“adjustment period, for a supply of goods or services to which sections 8(4B)(b), 9(2)(h), 20(3C) to (3J), and 21 to 21H apply, means a first or subsequent adjustment period referred to in section 21G(2):”.

“commercial dwelling—

• “(a) means—

  • “(i) a hotel, motel, homestay, farmstay, bed and breakfast establishment, inn, hostel, or boardinghouse:

  • “(ii) a serviced apartment managed or operated by a third party for which services in addition to the supply of accommodation are provided and in relation to which a resident does not have quiet enjoyment, as that term is used in section 38 of the Residential Tenancies Act 1986:

  • “(iii) a convalescent home, nursing home, rest home, or hospice:

  • “(iv) a camping ground:

  • “(v) premises of a similar kind to those referred to in subparagraphs (i) to (iv); and

• “(b) excludes—

  • “(i) a hospital except to the extent to which the hospital is a residential establishment:

  • “(ii) a dwelling situated in a retirement village or rest home if the consideration paid or payable for the supply of accommodation in the dwelling is for the right to occupy the dwelling:”.

“dwelling, for a person,—

• “(a) means premises, as defined in section 2 of the Residential Tenancies Act 1986,—

  • “(i) that the person occupies, or that it can reasonably be foreseen that the person will occupy, as their principal place of residence; and

  • “(ii) in relation to which the person has quiet enjoyment, as that term is used in section 38 of the Residential Tenancies Act 1986; and

• “(b) includes—

  • “(i) accommodation provided to a person who is occupying the same premises, or part of the same premises, as the supplier of the accommodation and who meets the requirements of paragraph (a)(i):

  • “(ii) any appurtenances belonging to or used with the premises; and

• “(c) excludes a commercial dwelling:”.

“land, in sections 5(24), 11(1)(mb), 21E, 21G(5), 21H(3), 60B(6), 75(3B), and 78F,—

• “(a) includes—

  • “(i) an estate or interest in land:

  • “(ii) a right that gives rise to an interest in land:

  • “(iii) an option to acquire land or an estate or interest in land:

  • “(iv) a share in the share capital of a flat-owning or office-owning company, as defined in section 121A of the Land Transfer Act 1952:

• “(b) does not include—

  • “(i) a mortgage:

  • “(ii) a lease of a dwelling:

  • “(iii) an interest in land in circumstances where the supply is made periodically and 25% or less of the total consideration specified in the agreement, in addition to any regular payments, is paid or payable under the agreement in advance of or contemporaneously with the supply being made”.

“percentage actual use is defined in section 21G(1)(a) for the purposes of sections 8(4B)(b), 9(2)(h), and 21 to 21H

“percentage difference is defined in section 21G(1)(c) for the purposes of sections 21 to 21H

“percentage intended use is defined in section 21G(1)(b) for the purposes of sections 8(4B)(b), 20(3H), and 21 to 21H

“previous actual use has the meaning given in section 21C(b)(i)”.

“principal place of residence, in the definition of dwelling and in sections 5(15), 11(1)(mb), and 78F(2), means a place that a person occupies as their main residence for the period to which the agreement for the supply of accommodation relates”.

• “(a) tax charged under section 8(1) on a supply of goods or services acquired by the person:

• “(b) tax levied under section 12(1) on goods entered for home consumption under the Customs and Excise Act 1996 by the person:”.

• “(c) the goods acquired by the person for making taxable supplies are either—

  • “(i) not charged with tax at the rate of 0% under section 11A(1)(q) or (r); or

  • “(ii) charged with tax at the rate of 0% under section 11A(1)(q) or (r) and, before the acquisition, have never been owned or used by the person or an associated person.”

• “(3B) Despite subsection (3)(a), if a supply wholly or partly consists of land, and is part of an arrangement involving more than 2 associated parties and more than 1 supply, the amount of input tax for the supply must not be more than the amount accounted for as output tax for all supplies that are part of the arrangement.

• “(3C) For a supply of goods or services to which section 21B applies, when the goods or services have been acquired from an associated person, the amount of input tax must not be more than the amount accounted for as output tax by the supplier of the goods or services.”

• “(15) When a principal place of residence is included in a supply, the supply of the residence is deemed to be a separate supply from the supply of any other real property included in the supply.”

• “(22) In relation to a supply to which subsection (2) applies, if the supply by the first person would be zero-rated under section 11(1)(mb), the second person must zero-rate the supply in the same way.

• “(23) If section 11(1)(mb) is treated as applying to a supply of goods and, after the date on which the relevant transaction is settled, it is found that the provision does not apply, the recipient of the supply is treated as if they were a supplier making, on the date of settlement, a supply of those goods that is chargeable with tax under section 8(1).

• “(24) If a supply that wholly or partly consists of land is made, and the supply includes the provision of services, the supply of the services is treated as a supply of goods for the purposes of section 11(1)(mb).”

• “(b) the recipient of the supply—

  • “(i) estimates at the time of acquisition that the percentage intended use of the services is less than 95%; or

  • “(ii) determines at the end of an adjustment period that the percentage actual use of the services is less than 90%; and”.

• “(h) if section 8(4B)(b)(ii) applies, the supply is treated as having been made on the first day in the adjustment period when the percentage actual use of the services falls below 90%.”

• “(7B) If goods and services are treated as supplied by a person under section 5(23), the value of the supply is an amount equal to the consideration for the supply first made to the recipient.”

• “(mb) the supply wholly or partly consists of land, being a supply—

  • “(i) made by a registered person to another registered person who acquires the goods with the intention of using them for making taxable supplies; and

  • “(ii) that is not a supply of land intended to be used as a principal place of residence of the recipient of the supply or a person associated with them under section 2A(1)(c); or”.

• “(o) the goods are supplied to or by the Crown as consideration for a supply—

  • “(i) for which there is no payment of a price; and

  • “(ii) that is chargeable at the rate of 0% under section 11A(1)(s) or (t).”

• “(8B) Whether a supply of goods is zero-rated under subsection (1)(mb) is determined at the time of settlement of the transaction relating to the supply.

• “(8C) Despite subsections (1)(mb) and (8B), a supplier may choose to apply the provisions of this Act applying before the changes made by the Taxation (GST and Remedial Matters) Act 2010 if they enter into a binding agreement before 1 April 2011 for which the time of supply is after that date.”

• “(u) the services are supplied to or by the Crown as consideration for a supply—

  • “(i) for which there is no payment of a price; and

  • “(ii) that is chargeable at the rate of 0% under paragraph (s) or (t); or”.

• “(2B) Subsection (1) does not apply if the supplier is a non-profit body that determines on the basis of reasonable information that, at the time of supply, the recipient—

  • “(a) is not a registered person; and

  • “(b) is either—

    • “(i) not intending to use the goods and services for the purposes of carrying on a taxable activity; or

    • “(ii) intending to use the goods and services for the purposes of carrying on a taxable activity but only after the full consideration for the supply is paid to the supplier.”

