Income Tax Amendment Act (No 2) 1982
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Income Tax Amendment Act (No 2) 1982
Public Act |
1982 No 142 |
|
Date of assent |
16 December 1982 |
|
Contents
An Act to amend the Income Tax Act 1976
Be it enacted by the General Assembly of New Zealand in Parliament assembled, and by the authority of the same, as follows:
1 Short Title
This Act may be cited as the Income Tax Amendment Act (No. 2) 1982, and shall be read together with and deemed part of the Income Tax Act 1976 (hereinafter referred to as the principal Act).
2 Application
Except where this Act otherwise provides, this Act shall apply with respect to the tax on income derived in the income year that commenced on the 1st day of April 1982 and in every subsequent year.
3 Superannuation
(1)
Section 2 of the principal Act is hereby amended by repealing the definition of the expression “superannuation fund”
, and substituting the following definitions:
“‘Superannuation category 1 scheme’ means—
“(a)
A superannuation scheme which is approved or deemed to be approved for the time being by the Government Actuary under Part II of the Superannuation Schemes Act 1976, and which is classified by him as—
“(i)
A non-subsidised employee pension superannuation scheme; or
“(ii)
A subsidised employee pension superannuation scheme; or
“(iii)
A subsidised employee lump sum superannuation scheme class A fund; or
“(iv)
A non-subsidised employee lump sum superannuation scheme class A fund; or
“(v)
A personal pension superannuation scheme; or
“(vi)
A personal lump sum superannuation scheme class A fund:
“(b)
The Government Superannuation Fund:
“‘Superannuation category 2 scheme’ means a superannuation scheme which is approved or deemed to be approved for the time being by the Government Actuary under Part II of the Superannuation Schemes Act 1976, and which is classified by him as—
“(a)
A subsidised employee lump sum superannuation scheme class B fund; or
“(b)
A non-subsidised employee lump sum superannuation scheme class B fund; or
“(c)
A personal lump sum superannuation scheme class B fund:
“‘Superannuation category 3 scheme’ means any scheme or fund, other than—
“(a)
A superannuation category 1 scheme; and
“(b)
A superannuation category 2 scheme,— established for the purposes of providing benefits which consist principally of superannuation, pension, or other retirement benefits, being any scheme or fund established—
“(c)
For the purpose of providing such benefits for the employees of any employer; or
“(d)
For the purposes of providing such benefits for contributors thereto otherwise than as employees of any employer:”.
(2)
This section shall apply with respect to the tax on income derived in the income year commencing on the 1st day of April 1983 and in every subsequent year.
4 Meaning of term “dividends”
(1)
Section 4(1) of the principal Act is hereby amended by inserting, after paragraph (c), the following paragraph:
“(ca)
The amount of any return of capital (whether or not that return of capital is authorised, and whether it arises from a reduction of capital or in any other manner), not being the amount of a distribution that, under section 263 of this Act, is deemed to be a further bonus issue, made on or after the 1st day of April 1982 where, within the period of 10 years immediately preceding the income year in which that return of capital is so made, the company has made a bonus issue on or after the 1st day of April 1982:
“Provided that the amount of any such return of capital which, pursuant to this paragraph, is deemed to constitute a dividend shall not exceed the aggregate of the amounts of every bonus issue made, on or after the 1st day of April 1982, by that company in that period of 10 years, reduced by the amount of any return of capital that has or, as the case may be, the aggregate of the amounts of all such returns of capital that have, by reason of any such bonus issue or, as the case may be, 2 or more such bonus issues (being in every case a bonus issue made by the company within the said period) previously constituted a dividend pursuant to this paragraph; and for the purposes of this proviso, the bonus issue or, as the case may be, the bonus issues by reason of which the amount of any return of capital is, or the amounts of 2 or more returns of capital are, so deemed to constitute a dividend shall be the bonus issue (so far as the amount thereof extends) that was first made, on or after the 1st day of April 1982, within the said period, and where the amount of that return of capital exceeds or, as the case may be, the amounts of those returns of capital exceed the amount of that last-mentioned bonus issue, the bonus issues so made first and secondly within the said period (so far as the aggregate of the amounts of those bonus issues extends), and so on:”.
(2)
Section 4(1)(as so amended) of the principal Act is hereby consequentially amended by omitting the words “but shall not in any case include”
, and substituting the words “but shall not, except where paragraph (ca) of this subsection applies, include”
.
(3)
Section 4 of the principal Act is hereby further amended by inserting, after subsection (5), the following subsections:
“(5a)
Where any asset of any company (that company being referred to hereafter in this subsection and in subsection (5b) of this section as the ‘specified company’) has been realised as part of, or subject to, any transaction or series of related or connected transactions between the specified company and any person related to that specified company, any profit arising from that realisation shall not, to the extent that any distribution thereof is made on Or after the 1st day of April 1982, constitute for the purposes of subsection (5) of this section, a profit or capital profit or capital gain to that specified company:
“Provided that where any asset of any specified company (being a private company within the meaning of the Companies Act 1955) has been realised, during the course of and for the purpose of the winding up of that specified company, by the sale of that asset to any person (not being a company) who, under subsection (5b) of this section, is deemed to be a person related to the specified company, this subsection shall not apply in respect of any profit arising from the realisation of that asset.
“(5b)
For the purposes of this subsection and subsection (5a) of this section—
“(a)
A person shall be deemed to be a person related to the specified company in any case where that person is—
“(i)
A person who owns, or has in any way the power to control (whether directly or indirectly), or has the right to acquire, 20 percent or more of the ordinary shares of the specified company:
“(ii)
A person who owns, or has in any way the power to control (whether directly or indirectly), or has the right to acquire, 20 percent or more of the voting rights of the specified company:
“(iii)
A person (being a company) of which 20 percent or more of the ordinary shares the specified company owns, or has in any way the power to control (whether directly or indirectly), or has the right to acquire:
“(iv)
A person (being a company) of which 20 percent or more of the voting rights the specified company owns, or has in any way the power to control (whether directly or indirectly), or has the right to acquire:
“(v)
A person (being a company) the shares of which are owned to the extent of 20 percent or more by any shareholders who own or control or have the right to acquire 20 percent or more of the shares or the voting rights of the specified company, or the voting rights of which are able to be controlled to the extent of 20 percent or more by any shareholders who own or control or have the right to acquire 20 percent or more of the shares or the voting rights of the specified company:
“(vi)
A person who is a partner or co-venturer of the specified company:
“(vii)
A trustee of a trust where the specified company, or another person who is a person related to the specified company, benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefitting under the trust either directly or indirectly:
“(viii)
A partnership in which any partner or in which 2 or more partners (being in each case a partner who is a person related to the specified company)—
“(A)
Holds or, as the case may be, hold in the aggregate an entitlement to 50 percent or more of the assets or profits of the partnership; or
“(B)
Is able or, as the case may be, are jointly able in any way to control the partnership:
“(b)
For the purposes of paragraph (a) of this subsection, in relation to any person, any interest held by—
“(i)
The spouse of that person; or
“(ii)
Any child of that person; or
“(iii)
Any child of the spouse of that person; or
“(iv)
Any spouse of any such child; or
“(v)
Any nominee of that person,—
shall be deemed to be held by that person:
“(c)
For the purposes of paragraph (a)(v) of this subsection, where any shares or voting rights of any company are owned or controlled by another company, those shares or voting rights shall be deemed to be owned or, as the case may be, controlled by the shareholders of that other company, and, where any shares or voting rights of that other company are owned or controlled by any further company, the shares or the voting rights of the first-mentioned company in this paragraph shall be deemed to be owned or controlled by the shareholders of that further company, and so on.”
(4)
This section shall apply with respect to the tax on income derived in the income year that commenced on the 1st day of April 1982 and in every subsequent year:
Provided that in any case where a taxpayer furnishes a return of income under section 15 of the principal Act for a year ending with the date of the annual balance of his accounts, being a date not earlier than the 1st day of April 1982 and not later than the 30th day of September 1982, this section shall apply with respect to the tax on income derived in the income year that commenced on the 1st day of April 1981 and in every subsequent year.
5 Commissioner to be notified of bonus issue
(1)
The principal Act is hereby further amended by inserting, after section 13, the following section:
“13a
Every company that makes any bonus issue in any year shall, within the time within which that company is required to furnish a return of its income for the income year, deliver in writing to the Commissioner a statement showing particulars of every bonus issue so made in that year, together with such further particulars as may be required by the Commissioner.”
(2)
This section shall apply in respect of every bonus issue made on or after the 1st day of April 1982.
6 Dates by which annual returns to be furnished
(1)
Section 17 of the principal Act (as amended by section 11(2) of the Income Tax Amendment Act 1978) is hereby amended by adding the following subsection:
“(4)
Where any taxpayer satisfies the Commissioner that he is unable to furnish the required return by the due date required under this section, the Commissioner, upon application in that behalf made in writing by or on behalf of the taxpayer on or before that date, or within such further period as the Commissioner in his discretion may allow in any case or class of cases, may extend the time for furnishing the required return to such date as, in his discretion, he thinks proper in the circumstances.”
(2)
Section 386 of the principal Act is hereby consequentially amended—
(a)
By omitting from subsection (1) the expression “(2) to (4)”
, and substituting the expression “(2) and (4)”
:
(b)
By omitting from subsection (1)(b) the words “under subsection (3) of this section”
, and substituting the words “under section 17 of this Act”
:
(c)
By repealing subsection (3).
7 Objections to which this Part does not apply
Section 36 of the principal Act (as amended by section 3(2) of the Income Tax Amendment Act 1980) is hereby further amended by repealing paragraph (e), and substituting the following paragraphs:
“(e)
Any decision or determination of the Commissioner approving or not approving a sick, accident, or death benefit fund for the purposes of section 61 of this Act; or
“(ea)
Any determination of the Commissioner, for the purposes of section 73 of this Act, as to whether and to what extent any allowance in respect of or in relation to the employment or service of any person constitutes a reimbursement of expenditure incurred by that person in gaining or producing his assessable income; or”.
8 Special exemption in respect of life insurance premiums, and other specified contributions
(1)
Section 59(1) of the principal Act is hereby amended by repealing paragraphs (a) and (b) of the definition of the expression “specified fund”
, and substituting the following paragraphs:
“(a)
Any superannuation category 1 scheme; or
“(b)
Any superannuation category 2 scheme; or”.
(2)
Section 59(1) of the principal Act is hereby further amended by repealing the definition of the expression “subsidised superannuation fund”
, and substituting the following definition:
“‘Subsidised superannuation scheme’, in relation to a taxpayer and to any income year, means a superannuation scheme approved by the Government Actuary under Part II of the Superannuation Schemes Act 1976 and classified by him as—
“(a)
A subsidised employee pension superannuation scheme; or
“(b)
A subsidised employee lump sum superannuation scheme class A fund; or
“(c)
A subsidised employee lump sum superannuation scheme class B fund:”.
(3)
Section 59(5) of the principal Act is hereby amended—
(a)
By omitting the expression “$800”
in both places where it occurs, and substituting in each case the expression “$1,200”
; and
(b)
By omitting the expression “$1,000”
, and substituting the expression “$1,400”
; and
(c)
By omitting the words “subsidised superannuation fund”
in both places where they occur, and substituting in each case the words “subsidised superannuation scheme”
.
(4)
This section shall apply with respect to the tax on income derived in the income year commencing on the 1st day of April 1983 and in every subsequent year.
9 Incomes wholly exempt from tax
(1)
Section 61 of the principal Act is hereby amended by repealing paragraph (4).
(2)
Section 61 of the principal Act is hereby amended by repealing paragraph (21), and substituting the following paragraph:
“(21)
Income derived by the trustee of a superannuation category 1 scheme:”.
