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Act In force Previous version as at 01 April 2008 (as enacted) | 2007 No 97 | Administered by Inland Revenue Department

Income Tax Act 2007

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Part A Purpose and interpretation

Part B Core provisions

Subpart BA—Purpose

Subpart BB—Income tax and resulting obligations

Imposition of income tax

Main obligations

Overriding effect of certain matters

Subpart BC—Calculating and satisfying income tax liabilities

Non-filing and filing taxpayers

Annual gross income

Annual total deduction

Net income and net loss

Income tax liability of filing taxpayer

Income tax liability of person with schedular income

Satisfaction of income tax liability

Subpart BD—Income, deductions, and timing

Income, exempt income, excluded income, nonresidents' foreign-sourced income, and assessable income

Allocation of income to particular income years

Allocation of deductions to particular income years

Subpart BE—Withholding liabilities

Withholding liabilities

Subpart BF—Other obligations

Other obligations

Subpart BG—Avoidance

Subpart BH—Double tax agreements

Double tax agreements

Subpart CA—General rules

Amounts that are income

Amounts that are exempt income or excluded income

Subpart CB—Income from business or trade-like activities

Business generally

Amounts derived from business

Amounts received on disposal of business assets that include trading stock

Schemes for profit

Profit-making undertaking or scheme

Personal property

Personal property acquired for purpose of disposal

Business of dealing in personal property

Disposal: land acquired for purpose or with intention of disposal

Disposal: land acquired for purposes of business relating to land

Disposal: land used for landfill, if notice of election

Disposal within 10 years: land dealing business

Disposal within 10 years: land development or subdivision business

Disposal within 10 years of improvement: building business

Disposal: schemes for development or division begun within 10 years

Disposal: amount from major development or division and not already in income

Disposal: amount from land affected by change and not already in income

Transactions between associated persons

Exclusions for residential land

Residential exclusion from sections CB 6 to CB 11

Residential exclusion from sections CB 12 and CB 13

Residential exclusion from section CB 14

Exclusions for business premises

Business exclusion from sections CB 6 to CB 11

Business exclusion from section CB 12

Exclusions for farm land

Farm land exclusion from sections CB 12 and CB 13

Farm land exclusion from section CB 14

Exclusion for investment land

Investment exclusion from section CB 12

Disposal of timber or right to take timber

Disposal of land with standing timber

Certain disposals by portfolio investment entities

Farming, forestry, or fishing

Income equalisation schemes

Environmental restoration

Environmental restoration accounts

Disposal of minerals

Intellectual property

Sale of patent applications or patent rights

Transfer of business

Sale of business: transferred employment income obligations

Stolen property

Property obtained by theft

Mutual associations

Amounts derived by mutual associations

Amounts derived by members from mutual associations

Subpart CC—Income from holding property (excluding equity)

Non-compliance with covenant for repair

Financial instruments

Financial arrangements

Payments of interest

Prizes received under Building Societies Act 1965

Consideration other than in money

Use of money interest payable by Commissioner

Lessee acquiring lease asset on expiry of term of lease

Lessor acquiring lease asset on expiry of term of lease

Hire purchase agreements

Amounts paid in income years after hire purchase agreement ends

Subpart CD—Income from equity

Distribution excluded from being dividend

What is a dividend?

Meaning of dividend

Transfers of value generally

What is a transfer of value?

When is a transfer caused by a shareholding relationship?

Bonus issues in lieu of dividend

Elections to make bonus issue into dividend

Interests in money or property of foreign unit trust

Bonus issue by foreign unit trust instead of money or property

Avoidance arrangements

Superannuation schemes entering trust rules

Notional distributions of producer boards and co-operative companies

Notional distributions of emigrating companies

Tax credits linked to dividends

Certain dividends not increased by tax credits

Credit transfer notice

Dividend reduced if foreign tax paid on company’s income

Foreign tax credits and refunds linked to dividends

Benefits of shareholder-employees or directors

Attributed repatriations from controlled foreign companies

What is not a dividend?

Returns of capital: off-market share cancellations

Ordering rule and slice rule

Returns of capital: on-market share cancellations

Treasury stock acquisitions

Capital distributions on liquidation or emigration

Property made available intra-group

Transfers of certain excepted financial arrangements within wholly-owned groups

Non-taxable bonus issues

Transfer by unit trust of legal interest after beneficial interest vests

Flat-owning companies

Employee benefits

Payments corresponding to notional distributions of producer boards and co-operative companies

Distribution to member of co-operative company based on member’s transactions

Resident’s restricted amalgamations

Foreign investment fund income

Maori authority distributions

Calculation rules

General calculation rule for transfers of value

Calculation of amount of dividend when property made available

Adjustment if dividend recovered by company

Adjustment if amount repaid later

Adjustment if additional consideration paid

Available subscribed capital (ASC) amount

Available capital distribution amount

Attributed repatriation calculation rules

When does a person have attributed repatriation from a controlled foreign company?

New Zealand repatriation amount

New Zealand property amount

Cost of tangible property

Cost of associated party equity

Outstanding balances of financial arrangements

Property transfers between associated persons

Unrepatriated income balance

Prevention of double taxation

Prevention of double taxation of share cancellation dividends

Returning share transfers

Replacement payments

Subpart CE—Employee or contractor income

Employment income

Amounts derived in connection with employment

Value and timing of benefits under share purchase agreements

Restrictions on disposal of shares under share purchase agreements

Adjustments to value of benefits under share purchase agreements

Meaning of expenditure on account of an employee

Meaning of share: when share acquired

Meaning of share purchase agreement

Attributed income

Attributed income from personal services

Restrictive covenants and exit inducement payments

Restrictive covenants

Exit inducements

Income protection insurance

Proceeds from claims under policies of income protection insurance

Tax credits added to caregiver’s income

Subpart CF—Income from living allowances, compensation, and government grants

Benefits, pensions, compensation, and government grants

Remission of specified suspensory loans

Subpart CG—Recoveries

Amount of depreciation recovery income

Remitted amounts

Bad debt repayment

Recovered expenditure or loss

Recoveries or receipts by employers from superannuation schemes

Receipts from insurance, indemnity, or compensation for trading stock

Recoveries after deduction of payments under lease

Subpart CH—Adjustments

Matching rules: revenue account property, prepayments, and deferred payments

Adjustment for closing values of trading stock, livestock, and excepted financial arrangements

Adjustment for prepayments

Adjustment for deferred payment of employment income

Change to accounting practice

Adjustment for change to accounting practice

Goods and services tax (GST)

Adjustment for GST

Adjustments under consecutive or successive finance leases

Avoidance and non-market transactions

Adjustment for avoidance arrangements

Market value substituted

Interest apportionment on thin capitalisation

Interest apportionment: excess debt entity

Interest apportionment: reporting bank

Subpart CP—Income from portfolio investment entities

Portfolio investor allocated income

Subpart CQ—Attributed income from foreign equity

Attributed controlled foreign company income

Attributed controlled foreign company income

When attributed CFC income arises

Calculation of attributed CFC income

Foreign investment fund income

Foreign investment fund income

When FIF income arises

Calculation of FIF income

Subpart CR—Income from life insurance

Income of life insurer

Amount of income of life insurer

Income of non-resident general insurer

Subpart CS—Superannuation funds

Exclusions of withdrawals of various kinds

Exclusion of withdrawal on grounds of hardship

Exclusion of withdrawal to settle division of relationship property

Exclusion of withdrawal paid as annuity or pension

Exclusion of withdrawal on partial retirement

Exclusion of withdrawal when member ends employment

Exclusion of withdrawal when member ends employment: lock-in rule

Exclusion of withdrawal from defined benefit fund when member ends employment

When member treated as not ending employment

Transfers to or from superannuation funds and superannuation schemes

Transfer by superannuation fund to another superannuation fund

Transfer from superannuation scheme to superannuation fund

Investment by superannuation fund in another superannuation fund

Treatment of amounts when superannuation fund becomes superannuation scheme or vice versa

Superannuation fund becomes superannuation scheme

Superannuation fund becomes foreign superannuation scheme

Superannuation scheme becomes superannuation fund

Treatment of distributions when superannuation fund wound up

Superannuation fund wound up

Treatment of loans to members

Value of loan treated as fund income

Subpart CT—Income from petroleum mining

Disposal of exploratory material or petroleum mining asset

Damage to assets

Exploratory well used for commercial production

Partnership interests and disposal of part of asset

Petroleum mining operations outside New Zealand

Meaning of petroleum miner

Meaning of petroleum mining asset

Subpart CU—Income from mineral mining

Introductory provision

Mining company’s 2 kinds of income

Income from mining

Mining company that processes or manufactures

Disposal of assets

Compensation for lost, destroyed, or damaged assets

Compensation and scrap payment: income from mining

Compensation and scrap payment: use to replace or repair asset

Compensation and scrap payment: not income from mining

Compensation and scrap payment: more than expenditure

Previous deduction for income appropriated

Mining asset used to derive income other than income from mining

Meaning of asset for sections CU 3 to CU 10

Application of sections to resident mining operators

Application of sections to non-resident mining operators

Recovery of reinvestment profit on disposal of mining shares

Recovery of reinvestment profit not used for mining purposes

Recovery of reinvestment profit on repayment of loans

Repayment by mining company of amount written off

Amount treated as repayment for purposes of section CU 17: excess

Amount treated as repayment for purposes of section CU 17: net income

Mining company or mining holding company liquidated

Meaning of income from mining

Meaning of mining company

Meaning of mining development expenditure

Meaning of mining exploration expenditure

Meaning of mining operations

Meaning of mining venture

Meaning of resident mining operator

Meaning of specified mineral

Other definitions

Subpart CV—Income specific to certain entities

Group companies

Consolidated groups: income of company in group

Consolidated groups: arrangement for disposal of shares

Amalgamated companies: amount derived after amalgamation

Statutory producer boards

Crown Research Institutes

Australian wine producer rebate

Regulations: Australian wine producer rebate

Supplementary dividend holding companies

Foreign dividend payment account companies or conduit tax relief companies

Maori authorities

Trustees: amounts received after person’s death

Amounts derived from trusts

Distributions from community trusts

Amounts derived from trusts while person absent from New Zealand

Non-resident shippers

Non-resident film renters

Subpart CW—Exempt income

Income from business or trade-like activities

Forestry companies established by the Crown, Maori owners, and holding companies buying land with standing timber from founders

Forestry encouragement agreements

Forestry companies and Maori investment companies

Income from holding property (excluding equity)

Annuities under life insurance policies

Payments of interest: post-war credits

Payments of interest: farm mortgages

Foreign-sourced interest

Money lent to government of New Zealand

Income from equity

Dividend derived by company from overseas

Dividend within New Zealand wholly-owned group

Dividend of conduit tax relief holding company

Proceeds of share disposal by qualifying foreign equity investor

Proceeds from share or option acquired under venture investment agreement

Dividends derived by qualifying companies

Dividends paid by qualifying companies

Employee or contractor income

Income of Governor-General

Expenditure on account, and reimbursement, of employees

Allowance for additional transport costs

Amounts derived during short-term visits

Amounts derived by visiting entertainers including sportspersons

Amounts derived by visiting crew of pleasure craft

Amounts derived by overseas experts and trainees in New Zealand by government arrangement

Income for military or police service in operational area

Deferred military pay for active service

Value of board for religious society members

Jurors’ and witnesses’ fees

Certain income of transitional resident

Certain income derived by transitional resident

Income from living allowances, compensation, and government grants

Reinvested amounts from foreign superannuation schemes in Australia

Annuities from Crown Bank Accounts

Services for members of Parliament

Maintenance payments

Allowances and benefits

Compensation payments

Payment to claimant of certain accident compensation payments

Scholarships and bursaries

Film production grants

Income of certain entities

Public authorities

Local authorities

Local and regional promotion bodies

Charities: non-business income

Charities: business income

Charitable bequests

Friendly societies

Bodies promoting amateur games and sports

TAB and racing clubs

Income from conducting gaming-machine gambling

Bodies promoting scientific or industrial research

Veterinary services bodies

Herd improvement bodies

Community trusts

Distributions from complying trusts

Foreign-sourced amounts derived by trustees

Maori authority distributions

Income from certain activities

Non-resident aircraft operators

Non-resident company involved in exploration and development activities

Disposal of companies’ own shares

New Zealand companies operating in Niue

Providing standard-cost household service

Interest paid under the KiwiSaver Act 2006

Avoidance arrangements

Exemption under other Acts

Subpart CX—Excluded income

Goods and services tax

Goods and services tax

Fringe benefits

Introductory provisions

Meaning of fringe benefit

Excluded income

Relationship with assessable income

Relationship with exempt income

Fringe benefits

Private use of motor vehicle

Employer or associated person treated as having right to use vehicle under arrangement

Private use of motor vehicle: use by more than 1 employee

Subsidised transport

Employment-related loans

Employment-related loans: loans by life insurers

Services for members of Parliament

Contributions to superannuation schemes

Contributions to sickness, accident, or death benefit funds

Contributions to funeral trusts

Contributions to life or health insurance

Benefits provided to employees who are shareholders or investors

Benefits provided to associates of both employees and shareholders

Exclusions and limitations

Benefits provided instead of allowances

Benefits to enable performance of duties

Benefits to non-executive directors

Benefits provided on premises

Benefits related to health or safety

Benefits provided by charitable organisations

Non-liable payments

Assistance with tax returns

Distinctive work clothing

Contributions to income protection insurance

Services provided to superannuation fund

Goods provided at discount by third parties

Meaning of emergency call

Meaning of employee share loan

Meaning of private use

Meaning of unclassified benefit

Meaning of work-related vehicle

Life insurers and fully reinsured persons

Superannuation fund deriving amount from life insurance policy

Resident insurance underwriters

Petroleum mining

Disposal of ownership interests in controlled petroleum mining entities

Farm-out arrangements for petroleum mining

Disposal of mining shares

Disposal of mining shares acquired with reinvestment profit

Repayment of loans made from reinvestment profit

Government grants

Government grants to businesses

Amounts remitted as condition of new start grant

Superannuation and savings

Employer’s superannuation contributions

Tax credits for KiwiSaver and complying superannuation funds

Farming, forestry, or fishing

Income equalisation schemes

Environmental restoration

Refund from environmental restoration account

Inflation-indexed instruments

Credits for inflation-indexed instruments

Share-lending arrangements

Share-lending collateral under share-lending arrangements

Portfolio investment income

Proceeds from certain disposals by portfolio investment entities or New Zealand Superannuation Fund

Portfolio investor allocated income and distributions of income by portfolio investment entities

Credits for certain fees by portfolio tax rate entities

Minors’ beneficiary income

Amounts derived by minors from trusts

Taxable distributions from non-complying trusts

Transactions between companies in consolidated groups

Intra-group transactions

Avoidance arrangements

Avoidance arrangements

Subpart CZ—Terminating provisions

Share purchase agreement income before 19 July 1968

Mining company’s 1970–71 tax year

Exchange variations on 8 August 1975

Mineral mining: company making loan before 1 April 1979

Exempt interest: overseas money lent to government or local or public authority before 29 July 1983

Commercial bills before 31 July 1986

Primary producer co-operative companies: 1987–88 income year

Farm-out arrangements for petroleum mining before 16 December 1991

Available capital distribution amount: 1965 and 1985–1992

Transitional relief for calculation of attributed repatriation dividends: 2 July 1992

Recovery of deductions for software acquired before 1 April 1993

General insurance with risk period straddling 1 July 1993

Treatment of units and interests in unit trusts and group investment funds on issue as at 1 April 1996

Treatment of superannuation fund interests in group investment funds on 1 April 1999

Accident insurance contracts before 1 July 2000

Interest payable to exiting company: 2001

Dividend of exiting company: 2001

Benefit provider approved within 6 months of 25 November 2003

Community trust receipts in 2004–05 or 2005–06 tax year

Disposal of personal property lease asset under specified lease

Superannuation fund loans made to members before 1 April 1989

Geothermal wells between 31 March 2003 and 17 May 2006

Part D Deductions

Subpart DA—General rules

General permission

General limitations

Effect of specific rules on general rules

Treatment of amount of depreciation loss

Subpart DB—Specific rules for expenditure types

Taxes, other than GST, and penalties

Goods and services tax

Determining tax liabilities

Chatham Islands dues

Financing costs

Transaction costs: borrowing money for use as capital

Interest: not capital expenditure

Interest: most companies need no nexus with income

Interest: money borrowed to acquire shares in group companies

Interest incurred on money borrowed to acquire shares in qualifying companies

Interest or expenditure connected to profit-related or substituting debentures

Financial arrangements adjustments

Negative base price adjustment

Base price adjustment under old financial arrangements rules

Repayment of debt sold at discount to associate of debtor

Security payment

Share-lending arrangements

Share-lending collateral under share-lending arrangements

Replacement payments and imputation credits under share-lending arrangements

Premises or land costs

Transaction costs: leases

Expenses of failed or withdrawn application for resource consent

Destruction of temporary building

Amounts paid for non-compliance with covenant for repair

Amounts paid for non-compliance and change in use

Revenue account property

Cost of revenue account property

Cancellation of shares held as revenue account property

Amount from profit-making undertaking or scheme and not already in income

Amount from major development or division and not already in income

Amount from land affected by change and not already in income

Apportionment when land acquired with other property

Cost of non-specified mineral

Bad debts owed to estates

Research and development

Scientific research

Research or development

Some definitions

Patent expenses

Expenses of failed or withdrawn patent application

Patent rights: devising patented inventions

Patent rights acquired before 1 April 1993

Patent applications or patent rights acquired on or after 1 April 1993

Charitable or other public benefit gifts by company

Theft and bribery

Property misappropriated by employees or service providers

Making good loss from misappropriation by partners

Restitution of stolen property

Bribes paid to public officials

Pollution control

Avoiding, remedying, or mitigating effects of discharge of contaminant

Payments for remitted amounts

Restrictive covenant breached

Matching rules: revenue account property, prepayments, and deferred payments

Adjustment for opening values of trading stock, livestock, and excepted financial arrangements

Adjustment for prepayments

Adjustment for deferred payment of employment income

Change to accounting practice

Adjustment for change to accounting practice

Investment income

Portfolio investment entities: zero-rated portfolio investors and allocated losses

Portfolio investment entities: treatment of certain fees charged

Expenditure incurred in deriving exempt dividend

Use of motor vehicle under certain arrangements

Expenditure incurred in operating motor vehicle under agreement or arrangement affected by section CX 7

Payments to spouses, civil union partners, or de facto partners

Payments to spouses, civil union partners, or de facto partners other than for services

Avoidance and non-market transactions

Adjustment for avoidance arrangements

Market value substituted

Subpart DC—Employee or contractor expenditure

Lump sum payments on retirement

Pension payments to former employees

Pension payments to former partners

Payments to working partners

Payments to spouses, civil union partners, or de facto partners: services

Contributions to employees’ benefit funds

Contributions to employees’ superannuation schemes

Attribution of personal services

Restrictive covenants or exit inducements

Sale of business: transferred employment income obligations

Transfers of employment income obligations to associates

Loans to employees under share purchase schemes

Criteria for approval of share purchase schemes: before period of restriction ends

Criteria for approval of share purchase schemes: when period of restriction ends

Some definitions

Subpart DD—Entertainment expenditure

Entertainment expenditure generally

Limitation rule

When limitation rule does not apply

Employment-related activities

Promoting businesses, goods, or services

Entertainment as business or for charitable purpose

Entertainment outside New Zealand

Entertainment that is income or fringe benefit

Relationship with fringe benefit tax rules

Interpretation: reimbursement and apportionment

Some definitions

Subpart DE—Motor vehicle expenditure

Introductory provisions

What this subpart does

Deductions for business use

Methods for calculating proportion of business use

Default method for calculating proportion of business use

Using logbook for test period

Logbook requirements

Inadequate logbook

Variance during logbook term

Replacement vehicles

Mileage rate method

Subpart DF—Government grants and compensation

Government grants to businesses

Repayment of grant-related suspensory loans

Identifying expenditure for purposes of sections DF 1 and DF 2

Accident compensation payment for attendant care

Subpart DN—Attributed losses from foreign equity

Attributed controlled foreign company (CFC) loss

Attributed controlled foreign company loss

When attributed CFC loss arises

Calculation of attributed CFC loss

Ring-fencing cap on deduction

Foreign investment fund (FIF) loss

Foreign investment fund loss

When FIF loss arises

Calculation of FIF loss

Ring-fencing cap on deduction: branch equivalent method

Subpart DO—Farming and aquacultural business expenditure

Enhancements to land, except trees

Erosion and shelter plantings

Improvements to farm land

Expenditure on land: planting of listed horticultural plants

Expenditure on land: horticultural replacement planting

Accounting for expenditure on listed horticultural plants under sections DO 5 and DO 6

Meaning of planting and plot

Meaning of replaced area fraction

Farming or horticulture expenditure of lessor or sublessor

Improvement destroyed or made useless

Improvements to aquacultural business

Improvement destroyed or made useless

Subpart DP—Forestry expenditure

Expenditure of forestry business

Plant or machinery

Improvements to forestry land

Improvement destroyed or made useless

Forestry encouragement agreement: deductions

Forestry encouragement agreement: no deduction

Land contouring: no deduction

Forestry business on land bought from the Crown, Maori owners, or holding company: no deduction

Cost of acquiring timber: forestry business on land bought from the Crown, Maori owners, or holding company

Cost of acquiring timber or right to take timber: other cases

Subpart DQ—Income equalisation schemes and environmental restoration accounts schemes

Main income equalisation scheme

Adverse event income equalisation scheme

Thinning operations income equalisation scheme

Environmental restoration accounts scheme

Subpart DR—Life insurance business expenditure

Mortality profit formula: negative result

Disposal of property

Specific deductions denied to life insurers and fully reinsured persons

Subpart DS—Film industry expenditure

Acquiring film rights

Film production expenditure

Clawback of deductions for film reimbursement schemes

Meaning of film reimbursement scheme

Subpart DT—Petroleum mining expenditure

Petroleum exploration expenditure

Petroleum exploration expenditure

Arrangement for petroleum exploration expenditure and sale of property

Acquisition of privileges and permits

Acquisition of exploratory material

Petroleum development expenditure

Petroleum development expenditure

Expenditure on petroleum mining assets

Exploratory well expenditure

Acquisition of certain petroleum mining assets

Disposal of petroleum mining asset to associate

Disposal of petroleum mining asset outside association

Association ending

Other expenditure

Damage to assets

Disposal of ownership interests in controlled petroleum mining entities

Farm-out arrangements

Persons associated with petroleum miner

Removal or restoration operations

General provisions

Attribution of expenditure

Replacement permits

Partnership interests and disposal of part of asset

Petroleum mining operations outside New Zealand

Subpart DU—Mineral mining expenditure

Mining exploration expenditure and mining development expenditure

Mining exploration expenditure or mining development expenditure on acquisition of asset

Replacing or repairing asset

Income appropriated to expenditure

Non-mining asset used to derive income from mining

Limit on deduction

Meaning of asset for sections DU 1 to DU 7

Application of sections to resident mining operators

Application of sections to non-resident mining operators

Disposal of mining shares by company

Amount written off by holding company

Subpart DV—Expenditure specific to certain entities

Superannuation funds

Publicising superannuation funds

Transfer of expenditure to master fund

Formula for calculating maximum deduction

Carry forward of expenditure

Investment funds: transfer of expenditure to master funds

Formula for calculating maximum deduction

Carry forward of expenditure

Non-profit organisations

Building societies

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

Maori authorities: donations

Group companies

Amalgamated company: expenditure on improvements for farming, horticultural, aquacultural, and forestry businesses

Amalgamated companies: property passing on resident’s restricted amalgamation

Consolidated groups: intra-group transactions

Consolidated groups: expenditure or loss incurred by group companies

Statutory producer boards and co-operative companies

Association rebates

Subpart DW—Expenditure specific to certain industries

Airport operators

Bloodstock racing

Non-resident general insurers, shippers, and film renters

Subpart DX—Other expenditure

Testamentary annuities

Tax credits: conduit financing arrangements

Tax credits: supplementary dividend holding companies

Subpart DZ—Terminating provisions

Commercial bills before 31 July 1986

Life insurers acquiring property before 1 April 1988

Petroleum mining: development expenditure from 1 October 1990 to 15 December 1991

Expenditure on abandoned exploratory well before 16 December 1991

Farm-out arrangements for petroleum mining before 16 December 1991

Partnership interests and disposal of part of asset before 16 December 1991

Petroleum mining operations outside New Zealand before 16 December 1991

Buying patent rights before 1 April 1993

Premium paid on land leased before 1 April 1993

General insurance with risk period straddling 1 July 1993

Film reimbursement scheme on or before 30 June 2001

Mineral mining: 1954–2005

Enhancements to land unamortised at end of 2004–05 year

Deductions under specified leases

Patent applications before 1 April 2005

Geothermal wells between 31 March 2003 and 17 May 2006

Expenditure on improvements to aquacultural business before 1995–96 income year

Expenditure on improvements to forestry land before 1995–96 income year

Part E Timing and quantifying rules

Subpart EA—Matching rules: revenue account property, prepayments, and deferred payments

Trading stock, livestock, and excepted financial arrangements

Other revenue account property

Deferred payment of employment income

Subpart EB—Valuation of trading stock (including dealer’s livestock)

Introductory provisions

When this subpart applies

Meaning of trading stock

Valuation of trading stock

Trading stock valuation methods

Transfers of trading stock within wholly-owned groups

Standard valuation

Cost allocation: cost-flow method

Cost allocation: budgeted method or standard cost method

Discounted selling price

Replacement price

Market selling value

Valuing closing stock consistently

Low-turnover valuation

Low-turnover valuation

Low-turnover valuation methods

Cost for low-turnover traders

Cost allocation: cost-flow method for low-turnover traders

Costs: manufactured or produced stock of low-turnover traders

Costs: other stock of low-turnover traders

Discounted selling price for low-turnover traders

Replacement price for low-turnover traders

Market selling value for low-turnover traders

Valuing closing stock consistently for low-turnover traders

Low value trading stock

Valuing closing stock under $5,000

Disposal of business assets

Apportionment on disposal of business assets that include trading stock

Subpart EC—Valuation of livestock

Introductory provisions

Application of this subpart

Valuation of livestock

Livestock valuation methods

Transfers of livestock within wholly-owned groups

Transfer of livestock because of self-assessed adverse event

Valuation of specified livestock

Application of sections EC 7 to EC 27

Valuation methods

Restrictions on use of herd scheme

Restrictions on use of national standard cost scheme

Restrictions on use of cost price method

Restrictions on making of elections

Interests in livestock

Changes in partnership interests

Determining national average market values

Valuation under herd scheme

Herd value ratio

Inaccurate herd value ratio

Chatham Islands adjustment to herd value

Herd livestock disposed of before values determined

Herd livestock on death before values determined

National standard cost scheme

National standard cost scheme

Determining national standard costs

Methods for determining costs using national standard cost scheme

Cost price, replacement price, or market value

Bailee’s treatment of livestock

Some definitions

Valuation of non-specified livestock

Application of sections EC 29 to EC 31

Determining standard values

Closing value methods

Enhanced production

Valuation of high-priced livestock

Application of sections EC 33 to EC 37

Determining depreciation percentages

Livestock reaching national average market value and livestock no longer used for breeding

Immature livestock and recently bought livestock

Valuation of bloodstock

Application of sections EC 39 to EC 48

First income year in breeding business

Later income years in breeding business

Reduction: bloodstock not previously used for breeding in New Zealand

Reduction: bloodstock previously used for breeding in New Zealand

Accident, birth deformity, or infertility

Other bloodstock

Residual value of bloodstock

Use of bloodstock for racing

Change of use of bloodstock in course of business

Replacement breeding stock

Subpart ED—Valuation of excepted financial arrangements

Valuation of excepted financial arrangements

Transfers of certain excepted financial arrangements within wholly-owned groups

Subpart EE—Depreciation

Introductory provision

What this subpart does

Nature of ownership of item

Ownership of goods subject to reservation of title

Ownership of lessee’s improvements: lessee

Ownership of lessee’s improvements: other person

Meaning of depreciable property

What is depreciable property?

What is not depreciable property?