• “(e) the supply is a supply of goods and services that is treated as made under section 60B to a nominated person and that person maintains sufficient records as required by section 24(7B):”.

• “(e) any amount calculated under sections 21D(1) and (3)(a), and 21F; and”.

• “(3C) For the purposes of subsection (3), input tax may be deducted only to the extent to which the goods or services are used for, or are available for use in, making taxable supplies. Subsection (3D) overrides this subsection.

• “(3D) A registered person is not required to apportion input tax in an adjustment period if they make both taxable and exempt supplies and have reasonable grounds to believe that the total value of their exempt supplies will not be more than the lesser of—

  • “(a) $90,000:

  • “(b) 5% of the total consideration for all their taxable and exempt supplies for the adjustment period.

• “(3E) A registered person who principally makes supplies of financial services may choose to use a fair and reasonable method of apportionment, as agreed with the Commissioner, in relation to the supply for an apportionment on acquisition. For this purpose,—

  • “(a) the method must have regard to the tenor of subsections (3C) to (3J):

  • “(b) the person may include a group of companies.

• “(3F) The method used to calculate the amount that may be deducted on acquisition is set out in subsections (3C) to (3J). The rules for calculating adjustments are set out in sections 21 to 21H.

• “(3G) In determining the extent to which goods or services are used for making taxable supplies, a person must estimate at the time of acquisition how they intend to use the goods or services, choosing a determination method that provides a fair and reasonable result. The determination is expressed as a percentage of the total use.

• “(3H) The extent to which a deduction for input tax is allowed is calculated using the formula—

  full input tax deduction × percentage intended use.

• “(3I) In the formula in subsection (3H),—

  • “(a) full input tax deduction is the total amount of input tax on the supply:

  • “(b) percentage intended use has the meaning set out in section 21G(1)(b).

• “(3J) For a supply to which section 11(1)(mb) applies, the recipient must,—

  • “(a) on acquisition,—

    • “(i) identify the nominal amount of tax (the nominal GST component) that would be chargeable on the value of the supply, as if the value were equal to the consideration charged for the supply, at the rate set out in section 8(1); and

    • “(ii) determine the extent to which they intend to use the goods or services as described in subsection (3G); and

    • “(iii) account for output tax under section 20(4) for the proportion of the nominal GST component for any non-taxable use of the goods; and

  • “(b) for later adjustment periods, make adjustments under the apportionment rules set out in sections 21 to 21H in relation to the taxable supply referred to in paragraph (a).

• “(3K) For the purposes of subsections (3) and (3C), to the extent to which a non-profit body uses goods or services other than for making exempt supplies, the goods or services are treated as being used for making taxable supplies.”

• “(c) in the case of a registered person who is required to account for tax payable under section 21D(1) and (3)(b), for the relevant adjustment period.”

• “(4B) A person who is treated under section 5(23) as a supplier of goods under section 11(1)(mb) is denied a deduction under subsection (3) in relation to the supply. However, this subsection does not apply to a person required to account for tax under section 5(23) who later becomes a registered person under section 51 and uses the relevant goods for making taxable supplies.”

“21 Adjustments for apportioned supplies

• “(1) A registered person must ascertain at the end of an adjustment period whether an adjustment is required to be made for any percentage difference in a supply of goods or services for the period in relation to the actual use of those goods or services for making taxable supplies.

  “(2) Despite subsection (1), the person is not required to make an adjustment if—

  • “(a) section 20(3D) applies to them:

  • “(b) the value of the goods or services, excluding GST, is $5,000 or less:

  • “(c) the difference between the percentage intended use on acquisition and the percentage actual use for the relevant adjustment period is less than 10 percentage points, but this paragraph does not apply if the adjustment amounts to more than $1,000:

  • “(d) the difference between the previous actual use calculated for the most recent adjustment period in which an adjustment was made and the percentage actual use for the relevant adjustment period is less than 10 percentage points, but this paragraph does not apply if the adjustment amounts to more than $1,000.

  “(3) An adjustment arises on the last day of the relevant adjustment period.

  “(4) For an adjustment to which sections 21A to 21H apply, a registered person who principally makes supplies of financial services may choose to use a fair and reasonable method, as agreed with the Commissioner, for making adjustments in subsequent adjustment periods. For this purpose,—

  • “(a) the method must have regard to the tenor of sections 21A to 21H:

  • “(b) the person may include a group of companies.

“21A When adjustments required

• A registered person must, at the end of an adjustment period,—

  • “(a) identify the percentage actual use of the goods or services in making taxable supplies in the period; and

  • “(b) compare the percentage actual use with percentage intended use or previous actual use, as applicable; and

  • “(c) if a percentage difference arises and section 21(2)(c) does not apply, make an adjustment for any percentage difference for the adjustment period.

“21B Adjustments when person becomes registered after acquiring goods and services

• “(1) This section applies when—

  • “(a) before becoming a registered person, a person acquires goods or services that were chargeable with tax under section 8(1); and

  • “(b) at the time of registration or at a later time, the person uses the goods or services for making taxable supplies.

  “(2) The person may make an adjustment under sections 21 and 21A, treating as the first adjustment period, the period that—

  • “(a) starts on the date of the acquisition of the goods or services; and

  • “(b) ends on the first balance date that falls after the events referred to in subsection (1)(b).

  “(3) For the purposes of this section,—

  • “(a) the person must either—

    • “(i) provide a tax invoice in relation to the supply, as required by section 20(2); or

    • “(ii) have adequate records that enable the identification of the particulars of an invoice as required by section 24(3):

  • “(b) in identifying the percentage actual use of the goods or services in the first adjustment period referred to in subsection (2), the person may use a method that provides a fair and reasonable result.

  “(4) This section does not apply if the original cost of the goods or services, excluding GST, was $5,000 or less.

“21C Adjustments for first and subsequent adjustment periods

• For the purposes of section 21A(b),—

  • “(a) for the first adjustment period applying to the goods or services, the person must compare the percentage intended use of the goods or services with their percentage actual use:

  • “(b) for a subsequent adjustment period, the person must compare the percentage actual use of the goods or services with—

    • “(i) their percentage actual use in an earlier period that is the most recent period in which an adjustment has been made (the previous actual use):

    • “(ii) their percentage intended use, if no adjustment has been made in an earlier period.

“21D Calculating amount of adjustment

• “(1) If a percentage difference arises for an adjustment period, a registered person must make a positive or negative adjustment for the period of an amount calculated using the formula—

  full input tax deduction × percentage difference.