(3)
Section 61(27) of the principal Act is hereby amended by adding the following second proviso:
“Provided also that in any case where, in any income year, in the carrying on of the said business, any benefit or advantage, whether or not convertible into money, or any income of any of the kinds referred to in section 65(2) of this Act is able to be afforded to, or received, gained, achieved, or derived by any person—
“(a)
Who is a settlor or trustee of the trust by which the business is carried on; or
“(b)
Who is a shareholder or director of the company by which the business is carried on; or
“(c)
Who is a settlor or trustee of a trust that is a shareholder of the company by which the business is carried on; or
“(d)
Where that person and that settlor or trustee or shareholder or director referred to in any of the foregoing paragraphs of this proviso are associated persons—
and that person is, in the opinion of the Commissioner, able, by virtue of that capacity as settlor or trustee or shareholder or director or associated person, in any way (whether directly or indirectly) to determine, or to materially influence in any way the determination of, the nature or the amount of that benefit or advantage or that income or the circumstances in which it is or is to be so received, gained, achieved, afforded, or derived, the exemption provided in this section shall not apply to any of the income so derived directly or indirectly from that business in that income year; and for the purposes of this paragraph—
“(e)
A person shall, in relation to a trust, be deemed to be a settlor of the trust and to gain a benefit or advantage in the carrying on of a business of the trust, in any case where that person disposes of, to the trust, any asset that is used by the trust in the carrying on of that business, and where that person retains or reserves an interest in that asset or that asset will revert to him:
“(f)
The deriving by any trustee of any rents, fines, premiums, or other revenues from any asset shall, in any case where any person, being a person of any of the kinds referred to in paragraphs (a) to (d) of this proviso, disposes of, to the trust, any asset that is used by the trustee in the deriving of those rents, fines, premiums, or other revenues, and where that person retains or reserves an interest in that asset or that asset will revert to him, be deemed to be the carrying on of a business by the trustee:
“(g)
Income shall be deemed not to be derived by any person of any of the classes referred to in paragraphs (a) to (d) of this proviso in any case where that income consists of interest on money lent that, in the opinion of the Commissioner, is payable at not more than current commercial rates, having regard to the nature and term of the loan:
“(h)
A person shall not, by reason only that he renders professional services to any trust or company by which a business is carried on, be considered to be able to determine, or to materially influence the determination of, the nature or the amount of any benefit or advantage or income afforded to, or received, gained, achieved, or derived by him or the circumstances in which it is or is to be so received, gained, afforded, or derived, in any case where that ability to so determine or to so materially influence results from the rendering by that person, in the course of and as part of the carrying on as a business of a professional public practice by that person, of professional services to the trust or company by which the business first mentioned in this paragraph is carried on; and, for the purposes of this subparagraph, the Public Trustee, the Maori Trustee, and any trustee company within the meaning of the Trustee Companies Act 1967, shall each be deemed to be a person carrying on as a business a professional public practice:”.
(4)
This section shall apply with respect to the tax on income derived in the income year commencing on the 1st day of April 1983 and in every subsequent year.
10 Exemption of dividends from tax
(1)
Section 63 of the principal Act is hereby amended by adding the following subsection:
“(3)
Subsection (1) of this section shall not apply to dividends derived by a company to which section 204 of this Act applies in respect of the business of life insurance carried on by it.”
(2)
Section 63(1) of the principal Act is hereby consequentially amended by omitting the words “subsection (2) of”
.
(3)
This section shall apply with respect to the tax on income derived in the income year commencing on the 1st day of April 1983 and in every subsequent year.
11 Power to exempt employees’ allowances
(1)
The principal Act is hereby further amended by repealing section 73 (as substituted by section 9 of the Income Tax Amendment Act 1980), and substituting the following section:
“73
“(1)
For the purposes of this section—
“‘Additional transport costs’ means—
“(a)
In relation to an employee and to any of the factors referred to in paragraphs (a) to (e) of subsection (3) of this section, the transport costs incurred by the employee in travelling between his home and his place of work, in excess of the costs which the Commissioner is satisfied that that employee would ordinarily have been expected to incur in that travelling were it not for that factor; and
“(b)
In relation to an employee and the factor referred to in paragraph (f) of subsection (3) of this section, the transport costs incurred by the employee in travelling between his home and his place of work in excess of an amount equal to $1 for each day on which the employee attends that place of work to perform his duties:
“Provided that, except in special circumstances in any case where the approval of the Commissioner is obtained, any distance in excess of 70 kilometres for any one day shall not be taken into account in calculating any additional transport costs:
“‘Allowance in respect of or in relation to the employment or service of any person’ includes remuneration paid in respect of or in relation to the services of any person as Chairman or as a member of a local authority or statutory Board within the meaning of the Fees and Travelling Allowances Act 1951 or in respect of or in relation to the services of any person as Chairman or as a member of any committee, board, council, or other body whatsoever to whom remuneration is paid pursuant to any other Act:
“‘Award’, ‘collective agreement’, and ‘instrument’ have the same meanings as in regulation 2 of the Wage Adjustment Regulations 1974:
“‘Public passenger transport system’ means a public passenger transport service which the Commissioner is satisfied—
“(a)
Operates fixed routes and regular timetables; and
“(b)
Is adequate and has the capacity to serve the place of work of the employer.
“(2)
Subject to this section, the Commissioner may from time to time determine whether and to what extent any allowance in respect of or in relation to the employment or service of any person constitutes a reimbursement of expenditure incurred by that person in gaining or producing his assessable income, and the allowance shall to the extent so determined be exempt from tax.
“(3)
Subject to this section the Commissioner may exempt from tax the whole or any part of any allowance, not being an allowance or part of an allowance which is exempt from tax under subsection (2) of this section, paid by an employer to an employee in respect of additional transport costs incurred by that employee in travelling between his home and his place of work for the purposes of his employment with that employer, to the extent that the Commissioner is satisfied, and thereupon determines, that the allowance constitutes a reimbursement of the whole or part of additional transport costs incurred by the employee for the benefit or convenience of the employer in relation to that employment where those additional transport costs were attributable to any one or more of the following factors:
“(a)
The time or times of day at or during which, or the day or days of the week on or during which, the employee was required to perform the duties of that employment:
“(b)
The carriage, necessitating the type of transport used, of any plant, machinery, equipment, technical aid, goods, or material for use or disposal by the employee in the course of that employment:
“(c)
The fulfilling of an obligation under any Act:
“(d)
A temporary change in the place of work of the employee from the normal place of work, in relation to the same employer:
“(e)
Any other condition of work of the employee:
“(f)
The absence of a public passenger transport system serving the place of work.
“(4)
On written application by any employer or workers’ union, or the authorised representative of any employer or group of employees or, where in the opinion of the Commissioner it is necessary to do so, the Commissioner may—
“(a)
For the purposes of subsection (2) of this section determine an amount equal to the average amount of the expenditure incurred during each pay-period by any employee or group of employees, being the amount of expenditure in respect of which a reimbursing allowance is payable; and
“(b)
For the purposes of subsection (3) of this section, determine an amount equal to the average amount of additional transport costs incurred during each pay-period by any employee or group of employees,—
and this section shall then apply as if the amount so determined by the Commissioner under paragraph (a) or, as the case may be, paragraph (b) of this subsection had been incurred during each pay-period by that employee or by each employee included in that group of employees of that employer.
“(5)
Where a determination in relation to any allowance is made by the Commissioner under subsection (2) or subsection (3) or subsection (4) of this section, the Commissioner shall give written notice thereof and that determination shall apply in relation to every payment of that allowance that is made after the period of one month that immediately succeeds the date of that notice.
“(6)
Notwithstanding subsection (5) of this section, in any case where—
“(a)
An allowance in respect of or in relation to the employment or service of any person is granted or is to be granted to that person under any clause or other provision of an award, collective agreement, or other instrument; and
“(b)
A determination made (on or after the 24th day of September 1981) in relation to that allowance by the Commissioner under subsection (2) or subsection (3) or subsection (4) of this section would, but for this subsection, apply in accordance with the said subsection (5); and
“(c)
Pursuant to that determination, that allowance is exempt to the extent of less than 100 percent; and
“(d)
At no time before the making of that determination has a determination in respect of that allowance been given effect to by the Commissioner,—
the Commissioner may specify in the written notice of that determination given by him under the said subsection (5) that that determination shall apply with effect from the making of such payment of that allowance as is first made on or after the earlier of—
“(e)
The date on which the said award, collective agreement, or other instrument, having been (after the date on which that notice is so given) first negotiated or, as the case may be, first renegotiated and, having been registered (as so negotiated or renegotiated) with the Arbitration Court, comes into force with respect to the said clause or other provision:
“(f)
The later of the following 2 days—
“(i)
The day immediately after the period of 6 months commencing with the date on which that notice is so given:
“(ii)
Such later day, after that period of 6 months, as the Commissioner (having regard to the particular award, collective agreement, or other instrument, to the progress towards its negotiation or renegotiation, and to such other circumstances as he deems relevant) considers appropriate and notifies in writing.
“(7)
Where the Commissioner is satisfied that in relation to an award, collective agreement, or other instrument, arrangements between the parties thereto have been made with a view to the affairs of the parties being so arranged or conducted that subsection (6) of this section would, but for this subsection, have effect more favourably in relation to those parties than would otherwise have been the case, the Commissioner may determine that the said subsection (6) shall not apply in relation to any allowance paid pursuant to any clause or other provision of that award, collective agreement, or instrument or shall apply in relation thereto to only such extent as the Commissioner sees fit.
“(8)
Notwithstanding anything in this Act, where any person who is granted or is to be granted an allowance to which a determination made under subsection (2) or subsection (3) of this section applies is dissatisfied with that determination, that person may object to that determination by delivering or posting to the Commissioner, within one month after the date on which the notice of that determination was given by the Commissioner, a written notice of objection stating shortly the grounds of his objection.
“(9)
Notwithstanding anything in this Act, where any employer or workers’ union, or the authorised representative of any employer or group of employees (referred to hereafter in this section as the applicant), being a party to an award, or a collective agreement, or another instrument a clause or other provision of which provides for the payment of an allowance in relation to which a determination has been made by the Commissioner under subsection (2) or subsection (3) or subsection (4) of this section, is dissatisfied with that determination, the applicant may, on behalf of any person who is granted or is to be granted that allowance, object to the determination by delivering or posting to the Commissioner a written notice of objection stating shortly the grounds of objection within one month after the date on which notice of that determination was given by the Commissioner.
“(10)
No notice of objection given after the time specified in subsection (8) or subsection (9) of this section shall be of any force or effect unless the Commissioner, in his discretion, accepts the same and gives notice to the objector accordingly.
“(11)
The Commissioner shall consider every objection made under this section and may alter the determination pursuant thereto.
“(12)
If an objection is not wholly allowed by the Commissioner, the objector may, within 2 months after the date on which the notice of disallowance is given to him by the Commissioner, by notice in writing to the Commissioner, require that the objection be referred to a Taxation Review Authority.
“(13)
For the purposes of this section, sections 32, 34, and 35 of this Act shall, in relation to any objection under this section, apply in the same manner and to the same extent that they would apply if the said objection were an objection made under section 30(1) of this Act.
“(14)
A Taxation Review Authority shall consider every objection referred to him by the Commissioner pursuant to subsection (12) of this section and shall in each case redetermine, in relation to the determination to which the objection is made, the extent (if any) to which the allowance to which that determination applies constitutes a reimbursement of expenditure incurred by that person in gaining or producing his assessable income.
“(15)
For the purpose of considering an objection referred to him by the Commissioner pursuant to subsection (12) of this section, a Taxation Review Authority may call for such evidence as he may require and shall, notwithstanding anything in this Act or any other Inland Revenue Act, have free access to all records under the control of the Commissioner which relate directly to the remuneration paid to the employee or, as the case may be, the group of employees where any allowance granted or to be granted (to that employee or to the employees in that group) is the allowance to which the objection referred to that Taxation Review Authority by the Commissioner under subsection (12) of this section relates.
“(16)
Notwithstanding anything in this Act or any other Inland Revenue Act, every decision or determination of a Taxation Review Authority made pursuant to subsection (14) of this section shall be final and conclusive.”
(2)
Section 43(1) of the Inland Revenue Department Act 1974 (as substituted by section 13 of the Inland Revenue Department Amendment Act 1976 and amended by section 9 of the Inland Revenue Department Amendment Act 1980) is hereby further amended by inserting, after the word “where”
, the words “, not being an objection referred to an Authority pursuant to section 73(12) of the Income Tax Act 1976,”
.
12 Income derived from use or occupation of land
(1)
Section 74(2)(b) of the principal Act is hereby amended by inserting in the second proviso, after the words “expenditure that is incurred”
, the words “on or before the 31st day of March 1983”
.
(2)
Section 74(2)(b) of the principal Act is hereby further amended by inserting in paragraph (i) of the third proviso, after the words “1st day of April 1975”
, the words “and on or before the 31st day of March 1983”
.
(3)
Section 213(2)(b) of the principal Act is hereby consequentially amended by inserting, after the words “of this Act”
, the words “, being expenditure incurred on or before the 31st day of March 1983”
.
