his capacity as trustee of that trust or is used for the purposes of any business carried on by the trustee in his capacity as trustee of that trust, whether or not in partnership with any other person, that amount shall be deemed not to have been paid to or applied for the benefit of that beneficiary, and the Commissioner may, notwithstanding anything to the contrary in section 24 of this Act, alter any assessment accordingly.
“(4)
Where the income derived in any income year by the trustee of a trust other than a specified trust is also income derived by any beneficiary who is an infant but whose interest in that income has, before the end of the income year, vested under the provisions of the trust and not by the exercise of any discretion by the trustee, the beneficiary shall be deemed to be entitled in possession to the receipt of that income under the trust during that income year.
“(5)
Where a trustee furnishes a return of income under section 8 of this Act for an accounting year ending with an annual balance date other than the thirty-first day of March, and any income derived by the trustee in that accounting year is also income derived by a beneficiary entitled or deemed to be entitled in possession to the receipt thereof under the trust during the same accounting year, the beneficiary shall, for the purposes of this Act, be deemed to have derived that income and to be entitled in possession to the receipt thereof under the trust during the same income year as that during which the trustee is, under section 8 of this Act, deemed to have derived that income.
“(6)
Nothing in this section or in section 155b or section 155c or section 155d of this Act shall be so construed as to exempt a beneficiary from any income tax which would be payable by him had he derived the income to which he is entitled under the trust directly instead of through a trustee.
“155b Special provisions with respect to income derived by trustees of specified trusts
(1)
If and so far as the income derived by the trustee of any specified trust is not also income derived by any beneficiary entitled or deemed to be entitled in possession to the receipt thereof in accordance with the provisions of section 155a of this Act, the trustee shall be assessable and liable for income tax on that income as if he were beneficially entitled thereto, except that—
“(a)
The rate of tax shall, subject to section 155d of this Act, be calculated by reference to that income alone; and
“(b)
The trustee shall not be entitled to any deduction by way of special exemption for the purpose of assessing either ordinary income tax or social security income tax.
“(2)
The trustee of any specified trust shall in every case make a return of the whole income so derived by him as trustee of that trust, and each such return shall be separate and distinct from any return of income derived by him under any other trust (whether a specified trust or not) or in his own right.
Compare: In subs. (1), a new para. (b) is substituted (as from 1 April 1969) by s. 3(1) of the Land and Income Tax Amendment Act (No. 3) 1968.
“155c Special provisions with respect to income derived by trustees of other trusts
—(1)
If and so far as the income derived by a trustee of any trust (other than a specified trust) is not also income derived by any beneficiary entitled or deemed to be entitled in possession to the receipt thereof in accordance with the provisions of section 155a of this Act, the trustee shall be assessable and liable for income tax as if he were beneficially entitled thereto, except that—
“(a)
The rate of tax shall, subject to section 155d of this Act, be calculated by reference to that income alone:
“(b)
Where the trustee is a company or a corporation, any income assessable to the trustee shall be assessable at the rate applicable to a trustee other than a company or a corporation:
“(c)
The trustee shall be entitled to a special exemption of four hundred dollars for the purpose of assessing ordinary income tax and shall not be entitled to any further deduction by way of special exemption for the purposes of assessing either ordinary income tax or social security income tax.
“(2)
The trustee of every trust, other than a specified trust, shall in every case make a return of the whole income so derived by him as trustee of that trust, and each such return shall be separate and distinct from any return of income derived by him under any other trust or in his own right.
Compare: In subs. (1), a new para. (c) is substituted (as from 1 April 1969) by s. 3(1) of the Land and Income Tax Amendment Act (No. 3) 1968.