  “(2) In the formula,—

  • “(a) full input tax deduction is the total amount of input tax on the supply, including any nominal GST component chargeable under section 20(3J)(a)(i):

  • “(b) percentage difference has the meaning set out in section 21G(1)(c).

  “(3) For the purposes of subsection (1),—

  • “(a) if the adjustment is positive and the percentage actual use is more than the person's percentage intended use or previous actual use, as applicable, the person is entitled to an additional deduction under section 20(3)(e):

  • “(b) if the adjustment is negative and the percentage actual taxable use is less than the person's percentage intended use or previous actual use, as applicable, the person must treat the amount as a positive amount of output tax and account for it under section 21A.

“21E Concurrent uses of land

• “(1) This section applies when a registered person uses all or part of an area of land during an adjustment period for making concurrent taxable and non-taxable supplies. The percentages determined under this section apply for the purposes of sections 21A and 21G.

  “(2) This section does not apply if the Commissioner agrees that the registered person may use another calculation method.

  “(3) The extent to which the land is used for making taxable supplies is calculated as a percentage using the formula—

  	consideration for taxable supply	× 100.
  	total consideration for supply

  “(4) In the formula in subsection (3),—

  • “(a) consideration for taxable supply is,—

    • “(i) on a disposal of the land in the adjustment period, the amount paid or payable; or

    • “(ii) the market value of the land at the time of making the adjustment:

  • “(b) total consideration for supply is the sum of the amount referred to in paragraph (a) and the amount of—

    • “(i) all rental income that is the consideration for the supply of a dwelling paid or payable since the land was acquired; and

    • “(ii) if no rental income is paid or payable in relation to the non-taxable use of the land, the market value of rental income that would have been paid or payable since the land was acquired if the land had been used for this purpose.

  “(5) For the purposes of subsection (4), if the person disposes of the land to an associated person, or if the amount of rental income is not an arm's length amount, subsection (4)(a)(i) and (b)(i) do not apply, and the amount of the consideration is measured under subsection (4)(a)(ii) and (b)(ii).

  “(6) For the purposes of subsection (4)(a)(ii) and (b)(ii), if the market value of the land or the market value of rental income is not readily identifiable, the person may use another method to provide a fair and reasonable estimate of the market value.

  “(7) If a person is required to estimate the extent of taxable use of the land under this section and the land has at any time been used in a month solely for making non-taxable supplies, the person must calculate the percentage use for the adjustment period on a month by month basis, calculated using the formula—

  	months	× result under subsection (3).
  	total months

  “(8) In the formula in subsection (7),—

  • “(a) months is the number of months since acquisition in which all or part of the land is used to some extent for making taxable supplies:

  • “(b) total months is the total number of months since acquisition.

“21F Treatment on disposal

• “(1) This section applies when a registered person—

  • “(a) acquires goods or services in relation to which they do not have a full deduction, taking into account any adjustments made to input tax in adjustment periods after acquisition; and

  • “(b) subsequently disposes, or is treated as disposing, of the goods or services in the course or furtherance of a taxable activity.

  “(2) The person must make a final adjustment of an amount calculated using the formula—

  	tax fraction × consideration ×	[	1−	actual deduction	]
  				full input tax deduction.

  “(3) For the purposes of the formula,—

  • “(a) tax fraction has the meaning given in section 2(1):

  • “(b) consideration is the amount of consideration received, or treated as received, for the supply:

  • “(c) actual deduction is the amount of deduction already claimed, taking into account adjustments made up to the date of disposal:

  • “(d) the amount, when added to any deduction already claimed, must not be more than the amount of the full input tax deduction on acquisition referred to in section 21D(2).

“21G Definitions and requirements for apportioned supplies and adjustment periods

• “(1) For the purposes of this section and sections 8(4B)(b), 9(2)(h), 20(3H), 21 to 21F, and 21H,—

  • “(a) percentage actual use, for a registered person and an adjustment period,—

    • “(i) means the extent to which the goods or services are actually used by the person for making taxable supplies; and

    • “(ii) is calculated for the period that starts when the goods or services are acquired and finishes at the end of the relevant adjustment period; and

    • “(iii) is expressed as a percentage of total use:

  • “(b) percentage intended use, for a registered person, means the extent to which the goods or services are intended to be used by the person for making taxable supplies, estimated at the time of acquisition under section 20(3G) and expressed as a percentage of total use:

  • “(c) percentage difference means the difference between the percentage actual use determined under paragraph (a) and, as applicable,—

    • “(i) the percentage intended use determined under paragraph (b); or

    • “(ii) for a subsequent adjustment period following a period in which a person has made an adjustment, the previous actual use of the goods or services in the earlier period.

  “(2) For the purposes of this section and sections 21 to 21F and 21H,—

  • “(a) the first adjustment period is a period that—

    • “(i) starts on the date of acquisition; and

    • “(ii) ends on the date as the person chooses that either corresponds to the person's first balance date described in section 15B(6) that falls after the date of acquisition, or corresponds to the person's first balance date that falls at least 12 months after the date of acquisition:

  • “(b) a subsequent adjustment period is a period of 12 months that—

    • “(i) starts on the day after the end of an earlier adjustment period; and

    • “(ii) ends on the last day of the equivalent taxable period in which the first adjustment period ended.

  “(3) For the purposes of subsection (2)(b), a registered person who chooses under section 38(1) of the Tax Administration Act 1994 to change their balance date at some time in an income year may realign their subsequent adjustment periods with the new balance date. However, an affected adjustment period must be of at least 12 months duration and, if the new balance date causes an adjustment period to be shorter than 12 months, the relevant period is extended to the balance date of the following income year.

  “(4) The number of adjustment periods in which a registered person must determine whether an adjustment is required under section 21A may, as the person chooses, be limited to—

  • “(a) one of the following based on the value of the goods or services, excluding GST:

    • “(i) 2 adjustment periods for goods or services valued at more than $5,000 but not more than $10,000:

    • “(ii) 5 adjustment periods for goods or services valued at more than $10,000 but not more than $500,000:

    • “(iii) 10 adjustment periods for goods or services valued at more than $500,000; or

  • “(b) the relevant adjustment periods that is equal to the number of years for the estimated useful life of the relevant asset as determined under the Tax Depreciation Rates Determinations set by the Commissioner under section 91AAF of the Tax Administration Act 1994.

  “(5) Subsection (4) does not apply in relation to a supply of land.

  “(6) An election by a registered person under subsection (4) to limit the number of adjustment periods applying to goods or services acquired by them cannot subsequently be changed.

  “(7) Despite subsection (4) if, after making adjustments for goods or services for the number of adjustment periods, the person subsequently disposes, or is treated as disposing, of the relevant asset, they must make a final adjustment under section 21F in the taxable period in which the disposal occurs.