13 Valuation of trading stock, including livestock
(1)
Section 85 of the principal Act is hereby amended by repealing the proviso to subsection (3).
(2)
Section 85 of the principal Act is hereby further amended by repealing subsections (6) and (7), and substituting the following subsections:
“(6)
An amount equal to the value of the trading stock of any taxpayer at the end of any income year shall be included in his assessable income for that year.
“(7)
An amount equal to the value of the trading stock of any taxpayer at the beginning of any income year shall be allowed as a deduction in calculating his assessable income for that income year.”
(3)
Section 85 of the principal Act is hereby further amended by adding the following subsection:
“(10)
Every reference in this section to an income year shall, where the taxpayer furnishes a return of income under section 15 of this Act for an accounting year ending with an annual balance date other than the 31st day of March, be deemed to be a reference to the accounting year corresponding with that income year, and, in every such case, this section shall, with any necessary modifications, apply accordingly.”
14 Standard value and nil value of livestock
(1)
Section 86(1) of the principal Act (as amended by section 14 of the Income Tax Amendment Act (No. 2) 1977 and section 25 of the Income Tax Amendment Act 1980) is hereby further amended by omitting from the definition of the expression “basic number”
the words “at the end of either of the 2 income years immediately preceding that taxpayer’s year of first election, whichever number is the greater”
, and substituting the words “at the end of any of the 4 income years immediately preceding that taxpayer’s year of first election, whichever number is the greatest”
.
(2)
Section 86(2) of the principal Act is hereby amended by inserting, after the words “notwithstanding anything in section 85(4) of this Act”
, the words “, but subject to this section”
.
(3)
Section 86 of the principal Act (as so amended) is hereby further amended by inserting, after subsection (2), the following subsection:
“(2a)
Where any taxpayer—
“(a)
Commences or recommences during any income year to derive income from livestock other than livestock used in dealing operations (that livestock other than livestock used in dealing operations being referred to hereafter in this subsection as the ‘farming livestock’); or
“(b)
Who derives income from farming livestock, in any income year—
“(i)
Brings into production or substantially increased production any land for the purpose of deriving income from farming livestock; or
“(ii)
Acquires any additional land for that purpose,—
and purchases in that income year or any of the 3 income years next succeeding that income year any farming livestock (not being replacement livestock) or, as the case may be, any additional farming livestock and has, with the concurrence of the Commissioner, fixed a standard value in respect of that farming livestock under subsection (2) of this section, the following provisions shall apply:
“(c)
The value to be taken into account in respect of that farming livestock pursuant to section 85(2) of this Act shall be—
“(i)
At the end of the income year in which that farming livestock is purchased, a value equal to an amount not less than the cost price of that farming livestock reduced by one-third of the amount by which that cost price exceeds the standard value so fixed:
“(ii)
At the end of the income year next succeeding the income year referred to in subparagraph (i) of this paragraph, a value equal to an amount not less than the cost price of that farming livestock reduced by two-thirds of the amount by which that cost price exceeds the standard value so fixed:
“(iii)
At the end of the income year next succeeding the income year referred to in subparagraph (ii) of this paragraph, the standard value so fixed:
“(d)
The value taken into account pursuant to subparagraph (i) or, as the case may be, subparagraph (ii) of paragraph (c) of this subsection shall, so far as it is applicable, be deemed to be, for the purposes of subsections (4) and (5) of this section, and sections 88, 89, 93, 94, and 95 of this Act, the standard value adopted or last adopted by the taxpayer or, as the case may be, the deceased taxpayer and for the time being in force under this Act.”
15 Limitation of deduction for expenditure to amount at risk
The principal Act is hereby further amended by inserting, after section 106, the following section:
“106a
“(1)
For the purposes of this section—
“‘Film’ means a film within the meaning of section 224b of this Act:
“‘Limited recourse loan’, in relation to a taxpayer and to any income year, means any amount borrowed by the taxpayer where the taxpayer is protected, either wholly or partially, against loss arising from any investment of the amount borrowed by virtue of—
“(a)
The amount borrowed being a non-recourse loan or part of a non-recourse loan; or
“(b)
Any guarantee provided by any person who has, at any time in the income year, an interest (other than an interest as a creditor) in the business or activity in which the amount so borrowed is invested or in any product, consequence, effect, or result of the carrying on of the business; or
“(c)
Any other arrangement which, in the opinion of the Commissioner, is of a substantially similar nature:
“‘Non-recourse loan’ means a loan arrangement entered into between a taxpayer and another person where the repayment of the loan or any interest thereon is secured upon the income to be derived from any venture or upon the happening of any other future event and where, in the event that the proceeds (whether of an income or capital nature) from that venture are less than the sum of the amount borrowed and any interest accrued thereon, or that that event does not occur, or for any other reason, the taxpayer is liable to repay less than the whole of the loan or, as the case may be, is liable to pay less than the whole of the interest accrued thereon.
“(2)
This section shall apply with respect to—
“(a)
Any limited recourse loan made on or after the 6th day of August 1982 which is used in any income year by the taxpayer in respect of or in relation to the acquisition, production, or marketing of any film:
“(b)
Any expenditure incurred in any income year by any taxpayer in respect of or in relation to the acquisition, production, or marketing of any film where that expenditure is financed from any such limited recourse loan;—
but shall not apply with respect to any limited recourse loan, or any expenditure financed from any limited recourse loan, where that loan is used wholly in respect of or in relation to the acquisition, production, or marketing of any film and where, under section 224c of this Act, the Commissioner is satisfied that that last-mentioned film commenced on or before the 5th day of August 1982.
“(3)
Where in any income year the whole or any part of a limited recourse loan made at any time to any taxpayer is used in the payment of any expenditure incurred by the taxpayer in respect of or in relation to the acquisition, production, or marketing of any film (not being expenditure of any of the kinds referred to in subsection (4) of this section) that would, but for this subsection, be allowable as a deduction under this Act in calculating the assessable income derived by the taxpayer (whether derived in that income year or in any other income year), the amount of that deduction shall, for the purposes of this Act, be reduced by an amount equal to so much of the amount of that limited recourse loan as is so used.
“(4)
Where in any income year the whole or any part of a limited recourse loan made at any time to any taxpayer is used in the payment of any expenditure of a capital nature incurred by the taxpayer in the acquisition, construction, installation, or extension of any asset (being an asset purchased for use in respect of or in relation to the acquisition, production, or marketing of any film and in respect of which a deduction by way of depreciation may be allowed under this Act by the Commissioner in calculating the assessable income derived by the taxpayer, whether derived in that income year or in any other income year), the amount of that expenditure shall, for the purposes of determining the amount of any such deduction by way of depreciation in respect of that asset, be reduced by an amount equal to so much of the amount of that limited recourse loan as is so used.
“(5)
Where in any income year the whole or any part of a limited recourse loan made at any time to any taxpayer is used in the payment of any expenditure of a capital nature incurred by the taxpayer in the acquisition, construction, installation, or extension of any asset (being an asset acquired, constructed, installed, or extended for use in respect of or in relation to the acquisition, production, or marketing of any film), the amount of that expenditure shall, for the purposes of calculating the amount (if any) allowable as a deduction under any of sections 119 to 123 of this Act in respect of that expenditure, be reduced by so much of the amount of that limited recourse loan as is so used.
“(6)
Where any limited recourse loan has been made to any taxpayer in any income year, that loan shall be deemed to be used in the payment, in the following order, of—
“(a)
First, so much of the expenditure, being expenditure of the kind referred to in subsection (3) of this section and being expenditure for use in the payment of which that limited recourse loan was so made, as, having been incurred in any income year preceding that income year, was not paid before the commencement of that income year:
“(b)
Secondly, so much of the expenditure, being expenditure of the kind referred to in subsection (4) of this section and being expenditure for use in the payment of which that limited recourse loan was so made, as, having been incurred in any income year preceding that income year, was not paid before the commencement of that income year:
“(c)
Thirdly, the payment of any expenditure, of the kind referred to in the said subsection (3), incurred in that income year:
“(d)
Fourthly, the payment of any expenditure, of the kind referred to in the said subsection (4), incurred in that income year.
“(7)
Where in any income year any taxpayer repays the whole or any part of a limited recourse loan made to him, the following provisions shall apply:
“(a)
The amount of that repayment shall, to the extent that it is equal to or less than the amount of the limited recourse loan that, pursuant to subsection (6)(a) of this section, is deemed to be applied in the making of the payment of the expenditure of the kind referred to in that subsection, be deemed, for the purposes of this Act, to be an amount of expenditure of that kind incurred by the taxpayer in that income year; and
“(b)
So much (if any) of that repayment as exceeds the amount which under paragraph (a) of this subsection is deemed to be an amount of expenditure incurred by the taxpayer in that income year, shall be deemed, for the purposes of this Act, to be an amount of the expenditure of the kind referred to in subsection (6)(b) of this section, incurred by the taxpayer in that income year; and
“(c)
So much (if any) of that repayment as exceeds the aggregate of the amounts which under paragraphs (a) and (b) of this subsection are deemed to be amounts of expenditure incurred by the taxpayer in that income year, shall be deemed, for the purposes of this Act, to be an amount of the expenditure of the kind referred to in subsection (6)(c) of this section, incurred by the taxpayer in that income year; and
“(d)
So much (if any) of that repayment as exceeds the aggregate of the amounts which under paragraphs (a), (b), and (c) of this subsection are deemed to be amounts of expenditure incurred by the taxpayer in that income year, shall, to the extent that it does not exceed the amount of the expenditure of the kind referred to in subsection (6)(d) of this section, be deemed, for the purposes of this Act, to be an amount of expenditure of the kind referred to in that subsection incurred by the taxpayer in that income year; and
“(e)
To the extent that the amount of the expenditure of the kind referred to in paragraph (a), or paragraph (b), or paragraph (c), or paragraph (d) of subsection (6) of this section (being the expenditure in the payment of which that limited recourse loan is deemed under that subsection to have been applied) exceeds the amount which, pursuant to, as the case may be, paragraph (a), or paragraph (b), or paragraph (c), or paragraph (d) of this subsection, is deemed to be an amount of expenditure incurred by the taxpayer in that income year, the amount of that excess shall for the purposes of this subsection, be deemed, in relation to any further such repayment made thereafter in any income year, to be the amount of the expenditure (of the kind referred to in, as the case may be, paragraph (a), or paragraph (b), or paragraph (c), or paragraph (d) of subsection (6) of this section) in the payment of which that limited recourse loan is, under the said subsection (6), deemed to have been applied, and so on:
“Provided that, in any case where, in relation to the amount of the expenditure of the kind referred to in, as the case may be, paragraph (a), or paragraph (b), or paragraph (c), or paragraph (d) of the said subsection (6), no such excess remains at the end of any income year, after the application (in relation to that income year) of the foregoing provisions of this subsection, this subsection shall, in relation to any further such repayment made thereafter in any income year, be read as if the reference to, as the case may be, that paragraph (a), or that paragraph (b), or that paragraph (c), or that paragraph (d) were a reference to the next succeeding paragraph (if any) of the said subsection (6).
“(8)
Subsection (7) of this section shall not apply to the extent that the whole or any part of a limited recourse loan is used, or could have been used, to repay the limited recourse loan referred to in that subsection.
“(9)
Notwithstanding anything in section 104 of this Act, in calculating the assessable income derived in any income year by any taxpayer, no deduction shall be allowed in respect of any interest payable in respect of a limited recourse loan (being a limited recourse loan which is used in the payment of any expenditure incurred in respect of the acquisition, production, or marketing of any film) except to the extent that the Commissioner is satisfied that the interest has been paid during the income year.
“(10)
Every reference in this section to an income year shall, where a taxpayer furnishes a return of income under section 15 of this Act for an accounting year ending with an annual balance date other than the 31st day of March, be deemed to be a reference to the accounting year corresponding with that income year, and, in every such case, this section shall, with any necessary modifications, apply accordingly.”
16 Depreciation allowances, etc., on motorcars
(1)
Section 110 of the principal Act (as amended by section 2(2) of the Income Tax Amendment Act (No. 2) 1980 and section 14(2) of the Income Tax Amendment Act 1981) is hereby further amended by inserting, after subsection (1), the following subsection:
“(1a)
For the purposes of this section, where under 2 or more consecutive leases or bailments, or 2 or more successive leases or bailments that are in each case separated successively the one from the other by a period of time not exceeding one month (those consecutive leases and those successive bailments being referred to hereafter in this subsection as the ‘leases’), any motor vehicle is leased or bailed to the same person,—
“(a)
Those leases shall be deemed to be one lease extending throughout the period of time from the commencement of the first of those leases to the expiry of the last of those leases; and
“(b)
Every motor vehicle leased or bailed pursuant to those leases shall be deemed to be a motor vehicle leased throughout that last-mentioned period of time.”