Election that property not be depreciable

How amounts of depreciation loss and depreciation recovery income are calculated

Description of elements of calculation

Calculation rule: item temporarily not available

Calculation rule: income year in which item disposed of

Depreciation methods

Amount of depreciation loss under diminishing value method or straight-line method

Application of sections EE 14 to EE 19

Diminishing value or straight-line method: calculating amount of depreciation loss

Amount of adjusted tax value

Amount resulting from standard calculation

Amount resulting from petroleum-related depreciable property calculation

Cost: change from diminishing value to straight-line method

Cost: fixed life intangible property

Amount of depreciation loss under pool method

Application of sections EE 21 to EE 24

Pool method: calculating amount of depreciation loss

Cases affecting pool

Property ceasing to qualify for pool

Depreciation loss for plant variety rights application granted in 2005–06 or later income year

Depreciation rates

Setting of economic depreciation rate

Economic rate for certain depreciable property

Economic rate for buildings

Economic rate for certain aircraft and motor vehicles

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

Annual rate for item acquired in person’s 1995–96 or later income year

Election in relation to certain depreciable property acquired on or after 1 April 2005

Annual rate for fixed life intangible property

Annual rate for patent granted in 2005–06 or later income year

Special rate or provisional rate

Using economic rate or provisional rate instead of special rate

Improvements, items of low value, or items no longer used

Items of low value

Items no longer used

Transfers of depreciable property: associated persons and certain amalgamations

Transfer of depreciable property on or after 24 September 1997

Transfer of depreciable property on certain amalgamations on or after 14 May 2002

Transfer of radiocommunications licence right on or after 24 September 1997

Transfer of depreciable intangible property on or after 1 July 1997

Disposals and similar events

Application of sections EE 48 to EE 52

Consideration for purposes of section EE 44

Items for purposes of section EE 44

Events for purposes of section EE 44

Effect of disposal or event

Amount of depreciation recovery income when item partly used for business

Amount of depreciation loss when item partly used to produce income

Amount of depreciation recovery income when lost or stolen items recovered

Amount of depreciation recovery income when compensation received

Unused geothermal well brought into use

Interpretation provisions

Adjusted tax value

Meaning of adjusted tax value

Base value in section EE 56 when none of sections EE 58, EE 59, and EZ 22(1) applies

Base value in section EE 56 when no previous deduction

Base value in section EE 56 when property is petroleum-related depreciable property

Total deductions in section EE 56

Meaning of annual rate

Meaning of depreciable intangible property

Meaning of estimated useful life

Meaning of excluded depreciable property

Meaning of maximum pooling value

Meaning of poolable property

Other definitions

Subpart EF—Taxes and levies

Fringe benefit tax

Employer’s superannuation contribution tax

Accident compensation levies and premiums

Use of money interest payable by Commissioner

Use of money interest payable by person

Different tax years

Subpart EG—Recognition of accounting treatment

Election to use balance date used in foreign country

Adjustment for changes to accounting practice

Allocation of income and deductions by portfolio tax rate entity

Subpart EH—Income equalisation schemes

Introductory provisions

Income equalisation schemes

Income Equalisation Reserve Account

Main income equalisation scheme

Persons to whom main income equalisation scheme applies

Deposits and accounts

Main income equalisation account

Interest on deposits in main income equalisation account

Deduction of deposit

Refunds: automatic

Refund of excess deposit

Income does not include excess deposit

Refund at end of 5 years

Income when refund given at end of 5 years

Refunds: on application

Application for refund by person, trustee of estate, Official Assignee, or liquidator

Refund on request

Income when refund given on request

Refund for development or recovery

Income when refund given for development or recovery

Refund on retirement

Income when refund given on retirement, and election to allocate amount to earlier year

Refund on death

Income when refund given on death

Income when refund given on death, and election to allocate amount to earlier year

Income when refund given on death, and election to allocate amount to later year or years

Refund on bankruptcy

Income when refund given on bankruptcy

Refund on liquidation

Income when refund given on liquidation

Refunds: general provisions

Amendment of assessment

Deposits from which refunds come

When person entitled to tax credit

Kind and amount of refund that entitles person to tax credit

Kind of person entitled to tax credit

Amount of tax credit

Meaning of income from forestry

Meaning of main maximum deposit

Other definitions

Adverse event income equalisation scheme

Persons to whom adverse event income equalisation scheme applies

Deposits and accounts

Adverse event deposit

Adverse event income equalisation account

Interest on deposits in adverse event income equalisation account

Deduction of deposit

Refunds: automatic

Refund of excess deposit

Income does not include excess deposit

Refunds: on application

Application for refund by person, trustee of estate, Official Assignee, or liquidator

Refund on request

Income when refund given on request

Refund on retirement

Income when refund given on retirement, and election to allocate amount to earlier year

Refund on death

Income when refund given on death

Income when refund given on death, and election to allocate amount to earlier year

Income when refund given on death, and election to allocate amount to later year or years

Refund on bankruptcy

Income when refund given on bankruptcy

Refund on liquidation

Income when refund given on liquidation

Refunds: general provisions

Amendment of assessment

Deposits from which refunds come

Transfer of deposit

Meaning of adverse event maximum deposit

Other definitions

Thinning operations income equalisation scheme

Persons to whom thinning operations income equalisation scheme applies

Deposits and accounts

Thinning operations deposit

Thinning operations income equalisation account

Interest on deposits in thinning operations income equalisation account

Deduction of deposit

Refunds: automatic

Refund of excess deposit

Income does not include excess deposit

Refunds: on application

Application for refund by person or liquidator

Refund on request

Income when refund given on request

Refund for development or recovery

Income when refund given for development or recovery

Refund on liquidation

Income when refund given on liquidation

Refunds: general provisions, and tax credits

Sections of main income equalisation scheme that apply to thinning operations income equalisation scheme

Meaning of thinning operations maximum deposit

Other definitions

Subpart EI—Spreading of specific income

Farming and forestry

Spreading backward of income from timber

Inflation-indexed instruments

Interest from inflation-indexed instruments

Intellectual property

Assigning or granting copyright

Spreading income from patent rights

Amount paid to lessor for non-compliance with covenant for repair

Amount paid for non-compliance: when lessor ceases to own land

Leases: income derived in anticipation

Disposal of land to the Crown

Shareholder-employees

Matching rule for employment income of shareholder-employee

Subpart EJ—Spreading of specific expenditure

Farming and forestry

Spreading backward of deductions for costs of timber

Spreading forward of deductions for repairs to fishing boats

Spreading forward of fertiliser expenditure

Expenditure incurred in acquiring film rights in feature films

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

Certification of New Zealand films

Film production expenditure for New Zealand films

Film production expenditure for films other than New Zealand films

Avoidance arrangements

Personal property lease payments

Amount paid by lessee for non-compliance with covenant for repair

Petroleum mining

Petroleum development expenditure

Relinquishing petroleum mining permit

Spreading deduction backwards

Disposal of petroleum mining asset

Disposal of petroleum mining asset to associate

Partnership interests and disposal of part of asset

Petroleum mining operations outside New Zealand

Meaning of offshore development

Meaning of onshore development

Superannuation contributions

Contributions to employees’ superannuation schemes

Research, development, and resulting market development

Deductions for market development: product of research, development

Allocation of deductions for research, development, and resulting market development

Subpart EK—Environmental restoration accounts

Environmental Restoration Funds Account

Persons who may make payment to environmental restoration account

Payments to environmental restoration account

Environmental restoration account

Details to be provided with payment to environmental restoration account

Interest on payments to environmental restoration account

Deduction for payment

Deduction for transfer

Refund of payment if excess, lacking details

Certain refunds not income

Application for refund

Refund if request or excess balance

Income when refund given on request

Application for transfer

Transfer on request

Transfer on death, bankruptcy, or liquidation

Minimum refund or transfer

Payments from which refunds come

Environmental restoration account of amalgamating company

Environmental restoration account of consolidated group company

Notices in electronic format

Meaning of maximum payment

Other definitions

Subpart EW—Financial arrangements rules

Introductory provisions

What this subpart does

Relationship of financial arrangements rules with other provisions

Meaning of financial arrangement and excepted financial arrangement

What is a financial arrangement?

What is not a financial arrangement?

What is an excepted financial arrangement?

Relationship between financial arrangements and excepted financial arrangements

Change from private or domestic purpose

Election to treat certain excepted financial arrangements as financial arrangements

Application of financial arrangements rules

Persons to whom financial arrangements rules apply

Financial arrangements to which financial arrangements rules apply

What financial arrangements rules do not apply to

Calculation and allocation of income and expenditure over financial arrangement’s term

When use of spreading method required

When use of spreading method not required

What spreading methods do

What is included when spreading methods used

Yield to maturity method or alternative

Straight-line method

Market valuation method

Choice among first 3 spreading methods

Determination method or alternative

Financial reporting method

Failure to use method for financial reporting purposes

Consistency of use of spreading method

Consistency of use of straight-line method and market valuation method

Change of spreading method

Spreading method adjustment formula

Calculation and allocation of income and expenditure when rights and obligations under financial arrangement cease

How base price adjustment calculated

When calculation of base price adjustment required

When calculation of base price adjustment not required

Base price adjustment formula

Consideration when financial arrangement involves property or services

Consideration for agreement for sale and purchase of property or services, hire purchase agreement, specified option, or finance lease

Consideration for hire purchase agreement or finance lease

Consideration in foreign currency

Value relevant for non-financial arrangements rule

Consideration treated as paid to person

Consideration when person exits from rules: accrued entitlement

Consideration when person enters rules: accrued obligation

Consideration when disposal for no, or inadequate, consideration

Consideration affected by unfavourable factors

Consideration treated as paid by person

Consideration when person exits from rules: accrued obligation

Consideration when person enters rules: accrued entitlement

Consideration when acquisition for no, or inadequate, consideration

Consideration when debt sold at discount to associate of debtor

Consideration when debt forgiven for natural love and affection

Consideration when debtor released from obligation

Consideration when debtor released as condition of new start grant

Consideration when legal defeasance has occurred

Legal defeasance

Consideration when anti-avoidance provision applies

Anti-avoidance provisions

Income and deduction provisions specifically related to financial arrangements

Income and deduction when debt sold at discount to associate of debtor

Income when debt forgiven to trustee

Deduction for security payment

Treatment of original share acquired under financial arrangement

Share supplier under share-lending arrangement

One kind of avoidance

Adjustment required

Application of financial arrangements rules to cash basis persons

Meaning of cash basis person

Effect of being cash basis person

Financial arrangements, income, and expenditure relevant to criteria

Exclusion by Commissioner

Trustee of deceased’s estate

Election to use spreading method

When and how calculation of cash basis adjustment required

Cash basis adjustment formula

Subpart EX—Controlled foreign company and foreign investment fund rules

Controlled foreign company (CFC) rules

When is a company a controlled foreign company?

Meaning of controlled foreign company

Calculation of person’s control interest

Four categories for calculating control interests

Control interest: total of direct, indirect, and associated person interests

Limits to requirement to include associated person interests

Direct control interests

Direct control interests include options and similar rights

Indirect control interests

Calculation of person’s income interest

Income interests: total of direct and indirect interests

Direct income interests

Indirect income interests

Options and similar rights in certain cases

Reduction of total income interests

Income interests of partners

Ten percent threshold and variations in income interest level

Attribution: 10% threshold

Associates and 10% threshold

Income interests for certain purposes

Income interest if variations within period

Calculation of attributed CFC income or loss

Formula for calculating attributed CFC income or loss

Taxable distribution from non-complying trust

Reduction in attributed CFC loss

Calculation of branch equivalent income or loss

Branch equivalent income or loss: calculation rules

Grey list exemption

Unqualified grey list CFCs

Tax concession grey list CFCs

Change of residence of companies

Companies moving to or from New Zealand

Change of CFC’s balance date

Change of CFC’s balance date

Ownership measurement concession

Use of quarterly measurement

Anti-avoidance rule: stapled stock

Anti-avoidance rule: stapled stock

Foreign investment fund (FIF) rules

What is a foreign investment fund?

Attributing interests in FIFs

Attributing interests in FIFs

Direct income interests in FIFs

Exemption for ASX-listed Australian companies

Exemption for Australian unit trusts with 25% turnover

Exemption for Australian regulated superannuation savings

CFC rules exemption

Exemption for 10% or greater interest in grey list company

Venture capital company emigrating to grey list country: 10-year exemption

Grey list company owning New Zealand venture capital company: 10-year exemption

Exemption for employee share purchase scheme of grey list company

Terminating exemption for grey list company with numerous New Zealand shareholders

Foreign exchange control exemption

Income interest of non-resident or transitional resident

New resident’s accrued superannuation entitlement exemption

Non-resident’s pension or annuity exemption

Calculation of FIF income or loss

Six calculation methods

Exclusion of amounts of death benefit

Limits on choice of calculation methods

Method required for share treated as debt

Default calculation method

Accounting profits method

Branch equivalent method

Comparative value method

Fair dividend rate method: usual method

Fair dividend rate method for funds that value investors’ units

Fair dividend rate method and cost method: when periods affected by share reorganisations

Deemed rate of return method

Conversion of foreign currency amounts: most methods

Additional FIF income or loss if CFC owns FIF

Relationship with other provisions in Act

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

Top-up FIF income: deemed rate of return method

Top-up FIF income: 1 April 1993 uplift interests

Changing calculation method

Limits on changes of method

Consequences of changes in method

Cases of entry into and exit from FIF rules

Migration of persons holding FIF interests

Changes in application of FIF exemptions

Entities emigrating from New Zealand

FIF rules first applying to interest on or after 1 April 2007

Measurement of cost

Measurement of cost

Change of FIF’s balance date

Change of FIF’s balance date

Market value rules

Market value of life policy and superannuation entitlements

Non-market transactions in FIF interests

Commissioner’s default assessment power

Commissioner’s default assessment power

Subpart EY—Life insurance rules

Introductory provisions

What this subpart does

Matters to which this subpart relates

Meaning of actuarial reserves

Actuarial reserves: calculation

Actuarial reserves: actuary’s declaration

Actuarial reserves: powers of Commissioner

Meaning of claim

Meaning of life insurance

Meaning of life insurance policy

Meaning of life insurer

Superannuation schemes providing life insurance

Meaning of life reinsurance

Meaning of life reinsurance policy

Life insurance and life reinsurance: how sections relate

Premium loading

How premium loading is calculated

Premium loading: when life insurers providing life insurance at start of income year

Premium loading: when life insurers not providing life insurance at start of income year

Premium loading formulas

Premium loading formulas: when life insurers not providing life insurance at start of income year

Premium loading formulas: option when more than 1 life insured

Premium loading formula (life): when annuity payable on death

Premium loading formulas: when annuity payable on survival to date or age specified in policy

Premium loading formula (life): when partial reinsurance exists

Premium loading formulas: individual result may never be negative

Mortality profit

How mortality profit is calculated

Mortality profit: when life insurers providing life insurance at start of income year

Mortality profit: when life insurers not providing life insurance at start of income year

Mortality profit formula

Mortality profit formula: when life insurers not providing life insurance at start of income year

Mortality profit formula: option when more than 1 life insured

Mortality profit formula: when annuity payable on death

Mortality profit formula: when partial reinsurance exists

Mortality profit formula: individual result may be negative only in some cases

Mortality profit formula: negative result

Discontinuance profit

How discontinuance profit is calculated

Discontinuance profit for income year

Discontinuance profit formula (existing policies)

Discontinuance profit formula (new policies)

Discontinuance profit formula (existing policies): when partial reinsurance exists

Discontinuance profit formula (new policies): when partial reinsurance exists

Discontinuance profit formulas: individual result may never be negative

Policyholder income

How policyholder income is calculated

Policyholder income formula

Policyholder income formula: when partial reinsurance exists

Policyholder income formula: when life insurance business transferred

Disposal of property

Income from disposal of property

Deductions for disposal of property

Non-resident life insurers

Non-resident life insurers with life insurance policies in New Zealand

Non-resident life insurer becoming resident

Subpart EZ—Terminating provisions

Life insurers acquiring property before 1 April 1988

Deductions for disposal of property: 1982–83 and 1989–90 income years

Petroleum mining

Petroleum development expenditure from 1 October 1990 to 15 December 1991

Valuation of livestock bailed or leased as at 2 September 1992

Reduction: bloodstock not previously used for breeding in New Zealand: pre-1 August 2006

Reduction: broodmare previously used for breeding in New Zealand: pre-1 August 2006

Buying patent rights before 1 April 1993

Premium paid on land leased before 1 April 1993

Pool method for items accounted for by globo method for 1992–93 income year

Pool items accounted for by globo method for 1992–93 income year

Amounts of depreciation recovery income and depreciation loss for part business use up to 2004–05 income year

Amount of depreciation loss for item acquired from associated person on or before 23 September 1997

Annual rate for item acquired on or after 1 April 1993 and before end of person’s 1994–95 income year

Pre-1993 depreciation rate

Annual rate for excluded depreciable property: 1992–93 tax year

Amount of depreciation loss for plant or machinery additional to section EZ 15 amount

Additional amount of depreciation loss: between 16 December 1991 and 1 April 1994

Section EZ 17 amount of depreciation loss when items transferred between companies in wholly-owned group before 1 April 1993

Section EZ 17 amount of depreciation loss when person previously exempt from tax acquires item

Adjusted tax value for software acquired before 1 April 1993

Sections EE 45 and EE 47: permanent removal: allowance before 1 April 1995

Base value and total deductions in section EE 56: before 1 April 1995

Economic rate for plant or equipment acquired before 1 April 2005 and buildings acquired before 19 May 2005

Meaning of new asset

Meaning of New Zealand-new asset

Meaning of qualifying capital value

Meaning of qualifying improvement

Meaning of qualifying asset

Accident insurance

Private insurers under Accident Insurance Act 1998

Base premium for 1998–99 premium year under Accident Insurance Act 1998

Controlled foreign company and foreign investment fund rules

Disclosure restrictions on grey list CFCs before 2011–12

Terminating exemption for grey list FIF investing in Australasian listed equities

Old financial arrangements rules

Application of old financial arrangements rules

Election to apply financial arrangements rules in subpart EW

Accruals in relation to income and expenditure in respect of financial arrangements

Excepted financial arrangement that is part of financial arrangement

Cash basis holder

Income and expenditure where financial arrangement redeemed or disposed of

Forgiveness of debt

Accrued income written off

Sale of debt to associate of debtor

Post facto adjustment

Variable principal debt instruments

Relationship with rest of Act

Application of old financial arrangements rules

Election to treat short term trade credit as financial arrangement

Election to continue to treat certain excepted financial arrangements as financial arrangements

Determination of core acquisition price where consideration for property denominated in foreign currency

Rules for non-market transactions

Transitional adjustment when changing to financial arrangements rules

References to new rules include old rules

Part F Recharacterisation of certain transactions

Subpart FA—Recharacterisation of certain commercial arrangements

Introductory provision

What this subpart does

Debentures and shares

Recharacterisation of certain debentures

Recharacterisation of certain dividends: recovery of cost of shares held on revenue account

Recharacterisation of shareholder’s base: company repurchasing share

Assets acquired and disposed of after deduction of payments under lease

Recharacterisation of amounts derived under finance leases

Determining amount of loan

Deductibility of expenditure under finance lease

Treatment when lease ends: lessee acquiring asset

Treatment when lease ends: lessor acquiring asset

Consecutive or successive finance leases

Hire purchase agreements

Recharacterisation of amounts derived under hire purchase agreements

Agreements recharacterised as sale with finance provided

Deductibility of expenditure or loss under hire purchase agreement

Treatment when agreement ends: seller acquiring property

Treatment when agreement ends: when seller is cash basis person

Treatment when agreement ends: when buyer is cash basis person

Treatment of amounts paid in income years after agreement ends

Subpart FB—Transfers of relationship property

What this subpart does

Personal property

Land acquired for certain purposes or under certain conditions

Land under scheme for major development or division

Disposal of land

Timber or right to take timber

Land with standing timber

Patent applications and patent rights

Financial arrangements rules

Continuity provisions: shares and options

Pension payments to former employees

Pension payments to former partners

Specified livestock

Specified livestock valued under herd scheme

Non-specified livestock

High-priced livestock

Depreciable property

Subpart FC—Distribution, transmission, and gifts of property

Introductory provisions

What this subpart does

Transfer at market value

Exceptions for property transferred on death of person

Property transferred to spouse, civil union partner, or de facto partner

Property transferred to charities or to close relatives and others

Land transferred to close relatives

Forestry assets transferred to close relatives

Transfer of prepaid property

Transfer of certain financial arrangements

Subpart FE—Interest apportionment on thin capitalisation

Introductory provisions

What this subpart does

When this subpart applies

Interest apportionment for individuals

Some definitions

Interest apportionment rules

Thresholds for application of interest apportionment rules

Apportionment of interest by excess debt entity

Apportionment of interest by reporting bank

Measurement dates

Temporary increases or decreases in value

Calculation of debt percentages

Financial arrangements entered into with persons outside group

Debt percentage of New Zealand group

Consolidation of debts and assets

Total group debt

Total group assets

Debt percentage of worldwide group

Consolidation of debts and assets

Measurement of debts and assets of worldwide group

New Zealand banking group

Banking group’s equity threshold

Financial value and regulatory value

Banking group’s New Zealand net equity

Notional offshore investment

Banking group’s funding debt

Determining membership of groups

New Zealand group

New Zealand group for excess debt entity that is a company

Identifying New Zealand parent

Establishing companies under parent’s control

Identifying members of New Zealand group

Holding companies

Ownership interests in companies outside New Zealand group

Worldwide group

Worldwide group for corporate excess debt entity

Joint venture parties

New Zealand banking group

New Zealand banking group

Identifying ultimate parent

Persons who may be excluded from banking groups

Identifying members of New Zealand banking group

Reporting bank for New Zealand banking group

Measuring ownership interests in companies

Measuring ownership interests in companies

Direct ownership interests

Tiered ownership interests

Treatment of associated persons’ interests

Subpart FF—Interest apportionment for conduit investment

Introductory provisions

What this subpart does

When interest apportionment rule applies

Steps required to determine treatment of excessive interest expenditure

Interest apportionment rule

Threshold for application of interest apportionment rule

Determination of excess amount of interest expenditure of group

Conduit tax relief

Surplus to foreign dividends

Membership and debt percentages of foreign groups

Identifying members of foreign groups

Calculating debt percentage of New Zealand foreign groups

Calculating debt percentage of consolidated foreign groups

Changes in foreign group membership

Subpart FL—Emigration of resident companies

What this subpart does

Treatment of emigrating companies and their shareholders

Subpart FM—Consolidated groups of companies

Introductory provisions

What this subpart applies to

Consolidation rules

Liability of consolidated groups and group companies

Limiting joint and several liability of group companies

Liability when company leaves consolidated group

Some general rules for treatment of consolidated groups

Calculating taxable income for consolidated group returns

Accounting generally

Treatment of amounts derived or expenditure incurred

Transactions between group companies: income

Amounts that are company’s income

Expenditure: intra-group transactions

Expenditure: nexus with income derivation

Expenditure when deduction would be denied to consolidated group

Capital expenditure

Part-year financial statements

Accounting for particular property

Amortising property and revenue account property

Land or business: certain farming or forestry expenditure

Financial arrangements: transfer from company A to company B

Financial arrangements: transfer for fair and reasonable consideration

Financial arrangements: transfer at market value

Property transfers when companies leave consolidated groups

Arrangements to avoid consolidation rules

Arrangements for disposal of shares

Treatment of foreign dividends

General treatment of foreign dividends

Reduction in payments for foreign dividends

Using tax losses to pay FDP

Refund when consolidated group has loss

Treatment of credit balance in consolidated group’s FDP account

Application of certain provisions to consolidated groups

Membership of consolidated groups

Eligibility and restrictions

Eligibility rules

Restriction on membership of consolidated groups

When membership is reduced

Nominated companies

Nominated companies

Forming, joining, or leaving consolidated groups

Forming consolidated group

Joining existing consolidated group

Leaving consolidated group

When membership starts and stops

Notice requirements on forming or joining consolidated group

Choosing to leave consolidated group

Losing eligibility or entitlement to be part of consolidated group

No nominated company

When company liquidated

Subpart FN—Imputation groups of companies

When this subpart applies

Imputation rules

Liabilities of companies in imputation group

Eligibility rules

Imputation groups with reduced numbers

Nominated companies

Forming imputation groups

Trans-Tasman imputation groups and resident imputation subgroups

Joining existing imputation group

When membership of imputation group ends

Company choosing to leave imputation group

Company no longer eligible or entitled to membership

Imputation group with no nominated company

Effect of liquidation of company

Subpart FO—Amalgamation of companies

Introductory provisions

What this subpart does

Amalgamation rules

Resident’s restricted amalgamations

Rights and obligations of amalgamated companies

Amalgamations and remitted liabilities

Treatment of shares, income, expenditure, and bad debts

Cancellation of shares

Income derived after amalgamation

Bad debts and expenditure or loss on resident’s restricted amalgamation

Unexpired portion of prepaid expenditure

Property passing to amalgamated company on amalgamation

When property passes on resident’s restricted amalgamation

When property passes on amalgamation other than resident’s restricted amalgamation

Financial arrangements: resident’s restricted amalgamation, companies in wholly-owned group

Financial arrangements: resident’s restricted amalgamation, calculation method unchanged

Financial arrangements: resident’s restricted amalgamation, other cases

Financial arrangements: amalgamation other than resident’s restricted amalgamation

Amortising property

Treatment of financial arrangements between amalgamating companies

When amalgamating companies are parties to financial arrangement

Calculation of outstanding accrued balance: consideration for discharge

Calculation of outstanding accrued balance: amounts remitted

Subpart FZ—Terminating provisions

Treatment of interest payable under debentures issued before certain date

Effect of specified lease on lessor and lessee

Income of lessor under specified lease

Deductions under specified leases

Relationship property

Commercial bills

Estate property

Transitional valuation rule for estate property

Part G Avoidance and non-market transactions

Subpart GA—Avoidance: general

Commissioner’s power to adjust

Commissioner’s power to adjust: fringe benefit tax

Subpart GB—Avoidance: specific

Arrangements involving dividend stripping

Arrangements involving dividend stripping

Arrangements involving transfer pricing

Arrangements involving transfer pricing

Arrangements involving tax losses

Arrangements for carrying forward loss balances: companies

Arrangements for grouping tax losses: companies

Arrangements to defeat continuity provisions

Arrangements involving trust beneficiaries

Arrangements involving qualifying companies

Arrangements involving qualifying companies

Arrangements involving controlled foreign companies

Arrangements involving CFC control interests

Arrangements involving attributed repatriation from CFCs

Temporary disposals of direct control or income interests

Temporary acquisitions of direct control or income interests

Temporary increases in totals for control interest categories

Temporary reductions in totals for control interest categories

When combination of changes reduces income

When combination of changes increases loss

CFC income or loss: arrangements related to quarterly measurement

Arrangements involving foreign investment funds

FIF income or loss: arrangements for measurement day concessions

Arrangements involving film rights

Excessive amounts for film rights or production expenditure

Arrangements to acquire film rights or incur production expenditure

When film production expenditure payments delayed or contingent

Arrangements involving petroleum mining

Arrangements involving petroleum mining

Arrangements involving financial arrangements

Dealing that defeats intention of financial arrangements rules

Arrangements involving trust beneficiary income

Arrangements involving trust beneficiary income

Excessive remuneration

Excessive remuneration to relatives

Exemption for genuine contracts

Close company remuneration to shareholders, directors, or relatives

Arrangements involving repatriation of commercial bills

Arrangements involving repatriation of commercial bills

Attribution rule for income from personal services

Attribution rule for income from personal services

Interpretation of terms used in section GB 27

Attribution rule: calculation

Arrangements involving restrictive covenants

Arrangements to avoid taxation of restrictive covenant payments

Arrangements involving fringe benefit tax

FBT arrangements: general

Benefits provided to employee’s associates

Arrangements involving depreciation loss

Arrangements involving depreciation loss

Arrangements involving imputation rules

ICA arrangements for carrying amounts forward

Imputation arrangements to obtain tax advantage

Reconstruction of imputation arrangements to obtain tax advantage

Arrangements for payment of dividend by other companies

When sections GB 35 to GB 37 apply to consolidated groups

Arrangements involving foreign dividends

FDP arrangements: general

BETA arrangements for carrying amounts forward

FDPA arrangements for carrying amounts forward

Arrangements involving Maori authority credits

Maori authority credit arrangements to obtain tax advantage

Reconstruction of Maori authority credit arrangements to obtain tax advantage

Arrangements involving family support credits

Arrangements involving family support credits

Arrangements involving money not at risk

Arrangements involving money not at risk

Deferral of surplus deductions from arrangements

Calculation rules for sections GB 45 and GB 46

Defined terms for sections GB 45 and GB 46

Arrangements involving returning share transfers

Arrangements involving returning share transfers

Subpart GC—Market value substituted

Disposals of trading stock or similar property

Disposals of trading stock at below market value

Disposals of timber rights or standing timber

Disposals by life insurers

Disposals and acquisitions of FIF attributing interests

Leases for inadequate rent

Transfer pricing arrangements

Purpose of rules and nature of arrangements

Excess amount payable by person

Insufficient amount receivable by person

Compensating arrangement: person paying less than arm’s length amount

Compensating arrangement: person receiving more than arm’s length amount

Requests for matching treatment

Effect on person’s withholding obligations

Calculation of arm’s length amounts

Definitions for sections GC 6 to GC 13

Subpart GZ—Terminating provisions

Limitation on section GB 20: petroleum mining arrangements

Part H Taxation of certain entities

Subpart HA—Qualifying companies (QC) and loss-attributing qualifying companies (LAQC)

Introductory provisions

What this subpart does

Meaning of qualifying company

Meaning of loss-attributing qualifying company

Conditions applying

Qualifying company status

Elections to become qualifying company

Corporate requirements

Shareholding requirements

Shareholders’ personal liability

Limit on foreign non-dividend income

Nature of LAQC shares

When requirements no longer met

Avoidance arrangements

Treatment of profits, dividends, and tax losses

Qualifying companies’ distributions

Dividends paid by qualifying companies

Fully imputed distributions

Dividends derived by qualifying companies

Treatment of dividends when qualifying company status ends

Credit accounts and dividend statements

Attribution of tax losses

Loss balances not carried forward

Group companies using tax losses

Treatment of tax losses on amalgamation

Special tax matters for loss-attributing qualifying companies

Treatment of tax losses other than certain foreign losses

Treatment of certain foreign losses

Attribution when balance dates differ

Attribution when loss results in reduction in value of shares

Elections: qualifying companies

Elections by trustee shareholders

Elections by majority shareholders

When elections take effect

Revocation of directors’ elections

Revocation of shareholders’ elections: by notice

Revocation of shareholders’ elections: by event

Period of grace following death of shareholder

Period of grace following revocation of election

Period of grace following revocation of joint election

Period of grace for new shareholder

Elections: loss-attributing qualifying companies

Elections by directors and shareholders required

Revocation of elections

Qualifying company election tax

Liability for qualifying company election tax

Calculating qualifying company election tax

Paying qualifying company election tax

Effective interests in qualifying companies

Meaning of effective interest

Measuring effective interests

Subpart HC—Trusts

Introductory provisions

What this subpart does

Obligations of joint trustees for calculating income and providing returns

Multiple settlements

Corpus of trust

Amounts derived by trustees

Beneficiary income

Amounts received after person’s death

Classification of trusts

Classifying trusts

Complying trusts

Non-complying trusts

Charitable trusts

Distributions from trusts

Distributions from trusts

Taxable distributions from non-complying and foreign trusts

Ordering rule for distributions from non-complying and foreign trusts

Tax treatment of amounts that beneficiaries derive from trusts

Amounts derived as beneficiary income

Taxable distributions from foreign trusts

Taxable distributions from non-complying trusts

Distributions from complying trusts

Distributions from community trusts

Use of tax losses to reduce taxable distributions from non-complying trusts

Temporary absences of beneficiaries

Tax treatment of trustee income

Trustees’ obligations

Foreign-sourced amounts: non-resident trustees

Foreign-sourced amounts: resident trustees

Settlors and their liabilities

Who is a settlor?