“155d Aggregation of income of trusts in certain cases
“(1)
Where, in relation to any person—
“(a)
Either—
“(i)
Two or more separate trusts have been created by that person, or the whole or substantially the whole of the property subject to two or more separate trusts has been received from that person, whether in either case the separate trusts are administered by the same or different trustees, and, in either case, the terms of the separate trusts are such that the whole, or substantially the whole, of the income of those trusts, whenever derived, is derived by or accrues to, or will ultimately be derived by or accrue to, the same beneficiary or beneficiaries or the same group or class of beneficiaries; or
“(ii)
Two or more separate trusts have been created by reason of the death of that person, whether under his will or codicil, or under his intestacy or partial intestacy, or under an order of Court varying or modifying either the provisions of his will or codicil, or the application of the law relating to the distribution of intestate estates in relation to his intestacy or partial intestacy; and
“(b)
The separate trusts are all specified trusts or, as the case may be, none of those trusts is a specified trust,—
then, for the purposes of this Act, the separate trusts shall be deemed to be one trust of which the income is the total income of the separate trusts and of which the trustees are all the trustees of the separate trusts and of which the beneficiaries are all the beneficiaries of the separate trusts.
“(2)
Where, in relation to any income year, two or more separate trusts are trusts to which the provisions of paragraph (a) of subsection (1) of this section apply, and one or more of those trusts are specified trusts, and one or more of those trusts are trusts other than specified trusts, the income tax payable in respect of the assessable income derived by the trustee of each of the separate trusts (not being income to which any beneficiary is entitled or deemed to be entitled in possession to the receipt thereof in accordance with section 155a of this Act during that income year) shall be calculated in accordance with the following formula:
_eqn2.JPG)
where—
a
is the amount of that assessable income derived in respect of that income year by that trustee; and
b
is an amount equal to the total of the assessable income derived in respect of that income year by all the trustees of all the separate trusts, other than income derived by any beneficiary entitled or deemed to be entitled in possession to the receipt thereof in accordance with section 155a of this Act during that income year; and
c
is the amount of income tax that would have been payable by that trustee under section 155b or section 155c of this Act, as the case may be, if he had derived in respect of that income year an assessable income equal in amount to item ‘b’ of this subsection.”
33 Basic rate of tax payable by trustees of specified trusts
(1)
The First Schedule to the principal Act (as substituted by section 22(1) of the Decimal Currency Amendment Act 1965) is hereby amended by inserting in Part A, after clause 4, the following clause:
“4a Trustees of specified trusts
On all income assessable to a trustee of a specified trust under section 155b or section 155d of this Act (whether or not the trustee is a company or a corporation), the basic rate of tax for every $1 of the taxable income shall be—
“(a)
35c; or
“(b)
The effective rate of tax ascertained by calculating tax on that income in accordance with the rates of tax specified in Part D of this Schedule and dividing the tax so calculated by the number of dollars included in that income,—
whichever is the greater.”
(2)
The First Schedule to the principal Act (as so substituted) is hereby further amended by inserting in subclause (2) of clause 5 of Part A, after the words “companies and public authorities”
, the words “and trustees of specified trusts”
.
(3)
For the year commencing on the first day of April nineteen hundred and sixty-eight, income tax payable by trustees of specified trusts shall be assessed, levied, and paid, pursuant to Part VI of the principal Act, at the rate specified in clause 4a of the First Schedule to that Act (as substituted as aforesaid and amended by subsection (1) of this section). For the purposes of section 78 of the principal Act, this subsection shall be deemed to be an annual taxing Act.
(4)
This section shall be deemed to have come into force on the first day of April, nineteen hundred and sixty-eight.
Compare: This section is repealed (as from 1 April 1969) by s. 6(1) of the Land and Income Tax Amendment Act (No. 3) 1968.
34 Amendments and repeals consequential on section 32
(1)
Section 2 of the principal Act is hereby amended by inserting, after the definition of the term “shareholder”
, the following definition:
“‘Specified trust’ has the meaning assigned to that term by section 155 of this Act:”.
(2)
The principal Act is hereby consequentially amended—
(a)
By repealing section 84a (as inserted by section 24 of the Land and Income Tax Amendment Act (No. 2) 1958):
(b)
By omitting from paragraph (ii) of subsection (1) of section 86 (as substituted by section 5(1) of the Land and Income Tax Amendment Act 1961) the words “paragraph (a) or paragraph (b) of section 155”
, and substituting the words “section 155a or section 155b or section 155c or section 155d”
:
(c)
By omitting from paragraph (b) of subsection (10) of section 138 and also from paragraph (c) the words “section 155”
, and substituting in each case the words “sections 155a, 155b, 155c, and 155d”
:
(d)
By omitting from subsection (1) of section 159 the words “section 155”
, and substituting the words “section 155a or section 155b or section 155c or section 155d”
.