(2)
This section shall apply in respect of any motor vehicle acquired on or after the day on which this Act receives the Governor-General’s assent.
17 Packing houses
(1)
Section 112(1) of the principal Act is hereby amended by repealing the definition of the expression “export packing house”
and inserting, after the definition of the expression “new”
, the following definition:
“‘Packing house’ has the same meaning as in the Meat Act 1981:”.
(2)
Section 112(2)(h) of the principal Act is hereby amended by omitting the words “an export packing house”
, and substituting the words “a packing house”
.
(3)
Section 116(1) of the principal Act is hereby amended by repealing the definition of the expression “export packing house”
, and inserting, after the definition of the expression “export slaughterhouse”
, the following definition:
“‘Packing house’ has the same meaning as in the Meat Act 1981:”.
(4)
Section 116(2) of the principal Act is hereby amended by omitting the words “an export packing house”
, and substituting the words “a packing house”
.
18 Depreciation allowance for alternative fuel systems in certain motorcars
(1)
The principal Act is hereby amended by inserting, after section 114a (as inserted by section 18 of the Income Tax Amendment Act (No. 2) 1977), the following section:
“114b
“(1)
For the purposes of this section—
“‘Motorcar’ means a motorcar as defined in section 110 of this Act:
“‘Qualifying expenditure’, in relation to the manufacture and assembling of a motorcar, means any expenditure of a capital nature incurred in incorporating in the motorcar equipment which enables it to burn and be powered by compressed natural gas or liquefied petroleum gas indigenous to New Zealand:
“Provided that in no case shall the amount of expenditure which is qualifying expenditure under this section exceed,—
“(a)
Where that equipment includes not more than one storage cylinder for the storage in that motorcar of such compressed natural gas, $1,200:
“(b)
Where that equipment includes more than one storage cylinder for the storage in that motorcar of such compressed natural gas, $1,600:
“(c)
Where that equipment includes one or more storage cylinders for the storage in that motorcar of such liquefied petroleum gas, $1,400.
“(2)
Where a taxpayer engaged in any business in New Zealand incurs, in the carrying on of that business, any qualifying expenditure in the acquisition of a new motorcar, the Commissioner may, subject to this section and sections 111 and 117 of this Act, in calculating the assessable income derived by the taxpayer from that business, allow in respect of that qualifying expenditure such deduction by way of depreciation as he thinks just.
“(3)
Where a deduction by way of depreciation under this section is allowed to any taxpayer in respect of any qualifying expenditure, no other deduction shall be allowed under any other provision of this Act in respect of that expenditure.”
(2)
Section 110(1) of the principal Act is hereby amended by omitting from paragraph (b) of the definition of the expression “expenditure”
the words “income year”
, and substituting the words “income year; and”
.
(3)
Section 110(1) of the principal Act is hereby further amended by inserting, after paragraph (b) of the definition of the expression “expenditure”
(as amended by subsection (2) of this section), the following paragraph:
“(c)
Qualifying expenditure for the purposes of section 114b of this Act:”.
19 Regional investment allowance on certain new plant and machinery
(1)
Section 119 of the principal Act (as amended by section 33 of the Income Tax Amendment Act 1979) is hereby further amended by inserting, after subsection (3), the following subsection:
“(3a)
Subject to this section, in any case where—
“(a)
The Commissioner is satisfied that either—
“(i)
A binding contract has been entered into by any taxpayer on or before the 5th day of August 1982; or
“(ii)
On or before the 5th day of August 1982 such preliminary steps of a definite nature have been taken by any taxpayer as are necessary for the purpose of enabling him to enter into a binding contract and that binding contract is entered into on or before the 31st day of March 1983; and
“(b)
Pursuant to that binding contract, expenditure of any of the kinds referred to in subsection (3) of this section is incurred by that taxpayer on or after the 1st day of April 1983; and
“(c)
That expenditure is incurred within such period after the 31st day of March 1983 as, in the opinion of the Commissioner, is reasonable in the circumstances of the particular case,—
subsection (3) of this section shall apply in relation to that expenditure as if the date on which that expenditure is incurred were the terminating date in relation to that expenditure.”
(2)
Section 119 of the principal Act (as so amended) is hereby further amended by inserting, after subsection (4), the following subsection:
“(4a)
Subject to this section, in any case where—
“(a)
The Commissioner is satisfied that either—
“(i)
On or before the 5th day of August 1982 any taxpayer has entered into a binding agreement to lease from any person under a qualifying lease any new plant or machinery to which this section applies; or
“(ii)
On or before the 5th day of August 1982 such preliminary steps of a definite nature have been taken by any taxpayer as are necessary for the purpose of enabling him to enter into a binding agreement to lease under a qualifying lease any such plant or machinery and that binding agreement to lease is entered into on or before the 31st day of March 1983; and
“(b)
Pursuant to that binding agreement, the taxpayer commences, within such period after the 31st day of March 1983 as, in the opinion of the Commissioner, is reasonable in the circumstances of the particular case, to so lease that plant or machinery for use by him in New Zealand in the production of assessable income,
subsection (4) of this section shall apply as if the terminating date in relation to that lease were the date on which that leasing so commences.”
20 Investment allowance on new manufacturing plant and machinery used for export
(1)
Section 120 of the principal Act (as amended by section 34 of the Income Tax Amendment Act 1979) is hereby further amended by inserting, after subsection (1), the following subsection:
“(1a)
Subject to this section, in any case where—
“(a)
The Commissioner is satisfied that either—
“(i)
A binding contract has been entered into by any taxpayer on or before the 5th day of August 1982; or
“(ii)
On or before the 5th day of August 1982 such preliminary steps of a definite nature have been taken by any taxpayer as are necessary for the purpose of enabling him to enter into a binding contract and that binding contract is entered into on or before the 31st day of March 1983; and
“(b)
Pursuant to that binding contract, expenditure of any of the kinds referred to in subsection (1) of this section is incurred by that taxpayer on or after the 1st day of April 1983; and
“(c)
That expenditure is incurred within such period after the 31st day of March 1983 as, in the opinion of the Commissioner, is reasonable in the circumstances of the particular case,—
subsection (1) of this section shall apply in relation to that expenditure as if the date on which that expenditure is incurred were the terminating date in relation to that expenditure.”
(2)
Section 120 of the principal Act (as so amended) is hereby further amended by inserting, after subsection (2), the following subsection:
“(2a)
Subject to this section, in any case where—
“(a)
The Commissioner is satisfied that either—
“(i)
On or before the 5th day of August 1982 any taxpayer has entered into a binding agreement to lease from any person under a qualifying lease any new manufacturing plant or machinery to which this section applies; or
“(ii)
On or before the 5th day of August 1982 such preliminary steps of a definite nature have been taken by any taxpayer as are necessary for the purpose of enabling him to enter into a binding agreement to lease under a qualifying lease any such plant or machinery and that binding agreement to lease is entered into on or before the 31st day of March 1983; and
“(b)
Pursuant to that binding agreement, the taxpayer commences, within such period after the 31st day of March 1983 as, in the opinion of the Commissioner, is reasonable in the circumstances of the particular case, to so lease that manufacturing plant or machinery for use by him in New Zealand in the production of assessable income,—
subsection (2) of this section shall apply as if the terminating date in relation to that lease were the date on which that leasing so commences.”
(3)
Section 120 of the principal Act (as so amended) is hereby further amended by inserting, after subsection (4), the following subsection:
“(4a)
Subject to this section, in any case where—
“(a)
The Commissioner is satisfied that pursuant to an export development project either—
“(i)
On or before the 5th day of August 1982 any taxpayer has entered into a binding contract for the acquisition, installation, or extension of new manufacturing plant or machinery or a binding agreement to lease under a qualifying lease any such plant or machinery; or
“(ii)
On or before the 5th day of August 1982 such preliminary steps of a definite nature have been taken by the taxpayer as are necessary for the purpose of enabling him to enter into a binding contract for the acquisition, installation, or extension of any such plant or machinery or a binding agreement to lease under a qualifying lease any such plant or machinery, and that binding contract or binding agreement to lease is entered into on or before the 31st day of March 1983; and
“(b)
Pursuant to that binding contract, expenditure of any of the kinds referred to in subsection (4)(a) of this section is incurred in any income year in any business of that taxpayer or, as the case may be, pursuant to that binding agreement new manufacturing plant or machinery to which this section applies is in any income year in any business of that taxpayer leased from any person under a qualifying lease; and
“(c)
That expenditure is incurred or, as the case may be, that leasing commences within such period after the 31st day of March 1983 as, in the opinion of the Commissioner, is reasonable in the circumstances of the particular case,—
subsection (4) of this section shall apply as if the terminating date in relation to that expenditure or, as the case may be, that lease were the date on which that expenditure is so incurred or that leasing so commences.”
21 Investment allowance on fishing boats and certain fishing plant and machinery
(1)
Section 123 of the principal Act is hereby amended by inserting, after subsection (4), the following subsection:
“(1A)
Subject to this section, in any case where—
“(a)
The Commissioner is satisfied that either—
“(i)
A binding contract has been entered into by any taxpayer on or before the 5th day of August 1982; or
“(ii)
On or before the 5th day of August 1982 such preliminary steps of a definite nature have been taken by any taxpayer as are necessary for the purpose of enabling him to enter into a binding contract and that binding contract is entered into on or before the 31st day of March 1983; and
“(b)
Pursuant to that binding contract, expenditure of any of the kinds referred to in subsection (4) of this section is incurred in any income year in any business of that taxpayer; and
“(c)
That expenditure is incurred within such period after the 31st day of March 1983 as, in the opinion of the Commissioner, is reasonable in the circumstances of the particular case,—
subsection (4) of this section shall apply in relation to that expenditure as if the date on which that expenditure is incurred were the terminating date in relation to that expenditure.”
(2)
Section 123 of the principal Act is hereby further amended by inserting, after subsection (5), the following subsection:
“(5a)
Subject to this section, in any case where—
“(a)
The Commissioner is satisfied that either—
“(i)
On or before the 5th day of August 1982 any taxpayer has entered into a binding agreement to lease from any person under a qualifying lease any new fishing plant or machinery to which this section applies; or
“(ii)
On or before the 5th day of August 1982 such preliminary steps of a definite nature have been taken by any taxpayer as are necessary for the purpose of enabling him to enter into a binding agreement to lease under a qualifying lease any such plant or machinery and that binding agreement to lease is entered into on or before the 31st day of March 1983; and
“(b)
Pursuant to that binding agreement, the taxpayer commences, within such period after the 31st day of March 1983 as, in the opinion of the Commissioner, is reasonable in the circumstances of the particular case, to so lease that fishing plant or machinery for use by him in New Zealand in the production of assessable income,—
subsection (5) of this section shall apply as if the terminating date in relation to that lease were the date on which that leasing so commences.”
22 Deduction of certain expenditure by rock oyster, mussel, scallop, and freshwater fish farmers
Section 128(2) of the principal Act is hereby amended by inserting, after paragraph (b), the following paragraph:
“(ba)
Any taxpayer engaged in the business of scallop farming in New Zealand shall, in calculating the assessable income derived by him from that business, be entitled to deduct any expenditure incurred in that business in any income year commencing on or after the 1st day of April 1982 and ending on or before the terminating date, and not deductible otherwise than under this section, in—
“(i)
The acquisition, preparation, and mooring of floating structures for collecting spat; or
“(ii)
The acquisition, mooring, and outfitting of longlines from which the collected spat is suspended for subsequent growth; and”.