Activities treated as those of settlor

Settlors’ liability to income tax

Treatment of transition situations

Treatment of foreign trusts when settlor becomes resident

Valuation of property, trading stock, and financial arrangements

When existing trusts come into tax base

Rate and payment of income tax

Liability of trustee as agent

Choosing to satisfy income tax liability of trustee

Taxable distributions from non-complying trusts

Beneficiary income of minors

Trusts and minor beneficiary rule

Testamentary trusts and minor beneficiary rule

Subpart HD—Agents

Introductory provisions

What this subpart does

Joint liability of principal and agent for tax obligations

Agents’ duties and liabilities

Treatment of principals

Matters between principals and agents

When relationship effectively that of principal and agent

Rate and amount of tax

Particular cases

Circumstances giving rise to agency

Mortgagees in possession

Nominated companies

Companies issuing debentures

Asset stripping of companies

Non-resident general insurers

Agent paying premiums to residents of Switzerland

Agency in relation to absentees generally

Persons receiving absentees’ income

Persons carrying on business for or with absentees

Banking companies

Trustees of group investment funds

Shipping businesses

Persons remitting amounts outside New Zealand

Agency in relation to non-residents generally

Government pensions and payments under superannuation schemes

Persons buying goods from overseas

Subpart HE—Mutual associations

Income and deductions of mutual associations

Classes of mutual transaction

Association rebates

Apportionment when transactions with members and non-members

Association rebates paid by shares or credit

Subpart HF—Maori authorities

Introductory provisions

Maori authorities and the Maori authority rules

Who is eligible to be a Maori authority?

Applying provisions to Maori authorities

Maori authority distributions

What constitutes a Maori authority distribution?

Notional distributions of co-operative companies

Tax treatment of Maori authority distributions

Taxable Maori authority distributions

Proportional allocation

Changing status

Treatment of companies and trusts that choose to apply this subpart

Market value calculations

Choosing to become Maori authority

Subpart HL—Portfolio investment entities

Introductory provisions

Intended effect on portfolio tax rate entities and investors

Scheme of subpart

Eligibility requirements: portfolio investment entities and foreign investment vehicles

Eligibility requirements for entities

Effect of failure to meet eligibility requirements for entities

Foreign investment vehicles

Investor membership requirement

Investor return adjustment requirement: portfolio tax rate entity

Imputation credit distribution requirement: portfolio listed company

Investor interest size requirement

Further eligibility requirements relating to investments

Becoming and ceasing to be portfolio investment entity

Election to become portfolio investment entity and cancellation of election

Unlisted company choosing to become portfolio listed company

Becoming portfolio investment entity

Tax consequences from transition

Ceasing to be portfolio investment entity

Periods relevant to calculation of portfolio entity tax liability

Portfolio allocation period and portfolio calculation period

Allocation of income in some cases

Treatment of income from interest when entitlement conditional or lacking

Certain new investors treated as part of existing portfolio investor class

Calculating portfolio entity tax liability

Portfolio class net income and portfolio class net loss for portfolio allocation period

Portfolio class taxable income and portfolio class taxable loss for portfolio allocation period

Portfolio entity tax liability and tax credits of portfolio tax rate entity for period

Payment by portfolio tax rate entity of tax for tax year

Payments of tax by portfolio tax rate entity making no election

Payments of tax by portfolio tax rate entity choosing to pay provisional tax

Payments of tax by portfolio tax rate entity choosing to make payments when investor leaves

Optional payments of tax by portfolio tax rate entities

Results for investors

Portfolio investor allocated income and portfolio investor allocated loss

Treatment of portfolio investor allocated loss for zero-rated portfolio investors and investors with portfolio investor exit period

Tax credits for entity

Treatment of portfolio investor allocated loss for other investors

Credits received by portfolio tax rate entity or portfolio investor proxy

Treatment of losses for entity

Portfolio entity formation loss

Portfolio class taxable income and portfolio class taxable loss for tax year

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

Portfolio investor proxies

Portfolio investor proxies

Subpart HR—Other entities

Partnerships and joint ventures

Partnerships and joint ventures

Group investment funds

Definitions for section HR 2: group investment funds

Government Superannuation Fund

Airport operators

Airport operators: general

Airport operator’s assets

Meaning of airport operator’s activities

Transitional residents

Transitional residents

Subpart HZ—Terminating provisions

Distributions from trusts of pre-1989 tax reserves

Trusts that may become complying trusts

Part I Treatment of tax losses

Subpart IA—General rules for tax losses

What this subpart does

Using tax losses in tax year

Using loss balances carried forward to tax year

Restrictions on companies’ loss balances carried forward

Restrictions on companies grouping tax losses

Restrictions relating to ring-fenced tax losses

Restrictions relating to schedular income

Amended assessments

Subpart IC—Grouping tax losses

Introductory provisions

Company A making tax loss available to company B

Threshold levels for grouping tax losses in tax year

Common ownership: group of companies

Common ownership: wholly-owned groups of companies

Requirements and methods

Company B using company A’s tax loss

Common ownership for period

Residence of company A

Limitations on amounts used

Date for payment and notice to Commissioner

When companies have different balance dates

Reduction of amounts used by companies

Bad debts or decline in value of shares

Subpart ID—Use of tax losses by consolidated groups

Treatment of tax losses by consolidated groups

Pre-consolidation losses: general treatment

Pre-consolidation losses: use by group companies

Pre-consolidation losses on entry: part-year rule

Pre-consolidation losses on exit: part-year rule

Subpart IE—Treatment of tax losses on amalgamation of companies

When this subpart applies

Treatment of tax losses by amalgamating company

Treatment of tax losses by amalgamated company

Group companies’ treatment of tax losses on amalgamation

Applying the continuity provisions when companies amalgamate

Subpart IP—Meeting requirements for part-years

Introductory provisions

When this subpart applies

Group companies’ common span

Tax loss components carried forward

Continuity breach: tax loss components of companies carried forward

Grouping part-year tax losses

Breach in income year in which tax loss component arises

Breach in tax year in which loss balance is grouped

Statements and notices

Financial statements required

Notices required

Subpart IQ—Attributed controlled foreign company net losses and foreign investment fund net losses

General treatment

Ring-fencing cap on attributed CFC net losses

Ring-fencing cap on FIF net losses

Group companies using attributed CFC net losses

Group companies using FIF net losses

Pre-consolidation losses: general treatment

When group membership lacking in loss period

When group membership lacking in tax year of use

When attributed CFC net loss becomes FIF net loss

Subpart IS—Mining companies’ and petroleum miners’ tax losses

General treatment of mining companies’ tax losses

Treatment of tax losses resulting from certain expenditure

Holding companies’ tax losses

Adjustments in certain circumstances

Petroleum miners’ tax losses

When company stops being mining company

Subpart IT—Life insurers’ net losses

Life insurers’ policyholder net losses

Subpart IV—Treatment of certain supplementary dividends

Supplementary dividend holding companies

Subpart IW—Use of tax losses to pay shortfall penalties

Shortfall penalties

Subpart IZ—Terminating provisions

Use of specified activity net losses

Petroleum mining companies: treatment of payments from shareholders

Petroleum mining companies: use of loss balances

Tax losses for tax years before 1977–78 tax year

Companies’ tax losses for tax years before 1991–92 tax year

Companies’ tax losses for 1990–91 and 1991–92 tax years

Grouping tax losses for tax years before 1981–82 and between 1981–82 and 1991–92

Part L Tax credits and other credits

Subpart LA—General rules for tax credits

What this Part does

Satisfaction of income tax liability

When total tax credit less than or equal to income tax liability

When total tax credit more than income tax liability

Treatment of remaining credits

Remaining refundable credits: PAYE, RWT, and certain other items

Remaining refundable credits: family scheme income

Remaining refundable credits: non-resident withholding tax

Use of tax credits

Meaning of tax credit

Subpart LB—Tax credits for payments, deductions, and family income assistance

Tax credits for PAYE income payments

Tax credits for provisional tax payments

Tax credits for resident withholding tax

Tax credits for family scheme income

Tax credits for non-resident withholding tax

Tax credits for caregivers

Subpart LC—Tax credits for natural persons

Tax credits for persons on low incomes

When net income under low income amount

When net income in low income abatement range

Tax credits for children

Child’s income

Tax credits for transitional circumstances

Tax credits for transitional circumstances

Meaning of engaged in full-time work

Tax credits for housekeeping

Tax credits for housekeeping

Meaning of housekeeper

Some definitions

Tax credits for absentees

Tax credits for absentees

Adjustments to certain tax credits

Adjustment for change in return date

Adjustment when person is non-resident for part of tax year

Assessment when person is non-resident

Subpart LD—Tax credits for charitable or other public benefit gifts

Tax credits for charitable or other public benefit gifts

Meaning of charitable or other public benefit gift

Subpart LE—Tax credits for imputation credits

Tax credits for imputation credits

Use of remaining credits by companies and trustees

Use of remaining credits by others

Trustees for minor beneficiaries

Beneficiaries of trusts

Partners in partnerships

Credit transfer notices

Application of imputation ratio

Application of combined imputation and FDP ratio

When income tax unpaid

Evidential requirements

Subpart LF—Tax credits for foreign dividend payment (FDP) credits

Tax credits for FDP credits

Trustees for minor beneficiaries

Beneficiaries of trusts

Partners in partnerships

Credit transfer notices

Application of FDP ratio

Application of combined imputation and FDP ratio

Credits for persons who are non-resident or who receive exempt income

When income tax unpaid

Evidential requirements

Subpart LJ—Tax credits for foreign income tax

What this subpart does

Tax credits for foreign income tax

Meaning of foreign income tax

Meaning of segment of foreign-sourced income

Calculation of New Zealand tax

Taxable distributions and NRWT rules

Repaid foreign tax

Subpart LK—Tax credits relating to attributed controlled foreign company income

Amounts of credits

Tax credits relating to attributed CFC income

Calculation of amount of credit

Currency conversion

Use of credits in later tax years

Use of remaining credits

Companies’ credits carried forward

Use of credits by group companies

Treatment of taxable distributions

Taxable distributions and NRWT rules

Consolidated companies

Tax credits of consolidated companies

Use of company’s credits carried forward

When group membership lacking in tax year in which credit arises

When group membership lacking in tax year in which credit used

Amalgamations of companies

Treatment of credits when companies amalgamate

Use of credits by amalgamated company

Use by amalgamated company of credits carried forward

Use of amalgamating company’s credits

Subpart LL—Underlying foreign tax credits (UFTC)

What this subpart does

Tax credits for underlying foreign tax

Meaning of grey list dividend

Tracking accounts

Meaning of foreign dividend company net earnings

Foreign dividend company lower tier UFTCs

Conduit financing arrangements

Currency conversion

Some definitions

Subpart LO—Tax credits for Maori authority credits

Tax credits for Maori authority credits

Beneficiaries of trusts

Application of Maori authority distribution ratio

When income tax unpaid

Evidential requirements

Subpart LP—Tax credits for supplementary dividends

Introductory provision

What this subpart does

Tax credits for supplementary dividends

Use of remaining credits

Continuity rules for carrying credits forward

Application of benchmark dividend rules and imputation credit ratio

Deriving supplementary dividend and breach of terms of trust

Supplementary dividend holding companies

Requirements for supplementary dividend holding companies

Relationship with exempt income rules

Relationship with RWT rules

Limitation on deductions

Subpart LQ—Tax credits of conduit tax relief companies

Tax credits of CTR companies

Limitation on amount of credit

Determining percentage of non-resident shareholders

Date for determining percentage of non-resident shareholders

CTR additional dividends

Subpart LR—Tax credits for policyholder income

Tax credits for policyholder income

Subpart LS—Tax credits for portfolio tax rate entities and investors

Tax credits for portfolio tax rate entities relating to certain investors

Tax credits for certain investors in portfolio tax rate entities

Tax credits for certain zero-rated portfolio investors

Tax credits for certain investors in portfolio investor exit period

Subpart LZ—Terminating provisions

Underlying foreign tax credits

Low tax jurisdiction companies

Credits for certain non-resident investment companies

Certain development projects

Interest derived from development investments

Dividends derived from development investments

Some definitions

Credits for interest on home vendor mortgages

Interest on home vendor mortgages

Maximum amount of credit under section LZ 6

Meaning of home vendor mortgage

Credits for savings in special home ownership accounts

Savings in special home ownership accounts

Maximum amount for 1 special home ownership account for 1 tax year

Maximum amount for all special home ownership accounts for all tax years

Meaning of increase in savings

Part M Tax credits paid in cash

Subpart MA—General provisions

What this Part does

Relationship with core provisions

Excluded income

Calculation of amounts of credit producing negative amounts

Advice from outside agencies

Avoidance arrangements

Meaning of full-time earner for family scheme

Some definitions for family scheme

Subpart MB—Adjustment of net income for family scheme

Adjustments for calculation of family scheme income

Adjustment for period that is less or more than 1 year

When person carries on 1 or more businesses

Family scheme income of major shareholders in close companies

Treatment of distributions from superannuation schemes

Subpart MC—Entitlements under family scheme

What this subpart does

Who qualifies for entitlements under family scheme?

First requirement: person’s age

Second requirement: principal care

Third requirement: residence

When person does not qualify

When spouse or partner entitled under family scheme

Continuing requirements

Credits for person aged 18

Principal caregiver

Relationship periods and entitlement periods

Subpart MD—Family assistance credit

Calculating amount of credit

Family assistance credit

Calculating net contributions to credits

Calculation of family support

In-work payment

Entitlement to in-work payment

First requirement: person’s age

Second requirement: principal care

Third requirement: residence

Fourth requirement: person not receiving benefit

Fifth requirement: full-time earner

Calculation of in-work payment

Parental tax credit

Entitlement to parental tax credit

Calculation of parental tax credit

Family credit abatement

Calculation of family credit abatement

Person receiving protected family support

Family scheme income for purposes of section MD 14

Subpart ME—Family tax credit

Family tax credit

Meaning of employment for this subpart

Subpart MF—Payment of credits

Application for payment of tax credit by instalment

When person not entitled to payment by instalment

Calculating amount of interim family assistance credit

Requirements for calculating instalment of tax credit

Recovery of overpaid tax credit

Overpayment of tax credit

Orders in Council

Subpart MK—Tax credits for KiwiSaver schemes and complying superannuation funds

What this subpart does

Eligibility requirements

Payment of tax credits

Amount of tax credit

Crown contributions for members

Credit given by fund providers

Amounts paid in excess

Treatment of tax credits on permanent emigration

Subpart MZ—Terminating provisions

Entitlement to child tax credit

Calculation of child tax credit

Part O Memorandum accounts

Subpart OA—General provisions

Introductory provisions

What this Part does

Memorandum accounts

General rules for maintaining memorandum accounts

Certain credits and debits arising only in group accounts

Credits and debits

Opening balances

Opening balances of memorandum accounts

Shareholder continuity requirements

Shareholder continuity requirements for memorandum accounts

Treatment of credits and debits on resident’s restricted amalgamation

General provision

General treatment of credits and debits on resident’s restricted amalgamation

When companies amalgamate

When credits or debits due to amalgamating company but not recorded

FDP account on resident’s restricted amalgamation

CTR account on resident’s restricted amalgamation

Policyholder credit account on resident’s restricted amalgamation

Amalgamation of companies in consolidated groups

Continuity of shareholding when group companies amalgamate

When credits or debits due to consolidated group but not recorded

When FDP account ends on resident’s restricted amalgamation

When policyholder credit account ends on resident’s restricted amalgamation

Maximum permitted ratios

Calculation of maximum permitted ratios

Subpart OB—Imputation credit accounts (ICA)

Introductory provisions

General rules for companies with imputation credit accounts

Australian companies with imputation credit accounts

Imputation credit accounts

Imputation credits

ICA payment of tax

ICA deposit in tax pooling account

ICA transfer from tax pooling account

ICA payment of further income tax

ICA resident withholding tax withheld

ICA dividend derived with imputation credit

ICA dividend derived with FDP credit

ICA payment of FDP

ICA transfer from FDP account

ICA transfer of debit balance on leaving wholly-owned group

ICA payment of tax on leaving wholly-owned group

ICA payment of tax on joining wholly-owned group

ICA attribution for personal services

ICA transfer from policyholder credit account

ICA transfer from ASC account

ICA transfer to master fund

ICA distribution with Maori authority credit

ICA balance of Maori authority credit account

ICA replacement payment to company under share-lending arrangement

ICA credit transfer to company

ICA credit on resident’s restricted amalgamation

ICA reversal of tax advantage arrangement

ICA elimination of double debit

ICA non-resident withholding tax withheld

ICA payment of amount of tax for schedular payment

ICA payment of schedular income tax

Imputation debits

ICA payment of dividend

ICA allocation of provisional tax

ICA refund of income tax

ICA amount applied to pay other taxes

ICA refund from tax pooling account

ICA transfer within tax pooling account

ICA refund of FDP

ICA refund of tax credit

ICA overpayment of FDP

ICA transfer for net foreign attributed income

ICA attribution for personal services

ICA debit for loss of shareholder continuity

ICA on-market cancellation

ICA breach of imputation ratio

ICA debit on leaving wholly-owned group

ICA redemption debit

ICA transfer from member fund

ICA transfer to policyholder credit account

ICA credit balance when Maori authority credit account starts

ICA replacement payment by company under share-lending arrangement

ICA returning share transfer

ICA credit transfer by company

ICA imputation credit of consolidated imputation group

ICA debit on resident’s restricted amalgamation

ICA tax advantage arrangement

ICA retrospective imputation credit

ICA final balance

ICA refund of NRWT

ICA refund of amount of tax for schedular payment

ICA refund of schedular income tax

Imputation credits attached to dividends

Imputation credits attached to dividends

ICA benchmark dividend rules

Retrospective attachment of imputation credits

Australian dividends

Replacement payments

Further income tax

Further income tax for ICA closing debit balance

Further income tax when company stops being ICA company

Reduction of further income tax

Income tax paid satisfying liability for further income tax

Further income tax paid satisfying liability for income tax

Application of other provisions

Imputation additional tax

Imputation additional tax on leaving wholly-owned group

Imputation additional tax on joining wholly-owned group

Distributions of statutory producer boards and co-operative companies

Statutory producer boards attaching imputation credits to cash distributions

Statutory producer boards attaching imputation credits to notional distributions

Statutory producer boards’ notional distributions that are dividends

Statutory producer boards attaching FDP credits

When and how statutory producer board makes election

Co-operative companies attaching imputation credits to cash distributions

Co-operative companies attaching imputation credits to notional distributions

Co-operative companies’ notional distributions that are dividends

Co-operative companies attaching FDP credits

When and how co-operative company makes election

Tables of credits and debits in memorandum accounts

Subpart OC—Foreign dividend payment accounts (FDPA)

Introductory provisions

General rules for companies with FDP accounts

Choosing to become FDPA company

When company chooses to stop being FDPA company

When company emigrates

FDPA payment of FDP

FDPA dividend derived with FDP credit

FDPA payment of FDP for transfer from CTR account

FDPA transfer for net foreign attributed income

FDPA payment of FDP for conduit debit balance

FDPA credit transfer to company

FDPA reversal of tax advantage arrangement

FDPA payment of dividend

FDPA refund of FDP

FDPA overpayment of FDP

FDPA refund of tax credit

FDPA credit transfer by company

FDPA transfer to imputation credit account

FDPA transfer to CTR account

FDPA transfer to policyholder credit account

FDPA transfer to group account

FDPA breach of FDP ratio

FDPA breach of FDP ratio by PCA company

FDPA debit for loss of shareholder continuity

FDPA tax advantage arrangement

FDPA final balance

FDP credits attached to dividends

FDP credits attached to dividends

FDPA benchmark dividend rules

FDP credits and imputation credits attached to dividends

Payment of further FDP for closing debit balance

Payment of further FDP when company no longer New Zealand resident

Reduction of further FDP

FDP paid satisfying liability for further FDP

Further FDP paid satisfying liability for FDP

Some definitions

Meaning of FDP reference period

Meaning of maximum deficit debit

Meaning of policyholder FDP ratio

Meaning of reduced deficit debit

Meaning of shareholder FDP ratio

Table O3: FDP credits

Table O4: FDP debits

Subpart OD—Conduit tax relief accounts (CTRA)

Introductory provisions

General rules for companies with CTR accounts

Choosing to become CTR company

When company stops being CTR company

CTRA tax credit for conduit tax relief

CTRA transfer from FDP account

CTRA dividend derived with CTR credit

CTRA reduction of FDP

CTRA reversal of tax advantage arrangement

CTRA payment of dividend

CTRA transfer to FDP account

CTRA transfer to group account

CTRA adjustment for conduit tax relief

CTRA break in shareholding chain for group company

CTRA break in shareholding chain for company

CTRA increase in resident shareholding

CTRA breach of CTR ratio

CTRA tax advantage arrangement

CTRA final balance

CTR credits attached to dividends

CTR credits attached to dividends

CTRA benchmark dividend rules

CTR credits and imputation credits attached to dividends

Payment of FDP and refunds

FDP payable for CTR debits

FDP payable on resident’s restricted amalgamation

Refunds on transfers to CTR account

Table O5: conduit tax relief credits

Table O6: conduit tax relief debits

Subpart OE—Branch equivalent tax accounts (BETA)

Introductory provision

General rules for companies and other persons with branch equivalent tax accounts

Companies with branch equivalent tax accounts

Introductory provisions

Branch equivalent tax accounts of companies

Choosing to become BETA company

When company stops being BETA company

Treatment of attributed CFC income and FIF income in this subpart

Branch equivalent tax credits

BETA payment of income tax on foreign income

BETA payment of income tax

BETA unused amount of debit balance

BETA refund of FDP

BETA credit for loss of shareholder continuity

BETA final balance

Branch equivalent tax debits

BETA payment of FDP

BETA reduction in FDP

BETA refund of income tax

BETA debit for loss of shareholder continuity

BETA final balance

Persons with branch equivalent tax accounts

Introductory provisions

Person choosing to become BETA person

When person stops being BETA person

Branch equivalent tax credits

BETA person’s payment of income tax on foreign income

Branch equivalent tax debits

BETA person’s payment of income tax

BETA person’s refund of income tax

BETA person’s final balance

Table O7 branch equivalent tax credits

Table O8 branch equivalent tax debits

Table O9 person's equivalent tax credits

Table O10 person's equivalent tax debits

Subpart OF—Available subscribed capital accounts (ASCA)

Introductory provisions

General rules for companies with ASC accounts

Choosing to become ASC account company

ASCA redemption credit

ASCA transfer to imputation credit account

Table O11 ASC credits

Table O12 ASC debits

Subpart OJ—Policyholder credit accounts (PCA)

Introductory provision

General rules for companies and other persons with policyholder credit accounts

Companies with policyholder credit accounts

Introductory provision

Policyholder credit accounts of companies

Policyholder credits of PCA company

PCA transfer from imputation credit account

PCA transfer from FDP account

PCA transfer of life insurance business

PCA credit for maximum deficit in FDP account

PCA credit for reduced deficit in FDP account

Policyholder debits of PCA company

PCA payment of tax relating to policyholder base

PCA transfer to imputation credit account

PCA transfer to group account

PCA company’s transfer of life insurance business

Persons with policyholder credit accounts

Introductory provisions

Choosing to become PCA person

Choosing to stop being PCA person

Policyholder credits of PCA person

PCA person’s equivalent credit

PCA person’s credit for transfer of life insurance business

Policyholder debits of PCA person

PCA person’s payment of tax relating to policyholder base

PCA person’s equivalent debit

PCA person’s debit for transfer of life insurance business

Table O13 policy holder credits

Table O14 policyholder debits

Table O15 person's policyholder credits

Table O16 person's policyholder debits

Subpart OK—Maori authority credit accounts (MACA)

Introductory provision

General rules for Maori authorities with Maori authority credit accounts

Maori authority credits

MACA payment of tax

MACA payment of tax to other Maori authorities

MACA payment of further income tax

MACA distribution with Maori authority credit

MACA dividend derived with imputation credit

MACA dividend derived with FDP credit

MACA resident withholding tax withheld

MACA reversal of tax advantage arrangement

Maori authority debits

MACA distribution

MACA allocation of provisional tax

MACA refund of income tax

MACA payment of other taxes

MACA refund of FDP

MACA debit for loss of shareholder continuity

MACA breach of Maori authority credit ratio

MACA tax advantage arrangement

MACA final balance

Maori authority credits attached to distributions

Maori authority credits attached to distributions

MACA benchmark distribution rules

Further income tax

Further income tax for closing debit balance

Further income tax paid when Maori authority no longer Maori authority

Further income tax paid satisfying liability for income tax

Income tax paid satisfying liability for further income tax

Table O17 Maori authority credits

Table O18 Maori authority debits

Subpart OP—Memorandum accounts of consolidated groups

Introductory provisions

Memorandum accounts of consolidated groups

When credits and debits arise only in group accounts

Consolidated groups and imputation credit accounts

Introductory provisions

Changes in consolidated imputation groups

Resident imputation subgroups

When credits and debits arise only in consolidated imputation group accounts

Provisions applying to consolidated imputation groups

Imputation credits of consolidated imputation groups

Consolidated ICA payment of tax

Consolidated ICA deposit in tax pooling account

Consolidated ICA transfer from tax pooling account

Consolidated ICA allocation from company with overpaid provisional tax

Consolidated ICA payment of further income tax

Consolidated ICA dividend derived with imputation credit

Consolidated ICA dividend derived with FDP credit

Consolidated ICA payment of FDP

Consolidated ICA replacement payment to company under share-lending arrangement

Consolidated ICA credit transfer to company

Consolidated ICA resident withholding tax withheld

Consolidated ICA transfer from group company’s FDP account

Consolidated ICA transfer from group’s FDP account

Consolidated ICA transfer from group company’s policyholder credit account

Consolidated ICA transfer from group’s policyholder credit account

Consolidated ICA group company’s credit

Consolidated ICA elimination of double debit

Consolidated ICA reversal of tax advantage arrangement

Consolidated ICA non-resident withholding tax withheld

Consolidated ICA payment of amount of tax for schedular payment

Consolidated ICA payment of schedular income tax

Imputation debits of consolidated imputation groups

Consolidated ICA payment of dividend

Consolidated ICA allocation of provisional tax

Consolidated ICA refund of income tax

Consolidated ICA amount applied to pay other taxes

Consolidated ICA refund from tax pooling account

Consolidated ICA transfer to tax pooling account

Consolidated ICA refund of FDP

Consolidated ICA refund of tax credit

Consolidated ICA overpayment of FDP

Consolidated ICA group company’s debit

Consolidated ICA transfer for net foreign attributed income

Consolidated ICA replacement payment by company under share-lending arrangement

Consolidated ICA returning share transfer

Consolidated ICA credit transfer by company

Consolidated ICA debit for loss of shareholder continuity

Consolidated ICA breach of imputation ratio

Consolidated ICA transfer to policyholder credit account

Consolidated ICA redemption debit

Consolidated ICA tax advantage arrangement

Consolidated ICA final balance

Consolidated ICA refund of NRWT

Consolidated ICA refund of amount of tax for schedular payment

Consolidated ICA refund of schedular income tax

Table O19 imputation credits of consolidated imputation groups

Table O20 imputation debits of consolidated imputation groups

Consolidated groups and FDP accounts

Introductory provisions

FDP accounts of consolidated FDP groups

Choosing to stop being consolidated FDP group

When group company emigrates

When credits and debits arise only in consolidated FDP group accounts

Provisions applying to consolidated FDP groups

FDP credits of consolidated FDP groups

Consolidated FDPA payment of FDP

Consolidated FDPA payment of further FDP

Consolidated FDPA dividend derived with FDP credit

Consolidated FDPA group company’s credit

Consolidated FDPA credit transfer to company

Consolidated FDPA transfer from group’s CTR account

Consolidated FDPA transfer for net foreign attributed income

Consolidated FDPA reversal of tax advantage arrangement

FDP debits of consolidated FDP groups

Consolidated FDPA payment of dividend

Consolidated FDPA credit transfer by company

Consolidated FDPA refund of FDP

Consolidated FDPA overpayment of FDP

Consolidated FDPA refund of tax credit

Consolidated FDPA transfer to imputation credit account

Consolidated FDPA transfer to group’s CTR account

Consolidated FDPA group company’s debit

Consolidated FDPA breach of FDP ratio

Consolidated FDPA debit for loss of shareholder continuity

Consolidated FDPA transfer to policyholder credit account

Consolidated FDPA breach of FDP ratio by PCA company

Consolidated FDPA tax advantage arrangement

Consolidated FDPA final balance

Table O21 : credits of consolidated FDP groups

Table O22 : FDP debits of consolidated FDP groups

Consolidated groups and CTR credits

Introductory provisions

CTR accounts of consolidated groups

When credits and debits arise only in CTR group accounts

Provisions applying to consolidated groups with CTR accounts

CTR credits of consolidated groups

Consolidated CTRA tax credit for conduit tax relief

Consolidated CTRA reduction of FDP

Consolidated CTRA dividend derived with CTR credit

Consolidated CTRA group company’s credit

Consolidated CTRA transfer from group’s FDP account

Consolidated CTRA reversal of tax advantage arrangement

CTR debits of consolidated groups

Consolidated CTRA payment of dividend

Consolidated CTRA transfer to group’s FDP account

Consolidated CTRA adjustment for conduit tax relief

Consolidated CTRA group company’s debit

Consolidated CTRA increase in resident shareholding

Consolidated CTRA breach of CTR ratio

Consolidated CTRA tax advantage arrangement

Consolidated CTRA final balance

Consolidated groups’ FDP payments and refunds

FDP payable for credits and debits in group’s CTR account

Refund on transfer from group’s FDP account

Table O23 : conduit tax relief credits of consolidated groups

Table O23 : conduit tax relief debits of consolidated groups

Consolidated groups and branch equivalent tax accounts

Introductory provisions

Branch equivalent tax accounts of consolidated BETA groups

Choosing to stop being consolidated BETA group

When credits and debits arise only in branch equivalent tax group accounts

Branch equivalent tax credits of consolidated BETA groups

Consolidated BETA payment of income tax on foreign income

Consolidated BETA payment of income tax

Consolidated BETA remaining debit balances

Consolidated BETA refund of FDP

Consolidated BETA credit for loss of shareholder continuity

Branch equivalent tax debits of consolidated BETA groups

Consolidated BETA payment of FDP

Consolidated BETA reduction of FDP

Consolidated BETA refund of income tax

Consolidated BETA debit for loss of shareholder continuity

Table O25 : branch equivalent tax credits of consolidated BETA groups

Table O26 : branch equivalent tax debits of consolidated BETA groups

Consolidated groups and policyholder credit accounts

Introductory provision

Policyholder credit accounts of consolidated groups

Policyholder credits of consolidated groups

Consolidated PCA transfer from imputation credit account

Consolidated PCA transfer from FDP account

Consolidated PCA group company’s credit

Consolidated PCA maximum deficit debit in FDP account

Consolidated PCA reduced deficit debit in FDP account

Policyholder debits of consolidated groups

Consolidated PCA payment of tax relating to policyholder base

Consolidated PCA transfer to imputation credit account

Subpart OZ—Terminating provisions

No imputation credit for pre-imputation tax paid

No imputation debit for pre-imputation refund

Overpaid income tax or foreign dividend payment for pre-imputation income year

Terminating modifications to debits for loss of shareholder continuity

ASCA lost excess available subscribed capital

ASCA redemption of unused investments

Part R General collection rules

Subpart RA—General withholding and payment obligations

Introductory provisions

What this Part does

Amounts treated as income tax

Payment and withholding obligations

Terminal tax obligations

Provisional tax obligations

Tax obligations for employment-related taxes

Withholding and payment obligations for passive income

Payment of tax by public authorities

Liability of persons receiving payments or benefits

Treatment of amounts withheld as received

When obligations not met

Adjustment to correct errors: certain underpayments

Adjustment to correct errors: certain excess amounts

Payment dates for terminal tax

Payment dates for provisional tax

Payment dates for interim and other tax payments

Payment date when taxable activity ends

Payment date when RWT exemption certificate expires

Payment date for emigrating companies

Refunds of excess amounts or when amounts mistakenly paid

Amalgamation of companies

Application of other provisions

Limits on application of other provisions for purposes of PAYE rules

Application of other provisions for purposes of ESCT rules and NRWT rules

Subpart RB—Terminal tax

Payment of terminal tax

Income tax liability for non-filing taxpayers for non-resident passive income

Schedular income tax liability for filing taxpayers for non-resident passive income

Using refunds to satisfy tax liabilities

Subpart RC—Provisional tax

Introductory provisions

What this subpart does

Provisional tax rules and their application

Who is required to pay provisional tax?