(3)
Section 14 of the Income Tax Assessment Act 1957 is hereby consequentially amended—
(a)
By repealing subparagraph (iv) of paragraph (c) of subsection (6), paragraph (d) of subsection (8), and paragraph (c) of subsection (9):
(b)
Omitting from subsection (7) the words “or the child becomes entitled to a vested or contingent interest (not subject to any prior interest) in the income of a trust referred to in section 84a of the principal Act”
.
(4)
The Income Tax Assessment Act 1957 is hereby consequentially further amended by omitting the words “paragraph (b) of section 155”
from—
(a)
Subparagraph (i) of paragraph (d) of subsection (1) of section 26a (as inserted by section 41 of the Land and Income Tax Amendment Act 1959); and
(b)
Paragraph (i) of subsection (2) of section 44,— and substituting in each case the words “section 155b or section 155c or section 155d”
.
(5)
The following enactments are hereby consequentially repealed:
(a)
Section 24 and subsections (1) and (2) of section 44 of the Land and Income Tax Amendment Act (No. 2) 1958:
(b)
Section 24 of the Land and Income Tax Amendment Act 1959:
(c)
Subsection (2) of section 3 of the Land and Income Tax Amendment Act 1962.
35 Tax on income derived by Maori authorities for twenty or less beneficiaries
(1)
Section 161 of the principal Act is hereby amended by repealing subsection (2), and substituting the following subsection:
“(2)
The income shall for the purpose of assessing ordinary income tax thereon be deemed to be income derived by the Maori authority as trustee for the Maori or Maoris and also to be income derived by each Maori according to his interest in the trust or authority as a beneficiary entitled in possession to the receipt thereof under the trust during the same income year within the meaning of subsection (1) of section 155a of this Act. The Maori authority shall in respect of that income be deemed to be the agent of each Maori, and each Maori as principal as well as the Maori authority as his agent shall be assessable and liable for ordinary income tax on his interest therein accordingly, and all the provisions of this Act as to agents shall, so far as applicable, apply accordingly.”
(2)
The Third Schedule to the Income Tax Assessment Act 1957 is hereby consequentially amended by repealing so much thereof as relates to subsection (2) of section 161 of the principal Act.
Compare:
In subs. (1), the words “income tax”
are substituted in the new subs. (2) (as from 1 April 1969) for the words “ordinary income tax”
wherever they occur by s. 3(1) of the Land and Income Tax Amendment Act (No. 3) 1968.
36 Classes of income deemed to be derived from New Zealand
(1)
Section 167 of the principal Act is hereby amended by repealing paragraph (a) of subsection (1), and substituting the following paragraph:
“(a)
Income derived from any business wholly or partly carried on in New Zealand:”.
(2)
Section 167 of the principal Act is hereby further amended by repealing paragraph (aa) of subsection (1) (as inserted by section 35(1) of the Land and Income Tax Amendment Act 1966), and substituting the following paragraph:
“(aa)
Income derived from any business carried on out of New Zealand to the extent that that income consists of income of any of the classes referred to in paragraph (c), or paragraph (d), or paragraph (e), or paragraph (f), or paragraph (i), or paragraph (j), or paragraph (jj), or paragraph (11) of this subsection:”.
(3)
Section 35 of the Land and Income Tax Amendment Act 1966 is hereby consequentially amended by repealing subsection (1).
37 Apportionment where income derived partly in New Zealand and partly elsewhere
Section 169 of the principal Act is hereby amended by adding, as subsection (2), the following subsection:
“(2)
The foregoing provisions of this section shall not be construed as applying with respect to—
“(a)
Income of any of the classes referred to in subsection (1) (except paragraphs (a) and (1)) of section 167 of this Act; or
“(b)
Income of any of the classes referred to in the said paragraph (a) or paragraph (1) of subsection (1) of section 167 of this Act to the extent that that income consists of income of any of the classes referred to in any of the other provisions of that subsection.”