23 Revised assessments where land or fish farms or certain assets sold within 10 years after acquisition after deductions in respect of certain expenditure
(1)
The principal Act is hereby amended by repealing section 129, and substituting the following section:
“129
“(1)
For the purposes of this section—
“‘Deduction for interest’, in relation to any land to which this section applies, means a deduction in respect of any interest which, in the opinion of the Commissioner, was payable on—
“(a)
Money borrowed (whether secured by way of mortgage over that land or not) and used for the purpose of—
“(i)
The purchase or other acquisition of that land, together with any improvements thereon; or
“(ii)
The effecting of any improvements of a capital nature on or in relation to that land; or
“(b)
Money borrowed and used for the purpose of the repayment of any other money borrowed where that other money was used for the purpose of—
“(i)
Any of the purposes referred to in paragraph (a) of this definition; or
“(ii)
The repayment of the money borrowed and used for the purpose of the aforesaid repayment:
“‘Disposal’, in relation to a lease or a licence within the meaning of the Marine Farming Act 1971, includes any assignment, expiry, surrender, or forfeiture of any such lease or licence; and ‘disposed’ and ‘disposition’ have corresponding meanings:
“‘Economic farm property’, in relation to a taxpayer, means any land which, in the opinion of the Commissioner, after, if he considers it necessary, consultation with the Director-General of Agriculture and Fisheries or the General Manager of the Rural Banking and Finance Corporation of New Zealand or any other person, is of such an area and nature that it is capable of being worked by the taxpayer as an economic unit as a farming, agricultural, horticultural, viticultural, or aquacultural business, as the case may be:
‘Land’ includes—
“(a)
Any estate or interest in land, whether legal or equitable, corporeal or incorporeal, freehold or chattel; and
“(b)
Any option to acquire land or any estate or interest in land; and
“(c)
Any lease, or any interest under a lease, of any leased area within the meaning of the Marine Farming Act 1971; and
“(d)
Any licence, or any interest under a licence, relating to any licensed area within the meaning of the Marine Farming Act 1971;—but does not include a mortgage:
“‘Lease improvements’, in relation to any lease or licence under the Marine Farming Act 1971, means any improvements on or in relation to the leased area or the licensed area to which that lease or licence relates.
“(2)
Where—
“(a)
Any land, whether or not together with the improvements thereon, or the lease improvements relating thereto, is sold or otherwise disposed of by a taxpayer within 10 years from the date of his acquisition of that land; and
“(b)
In calculating the assessable income of—
“(i)
The taxpayer; or
“(ii)
Any other person where the taxpayer and that other person are associated persons; or
“(iii)
The taxpayer and the other person,—a deduction has been allowed in respect of expenditure in relation to that land, being—
“(iv)
A deduction which, but for section 126 or section 127 or section 128 of this Act, would not have been allowed; or
“(v)
A deduction for interest; and
“(c)
In any case where the land is sold or otherwise disposed of without the improvements thereon or the lease improvements relating thereto, the value of the consideration for the sale or other disposal of the land exceeds the amount of the original purchase price of the land; and
“(d)
In any case where the land is sold or otherwise disposed of together with the improvements thereon, or the lease improvements relating thereto, the value of the consideration for the sale or other disposal of the land and the improvements or lease improvements exceeds the aggregate of the amounts of the original purchase price and any expenditure on those improvements or those lease improvements, being expenditure which has, since the acquisition of the land by the taxpayer, been incurred by—
“(i)
The taxpayer; or
“(ii)
The other person; or
“(iii)
The taxpayer and the other person,—and in respect of which no deduction, other than a deduction by way of depreciation or investment allowance under any provision of this Act, has been allowed under this Act,—
the amount of the excess shall be deemed, subject to subsection (4) of this section, to be assessable income derived by the taxpayer in the year in which the land is sold or otherwise disposed of to the extent that that excess does not exceed the sum of the total deductions allowed—
“(e)
Under section 126, or section 127, or section 128 of this Act; and
“(f)
In respect of the deduction for interest,—to the taxpayer or to the other person or to both the taxpayer and the other person since the acquisition of the land by the taxpayer.
“(3)
Where any taxpayer has been allowed a deduction pursuant to section 127 or section 128 of this Act in respect of the cost of any asset for which, but for that deduction, a deduction by way of depreciation would have been allowable under this Act, and the asset has been sold or otherwise disposed of by the taxpayer within 10 years from the date of his acquisition of that asset, the value of the consideration received for the sale or other disposal of that asset shall be deemed to be assessable income derived by the taxpayer in the year in which the asset is sold or otherwise disposed of:
“Provided that in no case shall the amount deemed to be assessable income under this subsection exceed the cost price of the asset sold or otherwise disposed of.
“(4)
For the purposes of this section and notwithstanding section 25 of this Act, if the taxpayer so elects, by notice in accordance with subsection (6) of this section (which election shall be irrevocable) the Commissioner may apportion, in such amounts as he considers just and equitable, the amount that under subsection (2) or, as the case may be, subsection (3) of this section is deemed to be assessable income derived by the taxpayer, between—
“(a)
The income year in which the sale or disposition takes place (being a sale or disposition to which subsection (2) or subsection (3) of this section applies); and
“(b)
Any number of the 4 income years that immediately precede that first-mentioned income year (being income years throughout the whole of which the land to which subsection (2) of this section applies or, as the case may be, the asset to which subsection (3) of this section applies, was owned by the taxpayer),—
and in every such case the part of the excess so apportioned to any income year shall be deemed to have been income derived by the taxpayer in that income year, and shall be assessable for income tax accordingly.
“(5)
Notwithstanding section 25 of this Act, where in any income year any taxpayer to whom this section applies—
“(a)
Sells or otherwise disposes of any land—
“(i)
To which this section applies; and
“(ii)
That is used by the taxpayer, or by the taxpayer and any other person, primarily and principally in the carrying on of a farming, agricultural, horticultural, viticultural, or aquacultural business; and
“(b)
That sale or other disposal is the first sale or other disposal of any such land by that taxpayer to which subsection (2) of this section applies; and
“(c)
Within the period of 12 months commencing with the date on which that sale or other disposition of land was made (or commencing with such earlier date as the Commissioner in his discretion, on application made to him in writing by the taxpayer, determines, having regard to the particular circumstances of the case and to the tenor of this section, is fair and reasonable) the taxpayer purchases or otherwise acquires an economic farm property; and
“(d)
That economic farm property is used by—
“(i)
That taxpayer; or
“(ii)
That taxpayer and any other person—primarily and principally in the carrying on of a farming, agricultural, horticultural, viticultural, or aquacultural business,—
the tax payable on the amount that, under subsection (2) or, as the case may be, subsection (4) of this section, is deemed to be assessable income derived by the taxpayer, shall, notwithstanding anything in this Act, be not payable unless and until that economic farm property is sold or otherwise disposed of by the taxpayer within the period of 10 years from the date on which he purchased or otherwise acquired the land, the sale or other disposition of which is the sale or disposition referred to in paragraph (b) of this subsection (that period referred to hereafter in this section as the specified period):
“Provided that in any case where that economic farm property is sold or otherwise disposed of by the taxpayer within the specified period and that sale or other disposition is a sale or other disposition to which subsection (9)(a), or subsection (9)(b) or subsection (9)(c), or subsection (9)(d), or subsection (9)(e) of this section applies, that sale or other disposition of that economic farm property shall, for the purposes of this subsection, be deemed not to have been made within the specified period.
“(6)
Every notice of election by any taxpayer under subsection (4) of this section shall be in writing and shall be given to the Commissioner within the time within which the taxpayer is required to furnish a return of income of the taxpayer for the year in which the land or, as the case may be, the asset is sold or otherwise disposed of, or within such further time as the Commissioner, in his discretion, may allow in any case or class of cases.
“(7)
The Commissioner may, where he considers it necessary for the purposes of subsection (2) of this section,—
“(a)
Determine the purchase price or, as the case may be, the value of the consideration for the sale or other disposal of any land in such manner as he thinks fit:
“(b)
Where any land is acquired or, as the case may be, sold or otherwise disposed of, together with any other real or personal property, apportion the purchase price or the value of the consideration for the sale or other disposal, between that land and that other real or personal property in such manner as he thinks fit.
“(8)
This section shall apply where the land sold or otherwise disposed of constitutes the whole or part of any land to which this section applies or the whole or part of any such land together with any other land.
“(9)
This section shall not apply where any profit or gain is derived by any person on the sale or other disposition of any land or any asset, and
“(a)
That land has been—
“(i)
Compulsorily acquired from that person under any Act by the Crown or by any public authority or by any local authority; or
“(ii)
Sold in circumstances in which the Commissioner is satisfied that, had the sale not been made, the land would have been compulsorily acquired by the purchaser from that person (being a compulsory acquisition of the kind referred to in subparagraph (i) of this paragraph); or
“(b)
That sale or other disposition is made by a trustee in the estate of any person (being a deceased person), whether by will or on an intestacy or otherwise, and that land or, as the case may be, that asset, was owned by that person at the date of his death; or
“(c)
That sale or other disposition is made, after the death of any person (being a deceased person in relation to the estate of whom paragraph (b) of this subsection has applied in respect of a sale or other disposition made by the trustee) by the widow or widower of that person and—
“(i)
That land or, as the case may be, that asset so sold or otherwise disposed of was, at the date of such death, used by that person and that widow or widower (being at that date the spouse of that person) in the carrying on by both of them of any business; and
“(ii)
That sale or other disposition is, in the opinion of the Commissioner, compelled by reason of circumstances arising primarily, principally, and directly from that death; or
“(d)
That sale or other disposition is made, after the death of any person (being a deceased person in relation to the estate of whom paragraph (b) of this subsection has applied in respect of a sale or other disposition made by the trustee) by the widow or widower of that person and—
“(i)
That land or, as the case may be, that asset so sold or otherwise disposed of was owned by that person at the date of his death; and
“(ii)
That sale or other disposition is, in the opinion of the Commissioner, compelled by reason of circumstances arising primarily, principally, and directly from that death; or
“(e)
That sale or other disposition is made in compliance with an order of any Court, made under—
“(i)
Section 25(2) of the Matrimonial Property Act 1976; or
“(ii)
Any other Act, in any case where the taxpayer satisfies the Commissioner that the making of that Court order has not been preceded by any action or inaction by or on the part of the taxpayer, being action or inaction having the purpose or intention, or purposes or intentions including the purpose or intention, of deferring the making of a sale or other disposal of that land or, as the case may be, that asset, that, had that Court order not been made, he would have made voluntarily; or
“(f)
The profit or gain so derived is required, under any other provision of this Act, to be included in the assessable income derived by that person in any income year:
“Provided that in any case where paragraph (f) of this subsection applies, this section shall apply to the extent that the profit or gain so derived is not so included in the assessable income derived by that person.
“(10)
Where the Commissioner is satisfied that arrangements have been made between a taxpayer and another person with a view to the affairs of the taxpayer and of that other person being so arranged or conducted that this section would, but for this subsection, have effect more favourably in relation to that taxpayer than would otherwise have been the case, the amount of the excess assessable to the taxpayer shall be not less than the amount of the excess which would, in the opinion of the Commissioner, have been assessable income derived by the taxpayer if those arrangements had not been made.”
(2)
This section shall come into force on the 1st day of April 1983 and shall apply with respect to every sale or other disposition of land, being land within the meaning of section 129(1) of the principal Act (as substituted by subsection (1) of this section), or of an asset, made on or after that date.
24 Apportionment of substantial expenditure incurred in topdressing hill-country marginal land
The principal Act is hereby further amended by repealing section 132.
25 Gifts of money by companies to universities, approved institutes, and individuals for education or research
Section 146(1) of the principal Act is hereby amended—
(a)
By inserting in paragraph (b), after the words “whether incorporated or not,”
, the words “or any trust, or any department of the Executive Government of New Zealand”
:
(b)
By inserting in paragraph (d), after the words “whether incorporated or not,”
, the words “or any trust, or any department of the Executive Government of New Zealand”
:
(c)
By omitting the words “for the purposes of education, training, or research”
, and substituting the words “to be expended or invested for the purposes of education, training, or research”
.
26 Contributions to employees’ superannuation schemes
(1)
Section 150(1)(c) of the principal Act (as substituted by section 28(1) of the Income Tax Amendment Act 1980) is hereby repealed.
(2)
Section 150(1) of the principal Act is hereby further amended by adding the following paragraph:
“(f)
The term ‘subsidised employee superannuation scheme’ means a superannuation scheme which is approved by the Government Actuary under Part II of the Superannuation Schemes Act 1976 and classified by him as—
“(i)
A subsidised employee lump sum superannuation scheme class A fund; or
“(ii)
A subsidised employee lump sum superannuation scheme class B fund; or
“(iii)
A subsidised employee pension superannuation scheme.”