Choosing to pay provisional tax

Calculating provisional tax liability

Methods for calculating provisional tax liability

Standard method

Estimation method

GST ratio method

Instalments of provisional tax

Provisional tax payable in instalments

Calculating amount of instalment under standard and estimation methods

Calculating amount of instalment using GST ratio

Voluntary payments

Paying 2 instalments for tax year

Paying 1 instalment for tax year

Requirements for using GST ratio

Choosing to use GST ratio

Who may use GST ratio?

When GST ratio must not be used

Changing calculation method

Disposal of assets

Transitional years

Calculating residual income tax in transitional years

Paying provisional tax in transitional years

Calculating instalments in transitional years: standard method

Calculating instalments in transitional years: estimation method

Calculating instalments in transitional years: GST ratio method

Consequences of change in balance date

When persons start or stop paying GST, or change taxable periods

Registering for GST or cancelling registration

Payment of provisional tax instalments when GST cycle changed

Treatment of groups of companies and amalgamated companies

Provisional tax rules and consolidated groups

Residual income tax of consolidated groups

Consolidated groups using estimation method

Consolidated groups using GST ratio method

Wholly-owned groups of companies

Amalgamated companies: calculating residual income tax

Attribution rule for income from personal services

Attribution rule for income from personal services

Further income tax credited to provisional tax liability

Disaster relief

Persons affected by adverse events

Early-payment discounts

Availability of early-payment discounts

Crediting income tax with early-payment discount

Credit treated as payment of income tax

Some definitions

Subpart RD—Employment-related taxes

Introductory provision

What this subpart does

PAYE rules and PAYE income payments

Introductory provisions

PAYE rules and their application

PAYE income payments

Payment of amounts of tax to Commissioner

Types of PAYE income payments

Salary or wages

Certain benefits and payments

Schedular payments

Calculating amounts of tax

Amounts of tax for PAYE income payments

Reduction in certain circumstances

Adjustments for certain PAYE income payments

Multiple payments of salary or wages

Advance payments of salary or wages

Changes to tax rates for salary or wages

Payments of salary or wages in pay periods

Payments to private domestic workers

Payment of extra pay with other PAYE income payments

Schedular payments without notification

Schedular payments to non-resident entertainers

Schedular payments to subcontractors

Paying amounts of tax

When amounts of tax not withheld or payment insufficient

PAYE income payment forms for amounts of tax paid to Commissioner

Bonds given by employers of certain non-resident employees

Exemption certificates for non-resident contractors

Fringe benefit tax (FBT) rules and fringe benefits

Introductory provisions

FBT rules and their application

Liability for FBT

Value of fringe benefits

Determining fringe benefit values

Private use of motor vehicle: calculation methods

Private use of motor vehicle: formulas

Private use of motor vehicle: 24-hour period

Motor vehicle test period

Replacement motor vehicles

Subsidised transport

Employment-related loans: value using prescribed interest rates

Employment-related loans: value using market interest rates

Repayment of employment-related loans

Contributions to superannuation schemes

Contributions to funds, trusts, and insurance premiums

Benefits provided by charitable organisations

Goods at staff discount

Goods on special with staff discount

Goods sold by group companies

Unclassified benefits

Adjustments for unclassified benefits on amalgamation

Attributing fringe benefits to employees

Attribution of certain fringe benefits

When attributed benefits provided to more than 1 employee

Application of thresholds to attributed benefits

Employer’s liability for attributed benefits

Calculation of all-inclusive pay

Calculation for certain employees when information lacking

Pooling non-attributed benefits

Taxable value of fringe benefits

Value of and payments towards fringe benefits

Private use of motor vehicle: taxable value in cases of part ownership

Private use of motor vehicle: when schedular value not used

Private use of motor vehicle: when schedular value used

Options for payment of FBT

Single rate option

Alternate rate option

Close company option

Small business option

Changes in payment periods

When employer stops employing staff

Employer’s superannuation contribution tax (ESCT) rules and employer’s superannuation contributions

Introductory provisions

ESCT rules and their application

Employer’s superannuation contributions

Complying fund rules

Calculating amounts of tax

Calculating amounts of tax for employer’s superannuation contribution

Choosing to have amount treated as salary or wages

Choosing different rates for employer’s superannuation contributions

Calculating amounts of tax on failure to withhold

Amounts of tax treated as paid to and received by superannuation funds

Tax on certain withdrawals from superannuation funds

Recovery of tax paid by superannuation funds

Subpart RE—Withholding tax on resident passive income (RWT)

Introductory provisions

RWT rules and their application

Resident passive income

Withholding obligations

Obligation to withhold RWT

Persons who have withholding obligations

No withholding obligation in certain circumstances

When obligation to withhold unreasonable

When resident passive income paid to trustees

When resident passive income paid to nominees

Agents’ or trustees’ obligations in relation to certain dividends

Special rule relating to payments of interest

Notification by companies

Calculating amounts of tax

Dividends other than non-cash dividends

Non-cash dividends other than bonus issues in lieu

Bonus issues in lieu

Taxable Maori authority distributions

Replacement payments under share-lending arrangements

Payments made by RWT proxies

Choosing higher rates

Paying amounts of tax

Basis for payment of RWT

When payment treated as non-resident passive income

When amount of tax treated as FDP credit

When amount of tax treated as Maori authority credit

When amount of tax treated as imputation credit

Payment by proxy

RWT exemption certificates

RWT exemption certificates

When certificates expire

Establishing whether person holds certificate

When unincorporated bodies hold certificates

Subpart RF—Withholding tax on non-resident passive income (NRWT)

Introductory provisions

NRWT rules and their application

Non-resident passive income

Withholding obligations

Obligation to withhold amounts of tax for non-resident passive income

Non-resident passive income received by agents and others

When amounts of tax already withheld

When amounts of tax not withheld or partly withheld

Calculating amounts of tax

General rate for NRWT

Certain dividends

When dividends fully imputed or fully credited

Non-cash dividends

Dividends paid to companies under control of non-residents

Certain amounts of interest

Paying amounts of tax

Basis for payment of amounts of tax for non-resident passive income

Treatment of FDP credits

Commissioner’s power to vary amounts of tax

Subpart RG—Payments for foreign dividends (FDP)

Introductory provisions

FDP rules and their application

Foreign dividends

Obligation to make payments

Obligation to pay FDP

Calculation of payments

Calculating amount of FDP

Adjustments to payments

Credit balance in branch equivalent tax account

Using loss balances

Reduction of payments for conduit tax relief

Subpart RM—Refunds

Introductory provision

What this subpart does

Refunds for overpaid amounts

Refunds for overpaid tax

Refunds for overpaid FDP

Overpayment on amended assessment

Overpayment on income statements

Refunds after 4-year period ends

Refunds to PAYE intermediaries

Overpaid RWT or NRWT

Calculations for attributed and non-attributed fringe benefits

Using refund to satisfy tax liability

Using GST refund to pay instalment of provisional tax

Reduction in provisional tax liability

Limits on refunds and transfers

Limits on refunds for ICA companies

Limits on refunds when company stops being ICA company

Changes in credit balances

Treatment of amounts not refunded

Treatment of further income tax paid

Companies receiving foreign dividends

Limits on refunds related to foreign dividends

Treatment of financial arrangements

Treatment of amounts not refunded

Refunds when loss balances used to reduce net income

Maori authorities

Limits on refunds for Maori authorities

Limits on refunds when Maori authority stops being Maori authority

Increase in credit balances

Treatment of amounts not refunded

Treatment of further income tax paid

Application when no credits arise

Persons with policyholder credit accounts

Limits on refunds for PCA persons

Limits on refunds when person no longer PCA person

Changes in credit balances

Treatment of amounts not refunded

Qualifying companies

Application of sections RM 13 to RM 17 to qualifying companies

Certain unit trusts and group investment funds

Limits on refunds for certain unit trusts and group investment funds

Subpart RP—Intermediaries

Introductory provision

What this subpart does

PAYE intermediaries

Obligations and treatment of PAYE intermediaries

PAYE intermediaries

Requirements for listed PAYE intermediaries

Payment of subsidies to certain PAYE intermediaries

Operation of PAYE intermediaries’ trust accounts

Employers’ responsibilities

General responsibilities of employers

Information required from employers

Authorised transfers from accounts

When transfers from accounts not authorised

Employer’s superannuation contributions

When payments made directly to employees

PAYE intermediaries’ responsibilities

General responsibilities of PAYE intermediaries

Collection, payment, and information requirements

When employers have authorised transfers from accounts

Obligations for employer’s superannuation contributions

Tax pooling intermediaries

Tax pooling intermediaries

Deposits in tax pooling accounts

Transfers from tax pooling accounts

Refusals to transfer amounts

Refunds from tax pooling accounts

Subpart RZ—Terminating provisions

Provisional tax

Certain elections to become person with provisional tax liability

Amount of provisional tax based on 1997–98 or earlier tax year

Standard method: 2008–09 and 2009–10 income years

GST ratio method: 2008–09 and 2009–10 income years

Calculating amounts under standard method: 2008–09 and 2009–10 income years

Limits on refunds: transitional dates

Withdrawal income

Withdrawal income

Payment and rate of withdrawal tax

Relief in certain cases

Recovery of amounts payable to Commissioner

Part Y Definitions and related matters

Subpart YA—General definitions

Meaning of income tax varied

Treatment of qualifying company election tax, FBT, FDP penalty tax, imputation penalty tax, and withdrawal tax

Table Y1 Associated person rules

Subpart YB—Associated persons and nominees

Associated persons

What this subpart does

Two companies with common control

Two companies with common control: 1988 version provisions

Company and associate’s associate: 1988 version provisions

Company and non-corporate 25% interest holder

Company and relative of 25% interest holder: 1973 version provisions

Company and non-corporate 50% interest holder: 1988 version provisions

Company and non-corporate 50% interest holder: 1990 version provisions

Relatives: persons with blood or adoption relationships

Relatives: person and their spouse or partner

Relatives: person with blood relationship to spouse or partner of other person

Trusts: person and trustee for their relative

Trusts: person and trustee for person

Trusts: trusts with common settlor

Trusts: trustee and settlor: 1988 version provisions

Partnerships: partnership and partner

Partnerships: partnership and associate of partner

Persons habitually acting together: 1988 version provisions

Person and controlled non-profit organisation: 1990 version provisions

Some definitions

Transparency of nominees

Subpart YC—Measurement of company control and ownership

Meaning of control

Voting and market value interests

Voting interests

Market value interests

Look-through rule for corporate shareholders

Treatment of special corporate entities

Disregarding certain securities

Voting and market value interests: modifications for continuity provisions

When sections YC 8 to YC 19 apply

Death of share or option holder

Shares or options held by trustees

Shareholders holding less than 10% direct interests

No look-through rule for companies in certain cases

Public unit trusts

Corporate spin-outs

Disregarding concessionary rules

Directors’ knowledge of failure to meet requirements of continuity provision

Disregarding market value changes

Demutualisation of insurers

Reverse takeovers

Legislative conversion of foreign company of proprietors

Credit account continuity provisions: excluded fixed rate securities

Subpart YD—Residence and source in New Zealand

Residence of natural persons

Residence of companies

Country of residence of foreign companies

Classes of income treated as having New Zealand source

Apportionment of income derived partly in New Zealand

Apportionment of income from sea transport

Apportionment of film rental income

Apportionment of premiums derived by non-resident general insurers

Conduit tax relief companies: special residence rules

Residence of CTR company shareholders

Meaning of CTR holding company

Meaning of CTR group member

Subpart YE—References to balance dates and years

References to balance dates and years

Subpart YF—Currency conversion

General rules for currency conversion

Subpart YZ—Terminating provisions

Source rule for interest

Part Z Repeals, amendments, and savings

Consequential amendments to other enactments

Transitional provisions

Saving of binding rulings

Saving of accrual determinations

Comparative tables of old and new provisions

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

Schedule 2 Basic tax rates for PAYE income payments

Schedule 3 Payment of provisional tax and terminal tax

Schedule 4 Rates of tax for schedular payments

Schedule 5 Fringe benefit values for motor vehicles

Schedule 10 Straight-line equivalents of diminishing value rates of depreciation

Schedule 11 New banded rates of depreciation

Schedule 12 Old banded rates of depreciation

Schedule 13 Depreciable land improvements

Schedule 14 Depreciable intangible property

Schedule 17 Types and classes of livestock

Schedule 18 Categories of livestock for which national standard costs to be declared

Schedule 19 Expenditure in avoiding, remedying, or mitigating detrimental effects of discharge of contaminant

Schedule 20 Expenditure on farming, horticultural, aquacultural, and forestry improvements

Schedule 24 International tax rules: grey list countries

Schedule 25 Foreign investment funds

Schedule 26 Low tax jurisdictions or territories

Schedule 27 Countries and types of income with unrecognised tax

Schedule 31 Annualised equivalent amount for Part M

Schedule 32 Recipients of charitable or other public benefit gifts

Schedule 36 State enterprises

Schedule 37 Statutory producer boards

Schedule 48 Enactments repealed

Schedule 49 Enactments amended

Schedule 50 Amendments to Tax Administration Act 1994

Schedule 51 Identified changes in legislation

Schedule 52 Comparative tables of old and rewritten provisions

Legislative history

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Income Tax Act 2007

Public Act	2007 No 97
Date of assent	1 November 2007

Contents

A 2 Commencement

Part A
Purpose and interpretation

AA 1 Purpose of Act

AA 2 Interpretation

AA 3 Definitions

AA 4 Crown bound

Part B
Core provisions

Subpart BA—Purpose

Subpart BB—Income tax and resulting obligations

BB 1 Imposition of income tax

BB 2 Main obligations

BB 3 Overriding effect of certain matters

Subpart BC—Calculating and satisfying income tax liabilities

BC 1 Non-filing and filing taxpayers

BC 2 Annual gross income

BC 3 Annual total deduction

BC 4 Net income and net loss

BC 5 Taxable income

BC 6 Income tax liability of filing taxpayer

BC 7 Income tax liability of person with schedular income

BC 8 Satisfaction of income tax liability

Subpart BD—Income, deductions, and timing

BD 1 Income, exempt income, excluded income, nonresidents' foreign-sourced income, and assessable income

BD 2 Deductions

BD 3 Allocation of income to particular income years

BD 4 Allocation of deductions to particular income years

Subpart BE—Withholding liabilities

BE 1 Withholding liabilities

Subpart BF—Other obligations

BF 1 Other obligations

Subpart BG—Avoidance

BG 1 Tax avoidance

Subpart BH—Double tax agreements

BH 1 Double tax agreements

Subpart CA—General rules

CA 1 Amounts that are income

CA 2 Amounts that are exempt income or excluded income

Subpart CB—Income from business or trade-like activities

Business generally

CB 1 Amounts derived from business

CB 2 Amounts received on disposal of business assets that include trading stock

Schemes for profit

CB 3 Profit-making undertaking or scheme

Personal property

CB 4 Personal property acquired for purpose of disposal

CB 5 Business of dealing in personal property

CB 6 Disposal: land acquired for purpose or with intention of disposal

CB 7 Disposal: land acquired for purposes of business relating to land

CB 8 Disposal: land used for landfill, if notice of election

CB 9 Disposal within 10 years: land dealing business

CB 10 Disposal within 10 years: land development or subdivision business

CB 11 Disposal within 10 years of improvement: building business

CB 12 Disposal: schemes for development or division begun within 10 years

CB 13 Disposal: amount from major development or division and not already in income

CB 14 Disposal: amount from land affected by change and not already in income

CB 15 Transactions between associated persons

Exclusions for residential land

CB 16 Residential exclusion from sections CB 6 to CB 11

CB 17 Residential exclusion from sections CB 12 and CB 13

CB 18 Residential exclusion from section CB 14

Exclusions for business premises

CB 19 Business exclusion from sections CB 6 to CB 11

CB 20 Business exclusion from section CB 12

Exclusions for farm land

CB 21 Farm land exclusion from sections CB 12 and CB 13

CB 22 Farm land exclusion from section CB 14

Exclusion for investment land

CB 23 Investment exclusion from section CB 12

CB 24 Disposal of timber or right to take timber

CB 25 Disposal of land with standing timber

CB 26 Certain disposals by portfolio investment entities

Farming, forestry, or fishing

CB 27 Income equalisation schemes

Environmental restoration

CB 28 Environmental restoration accounts

CB 29 Disposal of minerals

Intellectual property

CB 30 Sale of patent applications or patent rights

Transfer of business

CB 31 Sale of business: transferred employment income obligations

Stolen property

CB 32 Property obtained by theft

Mutual associations

CB 33 Amounts derived by mutual associations

CB 34 Amounts derived by members from mutual associations

Subpart CC—Income from holding property (excluding equity)

CC 2 Non-compliance with covenant for repair

Financial instruments

CC 3 Financial arrangements

CC 4 Payments of interest

CC 6 Prizes received under Building Societies Act 1965

CC 7 Consideration other than in money

CC 8 Use of money interest payable by Commissioner

CC 11 Lessee acquiring lease asset on expiry of term of lease

CC 12 Lessor acquiring lease asset on expiry of term of lease

Hire purchase agreements

CC 13 Amounts paid in income years after hire purchase agreement ends

Subpart CD—Income from equity

CD 2 Distribution excluded from being dividend

What is a dividend?

CD 3 Meaning of dividend

CD 4 Transfers of value generally

CD 5 What is a transfer of value?

CD 6 When is a transfer caused by a shareholding relationship?

CD 7 Bonus issues in lieu of dividend

CD 8 Elections to make bonus issue into dividend

CD 9 Interests in money or property of foreign unit trust

CD 10 Bonus issue by foreign unit trust instead of money or property

CD 11 Avoidance arrangements

CD 12 Superannuation schemes entering trust rules

CD 13 Notional distributions of producer boards and co-operative companies

CD 14 Notional distributions of emigrating companies

CD 15 Tax credits linked to dividends

CD 16 Certain dividends not increased by tax credits

CD 17 Credit transfer notice

CD 18 Dividend reduced if foreign tax paid on company’s income

CD 19 Foreign tax credits and refunds linked to dividends

CD 20 Benefits of shareholder-employees or directors

CD 21 Attributed repatriations from controlled foreign companies

What is not a dividend?

CD 22 Returns of capital: off-market share cancellations

CD 23 Ordering rule and slice rule

CD 24 Returns of capital: on-market share cancellations

CD 25 Treasury stock acquisitions

CD 26 Capital distributions on liquidation or emigration

CD 27 Property made available intra-group

CD 28 Transfers of certain excepted financial arrangements within wholly-owned groups

CD 29 Non-taxable bonus issues

CD 30 Transfer by unit trust of legal interest after beneficial interest vests

CD 31 Flat-owning companies

CD 32 Employee benefits

CD 33 Payments corresponding to notional distributions of producer boards and co-operative companies

CD 34 Distribution to member of co-operative company based on member’s transactions

CD 35 Resident’s restricted amalgamations

CD 36 Foreign investment fund income

CD 37 Maori authority distributions

Calculation rules

CD 38 General calculation rule for transfers of value

CD 39 Calculation of amount of dividend when property made available

CD 40 Adjustment if dividend recovered by company

CD 41 Adjustment if amount repaid later

CD 42 Adjustment if additional consideration paid

CD 43 Available subscribed capital (ASC) amount

CD 44 Available capital distribution amount

Attributed repatriation calculation rules

CD 45 When does a person have attributed repatriation from a controlled foreign company?

CD 46 New Zealand repatriation amount

CD 47 New Zealand property amount

CD 48 Cost of tangible property

CD 49 Cost of associated party equity

CD 50 Outstanding balances of financial arrangements

CD 51 Property transfers between associated persons

CD 52 Unrepatriated income balance

Prevention of double taxation

CD 53 Prevention of double taxation of share cancellation dividends

Returning share transfers

CD 54 Replacement payments

Subpart CE—Employee or contractor income

Employment income

CE 1 Amounts derived in connection with employment

CE 2 Value and timing of benefits under share purchase agreements

CE 3 Restrictions on disposal of shares under share purchase agreements

CE 4 Adjustments to value of benefits under share purchase agreements

CE 5 Meaning of expenditure on account of an employee

CE 6 Meaning of share: when share acquired

CE 7 Meaning of share purchase agreement

Attributed income

CE 8 Attributed income from personal services

Restrictive covenants and exit inducement payments

CE 9 Restrictive covenants

CE 10 Exit inducements

Income protection insurance

CE 11 Proceeds from claims under policies of income protection insurance

CE 12 Tax credits added to caregiver’s income

Subpart CF—Income from living allowances, compensation, and government grants

CF 1 Benefits, pensions, compensation, and government grants

CF 2 Remission of specified suspensory loans

Subpart CG—Recoveries

CG 1 Amount of depreciation recovery income

CG 2 Remitted amounts

CG 3 Bad debt repayment

CG 4 Recovered expenditure or loss

CG 5 Recoveries or receipts by employers from superannuation schemes

CG 6 Receipts from insurance, indemnity, or compensation for trading stock

CG 7 Recoveries after deduction of payments under lease

Subpart CH—Adjustments

Matching rules: revenue account property, prepayments, and deferred payments

CH 1 Adjustment for closing values of trading stock, livestock, and excepted financial arrangements

CH 2 Adjustment for prepayments

CH 3 Adjustment for deferred payment of employment income

Change to accounting practice

CH 4 Adjustment for change to accounting practice

Goods and services tax (GST)

CH 5 Adjustment for GST

CH 6 Adjustments under consecutive or successive finance leases

Avoidance and non-market transactions

CH 7 Adjustment for avoidance arrangements

CH 8 Market value substituted

Interest apportionment on thin capitalisation

CH 9 Interest apportionment: excess debt entity

CH 10 Interest apportionment: reporting bank

Subpart CP—Income from portfolio investment entities

CP 1 Portfolio investor allocated income

Subpart CQ—Attributed income from foreign equity

Attributed controlled foreign company income

CQ 1 Attributed controlled foreign company income

CQ 2 When attributed CFC income arises

CQ 3 Calculation of attributed CFC income

Foreign investment fund income

CQ 4 Foreign investment fund income

CQ 5 When FIF income arises

CQ 6 Calculation of FIF income

Subpart CR—Income from life insurance

CR 1 Income of life insurer

CR 2 Amount of income of life insurer

CR 3 Income of non-resident general insurer

Subpart CS—Superannuation funds

CS 1 Withdrawals

CS 2 Exclusions of withdrawals of various kinds

CS 3 Exclusion of withdrawal on grounds of hardship

CS 4 Exclusion of withdrawal to settle division of relationship property

CS 5 Exclusion of withdrawal paid as annuity or pension

CS 6 Exclusion of withdrawal on partial retirement

CS 7 Exclusion of withdrawal when member ends employment

CS 8 Exclusion of withdrawal when member ends employment: lock-in rule

CS 9 Exclusion of withdrawal from defined benefit fund when member ends employment

CS 10 When member treated as not ending employment

Transfers to or from superannuation funds and superannuation schemes

CS 11 Transfer by superannuation fund to another superannuation fund

CS 12 Transfer from superannuation scheme to superannuation fund

CS 13 Investment by superannuation fund in another superannuation fund

Treatment of amounts when superannuation fund becomes superannuation scheme or vice versa

CS 14 Superannuation fund becomes superannuation scheme

CS 15 Superannuation fund becomes foreign superannuation scheme

CS 16 Superannuation scheme becomes superannuation fund

Treatment of distributions when superannuation fund wound up

CS 17 Superannuation fund wound up

Treatment of loans to members

CS 18 Value of loan treated as fund income

Subpart CT—Income from petroleum mining

CT 1 Disposal of exploratory material or petroleum mining asset

CT 2 Damage to assets

CT 3 Exploratory well used for commercial production

CT 4 Partnership interests and disposal of part of asset

CT 5 Petroleum mining operations outside New Zealand

CT 6 Meaning of petroleum miner

CT 7 Meaning of petroleum mining asset

Subpart CU—Income from mineral mining

Introductory provision

CU 1 Mining company’s 2 kinds of income

Income from mining

CU 2 Mining company that processes or manufactures

CU 3 Disposal of assets

CU 4 Compensation for lost, destroyed, or damaged assets

CU 5 Compensation and scrap payment: income from mining

CU 6 Compensation and scrap payment: use to replace or repair asset

CU 7 Compensation and scrap payment: not income from mining

CU 8 Compensation and scrap payment: more than expenditure

CU 9 Previous deduction for income appropriated

CU 10 Mining asset used to derive income other than income from mining

CU 11 Meaning of asset for sections CU 3 to CU 10

CU 12 Application of sections to resident mining operators

CU 13 Application of sections to non-resident mining operators

CU 14 Recovery of reinvestment profit on disposal of mining shares

CU 15 Recovery of reinvestment profit not used for mining purposes

CU 16 Recovery of reinvestment profit on repayment of loans

CU 17 Repayment by mining company of amount written off

CU 18 Amount treated as repayment for purposes of section CU 17: excess

CU 19 Amount treated as repayment for purposes of section CU 17: net income

CU 20 Mining company or mining holding company liquidated

CU 21 Meaning of income from mining

CU 22 Meaning of mining company

CU 23 Meaning of mining development expenditure

CU 24 Meaning of mining exploration expenditure

CU 25 Meaning of mining operations

CU 26 Meaning of mining venture

CU 27 Meaning of resident mining operator

CU 28 Meaning of specified mineral

CU 29 Other definitions

Subpart CV—Income specific to certain entities

CV 1 Group companies

CV 2 Consolidated groups: income of company in group

CV 3 Consolidated groups: arrangement for disposal of shares

CV 4 Amalgamated companies: amount derived after amalgamation

CV 5 Statutory producer boards

CV 6 Crown Research Institutes

CV 7 Australian wine producer rebate

CV 8 Regulations: Australian wine producer rebate

CV 9 Supplementary dividend holding companies

CV 10 Foreign dividend payment account companies or conduit tax relief companies

CV 11 Maori authorities

CV 12 Trustees: amounts received after person’s death

CV 13 Amounts derived from trusts

CV 14 Distributions from community trusts

CV 15 Amounts derived from trusts while person absent from New Zealand

CV 16 Non-resident shippers

CV 17 Non-resident film renters

Subpart CW—Exempt income

Income from business or trade-like activities

CW 1 Forestry companies established by the Crown, Maori owners, and holding companies buying land with standing timber from founders

CW 2 Forestry encouragement agreements

CW 3 Forestry companies and Maori investment companies

Income from holding property (excluding equity)

CW 4 Annuities under life insurance policies

CW 5 Payments of interest: post-war credits

CW 6 Payments of interest: farm mortgages

CW 7 Foreign-sourced interest

CW 8 Money lent to government of New Zealand

Income from equity

CW 9 Dividend derived by company from overseas

CW 10 Dividend within New Zealand wholly-owned group

CW 11 Dividend of conduit tax relief holding company

CW 12 Proceeds of share disposal by qualifying foreign equity investor

CW 13 Proceeds from share or option acquired under venture investment agreement

CW 14 Dividends derived by qualifying companies

CW 15 Dividends paid by qualifying companies

Employee or contractor income

CW 16 Income of Governor-General

CW 17 Expenditure on account, and reimbursement, of employees

CW 18 Allowance for additional transport costs

CW 19 Amounts derived during short-term visits

CW 20 Amounts derived by visiting entertainers including sportspersons

CW 21 Amounts derived by visiting crew of pleasure craft

CW 22 Amounts derived by overseas experts and trainees in New Zealand by government arrangement

CW 23 Income for military or police service in operational area

CW 24 Deferred military pay for active service

CW 25 Value of board for religious society members

CW 26 Jurors’ and witnesses’ fees

Certain income of transitional resident

CW 27 Certain income derived by transitional resident

Income from living allowances, compensation, and government grants

CW 29 Reinvested amounts from foreign superannuation schemes in Australia

CW 30 Annuities from Crown Bank Accounts

CW 31 Services for members of Parliament

CW 32 Maintenance payments

CW 33 Allowances and benefits

CW 34 Compensation payments

CW 35 Payment to claimant of certain accident compensation payments

CW 36 Scholarships and bursaries

CW 37 Film production grants

Income of certain entities

CW 38 Public authorities

CW 39 Local authorities

CW 40 Local and regional promotion bodies

CW 41 Charities: non-business income

CW 42 Charities: business income

CW 43 Charitable bequests

CW 44 Friendly societies

CW 45 Funeral trusts

CW 46 Bodies promoting amateur games and sports

CW 47 TAB and racing clubs

CW 48 Income from conducting gaming-machine gambling

CW 49 Bodies promoting scientific or industrial research

CW 50 Veterinary services bodies

CW 51 Herd improvement bodies

CW 52 Community trusts

CW 53 Distributions from complying trusts

CW 54 Foreign-sourced amounts derived by trustees

CW 55 Maori authority distributions

Income from certain activities

CW 56 Non-resident aircraft operators

CW 57 Non-resident company involved in exploration and development activities

CW 58 Disposal of companies’ own shares

CW 59 New Zealand companies operating in Niue

CW 60 Stake money

CW 61 Providing standard-cost household service

CW 62 Interest paid under the KiwiSaver Act 2006

CW 63 Avoidance arrangements

CW 64 Exemption under other Acts

Subpart CX—Excluded income

Goods and services tax

CX 1 Goods and services tax

Fringe benefits

Introductory provisions

CX 2 Meaning of fringe benefit

CX 3 Excluded income

CX 4 Relationship with assessable income

CX 5 Relationship with exempt income

Fringe benefits

CX 6 Private use of motor vehicle

CX 7 Employer or associated person treated as having right to use vehicle under arrangement