  “(8) If a person does not choose the number of adjustment periods for an apportioned supply, the limits set out in subsection (4)(a) apply.

“21H Transitional accounting rules

• “(1) This section applies in relation to goods or services acquired before 1 April 2011, when a registered person determines the extent to which goods or services are applied for the purposes of making supplies other than taxable supplies under sections 21A to 21H (the old apportionment rules) as they were before the enactment of the Taxation (GST and Remedial Matters) Act 2010.

  “(2) The person must continue to apply the old apportionment rules in relation to the supply. However, the making of these adjustments is limited as follows:

  • “(a) for goods or services whose market value or book value on 1 April 2011 is $5,000 or less, no adjustment under the old apportionment rules may be, or may be required to be, made after 1 April 2011:

  • “(b) for goods or services whose market value or book value on 1 April 2011 is more than $5,000 but not more than $10,000, no adjustment under the old apportionment rules may be, or may be required to be, made after 1 April 2013:

  • “(c) for other goods or services, no adjustment under the old apportionment rules may be, or may be required to be, made after 1 April 2016.

  “(3) Subsection (2)(a) to (c) do not apply to a supply that wholly or partly consists of land.”

• “(7B) Despite subsections (1) and (3), if a tax invoice is not available in relation to a supply of goods to which section 60B(3) to (5) apply, the nominated person must maintain sufficient records to enable the following particulars to be ascertained:

  • “(a) the name and address of the supplier; and

  • “(b) the date on which payment for the supply was made; and

  • “(c) a description of the goods supplied; and

  • “(d) the consideration for the supply.”

• “(ab) section 11(1)(mb) was incorrectly applied to the treatment of the supply, so that the supply was either zero-rated when it should not have been, or not zero-rated when it should have been; or”.

• “(f) in the case of a supply to which subsection (1)(ab) applies, a credit note may not be issued after 7 years from the date of settlement of the transaction relating to the supply.”

• “(1B) For the purposes of the definition of amount payable in subsection (1), money that is on deposit or is deposited to the credit of a registered person includes money that—

  • “(a) is held in a joint bank account in the name of the registered person and 1 or more other persons; and

  • “(b) can be withdrawn from the account by or on behalf of the registered person without a signature or other authorisation being required at the time of the withdrawal from, or on behalf of, the other person or persons.

• “(1C) Subsection (1B) does not apply when the joint bank account is an account of a partnership that files a return of income under section 33(1) of the Tax Administration Act 1994.”

• “(4) For the purposes of this Act, in relation to a supply to which section 11(1)(mb) applies, a recipient who is treated as a supplier under section 5(23)—

  • “(a) is treated as registered from the date of the supply under section 5(23); and

  • “(b) must apply under section 51(2) to the Commissioner for registration.

• “(5) A person who is treated as registered under subsection (4)(b) may ask the Commissioner to cancel their registration under section 52(2) once they have accounted for output tax as required under section 5(23).

• “(6) For the purposes of subsection (5), section 5(3) does not apply if—

  • “(a) the person seeks cancellation of their registration by the end of the taxable period in which they have accounted for the output tax under section 5(23); or

  • “(b) the Commissioner so determines, on application by the person.”

“60B Nominated recipients of supplies

• “(1) This section applies when a person (person A) enters into a contract to supply goods and services to another person (person B), and person B directs person A to provide the goods and services to a nominated person (person C) who is not party to the contract.

  “(2) If person B pays the full consideration for the supply, the supply is treated as a supply from person A to person B and the existence of person C is ignored.

  “(3) If person C pays the full consideration for the supply, the supply is treated as a supply from person A to person C and the existence of person B is ignored.

  “(4) If person B and person C each pay part of the consideration for the supply, the supply is treated as a supply from person A to person B. However, person B and person C may agree in writing that the supply is to be treated as a supply made to person C, but no such agreement can be made if person B has claimed input tax in relation to the supply.

  “(5) Despite subsections (2) to (4), if the registration status of person B differs from the registration status of person C, the supply must be treated as a supply from person A to person C. For the purposes of this subsection, registration status differs when—

  • “(a) person B is a registered person and person C is not a registered person; or

  • “(b) person C is a registered person and person B is not a registered person.

  “(6) Despite subsections (2) to (5), for a supply that wholly or partly consists of land, the supply is treated as made by person A to person C.

  “(7) Section 60 overrides this section.”

• “(3B) For the purposes of section 11(1)(mb), the supplier must maintain sufficient records to enable the following particulars in relation to the supply to be ascertained:

  • “(a) the name and address of the recipient; and

  • “(b) the registration number of the recipient; and

  • “(c) a description of land; and

  • “(d) the consideration for the supply.”

“78F Liability in relation to supplies of land

• “(1) This section applies in relation to a supply that wholly or partly consists of land.

  “(2) At or before settlement of the transaction relating to the supply, the recipient is required to provide a statement in writing to the supplier as to whether, at the date of settlement,—

  • “(a) they are, or expect to be, a registered person; and

  • “(b) they are acquiring the goods with the intention of using them for making taxable supplies; and

  • “(c) they do not intend to use the land as a principal place of residence for them or a person associated with them under section 2A(1)(c).

  “(3) The supplier may rely on the information provided by the recipient in determining the tax treatment of the supply.

  “(4) For the purposes of section 5(2), the statement referred to in subsection (2) must be provided to the second person referred to in section 5(2).

  “(5) For the purposes of section 60B and a transaction that wholly or partly consists of land, subsection (2) is modified in relation to the nominated person so that the information provided by the recipient relates to their expectation of the nominated person's circumstances.”

“Look-through companies

“CB 32B Owners of look-through companies

• A person who has an effective look-through interest for a look-through company has an amount of income to the extent to which an amount of income results from the application of subpart HB (Look-through companies) to them and the look-through company.

  “Defined in this Act: amount, effective look-through interest, income, look-through company

“CB 32C Income for first year of look-through company

• “Income

  “(1) A person has an amount of income for an income year equal to the amount given by the formula in subsection (3) if the income year is one in which the person has,––

  • “(a) on the first day of that year, an effective look-through interest for a look-through company (LTC), and the company existed in the previous income year, but was not a look-through company in that previous year:

  • “(b) on the day after a look-through company amalgamates in that year with a company that ceases to exist after the amalgamation (the amalgamating company), an effective look-through interest for the LTC, and the amalgamating company was not a look-through company immediately before the amalgamation.

  “Exclusion

  “(2) A person does not have income under this section if the income year is 1 of the first or second income year that starts on or after 1 April 2011, and––

  • “(a) the LTC was a qualifying company that first becomes a look-through company for the income year; and

  • “(b) subsection (1)(b) does not apply for the income year.

  “Income formula

  “(3) For the purposes of subsection (1), the amount of income is a positive amount calculated using the following formula:

  untaxed reserves × effective interest.