(3)
Section 150 of the principal Act is hereby further amended by repealing subsection (2), and substituting the following subsection:
“(2)
In calculating the assessable income of any employer for any income year a deduction shall be allowed in accordance with this section in respect of any amount paid by way of contributions by the employer to any subsidised employee superannuation scheme.”
(4)
Section 150 of the principal Act is hereby further amended by repealing subsection (3), and substituting the following subsection:
“(3)
The deduction allowed in accordance with this section in any income year shall not exceed the smaller of—
“(a)
The amount which the employer was required to contribute under the conditions of the subsidised employee superannuation scheme or schemes in respect of his employees in that income year:
“(b)
An amount equal to 10 percent of the amount of the earnings paid by him to all his employees in that income year.”
(5)
Section 150(5) of the principal Act is hereby amended—
(a)
By omitting from paragraph (a) the expression “subsection (3)(a)”
, and substituting the expression “subsection (3)”
:
(b)
By repealing paragraph (b).
(6)
The Income Tax Amendment Act 1980 is hereby consequentially amended by repealing section 28.
(7)
This section shall apply with respect to the tax on income derived in the income year commencing on the 1st day of April 1983 and in every subsequent year.
27 Export performance incentive for qualifying goods
Section 156a(4) of the principal Act (as inserted by section 18 of the Income Tax Amendment Act 1979) is hereby amended by adding the following paragraph:
“(f)
Where the Secretary of Trade and Industry has, in relation to any export goods, specified in a supplement or an amendment to a supplement issued pursuant to subsection (2a) of section 156c of this Act, that there shall be a reduction (to the extent determined and so specified by the Secretary) in the specified percentage in relation to those export goods, that reduction shall apply also to every assigned percentage in relation to those export goods.”
28 Schedule of export goods and schedule of qualifying services
(1)
Section 156c of the principal Act (as inserted by section 18 of the Income Tax Amendment Act 1979) is hereby amended by repealing subsection (1), and substituting the following subsection:
“(1)
For the purposes of this section—
“(a)
The expressions ‘assigned percentage’, ‘export goods’, and ‘specified percentage’ have the same meaning as in section 156a of this Act:
“(b)
The expression ‘Secretary’ means the Secretary of Trade and Industry.”
(2)
Section 156c of the principal Act (as so inserted) is hereby further amended by inserting, after subsection (2), the following subsection:
“(2a)
For the purposes of this section and section 156a of this Act, the Secretary may issue a supplement to the schedule of export goods, specifying,—
“(a)
That in respect of any export goods and any place outside New Zealand—
“(i)
Any such export goods shall, when exported to that place, be deemed not to be export goods; or
“(ii)
Notwithstanding any assigned percentage in relation to any such export goods so exported, the specified percentage (if any) in relation to those export goods shall be reduced to such extent as the Secretary determines:
“(b)
That in respect of any class or kind of export goods the specified percentage (if any) in relation thereto shall, notwithstanding any assigned percentage in relation to those export goods, be reduced to such extent as the Secretary determines.”
(3)
Section 156c of the principal Act (as so inserted) is hereby further amended—
(a)
By inserting in subsection (4), after the words “the schedule of qualifying services”
, the words “or to the supplement to the schedule of export goods”
:
(b)
By inserting in subsection (5), after the words “the schedule of qualifying services”
, the words “and the supplement to the schedule of export goods”
:
(c)
By inserting in subsections (6) and (8), after the words “the schedule of qualifying services”
where they appear in each subsection, in each case the words “or the supplement to the schedule of export goods”
.
29 Export-market development and tourist-promotion incentive
(1)
Section 156f(1) of the principal Act (as inserted by section 18 of the Income Tax Amendment Act 1979 and amended by section 35 of the Income Tax Amendment Act 1980) is hereby further amended by inserting in paragraph (e) of the definition of the expression “export-market development expenditure”
, after the words “a new markets export development grant is paid or payable”
, the words “, or an export programme suspensory loan is made”
.
(2)
Section 156f(1) of the principal Act (as so inserted and amended) is hereby further amended by inserting, after the definition of the expression “export programme grant”
, the following definition:
“‘Export programme suspensory loan’ means any suspensory loan made and designated by the Secretary of Trade and Industry or any officer authorised by him in that behalf as an export programme suspensory loan:”.
30 Government grants to businesses
Section 169(1)(a) of the principal Act (as amended by sections 24(2) and 59 of the Income Tax Amendment Act 1979) is hereby further amended by inserting, after the words “the Development Finance Corporation of New Zealand”
, the words “or the New Zealand Film Commission”
.
31 Performance related suspensory loans
Section 173(1) of the principal Act (as substituted by section 32 of the Income Tax Amendment Act 1978) is hereby amended by adding the following paragraph:
“(c)
Any export programme suspensory loan made by the Department of Trade and Industry and designated as such by that Department.”
32 New sections inserted
(1)
The principal Act is hereby further amended by inserting, after section 188, the following sections:
“188a Loss incurred in specified activities
“(1)
For the purposes of this section—
“‘To conduct’, in relation to any taxpayer and to any specified activity, means to carry on or engage in or hold an interest in the specified activity, whether alone, or in association with any other person or persons as a member of a partnership or a special partnership or as a joint venturer or as a co-owner; and ‘conduct’, ‘conducts’, and ‘conducted’ have corresponding meanings:
“‘Established activity’, in relation to a taxpayer who is an existing farmer, means any specified activity or specified activities (not being a specified activity within the meaning of paragraph (i) of the definition of the expression ‘specified activity’ in this subsection) that the taxpayer conducted on the 11th day of October 1982, where, in the opinion of the Commissioner, the conduct of the specified activity or the specified activities constituted the livelihood of the taxpayer and his sole or principal source of income:
“‘Existing farmer’ means a taxpayer who in any income year conducts any specified activity or specified activities (not being a specified activity within the meaning of paragraph (i) of the definition of the expression ‘specified activity’ in this subsection) where, in the opinion of the Commissioner, the conduct of the specified activity or the specified activities constitutes throughout that conduct in that income year the livelihood of the taxpayer and his sole or principal source of income:
“‘Income from personal exertion’ means income of any of the kinds referred to in paragraph (a) or paragraph (b) of section 65(2) of this Act; but does not include income from any business of renting, or lending money, or making financial investments:
“‘Related activity’, in relation to a specified activity conducted by any taxpayer in any income year, means—
“(a)
Any other specified activity conducted by the taxpayer in the income year that is of the same kind as that specified activity, whether or not conducted on the same land as that on which that specified activity is conducted:
“(b)
Any other specified activity conducted by the taxpayer in the income year which is deemed, under subsection (3) or subsection (4) of this section, to be an activity related to that specified activity:
“‘Specified activity’ means—
“(a)
The business of animal husbandry, including poultry-keeping, bee-keeping, and the breeding of horses (other than bloodstock):
“(b)
The business of growing trees or plants—
“(i)
For sale as growing trees or plants; or
“(ii)
For the production of fruit (other than grapes), vegetables, flowers, seeds, or other crops, not being crops (other than flowers) in respect of which the preparation of the land, and the planting and cultivation of the tree or plant, and the harvesting of the crop is accomplished within a period of 12 months:
“(c)
The business of viticulture:
“(d)
The business of rock oyster farming:
“(e)
The business of mussel farming:
“(f)
The business of scallop farming:
“(g)
The business of freshwater fish farming:
“(h)
The deriving, otherwise than in the conduct of a specified activity of the kind referred to in paragraph (a) of this definition, of income from livestock including poultry, bees, and horses (other than bloodstock):
“(i)
The acquiring or holding of any land with a view to the derivation from the whole or a part thereof of any rents, fines, premiums, or other revenues from any lease, licence, or other agreement relating to that land.
“(2)
In this section—
“(a)
The expression ‘land’ includes—
“(i)
Any estate or interest in land, whether legal or equitable, corporeal or incorporeal, freehold or chattel; and
“(ii)
Any option to acquire land or any estate or interest in land; and
“(iii)
Any lease, or any interest under a lease, of any leased area within the meaning of the Marine Farming Act 1971; and
“(iv)
Any licence, or any interest under a licence, relating to any licensed area within the meaning of the Marine Farming Act 1971; and
“(v)
Any lease improvements;—but does not include a mortgage:
“(b)
The expression ‘lease improvements’, in relation to any lease or licence under the Marine Farming Act 1971, means any improvements on or in relation to the leased area or the licensed area to which that lease or licence relates.
“(3)
Subject to this section, where in any income year any taxpayer, being an existing farmer, commences to conduct another specified activity that is different from the specified activity or, as the case may be, every one of the specified activities by virtue of which he is, immediately before that commencement, an existing farmer and the Commissioner is satisfied that that other specified activity is one that is usually conducted in association with and is complementary to the specified activity or, as the case may be, any of the specified activities by virtue of which the taxpayer is, immediately before the said commencement, an existing farmer, that other specified activity shall be deemed to be an activity related to the specified activity to which, the Commissioner is satisfied, it is complementary.
“(4)
Subject to this section, where in any income year any taxpayer, being an existing farmer, commences to conduct another specified activity that is different from the specified activity or, as the case may be, every one of the specified activities by virtue of which he is, immediately before that commencement, an existing farmer and that other specified activity is conducted on land that the taxpayer has owned, or has held under any lease, licence, or other agreement, throughout the period of 5 years ending on the date of the said commencement, that other specified activity shall be deemed to be an activity related to, as the case may be,—
“(a)
The specified activity by virtue of which the taxpayer is, immediately before the said commencement, an existing farmer; or
“(b)
Such one of the specified activities by virtue of which the taxpayer is, immediately before the said commencement, an existing farmer—
“(i)
As the taxpayer elects by notice in writing (which notice shall be irrevocable) given to the Commissioner within the time within which the taxpayer is required to furnish a return of his income for the income year in which he commenced to conduct that other specified activity; or
“(ii)
Where the taxpayer does not so elect, as the Commissioner determines.
“(5)
For the purposes of subsections (6) to (8) of this section, any specified activity that is a related activity shall be deemed to be part of the specified activity in relation to which it is a related activity.
“(6)
Subsection (7) of this section shall not apply in respect of any loss incurred in any income year by any taxpayer, being an existing farmer, in the conduct of any established activity.
“(7)
Where in any income year any taxpayer incurs a loss in the conduct of any specified activity, the following provisions shall apply and sections 19, 188, and 191 of this Act shall, to the extent and in the manner that they are thereby modified, apply accordingly:
“(a)
The amount of that loss which, notwithstanding anything in this Act, may be deducted from or set off against the assessable income derived by the taxpayer in that income year (referred to in paragraphs (b) and (d) of this subsection as ‘year 1’) otherwise than from the conduct of that specified activity shall not exceed the lesser of—
“(i)
$10,000:
“(ii)
The amount of that loss:
“(b)
To the extent (if any) that the loss cannot be deducted or set off pursuant to paragraph (a) of this subsection, the loss shall, subject to subsection (3) of the said section 19 and to subsections (2a) and (7) of the said section 188, be carried forward to the income year immediately succeeding year 1 (that immediately succeeding income year being referred to hereafter in this subsection as ‘year 2’) and shall be added to the amount of the loss (if any) incurred by the taxpayer in the conduct of that specified activity in year 2:
“(c)
Of the aggregate of the amounts of the losses that are so added to each other pursuant to paragraph (b) of this subsection, the amount which may, pursuant to the said sections 19 and 188, be deducted from or set off against the assessable income derived by the taxpayer in year 2 otherwise than from the conduct of that specified activity shall not exceed the lesser of—
“(i)
$10,000:
“(ii)
The amount of the said aggregate:
“(d)
In respect of any income year succeeding year 2, paragraphs (b) and (c) of this subsection shall (so far as they are applicable) apply as if—
“(i)
That succeeding income year were year 2; and
“(ii)
The income year immediately preceding that income year were year 1; and
“(iii)
The amount (if any) by which the aggregate referred to in the said paragraph (c) exceeds the amount deducted or set off pursuant to that paragraph were the amount of the loss to be carried forward pursuant to the said paragraph (b):
“(e)
In any case where the specified activity is conducted in any income year by 2 or more persons, the foregoing provisions of this subsection shall apply as if every reference therein to a taxpayer and to the amount of a loss incurred by him in the conduct of the specified activity were a reference to each such person and to the amount of his share of the amount of any joint loss incurred in that income year by those persons in the conduct of the specified activity:
“(f)
Where in any income year any taxpayer conducts 2 or more specified activities, the amount, of the aggregate of the amounts of the losses incurred by the taxpayer in that income year in the conduct of every such specified activity, that may be deducted from or set off against the assessable income derived by the taxpayer in that income year, whether from the conduct of those specified activities or otherwise than from the conduct thereof, shall not exceed the lesser of—
“(i)
$10,000:
“(ii)
The amount of the said aggregate:
“(g)
In any case where paragraph (f) of this subsection applies, the taxpayer may elect, by notice in writing (which notice shall be irrevocable) given to the Commissioner within the time within which the taxpayer is required to furnish a return of his income for the income year in which losses are incurred in the conduct of 2 or more specified activities, that, of the aggregate of the amounts of the losses referred to in the said paragraph (f), the amount that may be deducted or set off pursuant to that paragraph shall comprise such amount (if any) of each of those losses as the taxpayer specifies in that notice, and each such amount shall, subject to the said paragraph (f), be deducted or set off accordingly:
“(h)
Where, in any case where paragraph (g) of this subsection applies, there remains after the deduction or set off made pursuant to that subsection a residue of the loss in relation to which that deduction or set off was so made, and the amount of that residue is carried forward to the income year immediately succeeding the income year (referred to hereafter in this subsection as the ‘first year’) in which that loss was incurred, the following provisions shall apply:
“(i)
To the extent that that amount so carried forward is less than the assessable income derived in that immediately succeeding income year from the conduct of the specified activity (in the conduct of which that loss was incurred in the first year), that amount shall be deducted from or set off against that assessable income; and
“(ii)
To the extent (if any) that that amount so carried forward exceeds the assessable income so derived, paragraphs (f) and (g) of this subsection shall, in relation to the amount of that excess, apply as if that amount were the amount of the loss incurred, in the said immediately succeeding income year, in the conduct of the said specified activity.