CX 8 Private use of motor vehicle: use by more than 1 employee

CX 9 Subsidised transport

CX 10 Employment-related loans

CX 11 Employment-related loans: loans by life insurers

CX 12 Services for members of Parliament

CX 13 Contributions to superannuation schemes

CX 14 Contributions to sickness, accident, or death benefit funds

CX 15 Contributions to funeral trusts

CX 16 Contributions to life or health insurance

CX 17 Benefits provided to employees who are shareholders or investors

CX 18 Benefits provided to associates of both employees and shareholders

Exclusions and limitations

CX 19 Benefits provided instead of allowances

CX 20 Benefits to enable performance of duties

CX 21 Business tools

CX 22 Benefits to non-executive directors

CX 23 Benefits provided on premises

CX 24 Benefits related to health or safety

CX 25 Benefits provided by charitable organisations

CX 26 Non-liable payments

CX 27 Assistance with tax returns

CX 28 Accommodation

CX 29 Entertainment

CX 30 Distinctive work clothing

CX 31 Contributions to income protection insurance

CX 32 Services provided to superannuation fund

CX 33 Goods provided at discount by third parties

CX 34 Meaning of emergency call

CX 35 Meaning of employee share loan

CX 36 Meaning of private use

CX 37 Meaning of unclassified benefit

CX 38 Meaning of work-related vehicle

CX 39 Life insurers and fully reinsured persons

CX 40 Superannuation fund deriving amount from life insurance policy

CX 41 Resident insurance underwriters

Petroleum mining

CX 42 Disposal of ownership interests in controlled petroleum mining entities

CX 43 Farm-out arrangements for petroleum mining

CX 44 Disposal of mining shares

CX 45 Disposal of mining shares acquired with reinvestment profit

CX 46 Repayment of loans made from reinvestment profit

Government grants

CX 47 Government grants to businesses

CX 48 Amounts remitted as condition of new start grant

Superannuation and savings

CX 49 Employer’s superannuation contributions

CX 50 Tax credits for KiwiSaver and complying superannuation funds

Farming, forestry, or fishing

CX 51 Income equalisation schemes

Environmental restoration

CX 52 Refund from environmental restoration account

Inflation-indexed instruments

CX 53 Credits for inflation-indexed instruments

Share-lending arrangements

CX 54 Share-lending collateral under share-lending arrangements

Portfolio investment income

CX 55 Proceeds from certain disposals by portfolio investment entities or New Zealand Superannuation Fund

CX 56 Portfolio investor allocated income and distributions of income by portfolio investment entities

CX 57 Credits for certain fees by portfolio tax rate entities

Minors’ beneficiary income

CX 58 Amounts derived by minors from trusts

CX 59 Taxable distributions from non-complying trusts

Transactions between companies in consolidated groups

CX 60 Intra-group transactions

Avoidance arrangements

CX 61 Avoidance arrangements

Subpart CZ—Terminating provisions

CZ 1 Share purchase agreement income before 19 July 1968

CZ 2 Mining company’s 1970–71 tax year

CZ 3 Exchange variations on 8 August 1975

CZ 4 Mineral mining: company making loan before 1 April 1979

CZ 5 Exempt interest: overseas money lent to government or local or public authority before 29 July 1983

CZ 6 Commercial bills before 31 July 1986

CZ 7 Primary producer co-operative companies: 1987–88 income year

CZ 8 Farm-out arrangements for petroleum mining before 16 December 1991

CZ 9 Available capital distribution amount: 1965 and 1985–1992

CZ 10 Transitional relief for calculation of attributed repatriation dividends: 2 July 1992

CZ 11 Recovery of deductions for software acquired before 1 April 1993

CZ 12 General insurance with risk period straddling 1 July 1993

CZ 13 Treatment of units and interests in unit trusts and group investment funds on issue as at 1 April 1996

CZ 14 Treatment of superannuation fund interests in group investment funds on 1 April 1999

CZ 15 Accident insurance contracts before 1 July 2000

CZ 16 Interest payable to exiting company: 2001

CZ 17 Dividend of exiting company: 2001

CZ 18 Benefit provider approved within 6 months of 25 November 2003

CZ 19 Community trust receipts in 2004–05 or 2005–06 tax year

CZ 20 Disposal of personal property lease asset under specified lease

CZ 21 Superannuation fund loans made to members before 1 April 1989

CZ 22 Geothermal wells between 31 March 2003 and 17 May 2006

Part D
Deductions

Subpart DA—General rules

DA 1 General permission

DA 2 General limitations

DA 3 Effect of specific rules on general rules

DA 4 Treatment of amount of depreciation loss

Subpart DB—Specific rules for expenditure types

DB 1 Taxes, other than GST, and penalties

DB 2 Goods and services tax

DB 3 Determining tax liabilities

DB 4 Chatham Islands dues

Financing costs

DB 5 Transaction costs: borrowing money for use as capital

DB 6 Interest: not capital expenditure

DB 7 Interest: most companies need no nexus with income

DB 8 Interest: money borrowed to acquire shares in group companies

DB 9 Interest incurred on money borrowed to acquire shares in qualifying companies

DB 10 Interest or expenditure connected to profit-related or substituting debentures

Financial arrangements adjustments

DB 11 Negative base price adjustment

DB 12 Base price adjustment under old financial arrangements rules

DB 13 Repayment of debt sold at discount to associate of debtor

DB 14 Security payment

Share-lending arrangements

DB 16 Share-lending collateral under share-lending arrangements

DB 17 Replacement payments and imputation credits under share-lending arrangements

Premises or land costs

DB 18 Transaction costs: leases

DB 19 Expenses of failed or withdrawn application for resource consent

DB 20 Destruction of temporary building

DB 21 Amounts paid for non-compliance with covenant for repair

DB 22 Amounts paid for non-compliance and change in use

Revenue account property

DB 23 Cost of revenue account property

DB 24 Share losses

DB 25 Cancellation of shares held as revenue account property

DB 26 Amount from profit-making undertaking or scheme and not already in income

DB 27 Amount from major development or division and not already in income

DB 28 Amount from land affected by change and not already in income

DB 29 Apportionment when land acquired with other property

DB 30 Cost of non-specified mineral

DB 31 Bad debts

DB 32 Bad debts owed to estates

Research and development

DB 33 Scientific research

DB 34 Research or development

DB 35 Some definitions

DB 36 Patent expenses

DB 37 Expenses of failed or withdrawn patent application

DB 38 Patent rights: devising patented inventions

DB 39 Patent rights acquired before 1 April 1993

DB 40 Patent applications or patent rights acquired on or after 1 April 1993

DB 41 Charitable or other public benefit gifts by company

Theft and bribery

DB 42 Property misappropriated by employees or service providers

DB 43 Making good loss from misappropriation by partners

DB 44 Restitution of stolen property

DB 45 Bribes paid to public officials

Pollution control

DB 46 Avoiding, remedying, or mitigating effects of discharge of contaminant

DB 47 Payments for remitted amounts

DB 48 Restrictive covenant breached

Matching rules: revenue account property, prepayments, and deferred payments

DB 49 Adjustment for opening values of trading stock, livestock, and excepted financial arrangements

DB 50 Adjustment for prepayments

DB 51 Adjustment for deferred payment of employment income

Change to accounting practice

DB 52 Adjustment for change to accounting practice

Investment income

DB 53 Portfolio investment entities: zero-rated portfolio investors and allocated losses

DB 54 Portfolio investment entities: treatment of certain fees charged

DB 55 Expenditure incurred in deriving exempt dividend

Use of motor vehicle under certain arrangements

DB 56 Expenditure incurred in operating motor vehicle under agreement or arrangement affected by section CX 7

Payments to spouses, civil union partners, or de facto partners

DB 57 Payments to spouses, civil union partners, or de facto partners other than for services

Avoidance and non-market transactions

DB 58 Adjustment for avoidance arrangements

DB 59 Market value substituted

Subpart DC—Employee or contractor expenditure

DC 1 Lump sum payments on retirement

DC 2 Pension payments to former employees

DC 3 Pension payments to former partners

DC 4 Payments to working partners

DC 5 Payments to spouses, civil union partners, or de facto partners: services

DC 6 Contributions to employees’ benefit funds

DC 7 Contributions to employees’ superannuation schemes

DC 8 Attribution of personal services

DC 9 Restrictive covenants or exit inducements

DC 10 Sale of business: transferred employment income obligations

DC 11 Transfers of employment income obligations to associates

DC 12 Loans to employees under share purchase schemes

DC 13 Criteria for approval of share purchase schemes: before period of restriction ends

DC 14 Criteria for approval of share purchase schemes: when period of restriction ends

DC 15 Some definitions

Subpart DD—Entertainment expenditure

DD 1 Entertainment expenditure generally

DD 2 Limitation rule

DD 3 When limitation rule does not apply

DD 4 Employment-related activities

DD 5 Promoting businesses, goods, or services

DD 6 Entertainment as business or for charitable purpose

DD 7 Entertainment outside New Zealand

DD 8 Entertainment that is income or fringe benefit

DD 9 Relationship with fringe benefit tax rules

DD 10 Interpretation: reimbursement and apportionment

DD 11 Some definitions

Subpart DE—Motor vehicle expenditure

Introductory provisions

DE 1 What this subpart does

DE 2 Deductions for business use

DE 3 Methods for calculating proportion of business use

DE 4 Default method for calculating proportion of business use

DE 5 Actual records

DE 6 Using logbook for test period

DE 7 Logbook requirements

DE 8 Logbook term

DE 9 Inadequate logbook

DE 10 Variance during logbook term

DE 11 Replacement vehicles

DE 12 Mileage rate method

Subpart DF—Government grants and compensation

DF 1 Government grants to businesses

DF 2 Repayment of grant-related suspensory loans

DF 3 Identifying expenditure for purposes of sections DF 1 and DF 2

DF 4 Accident compensation payment for attendant care

Subpart DN—Attributed losses from foreign equity

Attributed controlled foreign company (CFC) loss

DN 1 Attributed controlled foreign company loss

DN 2 When attributed CFC loss arises

DN 3 Calculation of attributed CFC loss

DN 4 Ring-fencing cap on deduction

Foreign investment fund (FIF) loss

DN 5 Foreign investment fund loss

DN 6 When FIF loss arises

DN 7 Calculation of FIF loss

DN 8 Ring-fencing cap on deduction: branch equivalent method

Subpart DO—Farming and aquacultural business expenditure

DO 1 Enhancements to land, except trees

DO 2 Erosion and shelter plantings

DO 3 Trees on farms

DO 4 Improvements to farm land

DO 5 Expenditure on land: planting of listed horticultural plants

DO 6 Expenditure on land: horticultural replacement planting

DO 7 Accounting for expenditure on listed horticultural plants under sections DO 5 and DO 6

DO 8 Meaning of planting and plot

DO 9 Meaning of replaced area fraction

DO 10 Farming or horticulture expenditure of lessor or sublessor

DO 11 Improvement destroyed or made useless

DO 12 Improvements to aquacultural business

DO 13 Improvement destroyed or made useless

Subpart DP—Forestry expenditure

DP 1 Expenditure of forestry business

DP 2 Plant or machinery

DP 3 Improvements to forestry land

DP 4 Improvement destroyed or made useless

DP 5 Forestry encouragement agreement: deductions

DP 6 Forestry encouragement agreement: no deduction

DP 7 Land contouring: no deduction

DP 8 Forestry business on land bought from the Crown, Maori owners, or holding company: no deduction

DP 9 Cost of acquiring timber: forestry business on land bought from the Crown, Maori owners, or holding company

DP 10 Cost of acquiring timber or right to take timber: other cases

DP 11 Cost of timber

Subpart DQ—Income equalisation schemes and environmental restoration accounts schemes

DQ 1 Main income equalisation scheme

DQ 2 Adverse event income equalisation scheme

DQ 3 Thinning operations income equalisation scheme

DQ 4 Environmental restoration accounts scheme

Subpart DR—Life insurance business expenditure

DR 1 Mortality profit formula: negative result

DR 2 Disposal of property

DR 3 Specific deductions denied to life insurers and fully reinsured persons

Subpart DS—Film industry expenditure

DS 1 Acquiring film rights

DS 2 Film production expenditure

DS 3 Clawback of deductions for film reimbursement schemes

DS 4 Meaning of film reimbursement scheme

Subpart DT—Petroleum mining expenditure

Petroleum exploration expenditure

DT 1 Petroleum exploration expenditure

DT 2 Arrangement for petroleum exploration expenditure and sale of property

DT 3 Acquisition of privileges and permits

DT 4 Acquisition of exploratory material

Petroleum development expenditure

DT 5 Petroleum development expenditure

DT 6 Expenditure on petroleum mining assets

DT 7 Exploratory well expenditure

DT 8 Acquisition of certain petroleum mining assets

DT 9 Disposal of petroleum mining asset to associate

DT 10 Disposal of petroleum mining asset outside association

DT 11 Association ending

Other expenditure

DT 12 Damage to assets

DT 13 Disposal of ownership interests in controlled petroleum mining entities

DT 14 Farm-out arrangements

DT 15 Persons associated with petroleum miner

DT 16 Removal or restoration operations

General provisions

DT 17 Attribution of expenditure

DT 18 Replacement permits

DT 19 Partnership interests and disposal of part of asset

DT 20 Petroleum mining operations outside New Zealand

Subpart DU—Mineral mining expenditure

DU 1 Mining exploration expenditure and mining development expenditure

DU 2 Mining exploration expenditure or mining development expenditure on acquisition of asset

DU 3 Replacing or repairing asset

DU 4 Income appropriated to expenditure

DU 5 Non-mining asset used to derive income from mining

DU 6 Depreciation

DU 7 Limit on deduction

DU 8 Meaning of asset for sections DU 1 to DU 7

DU 9 Application of sections to resident mining operators

DU 10 Application of sections to non-resident mining operators

DU 11 Disposal of mining shares by company

DU 12 Amount written off by holding company

Subpart DV—Expenditure specific to certain entities

Superannuation funds

DV 1 Publicising superannuation funds

DV 2 Transfer of expenditure to master fund

DV 3 Formula for calculating maximum deduction

DV 4 Carry forward of expenditure

DV 5 Investment funds: transfer of expenditure to master funds

DV 6 Formula for calculating maximum deduction

DV 7 Carry forward of expenditure

DV 8 Non-profit organisations

DV 10 Building societies

DV 11 Distribution to member of co-operative company, excluded from being dividend

DV 12 Maori authorities: donations

DV 13 Group companies

DV 14 Amalgamated company: expenditure on improvements for farming, horticultural, aquacultural, and forestry businesses

DV 15 Amalgamated companies: property passing on resident’s restricted amalgamation

DV 16 Consolidated groups: intra-group transactions

DV 17 Consolidated groups: expenditure or loss incurred by group companies

DV 18 Statutory producer boards and co-operative companies

DV 19 Association rebates

Subpart DW—Expenditure specific to certain industries

DW 1 Airport operators

DW 2 Bloodstock racing

DW 3 Non-resident general insurers, shippers, and film renters

Subpart DX—Other expenditure

DX 1 Testamentary annuities

DX 2 Tax credits: conduit financing arrangements

DX 3 Tax credits: supplementary dividend holding companies

Subpart DZ—Terminating provisions

DZ 1 Commercial bills before 31 July 1986

DZ 2 Life insurers acquiring property before 1 April 1988

DZ 3 Petroleum mining: development expenditure from 1 October 1990 to 15 December 1991

DZ 4 Expenditure on abandoned exploratory well before 16 December 1991

DZ 5 Farm-out arrangements for petroleum mining before 16 December 1991

DZ 6 Partnership interests and disposal of part of asset before 16 December 1991

DZ 7 Petroleum mining operations outside New Zealand before 16 December 1991

DZ 8 Buying patent rights before 1 April 1993

DZ 9 Premium paid on land leased before 1 April 1993

DZ 10 General insurance with risk period straddling 1 July 1993

DZ 11 Film reimbursement scheme on or before 30 June 2001

DZ 12 Mineral mining: 1954–2005

DZ 13 Enhancements to land unamortised at end of 2004–05 year

DZ 14 Deductions under specified leases

DZ 15 Patent applications before 1 April 2005

DZ 16 Geothermal wells between 31 March 2003 and 17 May 2006

DZ 17 Expenditure on improvements to aquacultural business before 1995–96 income year

DZ 18 Expenditure on improvements to forestry land before 1995–96 income year

Part E
Timing and quantifying rules

Subpart EA—Matching rules: revenue account property, prepayments, and deferred payments

EA 1 Trading stock, livestock, and excepted financial arrangements

EA 2 Other revenue account property

EA 3 Prepayments

EA 4 Deferred payment of employment income

Subpart EB—Valuation of trading stock (including dealer’s livestock)

Introductory provisions

EB 1 When this subpart applies

EB 2 Meaning of trading stock

EB 3 Valuation of trading stock

EB 4 Trading stock valuation methods

EB 5 Transfers of trading stock within wholly-owned groups

Standard valuation

EB 7 Cost allocation: cost-flow method

EB 8 Cost allocation: budgeted method or standard cost method

EB 9 Discounted selling price

EB 10 Replacement price

EB 11 Market selling value

EB 12 Valuing closing stock consistently

Low-turnover valuation

EB 13 Low-turnover valuation

EB 14 Low-turnover valuation methods

EB 15 Cost for low-turnover traders

EB 16 Cost allocation: cost-flow method for low-turnover traders

EB 17 Costs: manufactured or produced stock of low-turnover traders

EB 18 Costs: other stock of low-turnover traders

EB 19 Discounted selling price for low-turnover traders

EB 20 Replacement price for low-turnover traders

EB 21 Market selling value for low-turnover traders

EB 22 Valuing closing stock consistently for low-turnover traders

Low value trading stock

EB 23 Valuing closing stock under $5,000

Disposal of business assets

EB 24 Apportionment on disposal of business assets that include trading stock

Subpart EC—Valuation of livestock

Introductory provisions

EC 1 Application of this subpart

EC 2 Valuation of livestock

EC 3 Livestock valuation methods

EC 4 Transfers of livestock within wholly-owned groups

EC 5 Transfer of livestock because of self-assessed adverse event

Valuation of specified livestock

EC 6 Application of sections EC 7 to EC 27

EC 7 Valuation methods

EC 8 Restrictions on use of herd scheme

EC 9 Restrictions on use of national standard cost scheme

EC 10 Restrictions on use of cost price method

EC 11 Restrictions on making of elections

EC 12 Interests in livestock

EC 13 Changes in partnership interests

EC 14 Herd scheme

EC 15 Determining national average market values

EC 16 Valuation under herd scheme

EC 17 Herd value ratio

EC 18 Inaccurate herd value ratio

EC 19 Chatham Islands adjustment to herd value

EC 20 Herd livestock disposed of before values determined

EC 21 Herd livestock on death before values determined

National standard cost scheme

EC 22 National standard cost scheme

EC 23 Determining national standard costs

EC 24 Methods for determining costs using national standard cost scheme

EC 25 Cost price, replacement price, or market value

EC 26 Bailee’s treatment of livestock

EC 27 Some definitions

Valuation of non-specified livestock

EC 28 Application of sections EC 29 to EC 31

EC 29 Determining standard values

EC 30 Closing value methods

EC 31 Enhanced production

Valuation of high-priced livestock

EC 32 Application of sections EC 33 to EC 37

EC 33 Determining depreciation percentages

EC 34 General rule

EC 35 Livestock reaching national average market value and livestock no longer used for breeding

EC 36 Immature livestock and recently bought livestock

Valuation of bloodstock

EC 38 Application of sections EC 39 to EC 48

EC 39 First income year in breeding business

EC 40 Later income years in breeding business

EC 41 Reduction: bloodstock not previously used for breeding in New Zealand

EC 42 Reduction: bloodstock previously used for breeding in New Zealand

EC 43 Accident, birth deformity, or infertility

EC 44 Other bloodstock

EC 45 Residual value of bloodstock

EC 46 Use of bloodstock for racing

EC 47 Change of use of bloodstock in course of business

EC 48 Replacement breeding stock

Subpart ED—Valuation of excepted financial arrangements

ED 1 Valuation of excepted financial arrangements

ED 2 Transfers of certain excepted financial arrangements within wholly-owned groups

Subpart EE—Depreciation

Introductory provision

EE 1 What this subpart does

EE 2 Nature of ownership of item

EE 3 Ownership of goods subject to reservation of title

EE 4 Ownership of lessee’s improvements: lessee

EE 5 Ownership of lessee’s improvements: other person

Meaning of depreciable property

EE 6 What is depreciable property?

EE 7 What is not depreciable property?

EE 8 Election that property not be depreciable

How amounts of depreciation loss and depreciation recovery income are calculated

EE 9 Description of elements of calculation

EE 10 Calculation rule: item temporarily not available

EE 11 Calculation rule: income year in which item disposed of

EE 12 Depreciation methods

Amount of depreciation loss under diminishing value method or straight-line method

EE 13 Application of sections EE 14 to EE 19

EE 14 Diminishing value or straight-line method: calculating amount of depreciation loss

EE 15 Amount of adjusted tax value

EE 16 Amount resulting from standard calculation

EE 17 Amount resulting from petroleum-related depreciable property calculation

EE 18 Cost: change from diminishing value to straight-line method

EE 19 Cost: fixed life intangible property

Amount of depreciation loss under pool method

EE 20 Application of sections EE 21 to EE 24

EE 21 Pool method: calculating amount of depreciation loss

EE 22 Cases affecting pool

EE 23 Combined pools

EE 24 Property ceasing to qualify for pool

EE 25 Depreciation loss for plant variety rights application granted in 2005–06 or later income year

Depreciation rates

EE 26 Setting of economic depreciation rate

EE 27 Economic rate for certain depreciable property

EE 28 Economic rate for buildings

EE 29 Economic rate for certain aircraft and motor vehicles

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

EE 31 Annual rate for item acquired in person’s 1995–96 or later income year

EE 32 Election in relation to certain depreciable property acquired on or after 1 April 2005

EE 33 Annual rate for fixed life intangible property

EE 34 Annual rate for patent granted in 2005–06 or later income year

EE 35 Special rate or provisional rate

EE 36 Using economic rate or provisional rate instead of special rate

Improvements, items of low value, or items no longer used

EE 37 Improvements

EE 38 Items of low value

EE 39 Items no longer used

Transfers of depreciable property: associated persons and certain amalgamations

EE 40 Transfer of depreciable property on or after 24 September 1997

EE 41 Transfer of depreciable property on certain amalgamations on or after 14 May 2002

EE 42 Transfer of radiocommunications licence right on or after 24 September 1997

EE 43 Transfer of depreciable intangible property on or after 1 July 1997

Disposals and similar events

EE 44 Application of sections EE 48 to EE 52

EE 45 Consideration for purposes of section EE 44

EE 46 Items for purposes of section EE 44

EE 47 Events for purposes of section EE 44

EE 48 Effect of disposal or event

EE 49 Amount of depreciation recovery income when item partly used for business

EE 50 Amount of depreciation loss when item partly used to produce income

EE 51 Amount of depreciation recovery income when lost or stolen items recovered

EE 52 Amount of depreciation recovery income when compensation received

EE 53 Unused geothermal well brought into use

Interpretation provisions

EE 54 Cost: GST

Adjusted tax value

EE 55 Meaning of adjusted tax value

EE 57 Base value in section EE 56 when none of sections EE 58, EE 59, and EZ 22(1) applies

EE 58 Base value in section EE 56 when no previous deduction

EE 59 Base value in section EE 56 when property is petroleum-related depreciable property

EE 60 Total deductions in section EE 56

EE 61 Meaning of annual rate

EE 62 Meaning of depreciable intangible property

EE 63 Meaning of estimated useful life

EE 64 Meaning of excluded depreciable property

EE 65 Meaning of maximum pooling value

EE 66 Meaning of poolable property

EE 67 Other definitions

Subpart EF—Taxes and levies

EF 1 Fringe benefit tax

EF 2 Employer’s superannuation contribution tax

EF 3 Accident compensation levies and premiums

EF 4 Use of money interest payable by Commissioner

EF 5 Use of money interest payable by person

EF 6 Different tax years

Subpart EG—Recognition of accounting treatment

EG 1 Election to use balance date used in foreign country

EG 2 Adjustment for changes to accounting practice

EG 3 Allocation of income and deductions by portfolio tax rate entity

Subpart EH—Income equalisation schemes

Introductory provisions

EH 1 Income equalisation schemes

EH 2 Income Equalisation Reserve Account

Main income equalisation scheme

EH 3 Persons to whom main income equalisation scheme applies

Deposits and accounts

EH 4 Main deposit

EH 5 Main income equalisation account

EH 6 Interest on deposits in main income equalisation account

EH 7 Deduction of deposit

Refunds: automatic

EH 8 Refund of excess deposit

EH 9 Income does not include excess deposit

EH 10 Refund at end of 5 years

EH 11 Income when refund given at end of 5 years

Refunds: on application

EH 12 Application for refund by person, trustee of estate, Official Assignee, or liquidator

EH 13 Refund on request

EH 14 Income when refund given on request

EH 15 Refund for development or recovery

EH 16 Income when refund given for development or recovery

EH 17 Refund on retirement

EH 18 Income when refund given on retirement, and election to allocate amount to earlier year

EH 19 Refund on death

EH 20 Income when refund given on death

EH 21 Income when refund given on death, and election to allocate amount to earlier year

EH 22 Income when refund given on death, and election to allocate amount to later year or years

EH 23 Refund on bankruptcy

EH 24 Income when refund given on bankruptcy

EH 25 Refund on liquidation

EH 26 Income when refund given on liquidation

Refunds: general provisions

EH 27 Amendment of assessment

EH 28 Minimum refund

EH 29 Deposits from which refunds come

EH 30 When person entitled to tax credit

EH 31 Kind and amount of refund that entitles person to tax credit

EH 32 Kind of person entitled to tax credit

EH 33 Amount of tax credit

EH 34 Meaning of income from forestry

EH 35 Meaning of main maximum deposit

EH 36 Other definitions

Adverse event income equalisation scheme

EH 37 Persons to whom adverse event income equalisation scheme applies

Deposits and accounts

EH 38 Adverse event deposit

EH 39 Adverse event income equalisation account

EH 40 Interest on deposits in adverse event income equalisation account

EH 41 Deduction of deposit

Refunds: automatic

EH 42 Refund of excess deposit

EH 43 Income does not include excess deposit

Refunds: on application

EH 44 Application for refund by person, trustee of estate, Official Assignee, or liquidator

EH 45 Refund on request

EH 46 Income when refund given on request

EH 47 Refund on retirement

EH 48 Income when refund given on retirement, and election to allocate amount to earlier year

EH 49 Refund on death

EH 50 Income when refund given on death

EH 51 Income when refund given on death, and election to allocate amount to earlier year

EH 52 Income when refund given on death, and election to allocate amount to later year or years

EH 53 Refund on bankruptcy

EH 54 Income when refund given on bankruptcy

EH 55 Refund on liquidation

EH 56 Income when refund given on liquidation

Refunds: general provisions

EH 57 Amendment of assessment

EH 58 Minimum refund

EH 59 Deposits from which refunds come

EH 60 Transfer of deposit

EH 61 Meaning of adverse event maximum deposit

EH 62 Other definitions

Thinning operations income equalisation scheme

EH 63 Persons to whom thinning operations income equalisation scheme applies

Deposits and accounts

EH 64 Thinning operations deposit

EH 65 Thinning operations income equalisation account

EH 66 Interest on deposits in thinning operations income equalisation account

EH 67 Deduction of deposit

Refunds: automatic

EH 68 Refund of excess deposit

EH 69 Income does not include excess deposit

Refunds: on application

EH 70 Application for refund by person or liquidator

EH 71 Refund on request

EH 72 Income when refund given on request

EH 73 Refund for development or recovery

EH 74 Income when refund given for development or recovery

EH 75 Refund on liquidation

EH 76 Income when refund given on liquidation

Refunds: general provisions, and tax credits

EH 77 Sections of main income equalisation scheme that apply to thinning operations income equalisation scheme

EH 78 Meaning of thinning operations maximum deposit

EH 79 Other definitions

Subpart EI—Spreading of specific income

Farming and forestry

EI 1 Spreading backward of income from timber

Inflation-indexed instruments

EI 2 Interest from inflation-indexed instruments

Intellectual property

EI 3 Assigning or granting copyright

EI 4 Spreading income from patent rights

EI 5 Amount paid to lessor for non-compliance with covenant for repair

EI 6 Amount paid for non-compliance: when lessor ceases to own land

EI 7 Leases: income derived in anticipation

EI 8 Disposal of land to the Crown

Shareholder-employees

EI 9 Matching rule for employment income of shareholder-employee

Subpart EJ—Spreading of specific expenditure

Farming and forestry

EJ 1 Spreading backward of deductions for costs of timber

EJ 2 Spreading forward of deductions for repairs to fishing boats

EJ 3 Spreading forward of fertiliser expenditure

EJ 4 Expenditure incurred in acquiring film rights in feature films

EJ 5 Expenditure incurred in acquiring film rights in films other than feature films

EJ 6 Certification of New Zealand films

EJ 7 Film production expenditure for New Zealand films

EJ 8 Film production expenditure for films other than New Zealand films

EJ 9 Avoidance arrangements

EJ 10 Personal property lease payments

EJ 11 Amount paid by lessee for non-compliance with covenant for repair

Petroleum mining

EJ 12 Petroleum development expenditure

EJ 13 Relinquishing petroleum mining permit

EJ 14 Spreading deduction backwards

EJ 15 Disposal of petroleum mining asset

EJ 16 Disposal of petroleum mining asset to associate

EJ 17 Partnership interests and disposal of part of asset

EJ 18 Petroleum mining operations outside New Zealand

EJ 19 Meaning of offshore development

EJ 20 Meaning of onshore development

Superannuation contributions

EJ 21 Contributions to employees’ superannuation schemes

Research, development, and resulting market development

EJ 22 Deductions for market development: product of research, development

EJ 23 Allocation of deductions for research, development, and resulting market development

Subpart EK—Environmental restoration accounts

EK 1 Environmental Restoration Funds Account

EK 2 Persons who may make payment to environmental restoration account

EK 3 Payments to environmental restoration account

EK 4 Environmental restoration account

EK 5 Details to be provided with payment to environmental restoration account

EK 6 Interest on payments to environmental restoration account

EK 7 Deduction for payment

EK 8 Deduction for transfer

EK 9 Refund of payment if excess, lacking details

EK 10 Certain refunds not income

EK 11 Application for refund

EK 12 Refund if request or excess balance

EK 13 Income when refund given on request

EK 14 Application for transfer

EK 15 Transfer on request

EK 16 Transfer on death, bankruptcy, or liquidation

EK 17 Minimum refund or transfer

EK 18 Payments from which refunds come

EK 19 Environmental restoration account of amalgamating company

EK 20 Environmental restoration account of consolidated group company

EK 21 Notices in electronic format

EK 22 Meaning of maximum payment

EK 23 Other definitions

Subpart EW—Financial arrangements rules

Introductory provisions

EW 1 What this subpart does

EW 2 Relationship of financial arrangements rules with other provisions

Meaning of financial arrangement and excepted financial arrangement

EW 3 What is a financial arrangement?