38 Excess retention tax payable by privately controlled investment companies only
(1)
Section 172bb of the principal Act (as substituted by section 37(1) of the Land and Income Tax Amendment Act 1966) is hereby amended by repealing subsection (1), and substituting the following subsection:
“(1)
In this Part of this Act the term ‘privately controlled investment company’ means any proprietary company which, in the opinion of the Commissioner, is established exclusively or principally for the investment of money or the holding of or dealings in shares, securities, investments, or estates and interests, whether freehold or chattel, in real property; but does not include—
“(a)
A proprietary company in which all the shares are beneficially held by or on behalf of one or more companies none of which is a privately controlled investment company; or
“(b)
A proprietary company which, in the opinion of the Commissioner, is established exclusively or principally for the holding of estates or interests, whether freehold or chattel, in real property in order to provide premises for the use (other than subletting) of any other company or companies which are included in the same group of companies as the proprietary company.”
(2)
Section 172b of the principal Act (as inserted by section 15 of the Land and Income Tax Amendment Act (No. 2) 1958) is hereby consequentially amended by repealing the definition of the term “privately controlled company”
(as inserted by section 9(2) of the Land and Income Tax Amendment Act 1961), and substituting the following definition:
“‘Privately controlled investment company’ means a privately controlled investment company within the meaning of section 172bb of this Act:”.
(3)
Section 172c of the principal Act (as inserted by section 15 of the Land and Income Tax Amendment Act (No. 2) 1958 and amended by section 9(3) of the Land and Income Tax Amendment Act 1961) is hereby further amended by omitting the words “This Part of this Act shall apply to every company which is a privately controlled company at the end of its accounting year, except companies of the following classes:”
, and substituting the words “This Part of this Act shall apply to every company which is a privately controlled investment company at the end of its accounting year, except companies of the following classes:”
.
(4)
The following enactments are hereby consequentially repealed:
(a)
Paragraphs (b), (c), and (cc) and subparagraph (iv) of paragraph (f) of section 172c and sections 172k, 172kk, and 172m of the principal Act:
(b)
Section 28 of the Land and Income Tax Amendment Act 1959:
(c)
Section 9 of the Land and Income Tax Amendment Act 1961:
(d)
Section 24 of the Land and Income Tax Amendment Act (No. 2) 1963:
(e)
Section 45 of the Land and Income Tax Amendment Act 1964:
(f)
Section 38 of the Land and Income Tax Amendment Act 1966.
(5)
Section 35 of the principal Act (as substituted by section 2(1) of the Land and Income Tax Amendment Act 1960) is hereby consequentially amended by omitting from paragraph (i) the words “made under section 172m of this Act or”
.
(6)
This section shall apply with respect to the tax for the year of assessment that commenced on the first day of April, nineteen hundred and sixty-eight, and for every subsequent year.
39 Application of Part VIIc of the principal Act
Section 203s of the principal Act (as inserted by section 17 of the Land and Income Tax Amendment Act 1964) is hereby amended by repealing paragraph (g) of subsection (2), and substituting the following paragraph:
“(g)
Derived by way of interest by a non-resident investment company from any development investments within the meaning of section 2a of this Act.”
40 Non-resident withholding tax to be final tax in certain cases
(1)
The principal Act is hereby further amended by repealing section 203z (as inserted by section 17 of the Land and Income Tax Amendment Act 1964), and substituting the following section:
“203z
Notwithstanding anything to the contrary in this Act, non-resident withholding income that consists of—
“(a)
A dividend (other than an investment society dividend); or
“(b)
A royalty or other like payment of any of the kinds referred to in paragraph (e) of section 88 of this Act, being a royalty or payment that is for the use, production, or reproduction of, or for the privilege of using, producing, or reproducing, a literary, dramatic, musical, or artistic work in which copyright subsists; or
“(c)
Interest or an investment society dividend, in any case where the person by whom that interest or, as the case may be, that investment society dividend is derived and the person by whom that interest or, as the case may be, that investment society dividend is paid are not associated persons,—
shall not be included in the assessable income of the person by whom that non-resident withholding income is derived, and the amount of income tax for which that person is liable in respect of the amount of that non-resident withholding income derived by him in any income year shall, subject to sections 78b and 78e of this Act, be determined exclusively and finally by the total amount of non-resident withholding tax for which that person is liable in accordance with section 203t of this Act in respect of that non-resident withholding income.”