  “Definition of items in formula

  “(4) In the formula in subsection (3),––

  • “(a) untaxed reserves is the amount given by the formula in subsection (5):

  • “(b) effective interest is the person's effective look-through interest for a look-through company on the relevant day under subsection (1)(a) or (b).

  “Untaxed reserves formula

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

  	dividends + balances – assessable income –	balances	– exit exemption.
  		tax rate

  “Definition of items in formula

  “(6) The items in the formula in subsection (5) are defined in subsections (7) to (11).

  “Dividends

  “(7) Dividends is the sum of the amounts that would be dividends if the following events occurred for the company or the amalgamating company (the company), immediately before it became a look-through company or amalgamated with a look-through company:

  • “(a) it disposed of all of its property, other than cash, to an unrelated person at market value for cash; and

  • “(b) it met all of its liabilities at market value, excluding income tax payable through disposing of the property or meeting the liabilities; and

  • “(c) it was liquidated, with the amount of cash remaining being distributed to shareholders without imputation credits or FDP credits attached.

  “Balances

  “(8) Balances is the sum of the following amounts:

  • “(a) the balance in the company's imputation credit account:

  • “(b) the balance in the company's FDP account:

  • “(c) an amount of income tax payable for an earlier income year but not paid before the relevant date, less refunds due for the earlier income year but paid after the relevant date.

  “Assessable income

  “(9) Assessable income is the total assessable income that the company would derive by taking the actions described in subsection (7)(a) and (b) less the amount of any deduction that the company would have for taking those actions.

  “Tax rate

  “(10) Tax rate is the basic tax rate for the income year of the company that contains the relevant day described in subsection (12).

  “Exit exemption

  “(11) Exit exemption is the amount given by the formula in section CX 63(2) (Dividends derived after ceasing to be look-though company), treating the amount described in subsection (7) as a dividend paid by the company for the purposes of section CX 63(1), if section CX 63 would apply to a dividend paid by the company.

  “Relevant day

  “(12) In subsections (7) to (9) and (11), the relevant day for measuring items in the formula is—

  • “(a) the last day of the income year before the income year described in subsection (1)(a), as applicable; or

  • “(b) the day of the amalgamation described in subsection (1)(b) as applicable.

  “Income tax and refund

  “(13) For the purposes of subsection (8)(c),—

  • “(a) income tax payable is income tax that would, when paid, give rise to a credit in the company's imputation credit account under sections OB 4 to OB 29 (which relate to imputation credits):

  • “(b) a refund of income tax due is the amount that would, when paid, give rise to a debit to the company's imputation credit account under sections OB 30 to OB 59 (which relate to imputation debits).

  “Defined in this Act: amalgamating company, amalgamation, amount, assessable income, basic tax rate, company, deduction, dispose, dividend, effective look-through interest, FDP account, FDP credit, imputation credit, imputation credit account, income, income tax, income year, liquidation, look-through company, qualifying company”.

• “(7) The person is treated as selling a unit that is not a forest land emissions unit for an amount equal to the unit's market value if—

  • “(a) the person surrenders the unit when it has a value of zero; and

  • “(b) the unit was transferred to the person under Part 4, subpart 2 of the Climate Change Response Act 2002 at a price of zero.”

• “(d) look-through company returns is the total amount of consideration that the company paid, before the calculation time, on the cancellation or buyback of shares in the relevant class while the company was a look-through company, ignoring section HB 1.”

“Benefit of accommodation

• “(1B) The market value of the following benefits provided to a person is income of the person if the benefit is provided in relation to an office or position held by them:

  • “(a) the provision of accommodation:

  • “(b) the provision of an accommodation allowance instead of accommodation.”

• “(2) This section does not apply to an adjustment made in relation to a capital asset.”

• “(a) a local authority or a public authority makes a payment to a person for a business that the person carries on; and

• “(b) the payment—

  • “(i) is in the nature of a grant or subsidy to the person; or

  • “(ii) is a grant-related suspensory loan to the person; and

• “(c) the payment is not in the nature of an advance or loan other than a grant-related suspensory loan; and

• “(d) the payment corresponds to—

  • “(i) expenditure that they incur and for which they would be allowed a deduction in the absence of section DF 1 (Government grants to businesses):

  • “(ii) expenditure that they incur in acquiring, constructing, installing, or extending an asset for which they would have an amount of depreciation loss in the absence of section DF 1.”

“Further exclusion

• “(4) A person may choose that this section not apply to a payment under a grant to the extent to which—

  • “(a) the grant is made to the person for the person's business as a technology development grant or under a technology transfer voucher; and

  • “(b) the payment is withheld until the conditions of the grant are satisfied; and

  • “(c) in the absence of section DF 1, the person would be allowed for an income year before the income year of the payment,—

    • “(i) a deduction for expenditure to which the payment corresponds:

    • “(ii) depreciation loss resulting from expenditure to which the payment corresponds.”

“Look-through companies

“CX 63 Dividends derived after company ceased to be look-through company

• “Dividends

  “(1) A dividend derived by a person from a company after it has ceased to be a look-through company is excluded income of the person to the extent to which it is equal to or less than the amount given by subsection (2).

  “Excluded income formula

  “(2) For the purposes of subsection (1), the amount is calculated using the following formula:

  exit dividends – dividends after look-through.

  “Definition of items in formula

  “(3) The items in the formula are defined in subsections (4) and (5).

  “Exit dividends

  “(4) Exit dividends is the sum of the amounts that would be dividends if the company, immediately after it ceased to be a look-through company,––

  • “(a) disposed of all of its property, other than cash, to an unrelated person at market value for cash; and

  • “(b) met all its liabilities at market value, excluding income tax payable through disposing of the property or meeting the liabilities; and

  • “(c) were liquidated, with the amount of cash remaining being distributed to its shareholders without imputation credits or FDP credits attached.

  “Dividends after look-through

  “(5) Dividends after look-through is the total dividends paid by the company after it ceases to be a look-through company and before it pays the dividend described in subsection (1) to the person.

  “Defined in this Act: amount, company, dispose, dividend, excluded income, FDP credit, imputation credit, income tax, liquidation, look-through company, shareholder”.

• “(3) Subsection (2) does not apply to an adjustment made in relation to a capital asset.”

“DB 65 Allowance for certain commercial buildings

• “When this section applies

  “(1) This section applies when––

  • “(a) a person owns an item that is a commercial building (the building), and the building is depreciable property with an annual rate of 0%, in an income year; and

  • “(b) the item starting pool described in subsection (3)(a) is greater than the total of all deductions allowed under this section for income years before the income year; and

  • “(c) the person has been allowed a deduction for an amount of depreciation loss for the building for the 2010–11 income year and the person has not disposed of it since then; and

  • “(d) the person has never had a deduction for an amount of depreciation loss for a separate item of depreciable property that is commercial fit-out and that was acquired at the same time as the building and relates to the building; and

  • “(e) the building was acquired in the 2010–11 or earlier income years; and

  • “(f) the person is not allowed a deduction under any other provision in relation to the building, for the income year.