EW 4 What is not a financial arrangement?

EW 5 What is an excepted financial arrangement?

EW 6 Relationship between financial arrangements and excepted financial arrangements

EW 7 Change from private or domestic purpose

EW 8 Election to treat certain excepted financial arrangements as financial arrangements

Application of financial arrangements rules

EW 9 Persons to whom financial arrangements rules apply

EW 10 Financial arrangements to which financial arrangements rules apply

EW 11 What financial arrangements rules do not apply to

Calculation and allocation of income and expenditure over financial arrangement’s term

EW 12 When use of spreading method required

EW 13 When use of spreading method not required

EW 14 What spreading methods do

EW 15 What is included when spreading methods used

EW 16 Yield to maturity method or alternative

EW 17 Straight-line method

EW 18 Market valuation method

EW 19 Choice among first 3 spreading methods

EW 20 Determination method or alternative

EW 21 Financial reporting method

EW 22 Default method

EW 23 Failure to use method for financial reporting purposes

EW 24 Consistency of use of spreading method

EW 25 Consistency of use of straight-line method and market valuation method

EW 26 Change of spreading method

EW 27 Spreading method adjustment formula

Calculation and allocation of income and expenditure when rights and obligations under financial arrangement cease

EW 28 How base price adjustment calculated

EW 29 When calculation of base price adjustment required

EW 30 When calculation of base price adjustment not required

EW 31 Base price adjustment formula

Consideration when financial arrangement involves property or services

EW 32 Consideration for agreement for sale and purchase of property or services, hire purchase agreement, specified option, or finance lease

EW 33 Consideration for hire purchase agreement or finance lease

EW 34 Consideration in foreign currency

EW 35 Value relevant for non-financial arrangements rule

Consideration treated as paid to person

EW 36 Consideration when person exits from rules: accrued entitlement

EW 37 Consideration when person enters rules: accrued obligation

EW 38 Consideration when disposal for no, or inadequate, consideration

EW 39 Consideration affected by unfavourable factors

Consideration treated as paid by person

EW 40 Consideration when person exits from rules: accrued obligation

EW 41 Consideration when person enters rules: accrued entitlement

EW 42 Consideration when acquisition for no, or inadequate, consideration

EW 43 Consideration when debt sold at discount to associate of debtor

EW 44 Consideration when debt forgiven for natural love and affection

EW 45 Consideration when debtor released from obligation

EW 46 Consideration when debtor released as condition of new start grant

Consideration when legal defeasance has occurred

EW 47 Legal defeasance

Consideration when anti-avoidance provision applies

EW 48 Anti-avoidance provisions

Income and deduction provisions specifically related to financial arrangements

EW 49 Income and deduction when debt sold at discount to associate of debtor

EW 50 Income when debt forgiven to trustee

EW 51 Deduction for security payment

Treatment of original share acquired under financial arrangement

EW 52 Share supplier under share-lending arrangement

One kind of avoidance

EW 53 Adjustment required

Application of financial arrangements rules to cash basis persons

EW 54 Meaning of cash basis person

EW 55 Effect of being cash basis person

EW 56 Natural person

EW 57 Thresholds

EW 58 Financial arrangements, income, and expenditure relevant to criteria

EW 59 Exclusion by Commissioner

EW 60 Trustee of deceased’s estate

EW 61 Election to use spreading method

EW 62 When and how calculation of cash basis adjustment required

EW 63 Cash basis adjustment formula

Subpart EX—Controlled foreign company and foreign investment fund rules

Controlled foreign company (CFC) rules

When is a company a controlled foreign company?

EX 1 Meaning of controlled foreign company

Calculation of person’s control interest

EX 2 Four categories for calculating control interests

EX 3 Control interest: total of direct, indirect, and associated person interests

EX 4 Limits to requirement to include associated person interests

EX 5 Direct control interests

EX 6 Direct control interests include options and similar rights

EX 7 Indirect control interests

Calculation of person’s income interest

EX 8 Income interests: total of direct and indirect interests

EX 9 Direct income interests

EX 10 Indirect income interests

EX 11 Options and similar rights in certain cases

EX 12 Reduction of total income interests

EX 13 Income interests of partners

Ten percent threshold and variations in income interest level

EX 14 Attribution: 10% threshold

EX 15 Associates and 10% threshold

EX 16 Income interests for certain purposes

EX 17 Income interest if variations within period

Calculation of attributed CFC income or loss

EX 18 Formula for calculating attributed CFC income or loss

EX 19 Taxable distribution from non-complying trust

EX 20 Reduction in attributed CFC loss

Calculation of branch equivalent income or loss

EX 21 Branch equivalent income or loss: calculation rules

Grey list exemption

EX 22 Unqualified grey list CFCs

EX 23 Tax concession grey list CFCs

Change of residence of companies

EX 24 Companies moving to or from New Zealand

Change of CFC’s balance date

EX 25 Change of CFC’s balance date

Ownership measurement concession

EX 26 Use of quarterly measurement

Anti-avoidance rule: stapled stock

EX 27 Anti-avoidance rule: stapled stock

Foreign investment fund (FIF) rules

What is a foreign investment fund?

EX 28 Meaning of FIF

Attributing interests in FIFs

EX 29 Attributing interests in FIFs

EX 30 Direct income interests in FIFs

EX 31 Exemption for ASX-listed Australian companies

EX 32 Exemption for Australian unit trusts with 25% turnover

EX 33 Exemption for Australian regulated superannuation savings

EX 34 CFC rules exemption

EX 35 Exemption for 10% or greater interest in grey list company

EX 36 Venture capital company emigrating to grey list country: 10-year exemption

EX 37 Grey list company owning New Zealand venture capital company: 10-year exemption

EX 38 Exemption for employee share purchase scheme of grey list company

EX 39 Terminating exemption for grey list company with numerous New Zealand shareholders

EX 40 Foreign exchange control exemption

EX 41 Income interest of non-resident or transitional resident

EX 42 New resident’s accrued superannuation entitlement exemption

EX 43 Non-resident’s pension or annuity exemption

Calculation of FIF income or loss

EX 44 Six calculation methods

EX 45 Exclusion of amounts of death benefit

EX 46 Limits on choice of calculation methods

EX 47 Method required for share treated as debt

EX 48 Default calculation method

EX 49 Accounting profits method

EX 50 Branch equivalent method

EX 51 Comparative value method

EX 52 Fair dividend rate method: usual method

EX 53 Fair dividend rate method for funds that value investors’ units

EX 54 Fair dividend rate method and cost method: when periods affected by share reorganisations

EX 55 Deemed rate of return method

EX 56 Cost method

EX 57 Conversion of foreign currency amounts: most methods

EX 58 Additional FIF income or loss if CFC owns FIF

Relationship with other provisions in Act

EX 59 Codes: comparative value method, deemed rate of return method, fair dividend rate method, and cost method

EX 60 Top-up FIF income: deemed rate of return method

EX 61 Top-up FIF income: 1 April 1993 uplift interests

Changing calculation method

EX 62 Limits on changes of method

EX 63 Consequences of changes in method

Cases of entry into and exit from FIF rules

EX 64 Migration of persons holding FIF interests

EX 65 Changes in application of FIF exemptions

EX 66 Entities emigrating from New Zealand

EX 67 FIF rules first applying to interest on or after 1 April 2007

Measurement of cost

EX 68 Measurement of cost

Change of FIF’s balance date

EX 69 Change of FIF’s balance date

Market value rules

EX 70 Market value of life policy and superannuation entitlements

EX 71 Non-market transactions in FIF interests

Commissioner’s default assessment power

EX 72 Commissioner’s default assessment power

Subpart EY—Life insurance rules

Introductory provisions

EY 1 What this subpart does

EY 2 Matters to which this subpart relates

EY 3 Meaning of actuarial reserves

EY 4 Actuarial reserves: calculation

EY 5 Actuarial reserves: actuary’s declaration

EY 6 Actuarial reserves: powers of Commissioner

EY 7 Meaning of claim

EY 8 Meaning of life insurance

EY 9 Meaning of life insurance policy

EY 10 Meaning of life insurer

EY 11 Superannuation schemes providing life insurance

EY 12 Meaning of life reinsurance

EY 13 Meaning of life reinsurance policy

EY 14 Life insurance and life reinsurance: how sections relate

Premium loading

EY 15 How premium loading is calculated

EY 16 Premium loading: when life insurers providing life insurance at start of income year

EY 17 Premium loading: when life insurers not providing life insurance at start of income year

EY 18 Premium loading formulas

EY 19 Premium loading formulas: when life insurers not providing life insurance at start of income year

EY 20 Premium loading formulas: option when more than 1 life insured

EY 21 Premium loading formula (life): when annuity payable on death

EY 22 Premium loading formulas: when annuity payable on survival to date or age specified in policy

EY 23 Premium loading formula (life): when partial reinsurance exists

EY 24 Premium loading formulas: individual result may never be negative

Mortality profit

EY 25 How mortality profit is calculated

EY 26 Mortality profit: when life insurers providing life insurance at start of income year

EY 27 Mortality profit: when life insurers not providing life insurance at start of income year

EY 28 Mortality profit formula

EY 29 Mortality profit formula: when life insurers not providing life insurance at start of income year

EY 30 Mortality profit formula: option when more than 1 life insured

EY 31 Mortality profit formula: when annuity payable on death

EY 32 Mortality profit formula: when partial reinsurance exists

EY 33 Mortality profit formula: individual result may be negative only in some cases

EY 34 Mortality profit formula: negative result

Discontinuance profit

EY 35 How discontinuance profit is calculated

EY 36 Discontinuance profit for income year

EY 37 Discontinuance profit formula (existing policies)

EY 38 Discontinuance profit formula (new policies)

EY 39 Discontinuance profit formula (existing policies): when partial reinsurance exists

EY 40 Discontinuance profit formula (new policies): when partial reinsurance exists

EY 41 Discontinuance profit formulas: individual result may never be negative

Policyholder income

EY 42 How policyholder income is calculated

EY 43 Policyholder income formula

EY 44 Policyholder income formula: when partial reinsurance exists

EY 45 Policyholder income formula: when life insurance business transferred

Disposal of property

EY 46 Income from disposal of property

EY 47 Deductions for disposal of property

Non-resident life insurers

EY 48 Non-resident life insurers with life insurance policies in New Zealand

EY 49 Non-resident life insurer becoming resident

Subpart EZ—Terminating provisions

EZ 1 Life insurers acquiring property before 1 April 1988

EZ 2 Deductions for disposal of property: 1982–83 and 1989–90 income years

Petroleum mining

EZ 3 Petroleum development expenditure from 1 October 1990 to 15 December 1991

EZ 4 Valuation of livestock bailed or leased as at 2 September 1992

EZ 5 Reduction: bloodstock not previously used for breeding in New Zealand: pre-1 August 2006

EZ 6 Reduction: broodmare previously used for breeding in New Zealand: pre-1 August 2006

EZ 7 Buying patent rights before 1 April 1993

EZ 8 Premium paid on land leased before 1 April 1993

EZ 9 Pool method for items accounted for by globo method for 1992–93 income year

EZ 10 Pool items accounted for by globo method for 1992–93 income year

EZ 11 Amounts of depreciation recovery income and depreciation loss for part business use up to 2004–05 income year

EZ 12 Amount of depreciation loss for item acquired from associated person on or before 23 September 1997

EZ 13 Annual rate for item acquired on or after 1 April 1993 and before end of person’s 1994–95 income year

EZ 14 Pre-1993 depreciation rate

EZ 15 Annual rate for excluded depreciable property: 1992–93 tax year

EZ 16 Amount of depreciation loss for plant or machinery additional to section EZ 15 amount

EZ 17 Additional amount of depreciation loss: between 16 December 1991 and 1 April 1994

EZ 18 Section EZ 17 amount of depreciation loss when items transferred between companies in wholly-owned group before 1 April 1993

EZ 19 Section EZ 17 amount of depreciation loss when person previously exempt from tax acquires item

EZ 20 Adjusted tax value for software acquired before 1 April 1993

EZ 21 Sections EE 45 and EE 47: permanent removal: allowance before 1 April 1995

EZ 22 Base value and total deductions in section EE 56: before 1 April 1995

EZ 23 Economic rate for plant or equipment acquired before 1 April 2005 and buildings acquired before 19 May 2005

EZ 24 Meaning of new asset

EZ 25 Meaning of New Zealand-new asset

EZ 26 Meaning of qualifying capital value

EZ 27 Meaning of qualifying improvement

EZ 28 Meaning of qualifying asset

Accident insurance

EZ 29 Private insurers under Accident Insurance Act 1998

EZ 30 Base premium for 1998–99 premium year under Accident Insurance Act 1998

Controlled foreign company and foreign investment fund rules

EZ 31 Disclosure restrictions on grey list CFCs before 2011–12

EZ 32 Terminating exemption for grey list FIF investing in Australasian listed equities

Old financial arrangements rules

EZ 33 Application of old financial arrangements rules

EZ 34 Election to apply financial arrangements rules in subpart EW

EZ 35 Accruals in relation to income and expenditure in respect of financial arrangements

EZ 36 Excepted financial arrangement that is part of financial arrangement

EZ 37 Cash basis holder

EZ 38 Income and expenditure where financial arrangement redeemed or disposed of

EZ 39 Forgiveness of debt

EZ 40 Accrued income written off

EZ 41 Sale of debt to associate of debtor

EZ 42 Post facto adjustment

EZ 43 Variable principal debt instruments

EZ 44 Relationship with rest of Act

EZ 45 Application of old financial arrangements rules

EZ 46 Election to treat short term trade credit as financial arrangement

EZ 47 Election to continue to treat certain excepted financial arrangements as financial arrangements

EZ 48 Definitions

EZ 49 Determination of core acquisition price where consideration for property denominated in foreign currency

EZ 50 Rules for non-market transactions

EZ 51 Transitional adjustment when changing to financial arrangements rules

EZ 52 References to new rules include old rules

Part F
Recharacterisation of certain transactions

Subpart FA—Recharacterisation of certain commercial arrangements

Introductory provision

FA 1 What this subpart does

Debentures and shares

FA 2 Recharacterisation of certain debentures

FA 3 Recharacterisation of certain dividends: recovery of cost of shares held on revenue account

FA 4 Recharacterisation of shareholder’s base: company repurchasing share

FA 5 Assets acquired and disposed of after deduction of payments under lease

FA 6 Recharacterisation of amounts derived under finance leases

FA 7 Determining amount of loan

FA 8 Deductibility of expenditure under finance lease

FA 9 Treatment when lease ends: lessee acquiring asset

FA 10 Treatment when lease ends: lessor acquiring asset

FA 11 Consecutive or successive finance leases

Hire purchase agreements

FA 12 Recharacterisation of amounts derived under hire purchase agreements

FA 13 Agreements recharacterised as sale with finance provided

FA 14 Deductibility of expenditure or loss under hire purchase agreement

FA 15 Treatment when agreement ends: seller acquiring property

FA 16 Treatment when agreement ends: when seller is cash basis person

FA 17 Treatment when agreement ends: when buyer is cash basis person

FA 18 Treatment of amounts paid in income years after agreement ends

Subpart FB—Transfers of relationship property

FB 1 What this subpart does

FB 2 Personal property

FB 3 Land acquired for certain purposes or under certain conditions

FB 4 Land under scheme for major development or division

FB 5 Disposal of land

FB 6 Timber or right to take timber

FB 7 Land with standing timber

FB 8 Patent applications and patent rights

FB 9 Financial arrangements rules

FB 10 Continuity provisions: shares and options

FB 11 Pension payments to former employees

FB 12 Pension payments to former partners

FB 13 Trading stock

FB 14 Specified livestock

FB 15 Specified livestock valued under herd scheme

FB 16 Non-specified livestock

FB 17 High-priced livestock

FB 18 Bloodstock

FB 19 Leased assets

FB 20 Mining assets

FB 21 Depreciable property

Subpart FC—Distribution, transmission, and gifts of property

Introductory provisions

FC 1 What this subpart does

FC 2 Transfer at market value

Exceptions for property transferred on death of person

FC 3 Property transferred to spouse, civil union partner, or de facto partner

FC 4 Property transferred to charities or to close relatives and others

FC 5 Land transferred to close relatives

FC 6 Forestry assets transferred to close relatives

FC 7 Transfer of prepaid property

FC 8 Transfer of certain financial arrangements

Subpart FE—Interest apportionment on thin capitalisation

Introductory provisions

FE 1 What this subpart does

FE 2 When this subpart applies

FE 3 Interest apportionment for individuals

FE 4 Some definitions

Interest apportionment rules

FE 5 Thresholds for application of interest apportionment rules

FE 6 Apportionment of interest by excess debt entity

FE 7 Apportionment of interest by reporting bank

FE 8 Measurement dates

FE 11 Temporary increases or decreases in value

FE 12 Calculation of debt percentages

FE 13 Financial arrangements entered into with persons outside group

Debt percentage of New Zealand group

FE 14 Consolidation of debts and assets

FE 15 Total group debt

FE 16 Total group assets

Debt percentage of worldwide group

FE 17 Consolidation of debts and assets

FE 18 Measurement of debts and assets of worldwide group

New Zealand banking group

FE 19 Banking group’s equity threshold

FE 20 Financial value and regulatory value

FE 21 Banking group’s New Zealand net equity

FE 22 Notional offshore investment

FE 23 Banking group’s funding debt

FE 24 Regulations

Determining membership of groups

New Zealand group

FE 25 New Zealand group for excess debt entity that is a company

FE 26 Identifying New Zealand parent

FE 27 Establishing companies under parent’s control

FE 28 Identifying members of New Zealand group

FE 29 Holding companies

FE 30 Ownership interests in companies outside New Zealand group

Worldwide group

FE 31 Worldwide group for corporate excess debt entity

FE 32 Joint venture parties

New Zealand banking group

FE 33 New Zealand banking group

FE 34 Identifying ultimate parent

FE 35 Persons who may be excluded from banking groups

FE 36 Identifying members of New Zealand banking group

FE 37 Reporting bank for New Zealand banking group

Measuring ownership interests in companies

FE 38 Measuring ownership interests in companies

FE 39 Direct ownership interests

FE 40 Tiered ownership interests

FE 41 Treatment of associated persons’ interests

Subpart FF—Interest apportionment for conduit investment

Introductory provisions

FF 1 What this subpart does

FF 2 When interest apportionment rule applies

FF 3 Steps required to determine treatment of excessive interest expenditure

Interest apportionment rule

FF 4 Threshold for application of interest apportionment rule

FF 5 Determination of excess amount of interest expenditure of group

FF 6 Conduit tax relief

FF 7 Surplus to foreign dividends

Membership and debt percentages of foreign groups

FF 8 Identifying members of foreign groups

FF 9 Calculating debt percentage of New Zealand foreign groups

FF 10 Calculating debt percentage of consolidated foreign groups

FF 11 Changes in foreign group membership

Subpart FL—Emigration of resident companies

FL 1 What this subpart does

FL 2 Treatment of emigrating companies and their shareholders

Subpart FM—Consolidated groups of companies

Introductory provisions

FM 1 What this subpart applies to

FM 2 Consolidation rules

FM 3 Liability of consolidated groups and group companies

FM 4 Limiting joint and several liability of group companies

FM 5 Liability when company leaves consolidated group

FM 6 Some general rules for treatment of consolidated groups

Calculating taxable income for consolidated group returns

Accounting generally

FM 7 Treatment of amounts derived or expenditure incurred

FM 8 Transactions between group companies: income

FM 9 Amounts that are company’s income

FM 10 Expenditure: intra-group transactions

FM 11 Expenditure: nexus with income derivation

FM 12 Expenditure when deduction would be denied to consolidated group

FM 13 Capital expenditure

FM 14 Part-year financial statements

Accounting for particular property

FM 15 Amortising property and revenue account property

FM 16 Land or business: certain farming or forestry expenditure

FM 17 Trading stock

FM 18 Financial arrangements: transfer from company A to company B

FM 19 Financial arrangements: transfer for fair and reasonable consideration

FM 20 Financial arrangements: transfer at market value

FM 21 Property transfers when companies leave consolidated groups

FM 22 Arrangements to avoid consolidation rules

FM 23 Arrangements for disposal of shares

Treatment of foreign dividends

FM 24 General treatment of foreign dividends

FM 25 Reduction in payments for foreign dividends

FM 26 Using tax losses to pay FDP

FM 27 Refunds of FDP

FM 28 Refund when consolidated group has loss

FM 29 Treatment of credit balance in consolidated group’s FDP account

FM 30 Application of certain provisions to consolidated groups

Membership of consolidated groups

Eligibility and restrictions

FM 31 Eligibility rules

FM 32 Restriction on membership of consolidated groups

FM 33 When membership is reduced

Nominated companies

FM 34 Nominated companies

Forming, joining, or leaving consolidated groups

FM 35 Forming consolidated group

FM 36 Joining existing consolidated group

FM 37 Leaving consolidated group

When membership starts and stops

FM 38 Notice requirements on forming or joining consolidated group

FM 39 Choosing to leave consolidated group

FM 40 Losing eligibility or entitlement to be part of consolidated group

FM 41 No nominated company

FM 42 When company liquidated

Subpart FN—Imputation groups of companies

FN 1 When this subpart applies

FN 2 Imputation rules

FN 3 Liabilities of companies in imputation group

FN 4 Eligibility rules

FN 5 Imputation groups with reduced numbers

FN 6 Nominated companies

FN 7 Forming imputation groups

FN 8 Trans-Tasman imputation groups and resident imputation subgroups

FN 9 Joining existing imputation group

FN 10 When membership of imputation group ends

FN 11 Company choosing to leave imputation group

FN 12 Company no longer eligible or entitled to membership

FN 13 Imputation group with no nominated company

FN 14 Effect of liquidation of company

Subpart FO—Amalgamation of companies

Introductory provisions

FO 1 What this subpart does

FO 2 Amalgamation rules

FO 3 Resident’s restricted amalgamations

FO 4 Rights and obligations of amalgamated companies

FO 5 Amalgamations and remitted liabilities

Treatment of shares, income, expenditure, and bad debts

FO 6 Cancellation of shares

FO 7 Income derived after amalgamation

FO 8 Bad debts and expenditure or loss on resident’s restricted amalgamation

FO 9 Unexpired portion of prepaid expenditure

Property passing to amalgamated company on amalgamation

FO 10 When property passes on resident’s restricted amalgamation

FO 11 When property passes on amalgamation other than resident’s restricted amalgamation

FO 12 Financial arrangements: resident’s restricted amalgamation, companies in wholly-owned group

FO 13 Financial arrangements: resident’s restricted amalgamation, calculation method unchanged

FO 14 Financial arrangements: resident’s restricted amalgamation, other cases

FO 15 Financial arrangements: amalgamation other than resident’s restricted amalgamation

FO 16 Amortising property

Treatment of financial arrangements between amalgamating companies

FO 18 When amalgamating companies are parties to financial arrangement

FO 19 Calculation of outstanding accrued balance: consideration for discharge

FO 20 Calculation of outstanding accrued balance: amounts remitted

Subpart FZ—Terminating provisions

FZ 1 Treatment of interest payable under debentures issued before certain date

FZ 2 Effect of specified lease on lessor and lessee

FZ 3 Income of lessor under specified lease

FZ 4 Deductions under specified leases

Relationship property

FZ 5 Commercial bills

Estate property

FZ 6 Transitional valuation rule for estate property

Part G
Avoidance and non-market transactions

Subpart GA—Avoidance: general

GA 1 Commissioner’s power to adjust

GA 2 Commissioner’s power to adjust: fringe benefit tax

Subpart GB—Avoidance: specific

Arrangements involving dividend stripping

GB 1 Arrangements involving dividend stripping

Arrangements involving transfer pricing

GB 2 Arrangements involving transfer pricing

Arrangements involving tax losses

GB 3 Arrangements for carrying forward loss balances: companies

GB 4 Arrangements for grouping tax losses: companies

Arrangements to defeat continuity provisions

GB 5 Arrangements involving trust beneficiaries

Arrangements involving qualifying companies

GB 6 Arrangements involving qualifying companies

Arrangements involving controlled foreign companies

GB 7 Arrangements involving CFC control interests

GB 8 Arrangements involving attributed repatriation from CFCs

GB 9 Temporary disposals of direct control or income interests

GB 10 Temporary acquisitions of direct control or income interests

GB 11 Temporary increases in totals for control interest categories

GB 12 Temporary reductions in totals for control interest categories

GB 13 When combination of changes reduces income

GB 14 When combination of changes increases loss

GB 15 CFC income or loss: arrangements related to quarterly measurement

Arrangements involving foreign investment funds

GB 16 FIF income or loss: arrangements for measurement day concessions

Arrangements involving film rights

GB 17 Excessive amounts for film rights or production expenditure

GB 18 Arrangements to acquire film rights or incur production expenditure

GB 19 When film production expenditure payments delayed or contingent

Arrangements involving petroleum mining

GB 20 Arrangements involving petroleum mining

Arrangements involving financial arrangements

GB 21 Dealing that defeats intention of financial arrangements rules

Arrangements involving trust beneficiary income

GB 22 Arrangements involving trust beneficiary income

Excessive remuneration

GB 23 Excessive remuneration to relatives

GB 24 Exemption for genuine contracts

GB 25 Close company remuneration to shareholders, directors, or relatives

Arrangements involving repatriation of commercial bills

GB 26 Arrangements involving repatriation of commercial bills

Attribution rule for income from personal services

GB 27 Attribution rule for income from personal services

GB 28 Interpretation of terms used in section GB 27

GB 29 Attribution rule: calculation

Arrangements involving restrictive covenants

GB 30 Arrangements to avoid taxation of restrictive covenant payments

Arrangements involving fringe benefit tax

GB 31 FBT arrangements: general

GB 32 Benefits provided to employee’s associates

Arrangements involving depreciation loss

GB 33 Arrangements involving depreciation loss

Arrangements involving imputation rules

GB 34 ICA arrangements for carrying amounts forward

GB 35 Imputation arrangements to obtain tax advantage

GB 36 Reconstruction of imputation arrangements to obtain tax advantage

GB 37 Arrangements for payment of dividend by other companies

GB 38 When sections GB 35 to GB 37 apply to consolidated groups

Arrangements involving foreign dividends

GB 39 FDP arrangements: general

GB 40 BETA arrangements for carrying amounts forward

GB 41 FDPA arrangements for carrying amounts forward

Arrangements involving Maori authority credits

GB 42 Maori authority credit arrangements to obtain tax advantage

GB 43 Reconstruction of Maori authority credit arrangements to obtain tax advantage

Arrangements involving family support credits

GB 44 Arrangements involving family support credits

Arrangements involving money not at risk

GB 45 Arrangements involving money not at risk

GB 46 Deferral of surplus deductions from arrangements

GB 47 Calculation rules for sections GB 45 and GB 46

GB 48 Defined terms for sections GB 45 and GB 46

Arrangements involving returning share transfers

GB 49 Arrangements involving returning share transfers

Subpart GC—Market value substituted

Disposals of trading stock or similar property

GC 1 Disposals of trading stock at below market value

GC 2 Disposals of timber rights or standing timber

GC 3 Disposals by life insurers

GC 4 Disposals and acquisitions of FIF attributing interests

GC 5 Leases for inadequate rent

Transfer pricing arrangements

GC 6 Purpose of rules and nature of arrangements

GC 7 Excess amount payable by person

GC 8 Insufficient amount receivable by person

GC 9 Compensating arrangement: person paying less than arm’s length amount

GC 10 Compensating arrangement: person receiving more than arm’s length amount

GC 11 Requests for matching treatment

GC 12 Effect on person’s withholding obligations

GC 13 Calculation of arm’s length amounts

GC 14 Definitions for sections GC 6 to GC 13

Subpart GZ—Terminating provisions

GZ 1 Limitation on section GB 20: petroleum mining arrangements

Part H
Taxation of certain entities

Subpart HA—Qualifying companies (QC) and loss-attributing qualifying companies (LAQC)

Introductory provisions

HA 1 What this subpart does

HA 2 Meaning of qualifying company

HA 3 Meaning of loss-attributing qualifying company

HA 4 Conditions applying

Qualifying company status

HA 5 Elections to become qualifying company

HA 6 Corporate requirements

HA 7 Shareholding requirements

HA 8 Shareholders’ personal liability

HA 9 Limit on foreign non-dividend income

HA 10 Nature of LAQC shares

HA 11 When requirements no longer met

HA 12 Avoidance arrangements

Treatment of profits, dividends, and tax losses

HA 13 Qualifying companies’ distributions

HA 14 Dividends paid by qualifying companies

HA 15 Fully imputed distributions

HA 16 Exempt income

HA 17 Dividends derived by qualifying companies

HA 18 Treatment of dividends when qualifying company status ends

HA 19 Credit accounts and dividend statements

HA 20 Attribution of tax losses

HA 21 Loss balances not carried forward

HA 22 Group companies using tax losses

HA 23 Treatment of tax losses on amalgamation

Special tax matters for loss-attributing qualifying companies

HA 24 Treatment of tax losses other than certain foreign losses

HA 25 Treatment of certain foreign losses

HA 26 Attribution when balance dates differ

HA 27 Attribution when loss results in reduction in value of shares

Elections: qualifying companies

HA 28 Elections by trustee shareholders

HA 29 Elections by majority shareholders

HA 30 When elections take effect

HA 31 Revocation of directors’ elections

HA 32 Revocation of shareholders’ elections: by notice

HA 33 Revocation of shareholders’ elections: by event

HA 34 Period of grace following death of shareholder

HA 35 Period of grace following revocation of election

HA 36 Period of grace following revocation of joint election

HA 37 Period of grace for new shareholder

Elections: loss-attributing qualifying companies

HA 38 Elections by directors and shareholders required

HA 39 Revocation of elections

Qualifying company election tax

HA 40 Liability for qualifying company election tax

HA 41 Calculating qualifying company election tax

HA 42 Paying qualifying company election tax

Effective interests in qualifying companies

HA 43 Meaning of effective interest

HA 44 Measuring effective interests

Subpart HC—Trusts

Introductory provisions

HC 1 What this subpart does

HC 2 Obligations of joint trustees for calculating income and providing returns

HC 3 Multiple settlements

HC 4 Corpus of trust

HC 5 Amounts derived by trustees

HC 6 Beneficiary income

HC 7 Trustee income

HC 8 Amounts received after person’s death

Classification of trusts

HC 9 Classifying trusts

HC 10 Complying trusts

HC 11 Foreign trusts

HC 12 Non-complying trusts

HC 13 Charitable trusts

Distributions from trusts

HC 14 Distributions from trusts

HC 15 Taxable distributions from non-complying and foreign trusts

HC 16 Ordering rule for distributions from non-complying and foreign trusts

Tax treatment of amounts that beneficiaries derive from trusts

HC 17 Amounts derived as beneficiary income

HC 18 Taxable distributions from foreign trusts

HC 19 Taxable distributions from non-complying trusts

HC 20 Distributions from complying trusts

HC 21 Distributions from community trusts

HC 22 Use of tax losses to reduce taxable distributions from non-complying trusts

HC 23 Temporary absences of beneficiaries

Tax treatment of trustee income

HC 24 Trustees’ obligations

HC 25 Foreign-sourced amounts: non-resident trustees

HC 26 Foreign-sourced amounts: resident trustees

Settlors and their liabilities

HC 27 Who is a settlor?

