Income Tax Act 2007

If you need more information about this Act, please contact the administering agency: Inland Revenue Department
DB 3 Determining tax liabilities
Deduction

(1)

A person is allowed a deduction for expenditure that they incur in connection with the following matters:

(a)

calculating or determining their income tax liability for a tax year:

(b)

calculating or determining the GST payable by them in a taxable period:

(c)

preparing, instituting, or presenting an objection or challenge to, or an appeal following, a determination or assessment made under this Act or an earlier Act, the Tax Administration Act 1994, or the Goods and Services Tax Act 1985:

(d)

making a contribution towards the expenditure incurred by another person if—

(i)

the other person is allowed a deduction for that expenditure; and

(ii)

the expenditure relates to a matter affecting the determination of the first person’s liability for income tax or GST; and

(iii)

the first person has objected to, challenged, or appealed against an assessment or determination made in relation to the matter under this Act or an earlier Act, the Tax Administration Act 1994, or the Goods and Services Tax Act 1985.

Exclusions

(2)

This section does not apply to expenditure that a person incurs in connection with the following matters:

(a)

a matter arising from a return of income or a return under the Goods and Services Tax Act 1985 that was fraudulent or wilfully misleading:

(b)

an offence under any of the Inland Revenue Acts:

(c)

a shortfall penalty assessed under this Act or an earlier Act, the Tax Administration Act 1994, or the Goods and Services Tax Act 1985 (but not an assessment that is later cancelled):

(d)

an objection, challenge, or appeal that is inconsequential or frivolous:

(e)

a matter arising under the Goods and Services Tax Act 1985 to the extent to which it relates to a taxable activity that does not constitute a business for the purposes of this Act.

Taxable activity

(3)

In this section, taxable activity is defined in section 6 of the Goods and Services Tax Act 1985.

Link with subpart DA

(4)

This section supplements the general permission and overrides the capital limitation, the private limitation, and the employment limitation. The other general limitations still apply.

Defined in this Act: amount, assessment, business, capital limitation, deduction, employment limitation, general limitation, general permission, GST, GST payable, income tax liability, Inland Revenue Acts, pay, private limitation, return of income, supplement, tax year, taxable activity, taxable period

Compare: 2004 No 35 s DB 3

Section DB 3(4): substituted (with effect on 1 April 2008), on 6 October 2009, by section 68(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section DB 3(4) list of defined terms capital limitation: inserted (with effect on 1 April 2008), on 6 October 2009, by section 68(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).