  “Deduction

  “(2) Except as provided by subsection (6), the person is treated as having a loss for the income year equal to the amount calculated using the formula—

  	starting pool × 0.02 ×	whole months
  		12.

  “Definition of items in formula

  “(3) In the formula in subsection (2),––

  • “(a) starting pool is the amount given by the formula in subsection (4):

  • “(b) whole months is the number of whole months in the income year in which the item is used, or is available for use, by the person in deriving assessable income or carrying on a business for the purpose of deriving assessable income.

  “Starting pool: formula

  “(4) For the purposes of subsection (3)(a), the amount is calculated using the formula—

  (0.15 × building atv) – fitout atv.

  “Definition of items in formula

  “(5) In the formula in subsection (4),––

  • “(a) building atv is the adjusted tax value of the building that results for the 2010–11 income year after all relevant amounts for that income year have been subtracted under subpart EE (Depreciation):

  • “(b) fitout atv is the total adjusted tax value of all items of commercial fit-out that results for the 2010–11 income year after all relevant amounts for that income year have been subtracted under subpart EE, if––

    • “(i) the items of commercial fit-out relate to the building and were acquired after the building was acquired; and

    • “(ii) the person has had a deduction for an amount of depreciation loss for the items of commercial fit-out.

  “Exception: deductible amount

  “(6) Despite subsection (2), if the item starting pool described in subsection (3)(a), reduced by the total of all deductions allowed under this section for income years before the income year, is equal to an amount (the deductible amount) that is smaller than the amount given by the formula in subsection (2) (the formula amount), then the person is treated as having a loss for the income year equal to the deductible amount instead of the formula amount.

  “Treatment of amounts under specific and general rules for deductions

  “(7) The capital limitation does not apply to a loss under this section merely because the item of property is itself of a capital nature.

  “Defined in this Act: adjusted tax value, amount, assessable income, building, capital limitation, commercial building, commercial fit-out, deduction, depreciable property, depreciation loss, dispose, estimated useful life, income year”.

“DC 3B Payments to working owners

• “Deduction

  “(1) A person who has an effective look-through interest for a look-through company (an owner) is allowed a deduction for their share of a payment made under a contract of employment to a working owner.

  “Amount of deduction

  “(2) The amount of the deduction is limited to the amount of the payment authorised by the contract of employment and any bonus, whether or not the payment of a bonus is authorised by the contract.

  “Meaning of contract of employment

  “(3) In this section, contract of employment, for a working owner, means an agreement that—

  • “(a) specifies the terms and conditions of the services to be performed by the working owner; and

  • “(b) specifies the amount payable to the working owner for the performance of the services; and

  • “(c) is in writing.

  “Link with subpart DA

  “(4) This section supplements the general permission. The general limitations still apply.

  “Defined in this Act: amount, contract of employment, deduction, effective look-through interest, general limitation, general permission, look-through company, pay, supplement, working owner”.

“When this section applies

• “(1) This section applies when—

  • “(a) a local authority or a public authority makes a payment to a person for a business that the person carries on; and

  • “(b) the payment—

    • “(i) is in the nature of a grant or subsidy to the person; or

    • “(ii) is a grant-related suspensory loan to the person; and

  • “(c) the payment is not in the nature of an advance or loan other than a grant-related suspensory loan; and

  • “(d) the person does not make an election that section CX 47(4) (Government grants to businesses) apply to the payment.

“When subsection (2) applies

• “(1B) Subsection (2) applies when, in the absence of this section, the person would be allowed a deduction for expenditure by the person to which the payment by the local or public authority corresponds.”

• “(3) Subsection (4) applies when—

  • “(a) expenditure by the person in the acquisition, construction, installation, or extension of an item of depreciable property is expenditure to which the payment by the local or public authority corresponds; and

  • “(b) in the absence of this section, the person would be allowed a deduction for an amount of depreciation loss for the item of depreciable property.”

“DV 21 Losses for QCs entering partnership regime

• “When this section applies

  “(1) This section applies to a person when,––

  • “(a) for an income year, a person's partnership (the partnership) has effectively replaced a qualifying company or companies under a QCP transitional process; and

  • “(b) ignoring the application of section HZ 4B(3) (Qualifying companies: transition into partnership), the company or companies would have had loss balances to carry forward to the first or second income year, as applicable, starting on or after 1 April 2011 (the relevant transitional income year).

  “Losses extinguished

  “(2) Despite section HZ 4B(3), for the relevant transitional income year and subsequent income years, a loss balance under Part I (Treatment of tax losses) is cancelled if the loss balance arose in relation to an income year before the relevant transitional income year.

  “Deduction

  “(3) The person is allowed a deduction for an amount equal to an amount given by the formula in subsection (4), to the extent to which it is equal to or less than the net income the person would have for the income year if they were treated as having only income and deductions arising from the application of subpart HG (Joint venturers, partners, and partnerships) for the partnership.

  “Deduction formula

  “(4) For the purposes of subsection (3), the amount is calculated using the formula—

  (loss balance extinguished − subsequent deductions) × partnership share.

  “Definition of items in formula

  “(5) In the formula,––

  • “(a) loss balance extinguished is the loss balance cancelled under subsection (2):

  • “(b) subsequent deductions is the total amount of deductions allowed for previous income years under this section for all persons with a partnership share in the partnership:

  • “(c) partnership share is the person's average partnership share for the partnership for the income year.

  “Exception

  “(6) Despite subsection (3), a person is not allowed a deduction for an amount in subsection (4) to the extent to which––

  • “(a) it arises from an amount carried forward under subparts IA and IQ (which relate to the treatment of foreign losses); and

  • “(b) it is greater than the maximum amount they may subtract from their net income under subpart IQ, treating the amount as an attributed CFC net loss or a FIF net loss carried forward under subpart IQ, and the person as having the net income they would have for the income year if they were treated as having only income and deductions arising from the application of subpart HG for the partnership.

  “Link with subpart DA

  “(7) This section overrides the general permission and the general limitations.

  “Defined in this Act: amount, attributed CFC net loss, company, deduction, FIF net loss, general limitation, general permission, income, income year, loss balance, net income, partnership, partnership share, QCP transitional process, qualifying company

“Look-through companies

“DV 22 Owners of look-through companies

• A person who has an effective look-through interest for a look-through company has a deduction to the extent to which a deduction results from the application of subpart HB (Look-through companies) to them and the look-through company.