HC 28 Activities treated as those of settlor

HC 29 Settlors’ liability to income tax

Treatment of transition situations

HC 30 Treatment of foreign trusts when settlor becomes resident

Valuation of property, trading stock, and financial arrangements

HC 31 When existing trusts come into tax base

Rate and payment of income tax

HC 32 Liability of trustee as agent

HC 33 Choosing to satisfy income tax liability of trustee

HC 34 Taxable distributions from non-complying trusts

HC 35 Beneficiary income of minors

HC 36 Trusts and minor beneficiary rule

HC 37 Testamentary trusts and minor beneficiary rule

Subpart HD—Agents

Introductory provisions

HD 1 What this subpart does

HD 2 Joint liability of principal and agent for tax obligations

HD 3 Agents’ duties and liabilities

HD 4 Treatment of principals

HD 5 Matters between principals and agents

HD 6 When relationship effectively that of principal and agent

HD 7 Rate and amount of tax

Particular cases

HD 8 Circumstances giving rise to agency

HD 10 Mortgagees in possession

HD 11 Nominated companies

HD 13 Unit trusts

HD 14 Companies issuing debentures

HD 15 Asset stripping of companies

HD 16 Non-resident general insurers

HD 17 Agent paying premiums to residents of Switzerland

HD 18 Agency in relation to absentees generally

HD 19 Persons receiving absentees’ income

HD 20 Persons carrying on business for or with absentees

HD 21 Companies

HD 22 Banking companies

HD 23 Trustees of group investment funds

HD 24 Shipping businesses

HD 25 Persons remitting amounts outside New Zealand

HD 26 Agency in relation to non-residents generally

HD 27 Employers

HD 28 Government pensions and payments under superannuation schemes

HD 29 Persons buying goods from overseas

Subpart HE—Mutual associations

HE 1 Income and deductions of mutual associations

HE 2 Classes of mutual transaction

HE 3 Association rebates

HE 4 Apportionment when transactions with members and non-members

HE 5 Association rebates paid by shares or credit

Subpart HF—Maori authorities

Introductory provisions

HF 1 Maori authorities and the Maori authority rules

HF 2 Who is eligible to be a Maori authority?

HF 3 Applying provisions to Maori authorities

Maori authority distributions

HF 4 What constitutes a Maori authority distribution?

HF 5 Notional distributions of co-operative companies

HF 6 Tax treatment of Maori authority distributions

HF 7 Taxable Maori authority distributions

HF 8 Proportional allocation

Changing status

HF 9 Treatment of companies and trusts that choose to apply this subpart

HF 10 Market value calculations

HF 11 Choosing to become Maori authority

Subpart HL—Portfolio investment entities

Introductory provisions

HL 1 Intended effect on portfolio tax rate entities and investors

HL 2 Scheme of subpart

Eligibility requirements: portfolio investment entities and foreign investment vehicles

HL 3 Eligibility requirements for entities

HL 4 Effect of failure to meet eligibility requirements for entities

HL 5 Foreign investment vehicles

HL 6 Investor membership requirement

HL 7 Investor return adjustment requirement: portfolio tax rate entity

HL 8 Imputation credit distribution requirement: portfolio listed company

HL 9 Investor interest size requirement

HL 10 Further eligibility requirements relating to investments

Becoming and ceasing to be portfolio investment entity

HL 11 Election to become portfolio investment entity and cancellation of election

HL 12 Unlisted company choosing to become portfolio listed company

HL 13 Becoming portfolio investment entity

HL 14 Tax consequences from transition

HL 15 Ceasing to be portfolio investment entity

Periods relevant to calculation of portfolio entity tax liability

HL 16 Portfolio allocation period and portfolio calculation period

Allocation of income in some cases

HL 17 Treatment of income from interest when entitlement conditional or lacking

HL 18 Certain new investors treated as part of existing portfolio investor class

Calculating portfolio entity tax liability

HL 19 Portfolio class net income and portfolio class net loss for portfolio allocation period

HL 20 Portfolio class taxable income and portfolio class taxable loss for portfolio allocation period

HL 21 Portfolio entity tax liability and tax credits of portfolio tax rate entity for period

Payment by portfolio tax rate entity of tax for tax year

HL 22 Payments of tax by portfolio tax rate entity making no election

HL 23 Payments of tax by portfolio tax rate entity choosing to pay provisional tax

HL 24 Payments of tax by portfolio tax rate entity choosing to make payments when investor leaves

HL 25 Optional payments of tax by portfolio tax rate entities

Results for investors

HL 26 Portfolio investor allocated income and portfolio investor allocated loss

HL 27 Treatment of portfolio investor allocated loss for zero-rated portfolio investors and investors with portfolio investor exit period

Tax credits for entity

HL 28 Treatment of portfolio investor allocated loss for other investors

HL 29 Credits received by portfolio tax rate entity or portfolio investor proxy

Treatment of losses for entity

HL 30 Portfolio entity formation loss

HL 31 Portfolio class taxable income and portfolio class taxable loss for tax year

HL 32 Treatment of portfolio class taxable loss and portfolio class land loss for tax year

Portfolio investor proxies

HL 33 Portfolio investor proxies

Subpart HR—Other entities

Partnerships and joint ventures

HR 1 Partnerships and joint ventures

HR 2 Group investment funds

HR 3 Definitions for section HR 2: group investment funds

HR 4 Government Superannuation Fund

Airport operators

HR 5 Airport operators: general

HR 6 Airport operator’s assets

HR 7 Meaning of airport operator’s activities

Transitional residents

HR 8 Transitional residents

Subpart HZ—Terminating provisions

HZ 1 Distributions from trusts of pre-1989 tax reserves

HZ 2 Trusts that may become complying trusts

Part I
Treatment of tax losses

Subpart IA—General rules for tax losses

IA 1 What this subpart does

IA 2 Tax losses

IA 3 Using tax losses in tax year

IA 4 Using loss balances carried forward to tax year

IA 5 Restrictions on companies’ loss balances carried forward

IA 6 Restrictions on companies grouping tax losses

IA 7 Restrictions relating to ring-fenced tax losses

IA 8 Restrictions relating to schedular income

IA 9 Ordering rules

IA 10 Amended assessments

Subpart IC—Grouping tax losses

Introductory provisions

IC 1 Company A making tax loss available to company B

IC 2 Threshold levels for grouping tax losses in tax year

IC 3 Common ownership: group of companies

IC 4 Common ownership: wholly-owned groups of companies

Requirements and methods

IC 5 Company B using company A’s tax loss

IC 6 Common ownership for period

IC 7 Residence of company A

IC 8 Limitations on amounts used

IC 9 Date for payment and notice to Commissioner

IC 10 When companies have different balance dates

IC 11 Reduction of amounts used by companies

IC 12 Bad debts or decline in value of shares

Subpart ID—Use of tax losses by consolidated groups

ID 1 Treatment of tax losses by consolidated groups

ID 2 Pre-consolidation losses: general treatment

ID 3 Pre-consolidation losses: use by group companies

ID 4 Pre-consolidation losses on entry: part-year rule

ID 5 Pre-consolidation losses on exit: part-year rule

Subpart IE—Treatment of tax losses on amalgamation of companies

IE 1 When this subpart applies

IE 2 Treatment of tax losses by amalgamating company

IE 3 Treatment of tax losses by amalgamated company

IE 4 Group companies’ treatment of tax losses on amalgamation

IE 5 Applying the continuity provisions when companies amalgamate

Subpart IP—Meeting requirements for part-years

Introductory provisions

IP 1 When this subpart applies

IP 2 Group companies’ common span

Tax loss components carried forward

IP 3 Continuity breach: tax loss components of companies carried forward

Grouping part-year tax losses

IP 4 Breach in income year in which tax loss component arises

IP 5 Breach in tax year in which loss balance is grouped

Statements and notices

IP 6 Financial statements required

IP 7 Notices required

Subpart IQ—Attributed controlled foreign company net losses and foreign investment fund net losses

IQ 1 General treatment

IQ 2 Ring-fencing cap on attributed CFC net losses

IQ 3 Ring-fencing cap on FIF net losses

IQ 4 Group companies using attributed CFC net losses

IQ 5 Group companies using FIF net losses

IQ 6 Pre-consolidation losses: general treatment

IQ 7 When group membership lacking in loss period

IQ 8 When group membership lacking in tax year of use

IQ 9 When attributed CFC net loss becomes FIF net loss

Subpart IS—Mining companies’ and petroleum miners’ tax losses

IS 1 General treatment of mining companies’ tax losses

IS 2 Treatment of tax losses resulting from certain expenditure

IS 3 Holding companies’ tax losses

IS 4 Adjustments in certain circumstances

IS 5 Petroleum miners’ tax losses

IS 6 When company stops being mining company

Subpart IT—Life insurers’ net losses

IT 1 Life insurers’ policyholder net losses

Subpart IV—Treatment of certain supplementary dividends

IV 1 Supplementary dividend holding companies

Subpart IW—Use of tax losses to pay shortfall penalties

IW 1 Shortfall penalties

Subpart IZ—Terminating provisions

IZ 1 Use of specified activity net losses

IZ 2 Petroleum mining companies: treatment of payments from shareholders

IZ 3 Petroleum mining companies: use of loss balances

IZ 4 Tax losses for tax years before 1977–78 tax year

IZ 5 Companies’ tax losses for tax years before 1991–92 tax year

IZ 6 Companies’ tax losses for 1990–91 and 1991–92 tax years

IZ 7 Grouping tax losses for tax years before 1981–82 and between 1981–82 and 1991–92

Part L
Tax credits and other credits

Subpart LA—General rules for tax credits

LA 1 What this Part does

LA 2 Satisfaction of income tax liability

LA 3 When total tax credit less than or equal to income tax liability

LA 4 When total tax credit more than income tax liability

LA 5 Treatment of remaining credits

LA 6 Remaining refundable credits: PAYE, RWT, and certain other items

LA 7 Remaining refundable credits: family scheme income

LA 8 Remaining refundable credits: non-resident withholding tax

LA 9 Use of tax credits

LA 10 Meaning of tax credit

Subpart LB—Tax credits for payments, deductions, and family income assistance

LB 1 Tax credits for PAYE income payments

LB 2 Tax credits for provisional tax payments

LB 3 Tax credits for resident withholding tax

LB 4 Tax credits for family scheme income

LB 5 Tax credits for non-resident withholding tax

LB 6 Tax credits for caregivers

Subpart LC—Tax credits for natural persons

Tax credits for persons on low incomes

LC 1 When net income under low income amount

LC 2 When net income in low income abatement range

Tax credits for children

LC 3 Child’s income

Tax credits for transitional circumstances

LC 4 Tax credits for transitional circumstances

LC 5 Meaning of engaged in full-time work

Tax credits for housekeeping

LC 6 Tax credits for housekeeping

LC 7 Meaning of housekeeper

LC 8 Some definitions

Tax credits for absentees

LC 9 Tax credits for absentees

Adjustments to certain tax credits

LC 10 Adjustment for change in return date

LC 11 Adjustment when person is non-resident for part of tax year

LC 12 Assessment when person is non-resident

Subpart LD—Tax credits for charitable or other public benefit gifts

LD 1 Tax credits for charitable or other public benefit gifts

LD 2 Exclusions

LD 3 Meaning of charitable or other public benefit gift

Subpart LE—Tax credits for imputation credits

LE 1 Tax credits for imputation credits

LE 2 Use of remaining credits by companies and trustees

LE 3 Use of remaining credits by others

LE 4 Trustees for minor beneficiaries

LE 5 Beneficiaries of trusts

LE 6 Partners in partnerships

LE 7 Credit transfer notices

LE 8 Application of imputation ratio

LE 9 Application of combined imputation and FDP ratio

LE 10 When income tax unpaid

LE 11 Evidential requirements

Subpart LF—Tax credits for foreign dividend payment (FDP) credits

LF 1 Tax credits for FDP credits

LF 2 Trustees for minor beneficiaries

LF 3 Beneficiaries of trusts

LF 4 Partners in partnerships

LF 5 Credit transfer notices

LF 6 Application of FDP ratio

LF 7 Application of combined imputation and FDP ratio

LF 8 Credits for persons who are non-resident or who receive exempt income

LF 9 When income tax unpaid

LF 10 Evidential requirements

Subpart LJ—Tax credits for foreign income tax

LJ 1 What this subpart does

LJ 2 Tax credits for foreign income tax

LJ 3 Meaning of foreign income tax

LJ 4 Meaning of segment of foreign-sourced income

LJ 5 Calculation of New Zealand tax

LJ 6 Taxable distributions and NRWT rules

LJ 7 Repaid foreign tax

Subpart LK—Tax credits relating to attributed controlled foreign company income

Amounts of credits

LK 1 Tax credits relating to attributed CFC income

LK 2 Calculation of amount of credit

LK 3 Currency conversion

Use of credits in later tax years

LK 4 Use of remaining credits

LK 5 Companies’ credits carried forward

LK 6 Use of credits by group companies

Treatment of taxable distributions

LK 7 Taxable distributions and NRWT rules

Consolidated companies

LK 8 Tax credits of consolidated companies

LK 9 Use of company’s credits carried forward

LK 10 When group membership lacking in tax year in which credit arises

LK 11 When group membership lacking in tax year in which credit used

Amalgamations of companies

LK 12 Treatment of credits when companies amalgamate

LK 13 Use of credits by amalgamated company

LK 14 Use by amalgamated company of credits carried forward

LK 15 Use of amalgamating company’s credits

Subpart LL—Underlying foreign tax credits (UFTC)

LL 1 What this subpart does

LL 2 Tax credits for underlying foreign tax

LL 3 Meaning of grey list dividend

LL 4 Tracking accounts

LL 5 Meaning of foreign dividend company net earnings

LL 6 Foreign dividend company lower tier UFTCs

LL 7 Conduit financing arrangements

LL 8 Currency conversion

LL 9 Some definitions

Subpart LO—Tax credits for Maori authority credits

LO 1 Tax credits for Maori authority credits

LO 2 Beneficiaries of trusts

LO 3 Application of Maori authority distribution ratio

LO 4 When income tax unpaid

LO 5 Evidential requirements

Subpart LP—Tax credits for supplementary dividends

Introductory provision

LP 1 What this subpart does

LP 2 Tax credits for supplementary dividends

LP 3 Use of remaining credits

LP 4 Continuity rules for carrying credits forward

LP 5 Application of benchmark dividend rules and imputation credit ratio

LP 6 Deriving supplementary dividend and breach of terms of trust

Supplementary dividend holding companies

LP 7 Requirements for supplementary dividend holding companies

LP 8 Relationship with exempt income rules

LP 9 Relationship with RWT rules

LP 10 Limitation on deductions

Subpart LQ—Tax credits of conduit tax relief companies

LQ 1 Tax credits of CTR companies

LQ 2 Limitation on amount of credit

LQ 3 Determining percentage of non-resident shareholders

LQ 4 Date for determining percentage of non-resident shareholders

LQ 5 CTR additional dividends

Subpart LR—Tax credits for policyholder income

LR 1 Tax credits for policyholder income

Subpart LS—Tax credits for portfolio tax rate entities and investors

LS 1 Tax credits for portfolio tax rate entities relating to certain investors

LS 2 Tax credits for certain investors in portfolio tax rate entities

LS 3 Tax credits for certain zero-rated portfolio investors

LS 4 Tax credits for certain investors in portfolio investor exit period

Subpart LZ—Terminating provisions

Underlying foreign tax credits

LZ 1 Low tax jurisdiction companies

Credits for certain non-resident investment companies

LZ 2 Certain development projects

LZ 3 Interest derived from development investments

LZ 4 Dividends derived from development investments

LZ 5 Some definitions

Credits for interest on home vendor mortgages

LZ 6 Interest on home vendor mortgages

LZ 7 Maximum amount of credit under section LZ 6

LZ 8 Meaning of home vendor mortgage

Credits for savings in special home ownership accounts

LZ 9 Savings in special home ownership accounts

LZ 10 Maximum amount for 1 special home ownership account for 1 tax year

LZ 11 Maximum amount for all special home ownership accounts for all tax years

LZ 12 Meaning of increase in savings

Part M
Tax credits paid in cash

Subpart MA—General provisions

MA 1 What this Part does

MA 2 Relationship with core provisions

MA 3 Excluded income

MA 4 Calculation of amounts of credit producing negative amounts

MA 5 Advice from outside agencies

MA 6 Avoidance arrangements

MA 7 Meaning of full-time earner for family scheme

MA 8 Some definitions for family scheme

Subpart MB—Adjustment of net income for family scheme

MB 1 Adjustments for calculation of family scheme income

MB 2 Adjustment for period that is less or more than 1 year

MB 3 When person carries on 1 or more businesses

MB 4 Family scheme income of major shareholders in close companies

MB 5 Treatment of distributions from superannuation schemes

Subpart MC—Entitlements under family scheme

MC 1 What this subpart does

MC 2 Who qualifies for entitlements under family scheme?

MC 3 First requirement: person’s age

MC 4 Second requirement: principal care

MC 5 Third requirement: residence

MC 6 When person does not qualify

MC 7 When spouse or partner entitled under family scheme

MC 8 Continuing requirements

MC 9 Credits for person aged 18

MC 10 Principal caregiver

MC 11 Relationship periods and entitlement periods

Subpart MD—Family assistance credit

Calculating amount of credit

MD 1 Family assistance credit

MD 2 Calculating net contributions to credits

MD 3 Calculation of family support

In-work payment

MD 4 Entitlement to in-work payment

MD 5 First requirement: person’s age

MD 6 Second requirement: principal care

MD 7 Third requirement: residence

MD 8 Fourth requirement: person not receiving benefit

MD 9 Fifth requirement: full-time earner

MD 10 Calculation of in-work payment

Parental tax credit

MD 11 Entitlement to parental tax credit

MD 12 Calculation of parental tax credit

Family credit abatement

MD 13 Calculation of family credit abatement

MD 14 Person receiving protected family support

MD 15 Family scheme income for purposes of section MD 14

Subpart ME—Family tax credit

ME 1 Family tax credit

ME 2 Meaning of employment for this subpart

Subpart MF—Payment of credits

MF 1 Application for payment of tax credit by instalment

MF 2 When person not entitled to payment by instalment

MF 3 Calculating amount of interim family assistance credit

MF 4 Requirements for calculating instalment of tax credit

MF 5 Recovery of overpaid tax credit

MF 6 Overpayment of tax credit

MF 7 Orders in Council

Subpart MK—Tax credits for KiwiSaver schemes and complying superannuation funds

MK 1 What this subpart does

MK 2 Eligibility requirements

MK 3 Payment of tax credits

MK 4 Amount of tax credit

MK 5 Crown contributions for members

MK 6 Credit given by fund providers

MK 7 Amounts paid in excess

MK 8 Treatment of tax credits on permanent emigration

Subpart MZ—Terminating provisions

MZ 1 Entitlement to child tax credit

MZ 2 Calculation of child tax credit

Part O
Memorandum accounts

Subpart OA—General provisions

Introductory provisions

OA 1 What this Part does

OA 2 Memorandum accounts

OA 3 General rules for maintaining memorandum accounts

OA 4 Certain credits and debits arising only in group accounts

Credits and debits

Opening balances

OA 7 Opening balances of memorandum accounts

Shareholder continuity requirements

OA 8 Shareholder continuity requirements for memorandum accounts

Treatment of credits and debits on resident’s restricted amalgamation

General provision

OA 9 General treatment of credits and debits on resident’s restricted amalgamation

When companies amalgamate

OA 10 When credits or debits due to amalgamating company but not recorded

OA 11 FDP account on resident’s restricted amalgamation

OA 12 CTR account on resident’s restricted amalgamation

OA 13 Policyholder credit account on resident’s restricted amalgamation

Amalgamation of companies in consolidated groups

OA 14 Continuity of shareholding when group companies amalgamate

OA 15 When credits or debits due to consolidated group but not recorded

OA 16 When FDP account ends on resident’s restricted amalgamation

OA 17 When policyholder credit account ends on resident’s restricted amalgamation

Maximum permitted ratios

OA 18 Calculation of maximum permitted ratios

Subpart OB—Imputation credit accounts (ICA)

Introductory provisions

OB 1 General rules for companies with imputation credit accounts

OB 2 Australian companies with imputation credit accounts

OB 3 Imputation credit accounts

Imputation credits

OB 4 ICA payment of tax

OB 5 ICA deposit in tax pooling account

OB 6 ICA transfer from tax pooling account

OB 7 ICA payment of further income tax

OB 8 ICA resident withholding tax withheld

OB 9 ICA dividend derived with imputation credit

OB 10 ICA dividend derived with FDP credit

OB 11 ICA payment of FDP

OB 12 ICA transfer from FDP account

OB 13 ICA transfer of debit balance on leaving wholly-owned group

OB 14 ICA payment of tax on leaving wholly-owned group

OB 15 ICA payment of tax on joining wholly-owned group

OB 16 ICA attribution for personal services

OB 17 ICA transfer from policyholder credit account

OB 18 ICA transfer from ASC account

OB 19 ICA transfer to master fund

OB 20 ICA distribution with Maori authority credit

OB 21 ICA balance of Maori authority credit account

OB 22 ICA replacement payment to company under share-lending arrangement

OB 23 ICA credit transfer to company

OB 24 ICA credit on resident’s restricted amalgamation

OB 25 ICA reversal of tax advantage arrangement

OB 26 ICA elimination of double debit

OB 27 ICA non-resident withholding tax withheld

OB 28 ICA payment of amount of tax for schedular payment

OB 29 ICA payment of schedular income tax

Imputation debits

OB 30 ICA payment of dividend

OB 31 ICA allocation of provisional tax

OB 32 ICA refund of income tax

OB 33 ICA amount applied to pay other taxes

OB 34 ICA refund from tax pooling account

OB 35 ICA transfer within tax pooling account

OB 36 ICA refund of FDP

OB 37 ICA refund of tax credit

OB 38 ICA overpayment of FDP

OB 39 ICA transfer for net foreign attributed income

OB 40 ICA attribution for personal services

OB 41 ICA debit for loss of shareholder continuity

OB 42 ICA on-market cancellation

OB 43 ICA breach of imputation ratio

OB 44 ICA debit on leaving wholly-owned group

OB 45 ICA redemption debit

OB 46 ICA transfer from member fund

OB 47 ICA transfer to policyholder credit account

OB 48 ICA credit balance when Maori authority credit account starts

OB 49 ICA replacement payment by company under share-lending arrangement

OB 50 ICA returning share transfer

OB 51 ICA credit transfer by company

OB 52 ICA imputation credit of consolidated imputation group

OB 53 ICA debit on resident’s restricted amalgamation

OB 54 ICA tax advantage arrangement

OB 55 ICA retrospective imputation credit

OB 56 ICA final balance

OB 57 ICA refund of NRWT

OB 58 ICA refund of amount of tax for schedular payment

OB 59 ICA refund of schedular income tax

Imputation credits attached to dividends

OB 60 Imputation credits attached to dividends

OB 61 ICA benchmark dividend rules

OB 62 Retrospective attachment of imputation credits

OB 63 Australian dividends

OB 64 Replacement payments

Further income tax

OB 65 Further income tax for ICA closing debit balance

OB 66 Further income tax when company stops being ICA company

OB 67 Reduction of further income tax

OB 68 Income tax paid satisfying liability for further income tax

OB 69 Further income tax paid satisfying liability for income tax

OB 70 Application of other provisions

Imputation additional tax

OB 71 Imputation additional tax on leaving wholly-owned group

OB 72 Imputation additional tax on joining wholly-owned group

Distributions of statutory producer boards and co-operative companies

OB 73 Statutory producer boards attaching imputation credits to cash distributions

OB 74 Statutory producer boards attaching imputation credits to notional distributions

OB 75 Statutory producer boards’ notional distributions that are dividends

OB 76 Statutory producer boards attaching FDP credits

OB 77 When and how statutory producer board makes election

OB 78 Co-operative companies attaching imputation credits to cash distributions

OB 79 Co-operative companies attaching imputation credits to notional distributions

OB 80 Co-operative companies’ notional distributions that are dividends

OB 81 Co-operative companies attaching FDP credits

OB 82 When and how co-operative company makes election

Tables of credits and debits in memorandum accounts

Subpart OC—Foreign dividend payment accounts (FDPA)

Introductory provisions

OC 1 General rules for companies with FDP accounts

OC 2 FDP accounts

OC 3 Choosing to become FDPA company

OC 4 When company chooses to stop being FDPA company

OC 5 When company emigrates

OC 6 FDPA payment of FDP

OC 7 FDPA dividend derived with FDP credit

OC 8 FDPA payment of FDP for transfer from CTR account

OC 9 FDPA transfer for net foreign attributed income

OC 10 FDPA payment of FDP for conduit debit balance

OC 11 FDPA credit transfer to company

OC 12 FDPA reversal of tax advantage arrangement

OC 13 FDPA payment of dividend

OC 14 FDPA refund of FDP

OC 15 FDPA overpayment of FDP

OC 16 FDPA refund of tax credit

OC 17 FDPA credit transfer by company

OC 18 FDPA transfer to imputation credit account

OC 19 FDPA transfer to CTR account

OC 20 FDPA transfer to policyholder credit account

OC 21 FDPA transfer to group account

OC 22 FDPA breach of FDP ratio

OC 23 FDPA breach of FDP ratio by PCA company

OC 24 FDPA debit for loss of shareholder continuity

OC 25 FDPA tax advantage arrangement

OC 26 FDPA final balance

FDP credits attached to dividends

OC 27 FDP credits attached to dividends

OC 28 FDPA benchmark dividend rules

OC 29 FDP credits and imputation credits attached to dividends

OC 30 Payment of further FDP for closing debit balance

OC 31 Payment of further FDP when company no longer New Zealand resident

OC 32 Reduction of further FDP

OC 33 FDP paid satisfying liability for further FDP

OC 34 Further FDP paid satisfying liability for FDP

Some definitions

OC 35 Meaning of FDP reference period

OC 36 Meaning of maximum deficit debit

OC 37 Meaning of policyholder FDP ratio

OC 38 Meaning of reduced deficit debit

OC 39 Meaning of shareholder FDP ratio

Table O3: FDP credits

Table O4: FDP debits

Subpart OD—Conduit tax relief accounts (CTRA)

Introductory provisions

OD 1 General rules for companies with CTR accounts

OD 2 CTR accounts

OD 3 Choosing to become CTR company

OD 4 When company stops being CTR company

OD 5 CTRA tax credit for conduit tax relief

OD 6 CTRA transfer from FDP account

OD 7 CTRA dividend derived with CTR credit

OD 8 CTRA reduction of FDP

OD 9 CTRA reversal of tax advantage arrangement

OD 10 CTRA payment of dividend

OD 11 CTRA transfer to FDP account

OD 12 CTRA transfer to group account

OD 13 CTRA adjustment for conduit tax relief

OD 14 CTRA break in shareholding chain for group company

OD 15 CTRA break in shareholding chain for company

OD 16 CTRA increase in resident shareholding

OD 17 CTRA breach of CTR ratio

OD 18 CTRA tax advantage arrangement

OD 19 CTRA final balance

CTR credits attached to dividends

OD 20 CTR credits attached to dividends

OD 21 CTRA benchmark dividend rules

OD 22 CTR credits and imputation credits attached to dividends

Payment of FDP and refunds

OD 23 FDP payable for CTR debits

OD 24 FDP payable on resident’s restricted amalgamation

OD 25 Refunds on transfers to CTR account

Table O5: conduit tax relief credits

Table O6: conduit tax relief debits

Subpart OE—Branch equivalent tax accounts (BETA)

Introductory provision

OE 1 General rules for companies and other persons with branch equivalent tax accounts

Companies with branch equivalent tax accounts

Introductory provisions

OE 2 Branch equivalent tax accounts of companies

OE 3 Choosing to become BETA company

OE 4 When company stops being BETA company

OE 5 Treatment of attributed CFC income and FIF income in this subpart

Branch equivalent tax credits

OE 6 BETA payment of income tax on foreign income

OE 7 BETA payment of income tax

OE 8 BETA unused amount of debit balance

OE 9 BETA refund of FDP

OE 10 BETA credit for loss of shareholder continuity

OE 11 BETA final balance

Branch equivalent tax debits

OE 12 BETA payment of FDP

OE 13 BETA reduction in FDP

OE 14 BETA refund of income tax

OE 15 BETA debit for loss of shareholder continuity

OE 16 BETA final balance

Persons with branch equivalent tax accounts

Introductory provisions

OE 17 Person choosing to become BETA person

OE 18 When person stops being BETA person

Branch equivalent tax credits

OE 19 BETA person’s payment of income tax on foreign income

Branch equivalent tax debits

OE 20 BETA person’s payment of income tax

OE 21 BETA person’s refund of income tax

OE 22 BETA person’s final balance

Table O7 branch equivalent tax credits

Table O8 branch equivalent tax debits

Table O9 person's equivalent tax credits

Table O10 person's equivalent tax debits

Subpart OF—Available subscribed capital accounts (ASCA)