“(8)
Notwithstanding anything in the foregoing provisions of this section, in any case where in any income year any taxpayer—
“(a)
Is engaged (on average in respect of the whole of the income year) principally and personally in conducting any specified activity (not being a specified activity within the meaning of paragraph (i) of the definition of the expression ‘specified activity’ in subsection (1) of this section) which, in the opinion of the Commissioner, is the livelihood of the taxpayer or the taxpayer is in the course of establishing as his livelihood; and
“(b)
Derives income from personal exertion, being income derived otherwise than from the conduct of that specified activity and being income which the taxpayer is compelled, by reason of circumstances that arise in the course of and as a result of the conduct of that specified activity, to derive; and
“(c)
Derives that income from personal exertion for the purposes of enabling him to meet expenditure (whether or not the expenditure is required to meet losses suffered through any adverse event, happening, or cause) essential for the maintenance of himself and his dependants, or for the continuance of that specified activity; and
“(d)
Would, in the opinion of the Commissioner, suffer hardship from the application of subsection (7) of this section,—
the Commissioner may determine that an amount of loss greater than that authorised in the said subsection (7)(being a loss incurred by the taxpayer in the conduct of the specified activity) may, subject to section 188(7) of this Act, be deducted from or set off against the said income from personal exertion derived by the taxpayer in such income year or income years as the Commissioner specifies.
“(9)
Every reference in this section to an income year shall, where the taxpayer furnishes a return of income under section 15 of this Act for an accounting year ending with an annual balance date other than the 31st day of March, be deemed to be a reference to the accounting year corresponding with that income year, and, in every such case, this section shall, with any necessary modifications, apply accordingly.
“188b Transitional provisions for payment of income tax arising from application of section 188a
“(1)
For the purposes of this section—
“‘To conduct’, in relation to a taxpayer and to any specified activity, has the same meaning as in section 188a(1) of this Act:
“‘Specified activity’ means a specified activity within the meaning of the definition of that expression in section 188a(1) of this Act, not being a specified activity within the meaning of paragraph (i) of that definition:
“‘Specified amount of tax’, in relation to the tax payable by any taxpayer on income derived in any transitional year, means an amount of tax equal to the difference between the amount of tax payable by that taxpayer on income derived in that transitional year and the amount of tax that would have been payable if section 188a of this Act had not applied in respect of any loss incurred by him in the conduct in the transitional year of any specified activity, being a specified activity that was conducted by him on the 11th day of October 1982:
“‘Transitional year’ means any of the 3 income years commencing on the 1st day of April 1983, the 1st day of April 1984, and the 1st day of April 1985.
“(2)
Notwithstanding anything in this Act but subject to this section, where the taxpayer so elects in accordance with subsection (5) of this section, the specified amount of tax payable by the taxpayer in respect of income derived in any transitional year shall be due and payable in 3 equal instalments, one of each such instalments being due and payable on each of the dates on which the taxpayer is required to pay the tax (if any) on the income derived in each of the 3 income years next succeeding that transitional year under section 361 or, as the case may be, section 392 of this Act.
“(3)
Interest, at the rate of 1.25 percent per month, shall be payable on so much of the amount of any instalment of the specified amount of tax as remains unpaid throughout any complete month in the period commencing on the day after the date on which the specified amount of tax would have been due and payable if it were not for this section, and ending on the date on which it is due and payable under subsection (2) or, as the case may be, subsection (6) of this section.
“(4)
Interest payable under subsection (3) of this section shall, subject to subsection (7) of this section, for all purposes other than the calculation of interest be deemed to be income tax and be added to and form part of the instalment to which it relates and be due and payable on the same date as that instalment is due and payable.
“(5)
Any taxpayer may, upon application made in writing by him or on his behalf within the time within which he is required to furnish a return of his income for any transitional year, or within such further time as the Commissioner in his discretion may allow in any case or class of cases, elect that this section shall apply in respect of any specified amount of tax due and payable in respect of the income derived by him in that transitional year.
“(6)
Notwithstanding anything in subsection (2) of this section, where any taxpayer to whom this section applies—
“(a)
Is believed by the Commissioner to be about to discontinue the carrying on of business in New Zealand; or
“(b)
Has ceased to carry on business in New Zealand or to derive income; or
“(c)
Becomes bankrupt or, being a company, is in the course of being wound up (whether by order of the Court or voluntarily or subject to the supervision of the Court),—
the Commissioner may give notice or amended notice to that taxpayer specifying such earlier date or dates as the Commissioner shall in his discretion determine on which any instalment of the specified amount of tax payable by that taxpayer shall be due and payable:
“Provided that where the cessation of business is caused by the death of the taxpayer, the Commissioner may make such arrangements in respect of the payment of any instalment and the calculation and payment of any interest applicable thereto, having regard to the tenor of this section, as he considers to be fair and reasonable.
“(7)
Notwithstanding anything in this Act, interest paid under this section shall, for the purposes of this Act, be deemed to be an amount of expenditure incurred by the taxpayer in the production of his assessable income from the conduct of the specified activity in relation to which the specified amount of tax is calculated.”
(2)
Section 191(5) of the principal Act is hereby consequentially amended by inserting, after the words “subject to”
, the words “section 188a of this Act and”
.
(3)
This section shall apply with respect to the tax on income derived, and to any loss incurred, in the income year commencing on the 1st day of April 1983 and in every subsequent year.
33 Allowable deductions of building societies
(1)
The principal Act is hereby further amended by inserting, after section 194, the following section:
“194a
“(1)
For the purposes of this section—
“‘Balloted loan right’ means a right arising from a ballot, held by or on behalf of a building society, of terminating shares, being a ballot held for the purpose of ascertaining which of the holders of those shares is or are entitled to receive an interest free loan in respect of those shares:
“‘Building society’ means a building society incorporated under the Building Societies Act 1965 or under the Building Societies Act 1908:
“‘Terminating share’ means any share in a building society, being a share that is included in a group of shares, where that group is to terminate at the end of a period, or on the attainment of a result, being a period or result specified on the issue of the shares:
“‘Withdrawable share’ means—
“(a)
Any share in a building society that is redeemable—
“(i)
At the end of a fixed term; or
“(ii)
At the option of the shareholder,—and which in either case bears a rate of dividend specified on the issue of the share; or
“(b)
Any share in a building society that has been issued pursuant to section 31a of the Building Societies Act 1965; or
“(c)
A terminating share,—but does not include any share on which a dividend is declared and payable from the annual surplus revenue of the building society, being a share which is irredeemable, or is redeemable only at the society’s option.
“(2)
Subject to this section the Commissioner shall, in calculating the assessable income derived in any income year by any building society, allow a deduction of—
“(a)
The amount of the dividends paid by the building society in that income year in respect of, and pursuant to the terms specified on issue of, any withdrawable shares of that building society; and
“(b)
The amount of any interest and other financial charges incurred by the building society in that income year in providing money used in that income year to make any interest free loan to any holder of a terminating share; and
“(c)
The amount paid by the building society in that income year in the purchase, from a holder of any terminating share, of any balloted loan right acquired by that holder.
“(3)
Every reference in this section to an income year shall, where the building society furnishes a return of income under section 15 of this Act for an accounting year ending with a balance date other than the 31st day of March, be deemed to be a reference to the accounting year corresponding with that income year, and, in every such case, this section shall, with any necessary modifications, apply accordingly.”
(2)
This section shall apply with respect to the tax on income derived in the income year commencing on the 1st day of April 1983 and in every subsequent year.
34 Life insurance and reinsurance companies
(1)
The principal Act is hereby further amended by repealing sections 204, 205, and 206, and substituting the following section:
“204
“(1)
For the purposes of this section,—
“‘Direct investment revenue costs’, in relation to revenue from investments, fees, and commissions (excluding commissions in respect of contracts for reinsurance) derived in any income year by a company to which this section applies, means costs incurred in carrying on its business of life insurance in that income year by that company exclusively in deriving that revenue, not being costs which are recoverable, directly or indirectly, from any person:
“‘Direct premium revenue costs’, in relation to revenue derived in any income year by a company to which this section applies in respect of premiums on policies of life insurance and contracts for reinsurance and annuities granted, means costs incurred in that income year by that company exclusively in deriving such revenue, and without in any way limiting the meaning of the expression, includes the costs of developing, marketing, promoting, advertising, servicing, and selling such policies, contracts, and annuities (including salaries, wages, commissions, fees, allowances, or other remuneration paid or payable to employees and agents):
“‘Gross revenue’, in relation to any company to which this section applies and to any income year, means the gross revenue derived by that company in carrying on its business of life insurance and reinsurance and granting of annuities; and includes—
“(a)
Premiums on policies of life insurance issued by that company, reduced by the amount of any premiums or other considerations paid or payable in respect of contracts of reinsurance made in respect of those policies:
“(b)
Premiums or other considerations received or receivable by that company in respect of contracts of reinsurance made in respect of policies of life insurance issued by any other person:
“(c)
Considerations received or receivable by that company in respect of the granting of annuities:
“(d)
Total revenue received or receivable by that company from its investments otherwise than by way of sale or other disposal of any investment:
“(e)
The aggregate amount of all profits derived from the sale or other disposal of any investment of that company:
“(f)
All commissions and fees received or receivable by that company, reduced by—
“(i)
Commissions in respect of contracts for reinsurance; and
“(ii)
Fees in respect of policies of life insurance, contracts of reinsurance, and annuities granted,—
reduced by the aggregate amount of all losses incurred in carrying on its business of life insurance on the sale or other disposal of any investments of that company:
“‘Indirect general revenue costs’, in relation to a company to which this section applies and to any income year, means costs of a revenue nature incurred in that income year by that company in carrying on its business of life insurance, not being direct investment revenue costs or direct premium revenue costs:
“‘Indirect investment revenue costs’, in relation to any company to which this section applies and to any income year, means the indirect general revenue costs incurred by that company in carrying on its business of life insurance in that income year, reduced by the indirect premium revenue costs incurred by that company in that income year:
“‘Indirect premium revenue costs’, in relation to any company to which this section applies and to any income year, means costs incurred by that company indirectly in respect of or in relation to policies of life insurance, contracts of reinsurance, and the granting of annuities, being that proportion of the indirect general revenue costs of that company in that income year ascertained in accordance with subsection (6) of this section:
“‘Life Insurance Fund’, in relation to a company to which this section applies, means the Life Insurance Fund (within the meaning of section 15 of the Life Insurance Act 1908) of that company:
“‘Policy’ includes a contract for a policy:
“‘Specified mortgage repayment insurance policy’ means a single premium non-profit policy of life insurance issued on or before the 31st day of March 1983, under which the sum assured is related to the amount outstanding on a mortgage of land:
“‘Superannuation policy’ means a policy of life insurance upon human life in New Zealand—
“(a)
That is vested in the trustees of a superannuation category 1 scheme; or
“(b)
That was—
“(i)
Effected for the purposes of a superannuation category 1 scheme; or
“(ii)
Accepted by the person maintaining a superannuation category 1 scheme for the purposes of the scheme,—
not being in any case a policy that has ceased to be a policy for the purposes of any such scheme.