  “Defined in this Act: deduction, effective look-through interest, look-through company

“DV 23 Losses for QCs entering look-through companies rules

• “When this section applies

  “(1) This section applies to a person who has an effective look-through interest for a look-through company (the LTC) for an income year when—

  • “(a) the LTC was a qualifying company that first becomes a look-through company for the first or second income year that starts on or after 1 April 2011; and

  • “(b) but for becoming a look-through company and the application of section HB 3 (Loss balances extinguished), there would have been a loss balance to carry forward to the first or second income year that starts on or after 1 April 2011 (the relevant transitional income year).

  “Deduction

  “(2) The person is allowed a deduction for an amount equal to an amount given by the formula in subsection (3), to the extent to which it is equal to or less than the net income the person would have for the income year if they were treated as having only income and deductions arising from the application of subpart HB (Look-through companies) for the LTC.

  “Deduction formula

  “(3) For the purposes of subsection (2), the amount is calculated using the formula—

  (loss balance extinguished − subsequent deductions) × effective interest.

  “Definition of items in formula

  “(4) In the formula,––

  • “(a) loss balance extinguished is the loss balance that would have been carried forward to the relevant transitional income year:

  • “(b) subsequent deductions is the total amount of deductions allowed for previous income years under this section for all persons with an effective look-through interest for the LTC:

  • “(c) effective interest is the person's average effective look-through interest for the income year for the LTC.

  “Exception

  “(5) Despite subsection (2), a person is denied a deduction for an amount in subsection (3) to the extent to which––

  • “(a) it arises from an amount carried forward under subparts IA and IQ (which relate to the treatment of foreign losses); and

  • “(b) it is greater than the maximum amount they may subtract from their net income under subpart IQ, treating the amount as an attributed CFC net loss or a FIF net loss carried forward under subpart IQ, and the person as having the net income they would have for the income year if they were treated as having only income and deductions arising from the application of subpart HB for the LTC.

  “Link with subpart DA

  “(6) This section overrides the general permission and the general limitations.

  “Defined in this Act: amount, attributed CFC net loss, deduction, effective look-through interest, FIF net loss, general limitation, general permission, income, income year, look-through company, loss balance, net income, qualifying company

“Sole traders

“DV 24 Losses for QCs becoming sole traderships

• “When this section applies

  “(1) This section applies to a person when,––

  • “(a) for an income year, the person's sole tradership has effectively replaced a qualifying company under a QCST transitional process; and

  • “(b) ignoring the application of section HZ 4D(3) (Qualifying companies: transition into sole traderships), the company would have had a loss balance to carry forward to the first or second income year, as applicable, starting on or after 1 April 2011 (the relevant transitional income year).

  “Losses extinguished

  “(2) Despite section HZ 4D(3), for the relevant transitional income year and subsequent income years, a loss balance under Part I (Treatment of tax losses) is cancelled if the loss balance arose in relation to an income year before the relevant transitional income year.

  “Deduction

  “(3) The person is allowed a deduction for an amount equal to an amount given by the formula in subsection (4).

  “Deduction formula

  “(4) For the purposes of subsection (3), the amount is calculated using the following formula:

  loss balance extinguished − subsequent deductions.

  “Definition of items in formula

  “(5) In the formula,––

  • “(a) loss balance extinguished is the loss balance cancelled under subsection (2):

  • “(b) subsequent deductions is the total amount of deductions allowed for previous income years under this section.

  “Exception

  “(6) Despite subsection (3), a person is denied a deduction for an amount in subsection (4) to the extent to which––

  • “(a) it arises from an amount carried forward under subparts IA and IQ (which relate to the treatment of foreign losses); and

  • “(b) it is greater than the maximum amount they may subtract from their net income under subpart IQ, treating the amount as an attributed CFC net loss or a FIF net loss carried forward under subpart IQ.

  “Link with subpart DA

  “(7) This section overrides the general permission and the general limitations.

  “Defined in this Act: amount, attributed CFC net loss, deduction, FIF net loss, general limitation, general permission, income, income year, loss balance, net income, QCST transitional process, qualifying company”.

“Look-through company owners' interests

• “(5) For the purposes of an election under this section, a person's interest for a look-through company that owns livestock is treated separately from any other interest that the person has in livestock. Separate elections are required for the person's owner's interest and for their other livestock interests. The person is not required to choose the same valuation method in both cases.”

• “(a) an emissions unit transferred under section 64, or Part 4, subpart 2, of the Climate Change Response Act 2002 in an income year for no payment of a price, and to which section ED 1B does not apply, has a value of zero for the period beginning with the transfer and ending before the end of the income year:”.

• “(cb) a fishing quota emissions unit has a value at the end of each income year of—

  • “(i) the market value of the unit at the end of the income year, if the holder of the unit would derive income, other than exempt income and excluded income, from a disposal of the individual transferable quota to which the units relate; or

  • “(ii) zero, if subparagraph (i) does not apply:”.

“ED 1B Valuation of emissions units issued for zero price

• “What this section applies to

  “(1) This section applies to emissions units held by a person in an income year that—

  • “(a) are transferred to the person at a price of zero—

    • “(i) under Part 4, subpart 2, of the Climate Change Response Act 2002:

    • “(ii) by a public authority under a supplementary agreement to a negotiated greenhouse agreement; and

  • “(b) have been held continuously by the person from the time of the transfer; and

  • “(c) have not been valued under either of subsections (4)(a) and (8)(a) before the income year; and

  • “(d) are not forest land emissions units; and

  • “(e) are not replacement forest land emissions units; and

  • “(f) are not fishing quota emissions units.

  “Value of units transferred to person if no earlier emissions unit shortfall year

  “(2) If an emissions unit is transferred to the person in the income year and there is no earlier income year that is an emissions unit shortfall year for the person under subsections (9) and (10), the emissions unit is assigned a value of zero at the time of the transfer.

  “Value of units transferred to person in income year after emissions unit shortfall year

  “(3) If an earlier income year is an emissions unit shortfall year for the person immediately before an emissions unit (the transferred unit) is transferred to the person in the income year, the value of the transferred unit at the time of the transfer is given by the application of the paragraphs in subsection (4) in alphabetical order to transferred units until all the transferred units are assigned a value.

  “Valuation method at transfer for transferred units

  “(4) If emissions units are transferred to the person in an income year when there is a unit shortfall under subsections (9) and (10) for an earlier emissions unit shortfall year,—

  • “(a) for each emissions unit shortfall year in date order, transferred units, up to the number corresponding to the unit shortfall relating to the emissions unit shortfall year, are each assigned a value equal to the market value of an emissions unit at the end of the emissions unit shortfall year:

  • “(b) transferred units are each assigned a value equal to zero.