(2)
Section 203za of the principal Act (as inserted by section 17 of the Land and Income Tax Amendment Act 1964) is hereby amended by inserting in subsection (1), after the words “that consists of interest, or of an investment society dividend”
, the words “(other than interest or an investment society dividend referred to in paragraph (c) of section 203z of the Act)”
.
41 Refund of excess tax
(1)
Section 223 of the principal Act (as substituted by section 41(1) of the Land and Income Tax Amendment Act 1966) is hereby amended by omitting from the proviso to subsection (1), and also from the proviso to subsection (2), the words “six years”
, and substituting in each case the words “eight years”
.
(2)
Section 25 of the Income Tax Assessment Act 1957 (as substituted by section 44(1) of the Land and Income Tax Amendment Act 1966) is hereby amended by omitting from the proviso the words “six years”
, and substituting the words “eight years”
.
(3)
Subsection (1) of this section shall apply to any assessment made on or after the first day of April, nineteen hundred and sixty-two, or, in any case where the original assessment has been altered, to any altered assessment where the original assessment was made on or after the first day of April, nineteen hundred and sixty-two:
Provided that where an assessment has been altered so as to increase the amount of tax payable and the Commissioner is satisfied that by reason of that alteration tax has been paid in excess of the amount properly payable, this section shall apply to any such assessment which has been altered on or after the first day of April, nineteen hundred and sixty-two.
(4)
Subsection (2) of this section shall apply to the tax deductions made from income derived in the income year commencing on the first day of April, nineteen hundred and sixty-two, and every subsequent income year.
42 Recovery of tax deductions from employers
(1)
Section 31 of the Income Tax Assessment Act 1957 is hereby amended by repealing subsection (2), and substituting the following subsections:
“(2)
Where a tax deduction has been made under this Part of this Act and the employer has failed to deal with the amount of the tax deduction or any part thereof in the manner required by subsection (1) of this section or the other provisions of this Part of this Act, the amount of the tax deduction for the time being unpaid to the Commissioner shall, in the application of the assets of the employer, rank as follows:
“(a)
Where the employer is, or one of whom is, an individual, upon his bankruptcy or upon his making an assignment for the benefit of his creditors, the amount of the tax deduction shall rank without limitation in amount, and notwithstanding anything in any other Act, in order of priority immediately after preferential claims for wages or other sums payable to or on account of any servant or worker or apprentice or articled clerk, and in priority to all other claims:
“(b)
Where the employer is a company, upon the liquidation of the company or upon the appointment of a receiver on behalf of the holder of any debenture given by the company secured by a charge over any property of the company or upon possession being taken on behalf of that debenture holder of that property, the amount of the tax deduction shall rank immediately after the debts referred to in subsection (1) of section 308 of the Companies Act 1955, such debts being limited as provided in subsection (2) thereof, and so far as the assets of the company available for payment of general creditors are insufficient to meet the amount of that tax deduction, it shall have priority over the claims of holders of debentures under any floating charge created by the company and be paid accordingly out of any property comprised in or subject to that charge.
“(3)
This section shall apply notwithstanding anything in any other Act, and in particular section 308 of the Companies Act 1955 shall apply subject thereto.”
(2)
Section 32 of the Income Tax Assessment Act 1957 is hereby consequentially amended by adding the following subsection:
“(11)
This section shall apply subject to section 31 of this Act.”
(3)
This section shall apply with respect to tax deductions made after the passing of this Act.
This Act is administered in the Inland Revenue Department.
Versions
Land and Income Tax Amendment Act (No 2) 1968
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