Introductory provisions

OF 1 General rules for companies with ASC accounts

OF 2 ASC accounts

OF 3 Choosing to become ASC account company

OF 4 ASCA redemption credit

OF 5 ASCA transfer to imputation credit account

Table O11 ASC credits

Table O12 ASC debits

Subpart OJ—Policyholder credit accounts (PCA)

Introductory provision

OJ 1 General rules for companies and other persons with policyholder credit accounts

Companies with policyholder credit accounts

Introductory provision

OJ 2 Policyholder credit accounts of companies

Policyholder credits of PCA company

OJ 3 PCA transfer from imputation credit account

OJ 4 PCA transfer from FDP account

OJ 5 PCA transfer of life insurance business

OJ 6 PCA credit for maximum deficit in FDP account

OJ 7 PCA credit for reduced deficit in FDP account

Policyholder debits of PCA company

OJ 8 PCA payment of tax relating to policyholder base

OJ 9 PCA transfer to imputation credit account

OJ 10 PCA transfer to group account

OJ 11 PCA company’s transfer of life insurance business

Persons with policyholder credit accounts

Introductory provisions

OJ 12 Choosing to become PCA person

OJ 13 Choosing to stop being PCA person

Policyholder credits of PCA person

OJ 14 PCA person’s equivalent credit

OJ 15 PCA person’s credit for transfer of life insurance business

Policyholder debits of PCA person

OJ 16 PCA person’s payment of tax relating to policyholder base

OJ 17 PCA person’s equivalent debit

OJ 18 PCA person’s debit for transfer of life insurance business

Table O13 policy holder credits

Table O14 policyholder debits

Table O15 person's policyholder credits

Table O16 person's policyholder debits

Subpart OK—Maori authority credit accounts (MACA)

Introductory provision

OK 1 General rules for Maori authorities with Maori authority credit accounts

Maori authority credits

OK 2 MACA payment of tax

OK 3 MACA payment of tax to other Maori authorities

OK 4 MACA payment of further income tax

OK 5 MACA distribution with Maori authority credit

OK 6 MACA dividend derived with imputation credit

OK 7 MACA dividend derived with FDP credit

OK 8 MACA resident withholding tax withheld

OK 9 MACA reversal of tax advantage arrangement

Maori authority debits

OK 10 MACA distribution

OK 11 MACA allocation of provisional tax

OK 12 MACA refund of income tax

OK 13 MACA payment of other taxes

OK 14 MACA refund of FDP

OK 15 MACA debit for loss of shareholder continuity

OK 16 MACA breach of Maori authority credit ratio

OK 17 MACA tax advantage arrangement

OK 18 MACA final balance

Maori authority credits attached to distributions

OK 19 Maori authority credits attached to distributions

OK 20 MACA benchmark distribution rules

Further income tax

OK 21 Further income tax for closing debit balance

OK 22 Further income tax paid when Maori authority no longer Maori authority

OK 23 Further income tax paid satisfying liability for income tax

OK 24 Income tax paid satisfying liability for further income tax

Table O17 Maori authority credits

Table O18 Maori authority debits

Subpart OP—Memorandum accounts of consolidated groups

Introductory provisions

OP 1 Memorandum accounts of consolidated groups

OP 2 When credits and debits arise only in group accounts

Consolidated groups and imputation credit accounts

Introductory provisions

OP 3 Changes in consolidated imputation groups

OP 4 Resident imputation subgroups

OP 5 When credits and debits arise only in consolidated imputation group accounts

OP 6 Provisions applying to consolidated imputation groups

Imputation credits of consolidated imputation groups

OP 7 Consolidated ICA payment of tax

OP 8 Consolidated ICA deposit in tax pooling account

OP 9 Consolidated ICA transfer from tax pooling account

OP 10 Consolidated ICA allocation from company with overpaid provisional tax

OP 11 Consolidated ICA payment of further income tax

OP 12 Consolidated ICA dividend derived with imputation credit

OP 13 Consolidated ICA dividend derived with FDP credit

OP 14 Consolidated ICA payment of FDP

OP 15 Consolidated ICA replacement payment to company under share-lending arrangement

OP 16 Consolidated ICA credit transfer to company

OP 17 Consolidated ICA resident withholding tax withheld

OP 18 Consolidated ICA transfer from group company’s FDP account

OP 19 Consolidated ICA transfer from group’s FDP account

OP 20 Consolidated ICA transfer from group company’s policyholder credit account

OP 21 Consolidated ICA transfer from group’s policyholder credit account

OP 22 Consolidated ICA group company’s credit

OP 23 Consolidated ICA elimination of double debit

OP 24 Consolidated ICA reversal of tax advantage arrangement

OP 25 Consolidated ICA non-resident withholding tax withheld

OP 26 Consolidated ICA payment of amount of tax for schedular payment

OP 27 Consolidated ICA payment of schedular income tax

Imputation debits of consolidated imputation groups

OP 28 Consolidated ICA payment of dividend

OP 29 Consolidated ICA allocation of provisional tax

OP 30 Consolidated ICA refund of income tax

OP 31 Consolidated ICA amount applied to pay other taxes

OP 32 Consolidated ICA refund from tax pooling account

OP 33 Consolidated ICA transfer to tax pooling account

OP 34 Consolidated ICA refund of FDP

OP 35 Consolidated ICA refund of tax credit

OP 36 Consolidated ICA overpayment of FDP

OP 37 Consolidated ICA group company’s debit

OP 38 Consolidated ICA transfer for net foreign attributed income

OP 39 Consolidated ICA replacement payment by company under share-lending arrangement

OP 40 Consolidated ICA returning share transfer

OP 41 Consolidated ICA credit transfer by company

OP 42 Consolidated ICA debit for loss of shareholder continuity

OP 43 Consolidated ICA breach of imputation ratio

OP 44 Consolidated ICA transfer to policyholder credit account

OP 45 Consolidated ICA redemption debit

OP 46 Consolidated ICA tax advantage arrangement

OP 47 Consolidated ICA final balance

OP 48 Consolidated ICA refund of NRWT

OP 49 Consolidated ICA refund of amount of tax for schedular payment

OP 50 Consolidated ICA refund of schedular income tax

Table O19 imputation credits of consolidated imputation groups

Table O20 imputation debits of consolidated imputation groups

Consolidated groups and FDP accounts

Introductory provisions

OP 51 FDP accounts of consolidated FDP groups

OP 52 Choosing to stop being consolidated FDP group

OP 53 When group company emigrates

OP 54 When credits and debits arise only in consolidated FDP group accounts

OP 55 Provisions applying to consolidated FDP groups

FDP credits of consolidated FDP groups

OP 56 Consolidated FDPA payment of FDP

OP 57 Consolidated FDPA payment of further FDP

OP 58 Consolidated FDPA dividend derived with FDP credit

OP 59 Consolidated FDPA group company’s credit

OP 60 Consolidated FDPA credit transfer to company

OP 61 Consolidated FDPA transfer from group’s CTR account

OP 62 Consolidated FDPA transfer for net foreign attributed income

OP 63 Consolidated FDPA reversal of tax advantage arrangement

FDP debits of consolidated FDP groups

OP 64 Consolidated FDPA payment of dividend

OP 65 Consolidated FDPA credit transfer by company

OP 66 Consolidated FDPA refund of FDP

OP 67 Consolidated FDPA overpayment of FDP

OP 68 Consolidated FDPA refund of tax credit

OP 69 Consolidated FDPA transfer to imputation credit account

OP 70 Consolidated FDPA transfer to group’s CTR account

OP 71 Consolidated FDPA group company’s debit

OP 72 Consolidated FDPA breach of FDP ratio

OP 73 Consolidated FDPA debit for loss of shareholder continuity

OP 74 Consolidated FDPA transfer to policyholder credit account

OP 75 Consolidated FDPA breach of FDP ratio by PCA company

OP 76 Consolidated FDPA tax advantage arrangement

OP 77 Consolidated FDPA final balance

Table O21 : credits of consolidated FDP groups

Table O22 : FDP debits of consolidated FDP groups

Consolidated groups and CTR credits

Introductory provisions

OP 78 CTR accounts of consolidated groups

OP 79 When credits and debits arise only in CTR group accounts

OP 80 Provisions applying to consolidated groups with CTR accounts

CTR credits of consolidated groups

OP 81 Consolidated CTRA tax credit for conduit tax relief

OP 82 Consolidated CTRA reduction of FDP

OP 83 Consolidated CTRA dividend derived with CTR credit

OP 84 Consolidated CTRA group company’s credit

OP 85 Consolidated CTRA transfer from group’s FDP account

OP 86 Consolidated CTRA reversal of tax advantage arrangement

CTR debits of consolidated groups

OP 87 Consolidated CTRA payment of dividend

OP 88 Consolidated CTRA transfer to group’s FDP account

OP 89 Consolidated CTRA adjustment for conduit tax relief

OP 90 Consolidated CTRA group company’s debit

OP 91 Consolidated CTRA increase in resident shareholding

OP 92 Consolidated CTRA breach of CTR ratio

OP 93 Consolidated CTRA tax advantage arrangement

OP 94 Consolidated CTRA final balance

Consolidated groups’ FDP payments and refunds

OP 95 FDP payable for credits and debits in group’s CTR account

OP 96 Refund on transfer from group’s FDP account

Table O23 : conduit tax relief credits of consolidated groups

Table O23 : conduit tax relief debits of consolidated groups

Consolidated groups and branch equivalent tax accounts

Introductory provisions

OP 97 Branch equivalent tax accounts of consolidated BETA groups

OP 98 Choosing to stop being consolidated BETA group

OP 99 When credits and debits arise only in branch equivalent tax group accounts

Branch equivalent tax credits of consolidated BETA groups

OP 100 Consolidated BETA payment of income tax on foreign income

OP 101 Consolidated BETA payment of income tax

OP 102 Consolidated BETA remaining debit balances

OP 103 Consolidated BETA refund of FDP

OP 104 Consolidated BETA credit for loss of shareholder continuity

Branch equivalent tax debits of consolidated BETA groups

OP 105 Consolidated BETA payment of FDP

OP 106 Consolidated BETA reduction of FDP

OP 107 Consolidated BETA refund of income tax

OP 108 Consolidated BETA debit for loss of shareholder continuity

Table O25 : branch equivalent tax credits of consolidated BETA groups

Table O26 : branch equivalent tax debits of consolidated BETA groups

Consolidated groups and policyholder credit accounts

Introductory provision

OP 109 Policyholder credit accounts of consolidated groups

Policyholder credits of consolidated groups

OP 110 Consolidated PCA transfer from imputation credit account

OP 111 Consolidated PCA transfer from FDP account

OP 112 Consolidated PCA group company’s credit

OP 113 Consolidated PCA maximum deficit debit in FDP account

OP 114 Consolidated PCA reduced deficit debit in FDP account

Policyholder debits of consolidated groups

OP 115 Consolidated PCA payment of tax relating to policyholder base

OP 116 Consolidated PCA transfer to imputation credit account

Subpart OZ—Terminating provisions

OZ 1 No imputation credit for pre-imputation tax paid

OZ 2 No imputation debit for pre-imputation refund

OZ 3 Overpaid income tax or foreign dividend payment for pre-imputation income year

OZ 4 Terminating modifications to debits for loss of shareholder continuity

OZ 5 ASCA lost excess available subscribed capital

OZ 6 ASCA redemption of unused investments

Part R
General collection rules

Subpart RA—General withholding and payment obligations

Introductory provisions

RA 1 What this Part does

RA 2 Amounts treated as income tax

Payment and withholding obligations

RA 3 Terminal tax obligations

RA 4 Provisional tax obligations

RA 5 Tax obligations for employment-related taxes

RA 6 Withholding and payment obligations for passive income

RA 7 Payment of tax by public authorities

RA 8 Liability of persons receiving payments or benefits

RA 9 Treatment of amounts withheld as received

RA 10 When obligations not met

RA 11 Adjustment to correct errors: certain underpayments

RA 12 Adjustment to correct errors: certain excess amounts

RA 13 Payment dates for terminal tax

RA 14 Payment dates for provisional tax

RA 15 Payment dates for interim and other tax payments

RA 16 Payment date when taxable activity ends

RA 17 Payment date when RWT exemption certificate expires

RA 18 Payment date for emigrating companies

RA 19 Refunds of excess amounts or when amounts mistakenly paid

RA 20 Amalgamation of companies

RA 21 Regulations

Application of other provisions

RA 22 Limits on application of other provisions for purposes of PAYE rules

RA 23 Application of other provisions for purposes of ESCT rules and NRWT rules

Subpart RB—Terminal tax

RB 1 Payment of terminal tax

RB 2 Income tax liability for non-filing taxpayers for non-resident passive income

RB 3 Schedular income tax liability for filing taxpayers for non-resident passive income

RB 4 Using refunds to satisfy tax liabilities

Subpart RC—Provisional tax

Introductory provisions

RC 1 What this subpart does

RC 2 Provisional tax rules and their application

RC 3 Who is required to pay provisional tax?

RC 4 Choosing to pay provisional tax

Calculating provisional tax liability

RC 5 Methods for calculating provisional tax liability

RC 6 Standard method

RC 7 Estimation method

RC 8 GST ratio method

Instalments of provisional tax

RC 9 Provisional tax payable in instalments

RC 10 Calculating amount of instalment under standard and estimation methods

RC 11 Calculating amount of instalment using GST ratio

RC 12 Voluntary payments

RC 13 Paying 2 instalments for tax year

RC 14 Paying 1 instalment for tax year

Requirements for using GST ratio

RC 15 Choosing to use GST ratio

RC 16 Who may use GST ratio?

RC 17 When GST ratio must not be used

RC 18 Changing calculation method

RC 19 Disposal of assets

Transitional years

RC 20 Calculating residual income tax in transitional years

RC 21 Paying provisional tax in transitional years

RC 22 Calculating instalments in transitional years: standard method

RC 23 Calculating instalments in transitional years: estimation method

RC 24 Calculating instalments in transitional years: GST ratio method

RC 25 Consequences of change in balance date

When persons start or stop paying GST, or change taxable periods

RC 26 Registering for GST or cancelling registration

RC 27 Payment of provisional tax instalments when GST cycle changed

Treatment of groups of companies and amalgamated companies

RC 28 Provisional tax rules and consolidated groups

RC 29 Residual income tax of consolidated groups

RC 30 Consolidated groups using estimation method

RC 31 Consolidated groups using GST ratio method

RC 32 Wholly-owned groups of companies

RC 33 Amalgamated companies: calculating residual income tax

Attribution rule for income from personal services

RC 34 Attribution rule for income from personal services

RC 35 Further income tax credited to provisional tax liability

Disaster relief

RC 36 Persons affected by adverse events

Early-payment discounts

RC 37 Availability of early-payment discounts

RC 38 Crediting income tax with early-payment discount

RC 39 Credit treated as payment of income tax

RC 40 Some definitions

Subpart RD—Employment-related taxes

Introductory provision

RD 1 What this subpart does

PAYE rules and PAYE income payments

Introductory provisions

RD 2 PAYE rules and their application

RD 3 PAYE income payments

RD 4 Payment of amounts of tax to Commissioner

Types of PAYE income payments

RD 5 Salary or wages

RD 6 Certain benefits and payments

RD 8 Schedular payments

Calculating amounts of tax

RD 9 Maximum amount

RD 10 Amounts of tax for PAYE income payments

RD 11 Reduction in certain circumstances

Adjustments for certain PAYE income payments

RD 12 Multiple payments of salary or wages

RD 13 Advance payments of salary or wages

RD 14 Changes to tax rates for salary or wages

RD 15 Payments of salary or wages in pay periods

RD 16 Payments to private domestic workers

RD 17 Payment of extra pay with other PAYE income payments

RD 18 Schedular payments without notification

RD 19 Schedular payments to non-resident entertainers

RD 20 Schedular payments to subcontractors

Paying amounts of tax

RD 21 When amounts of tax not withheld or payment insufficient

RD 22 PAYE income payment forms for amounts of tax paid to Commissioner

RD 23 Bonds given by employers of certain non-resident employees

RD 24 Exemption certificates for non-resident contractors

Fringe benefit tax (FBT) rules and fringe benefits

Introductory provisions

RD 25 FBT rules and their application

RD 26 Liability for FBT

Value of fringe benefits

RD 27 Determining fringe benefit values

RD 28 Private use of motor vehicle: calculation methods

RD 29 Private use of motor vehicle: formulas

RD 30 Private use of motor vehicle: 24-hour period

RD 31 Motor vehicle test period

RD 32 Replacement motor vehicles

RD 33 Subsidised transport

RD 34 Employment-related loans: value using prescribed interest rates

RD 35 Employment-related loans: value using market interest rates

RD 36 Repayment of employment-related loans

RD 37 Contributions to superannuation schemes

RD 38 Contributions to funds, trusts, and insurance premiums

RD 39 Benefits provided by charitable organisations

RD 42 Goods at staff discount

RD 43 Goods on special with staff discount

RD 44 Goods sold by group companies

RD 45 Unclassified benefits

RD 46 Adjustments for unclassified benefits on amalgamation

Attributing fringe benefits to employees

RD 47 Attribution of certain fringe benefits

RD 48 When attributed benefits provided to more than 1 employee

RD 49 Application of thresholds to attributed benefits

RD 50 Employer’s liability for attributed benefits

RD 51 Calculation of all-inclusive pay

RD 52 Calculation for certain employees when information lacking

RD 53 Pooling non-attributed benefits

Taxable value of fringe benefits

RD 54 Value of and payments towards fringe benefits

RD 55 Private use of motor vehicle: taxable value in cases of part ownership

RD 56 Private use of motor vehicle: when schedular value not used

RD 57 Private use of motor vehicle: when schedular value used

Options for payment of FBT

RD 58 Single rate option

RD 59 Alternate rate option

RD 60 Close company option

RD 61 Small business option

RD 62 Changes in payment periods

RD 63 When employer stops employing staff

Employer’s superannuation contribution tax (ESCT) rules and employer’s superannuation contributions

Introductory provisions

RD 64 ESCT rules and their application

RD 65 Employer’s superannuation contributions

RD 66 Complying fund rules

Calculating amounts of tax

RD 67 Calculating amounts of tax for employer’s superannuation contribution

RD 68 Choosing to have amount treated as salary or wages

RD 69 Choosing different rates for employer’s superannuation contributions

RD 70 Calculating amounts of tax on failure to withhold

RD 71 Amounts of tax treated as paid to and received by superannuation funds

Tax on certain withdrawals from superannuation funds

RD 72 Recovery of tax paid by superannuation funds

Subpart RE—Withholding tax on resident passive income (RWT)

Introductory provisions

RE 1 RWT rules and their application

RE 2 Resident passive income

Withholding obligations

RE 3 Obligation to withhold RWT

RE 4 Persons who have withholding obligations

RE 5 No withholding obligation in certain circumstances

RE 6 When obligation to withhold unreasonable

RE 7 When resident passive income paid to trustees

RE 8 When resident passive income paid to nominees

RE 9 Agents’ or trustees’ obligations in relation to certain dividends

RE 10 Special rule relating to payments of interest

RE 11 Notification by companies

Calculating amounts of tax

RE 13 Dividends other than non-cash dividends

RE 14 Non-cash dividends other than bonus issues in lieu

RE 15 Bonus issues in lieu

RE 16 Taxable Maori authority distributions

RE 17 Replacement payments under share-lending arrangements

RE 18 Payments made by RWT proxies

RE 19 Choosing higher rates

Paying amounts of tax

RE 20 Paying RWT

RE 21 Basis for payment of RWT

RE 22 When payment treated as non-resident passive income

RE 23 When amount of tax treated as FDP credit

RE 24 When amount of tax treated as Maori authority credit

RE 25 When amount of tax treated as imputation credit

RE 26 Payment by proxy

RWT exemption certificates

RE 27 RWT exemption certificates

RE 28 When certificates expire

RE 29 Establishing whether person holds certificate

RE 30 When unincorporated bodies hold certificates

Subpart RF—Withholding tax on non-resident passive income (NRWT)

Introductory provisions

RF 1 NRWT rules and their application

RF 2 Non-resident passive income

Withholding obligations

RF 3 Obligation to withhold amounts of tax for non-resident passive income

RF 4 Non-resident passive income received by agents and others

RF 5 When amounts of tax already withheld

RF 6 When amounts of tax not withheld or partly withheld

Calculating amounts of tax

RF 7 General rate for NRWT

RF 8 Certain dividends

RF 9 When dividends fully imputed or fully credited

RF 10 Non-cash dividends

RF 11 Dividends paid to companies under control of non-residents

RF 12 Certain amounts of interest

Paying amounts of tax

RF 13 Basis for payment of amounts of tax for non-resident passive income

RF 14 Treatment of FDP credits

RF 15 Commissioner’s power to vary amounts of tax

Subpart RG—Payments for foreign dividends (FDP)

Introductory provisions

RG 1 FDP rules and their application

RG 2 Foreign dividends

Obligation to make payments

RG 3 Obligation to pay FDP

Calculation of payments

RG 4 Calculating amount of FDP

Adjustments to payments

RG 5 Credit balance in branch equivalent tax account

RG 6 Using loss balances

RG 7 Reduction of payments for conduit tax relief

Subpart RM—Refunds

Introductory provision

RM 1 What this subpart does

Refunds for overpaid amounts

RM 2 Refunds for overpaid tax

RM 3 Refunds for overpaid FDP

RM 4 Overpayment on amended assessment

RM 5 Overpayment on income statements

RM 6 Refunds after 4-year period ends

RM 7 Refunds to PAYE intermediaries

RM 8 Overpaid RWT or NRWT

RM 9 Calculations for attributed and non-attributed fringe benefits

RM 10 Using refund to satisfy tax liability

RM 11 Using GST refund to pay instalment of provisional tax

RM 12 Reduction in provisional tax liability

Limits on refunds and transfers

RM 13 Limits on refunds for ICA companies

RM 14 Limits on refunds when company stops being ICA company

RM 15 Changes in credit balances

RM 16 Treatment of amounts not refunded

RM 17 Treatment of further income tax paid

Companies receiving foreign dividends

RM 18 Limits on refunds related to foreign dividends

RM 19 Treatment of financial arrangements

RM 20 Treatment of amounts not refunded

RM 21 Refunds when loss balances used to reduce net income

Maori authorities

RM 22 Limits on refunds for Maori authorities

RM 23 Limits on refunds when Maori authority stops being Maori authority

RM 24 Increase in credit balances

RM 25 Treatment of amounts not refunded

RM 26 Treatment of further income tax paid

RM 27 Application when no credits arise

Persons with policyholder credit accounts

RM 28 Limits on refunds for PCA persons

RM 29 Limits on refunds when person no longer PCA person

RM 30 Changes in credit balances

RM 31 Treatment of amounts not refunded

Qualifying companies

RM 32 Application of sections RM 13 to RM 17 to qualifying companies

Certain unit trusts and group investment funds

RM 33 Limits on refunds for certain unit trusts and group investment funds

Subpart RP—Intermediaries

Introductory provision

RP 1 What this subpart does

PAYE intermediaries

Obligations and treatment of PAYE intermediaries

RP 2 PAYE intermediaries

RP 3 Requirements for listed PAYE intermediaries

RP 4 Payment of subsidies to certain PAYE intermediaries

RP 5 Subsidy claims

RP 6 Operation of PAYE intermediaries’ trust accounts

Employers’ responsibilities

RP 7 General responsibilities of employers

RP 8 Information required from employers

RP 9 Authorised transfers from accounts

RP 10 When transfers from accounts not authorised

RP 11 Employer’s superannuation contributions

RP 12 When payments made directly to employees

PAYE intermediaries’ responsibilities

RP 13 General responsibilities of PAYE intermediaries

RP 14 Collection, payment, and information requirements

RP 15 When employers have authorised transfers from accounts

RP 16 Obligations for employer’s superannuation contributions

Tax pooling intermediaries

RP 17 Tax pooling intermediaries

RP 18 Deposits in tax pooling accounts

RP 19 Transfers from tax pooling accounts

RP 20 Refusals to transfer amounts

RP 21 Refunds from tax pooling accounts

Subpart RZ—Terminating provisions

Provisional tax

RZ 1 Certain elections to become person with provisional tax liability

RZ 2 Amount of provisional tax based on 1997–98 or earlier tax year

RZ 3 Standard method: 2008–09 and 2009–10 income years

RZ 4 GST ratio method: 2008–09 and 2009–10 income years

RZ 5 Calculating amounts under standard method: 2008–09 and 2009–10 income years

RZ 6 Limits on refunds: transitional dates

Withdrawal income

RZ 7 Withdrawal income

RZ 8 Payment and rate of withdrawal tax

RZ 9 Relief in certain cases

RZ 10 Recovery of amounts payable to Commissioner

Part Y
Definitions and related matters

Subpart YA—General definitions

YA 1 Definitions

YA 2 Meaning of income tax varied

YA 3 Treatment of qualifying company election tax, FBT, FDP penalty tax, imputation penalty tax, and withdrawal tax

Table Y1 Associated person rules

Subpart YB—Associated persons and nominees

Associated persons

YB 1 What this subpart does

YB 2 Two companies with common control

YB 3 Two companies with common control: 1988 version provisions

YB 4 Company and associate’s associate: 1988 version provisions

YB 5 Company and non-corporate 25% interest holder

YB 6 Company and relative of 25% interest holder: 1973 version provisions

YB 7 Company and non-corporate 50% interest holder: 1988 version provisions

YB 8 Company and non-corporate 50% interest holder: 1990 version provisions

YB 9 Relatives: persons with blood or adoption relationships

YB 10 Relatives: person and their spouse or partner

YB 11 Relatives: person with blood relationship to spouse or partner of other person

YB 12 Trusts: person and trustee for their relative

YB 13 Trusts: person and trustee for person

YB 14 Trusts: trusts with common settlor

YB 15 Trusts: trustee and settlor: 1988 version provisions

YB 16 Partnerships: partnership and partner

YB 17 Partnerships: partnership and associate of partner

YB 18 Persons habitually acting together: 1988 version provisions

YB 19 Person and controlled non-profit organisation: 1990 version provisions

YB 20 Some definitions

YB 21 Transparency of nominees

Subpart YC—Measurement of company control and ownership

YC 1 Meaning of control

Voting and market value interests

YC 2 Voting interests

YC 3 Market value interests

YC 4 Look-through rule for corporate shareholders

YC 5 Treatment of special corporate entities

YC 6 Disregarding certain securities

Voting and market value interests: modifications for continuity provisions

YC 7 When sections YC 8 to YC 19 apply

YC 8 Death of share or option holder

YC 9 Shares or options held by trustees

YC 10 Shareholders holding less than 10% direct interests

YC 11 No look-through rule for companies in certain cases

YC 12 Public unit trusts

YC 13 Corporate spin-outs

YC 14 Disregarding concessionary rules

YC 15 Directors’ knowledge of failure to meet requirements of continuity provision

YC 16 Disregarding market value changes

YC 17 Demutualisation of insurers

YC 18 Reverse takeovers

YC 19 Legislative conversion of foreign company of proprietors

YC 20 Credit account continuity provisions: excluded fixed rate securities

Subpart YD—Residence and source in New Zealand

YD 1 Residence of natural persons

YD 2 Residence of companies

YD 3 Country of residence of foreign companies

YD 4 Classes of income treated as having New Zealand source

YD 5 Apportionment of income derived partly in New Zealand

YD 6 Apportionment of income from sea transport

YD 7 Apportionment of film rental income

YD 8 Apportionment of premiums derived by non-resident general insurers

Conduit tax relief companies: special residence rules

YD 9 Residence of CTR company shareholders

YD 10 Meaning of CTR holding company

YD 11 Meaning of CTR group member

Subpart YE—References to balance dates and years

YE 1 References to balance dates and years

Subpart YF—Currency conversion

YF 1 General rules for currency conversion

Subpart YZ—Terminating provisions

YZ 1 Source rule for interest

Part Z
Repeals, amendments, and savings

ZA 2 Consequential amendments to other enactments

ZA 3 Transitional provisions

ZA 4 Saving of binding rulings

ZA 5 Saving of accrual determinations

ZA 6 Comparative tables of old and new provisions

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

Schedule 2
Basic tax rates for PAYE income payments

Schedule 3
Payment of provisional tax and terminal tax

Schedule 4
Rates of tax for schedular payments

Schedule 5
Fringe benefit values for motor vehicles

Schedule 10
Straight-line equivalents of diminishing value rates of depreciation

Schedule 11
New banded rates of depreciation

Schedule 12
Old banded rates of depreciation

Schedule 13
Depreciable land improvements

Schedule 14
Depreciable intangible property

Schedule 17
Types and classes of livestock

Schedule 18
Categories of livestock for which national standard costs to be declared

Schedule 19
Expenditure in avoiding, remedying, or mitigating detrimental effects of discharge of contaminant

Schedule 20
Expenditure on farming, horticultural, aquacultural, and forestry improvements

Schedule 24
International tax rules: grey list countries

Schedule 25
Foreign investment funds

Schedule 26
Low tax jurisdictions or territories

Schedule 27
Countries and types of income with unrecognised tax

Schedule 31
Annualised equivalent amount for Part M

Schedule 32
Recipients of charitable or other public benefit gifts

Schedule 36
State enterprises

Schedule 37
Statutory producer boards

Schedule 48
Enactments repealed

Schedule 49
Enactments amended

Schedule 50
Amendments to Tax Administration Act 1994

Schedule 51
Identified changes in legislation

Schedule 52
Comparative tables of old and rewritten provisions

The Parliament of New Zealand enacts as follows:

A 1 Title

This Act is the Income Tax Act 2007.

Compare: 2004 No 35 s A 1

A 2 Commencement

1 April 2008

(1) This Act comes into force on 1 April 2008.

Act effective for 2008–09 income year and later

(2) However, except when the context requires otherwise, this Act applies only with respect to the tax on income derived in the 2008–09 income year and later income years.

Defined in this Act: income year, tax,

Compare: 2004 No 35 s A 2

Legislative history
15 November 2006	Introduction (Bill 92-1)
23 November 2006	First reading and referral to Finance and Expenditure Committee
16 July 2007	Reported from Finance and Expenditure Committee (Bill 91-2)
16 August 2007	Second reading
21 August 2007	Committee of the whole House
25 October 2007	Third reading
1 November 2007	Royal assent

This Act is administered by the Inland Revenue Department.

NEXT · Part A Purpose and interpretation

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