  “Value of units with zero value immediately before end of income year

  “(5) If the value of an emissions unit (the revalued unit) held by the person immediately before the end of the income year is zero, the value of the revalued unit at the end of the year is given by the application of the paragraphs in subsection (8) in alphabetical order to revalued units until all the revalued units are assigned a value.

  “Limit on application of subsection (8)(a)

  “(6) The maximum number of units valued under subsection (8)(a) for the income year is the greater of zero and the number calculated using the formula—

  unit entitlement

  –

  disposals at zero value.

  “Definition of items in formula

  “(7) In the formula,—

  • “(a) unit entitlement is the total for the income year of amounts, each of which the person would have for the period of overlap between a calendar year ending 31 December and the income year if the period of overlap were treated as a year, of—

    • “(i) final allocation entitlement under section 83 of the Climate Change Response Act 2002:

    • “(ii) allocation entitlement under section 85 of that Act:

    • “(iii) emissions units corresponding to the actual emissions amount under a supplementary agreement to a negotiated greenhouse agreement:

  • “(b) disposals at zero value is the number of emissions units disposed of by the person in the income year that had a value of zero at the disposal.

  “Valuation method at end of income year for revalued units

  “(8) If the person holds revalued units immediately before the end of the income year, the units are each assigned a value—

  • “(a) equal to the market value of an emissions unit at the end of the income year:

  • “(b) equal to zero.

  “Emissions unit shortfall year

  “(9) If the number of units assigned a market value for an income year under subsection (8)(a) is less than the maximum number given by subsection (6) for the income year, at the end of the income year—

  • “(a) the income year is an emissions unit shortfall year and has 2 numbers (the unit shortfall and the unit shortfall value) associated with it:

  • “(b) the unit shortfall relating to the emissions unit shortfall year is the difference between the maximum number given by subsection (6) for the income year and the number of zero value units assigned a market value under subsection (8)(a) for the income year:

  • “(c) the unit shortfall value relating to the emissions unit shortfall year is the unit shortfall multiplied by the market value of an emissions unit at the end of the income year.

  “Reductions in unit shortfall and unit shortfall value

  “(10) When an emissions unit held by a person is assigned a value under subsection (4)(a) in relation to a year that is an emissions unit shortfall year for the person,—

  • “(a) the unit shortfall relating to that year is reduced by the number of emissions units assigned a value in relation to that year:

  • “(b) the unit shortfall value relating to that year is reduced by an amount equal to the number of emissions units assigned a value in relation to that year multiplied by the value assigned to each of those emissions units:

  • “(c) the year ceases to be an emissions unit shortfall year, if the unit shortfall relating to the year is reduced to zero.

  “Unit shortfall values treated as values of additional emissions units for purposes of adjustments

  “(11) For the purposes of sections CH 1 and DB 49 (which relate to adjustments for values of excepted financial arrangements), the person is treated as holding at the end of the income year additional emissions units with a value equal to the total of the unit shortfall values relating to emissions unit shortfall years for the person.

  “Defined in this Act: amount, emissions unit, emissions unit shortfall year, fishing quota emissions units, forest land emissions units, income year, public authority, replacement forest land emissions units, year”.

“Requirements for subsection (2) rate

• “(2A) This subsection applies, and the rate is 1 of the rates given by subsection (2), if the person––

  • “(a) acquires the item on or before 20 May 2010; or

  • “(b) decides to purchase or construct the item, meets the administrative requirements in subsection (4), and—

    • “(i) enters into a binding contract for the purchase or construction of the item on or before 20 May 2010:

    • “(ii) after deciding to purchase or construct the item, incurs expenditure in relation to its purchase or construction on or before 20 May 2010.”

“Requirements for subsection (3) rate

• “(3A) This subsection applies, and the rate is 1 of the rates given by subsection (3), if subsections (2A) and (2) do not apply and the person––

  • “(a) acquires the item after 20 May 2010; or

  • “(b) decides to purchase or construct the item, and—

    • “(i) enters into a binding contract for the purchase or construction of the item after 20 May 2010:

    • “(ii) incurs expenditure in relation to the item's purchase or construction after 20 May 2010.”

“Administrative requirements

• “(4) For the purposes of subsection (2A)(b), a person must––

  • “(a) have available for the Commissioner documents dated on or before 20 May 2010 that evidence that the person had, on or before 20 May 2010, decided to purchase or construct the relevant item:

  • “(b) send to the Commissioner a statutory declaration that the person had, on or before 20 May 2010, decided to purchase or construct the relevant item.”

• “(i) treating the improvement as an item, section EE 31(2A) does not apply, but section EE 31(3A) does apply; and”.

“General rule

• “(1) For the purposes of section EE 44, the consideration equals the amount that a person derives excluding any GST charged if the person is a registered person, as modified by subsections (3) to (11) minus the amount (the disposal cost) that they incur in deriving that amount, to the extent to which the disposal cost––

  • “(a) is not allowed as a deduction to the person other than as a deduction for an amount of depreciation loss; and

  • “(b) is not counted in ‘the amount that a person derives’.

“GST for disposal costs

• “(1B)  All amounts deducted or deductible by the person under section 20(3) of the Goods and Services Tax Act 1985 in relation to the disposal cost described in subsection (1) are subtracted from the disposal costs under that subsection.

“Consideration may be zero or negative

• “(2) For the purposes of section EE 44, the consideration may be zero or a negative amount.”

“Deductions from output tax

• “(3) The item's cost is reduced by the amount of any adjustment taken into account in the income year under section 20(3)(e) of the Goods and Services Tax Act 1985.

“Adjustments for output tax

• “(4) The item's cost is increased by adding an amount of deductible output tax that the person has for the income year.”

“Research and development agreement

• “(3D) An agreement between a person and another person (the provider) that the provider will provide property or services to the person in consideration for a payment to the provider by a public authority under a technology development grant, or technology transfer voucher, for the benefit of the person is an excepted financial arrangement for the person.”

“Look-through companies

• “(11B) A look-through interest for a look-through company is an excepted financial arrangement.”

“Nature of funds

• “(5) At all times in the income year, the fund must be 1 of the following kinds:

  • “(a) a fund established by an employer, or a group of employers who are associated, to provide benefits only to persons who are employees of, or related by employment to, such an employer, or to another associated employer who agrees after the fund's establishment to make contributions to it:

  • “(b) a fund constituted under the Government Superannuation Fund Act 1956 that provides benefits only to persons who are employees of, or related by employment to, an employer who agrees or is required to contribute, or on whose behalf contributions are made, to the fund:

  • “(c) a fund constituted under the National Provident Fund Act 1950, the National Provident Fund Restructuring Act 1990, or the National Provident Fund Restructuring Amendment Act 1997 that has as its trustee the Board of Trustees of the National Provident Fund.”