“(2)
This section applies to every company, whether established or incorporated in New Zealand or elsewhere, engaged in the business of life insurance or reinsurance in New Zealand where the Commissioner is satisfied that the business in New Zealand consists of—
“(a)
The issue by that company of policies of life insurance upon human life in New Zealand or the entering into contracts of reinsurance in relation to policies of life insurance upon human life in New Zealand or the granting of annuities upon human life in New Zealand; and
“(b)
The investment and management of money received by way of premiums in respect of those policies and consideration for those contracts and annuities.
“(3)
For the purposes of subsection (2) of this section, where a company has, in respect of the whole or, as the case may be, part of any policy of life insurance upon human life in New Zealand issued by it, entered into a contract of reinsurance with any other person as reinsurer, the expression ‘the issue by that company of policies of life insurance upon human life in New Zealand’ shall, in determining whether the requirements of that subsection have been satisfied, be construed without regard to the fact that the company has entered into that contract of reinsurance.
“(4)
For the purposes of this section, the Government Insurance Commissioner shall be deemed to be a company to which this section applies.
“(5)
Subject to this section and clause 2a of the First Schedule to this Act, every company to which this section applies shall be assessable and liable for income tax as if it were not a company to which this section applied.
“(6)
For the purposes of this section, the amount of the indirect premium revenue costs incurred in any income year by any company to which this section applies in carrying on its business of life insurance, shall be an amount calculated in accordance with the following formula:
_eqn1.JPG)
Where—
x
is an amount equal to the aggregate of all the premiums and other considerations referred to in paragraphs (a), (b), and (c) of the definition of the expression ‘gross revenue’ in subsection (1) of this section received or receivable by that company in that income year; and
y
is the gross revenue of that company for that income year; and
z
is the indirect general revenue costs incurred by that company in that income year.
“(7)
For the purposes of this section the amount of any profit derived or loss incurred in any income year on the sale or other disposal of any investment of any company to which this section applies in carrying on its business of life insurance, being a profit or, as the case may be, a loss which is taken into account in calculating the assessable income of that company in that income year, shall be ascertained as follows,—
“(a)
In any case where that investment was made or acquired on or before the last day of the income year that commenced on the 1st day of April 1982, by calculating the amount of the difference between—
“(i)
The amount of the consideration received or receivable on the sale or other disposal of that investment; and
“(ii)
The greater of—
“(A)
The cost price or acquisition value of that investment:
“(B)
The market value of that investment on the last day of the income year that commenced on the 1st day of April 1982:
“(b)
In any other case, by calculating the amount of the difference between—
“(i)
The amount of the consideration received or receivable on the sale or other disposal of that investment; and
“(ii)
The cost price or acquisition value of that investment.
“(8)
Every company to which this section applies shall for the purposes of assessing income tax be deemed to have derived and to derive profits from its business of life insurance in any income year of an amount equal to the amount of the gross revenue of that company for that income year reduced by an amount equal to the sum of—
“(a)
An amount equal to the aggregate of all the premiums and other considerations referred to in paragraphs (a), (b), and (c) of the definition of the expression ‘gross revenue’ in subsection (1) of this section, received or receivable by that company in that income year; and
“(b)
The amount of the direct investment revenue costs incurred by that company in that income year; and
“(c)
The amount of the indirect investment revenue costs incurred by that company in that income year.
“(9)
For the purposes of assessing income tax, every company to which this section applies shall be deemed to have derived and to derive assessable income from its business of life insurance in any income year of an amount equal to the profits ascertained in accordance with subsection (8) of this section, reduced by an amount equal to an amount calculated in accordance with the following formula:
_eqn2.JPG)
Where—
a
is the amount of so much of the liabilities of the company in respect of policies of life insurance, contracts of reinsurance, and annuities granted (being the liabilities at the end of that income year) as, in the opinion of the Commissioner, relates to—
“(i)
Specified mortgage repayment insurance policies included in the Life Insurance Fund of that company; and
“(ii)
Superannuation policies included in that Fund; and
“(iii)
Annuities granted included in that Fund; and
b
is the amount of so much of the liabilities of the company as, in the opinion of the Commissioner, relates to all policies of life insurance, contracts of reinsurance, and annuities granted (being the liabilities at the end of that income year) included in that Fund; and
c
is the amount of the profits of the company for that income year, ascertained in accordance with subsection (8) of this section,—
and the company shall be assessable and liable for income tax accordingly.
“(10)
For the purposes of subsection (9) of this section, a policy shall be taken to be included in the Life Insurance Fund if, in the opinion of the Commissioner, liabilities under that policy would be payable from that Fund.
“(11)
Every reference in this section to an income year shall, where the company to which this section applies furnishes a return of income under section 15 of this Act for an accounting year ending with an annual balance date other than the 31st day of March, be deemed to be a reference to the accounting year corresponding with that income year, and, in every such case, this section shall, with any necessary modifications, apply accordingly.”
(2)
The principal Act is hereby consequentially amended—
(a)
By omitting from section 5(1) the words (“not being a company of the kind referred to in section 206(2) of this Act”
), and substituting the words (“not being a company to which section 204 of this Act applies”
):
(b)
By repealing section 41:
(c)
By omitting from sections 207(2) and 310(2)(e) in each case the words “or section 205”
:
(d)
By repealing the definition of the expression “income”
in section 293(1).
(3)
This section shall apply with respect to the tax on income derived in the income year commencing on the 1st day of April 1983 and in every subsequent year.
35 Resident mining operators
(1)
Section 220(2) of the principal Act is hereby amended by repealing the definition of the expression “resident mining operator”
(as substituted by section 46 of the Income Tax Amendment Act 1979), and substituting the following definition:
“‘Resident mining operator’ means a person (not being a mining company or a petroleum mining company) who is resident in New Zealand and who satisfies the Commissioner that he is an active miner:”.
(2)
Section 220(2) of the principal Act is hereby further amended by inserting, immediately before the definition of the expression “resident mining operator”
(as substituted by subsection (1) of this section), the following definition:
“‘Active miner’ means a person who satisfies the Commissioner that he carries on, or proposes to carry on,—
“(a)
Personally and actively in the field; and
“(b)
As a business; and
“(c)
Pursuant to, as the case may be, an exploration licence, a prospecting licence, or a mining licence granted by the Minister of Energy,—the activities of exploring or searching for or mining any specified mineral or performing development work relating to such exploring or searching or mining, not being activities so carried on or, as the case may be, so proposed to be carried on by him as a service to any other person for reward unless the Commissioner is satisfied that that reward is solely or principally—
“(d)
Related to and dependent upon the production of that specified mineral; or
“(e)
By way of participation in profits from the production of that specified mineral:”.
(3)
The Income Tax Amendment Act 1979 is hereby consequentially amended by repealing section 46.
36 Non-resident mining operators
(1)
Section 221(2) of the principal Act (as amended by section 47 of the Income Tax Amendment Act 1979) is hereby further amended by repealing the definition of the expression “non-resident mining operator”
, and substituting the following definition:
“‘Non-resident mining operator’ means a person (being a person who is not resident in New Zealand) who satisfies the Commissioner that he carries on, personally and actively in the field, a mining venture.”
(2)
Section 221(2) of the principal Act (as so amended) is hereby further amended by inserting in the definition of the expression “mining venture”
, after paragraph (a), the following paragraph:
“(aa)
That it is carried on, or is proposed to be carried on, pursuant to, as the case may be, an exploration licence, a prospecting licence, or a mining licence granted by the Minister of Energy; and”.
(3)
Section 221(3) of the principal Act is hereby amended by inserting, after the words “carried on by him”
, the words (“being a mining venture in relation to which he is a non-resident mining operator”
).
(4)
Section 221(4) of the principal Act is hereby amended by inserting, after the words “carried on by him”
, the words (“being a mining venture in relation to which he is a non-resident mining operator”
).
(5)
Section 221(5) of the principal Act (as amended by section 22 of the Income Tax Amendment Act 1981) is hereby amended by inserting, after the words “carried on by him”
, the words “as a non-resident mining operator”
.
37 New sections relating to specified leases inserted
(1)
The principal Act is hereby amended by inserting, after section 222, the heading “Specified Leases”
and the following sections:
“222a Interpretation
“(1)
For the purposes of this section and sections 222b, 222c, 222d, and 222e of this Act—
“‘Cost price’, in relation to a lease asset and to any lessor, means the amount of expenditure of a capital nature incurred by the lessor in acquiring and installing that lease asset, and, where the lessor in any lease acquires the lease asset as lessee in any other lease, means an amount equal to the amount of expenditure of a capital nature so incurred by the person who is the lessor in that other lease:
“Provided that where, in the carrying on of any business in the income year in which the lease asset is acquired, the lessor acquires, manufactures, or assembles as trading stock, and distributes or sells, any asset of the same kind as the lease asset, the cost price in relation to the lease asset shall be deemed to be an amount equal to the normal price for which, at the commencement of the lease period, the lessor would have sold to the lessee an asset of the same kind as the lease asset:
“Provided also that in any case where that lease asset has, before the entering into of the lease, been used by the lessor in deriving assessable income, the cost price of the lease asset shall be an amount equal to the amount of the capital expenditure incurred by the lessor in acquiring the lease asset, reduced by the aggregate of the amounts of all deductions by way of depreciation allowed in respect of that lease asset by the Commissioner in calculating the assessable income derived by the lessor in every income year:
“‘Guaranteed residual value’, in relation to a lease and to any lease asset, means an amount equal to the value of the lease asset as agreed in the lease by the lessor and the lessee, being an amount (as so agreed) the receipt of which by the lessor, on the expiry of the lease term, is assured or guaranteed by the lessee:
“‘Initial period’, in relation to a lease, means the period commencing on the date of the commencement of the lease and ending immediately before the commencement of the instalment period which first succeeds the commencement of the lease:
“‘Instalment’ means any amount payable by a lessee, pursuant to a lease, by way of repayment of the whole or any part of any loan which a lessor is deemed to have advanced under section 222b(3) of this Act, or by way of payment of interest, or by way of both:
“‘Instalment period’, in relation to a specified lease, means the period that commences with the day on which an instalment is payable and ends with the day immediately preceding the day on which the next succeeding instalment is payable:
“‘Lease’ means any agreement entered into on or after the 6th day of August 1982 pursuant to which a lessor conveys to a lessee for a lease term a lease asset or the right to possession of a lease asset in consideration for any lease payment; and includes any hire or bailment, and any sublease:
“‘Lease asset’, in relation to a lease, means any personal property which is subject to the lease; but does not include any livestock or bloodstock:
“‘Lease payment’, in relation to a lease, means any payment made by a lessee to a lessor, in money or money’s worth, in respect of, or in consideration for, a lease asset and includes any payment to which section 139 of this Act applies:
“‘Lease term’, in relation to a lease, means the period of time from the date of commencement of the lease to the date of expiry of the lease or, where the lease term is an indefinite period of time, that period of time within which the lessee is unable, under the lease, to cancel, terminate, or withdraw from that lease without incurring a penalty:
“‘Lessee’, in relation to a lease, means any person who leases, hires, or bails a lease asset from a lessor; and includes any trustee or assignee of that person:
“‘Lessor’, in relation to a lease, means any person who manufactures, assembles, purchases, or otherwise acquires any lease asset and leases that lease asset to a lessee; and includes any trustee or assignee of that person:
“‘Outstanding balance’, in relation to any instalment period, means the sum of—
“(a)
The aggregate of the amounts of all loans advanced under the lease by the lessor in the period that commenced with the lease and ends immediately before the commencement of the instalment period; and
“(b)
The aggregate of every amount of interest payable (in respect of every such loan) in respect of the period from the date of the commencement of the lease and ending with the day immediately preceding the instalment period,—reduced by the aggregate of the amount of all instalments paid by the lessee in that first-mentioned period:
“‘Specified lease’ means—
“(a)
A lease which has a guaranteed residual value; or
“(b)
A lease pursuant to which—
“(i)
The lease term is a period of more than 36 consecutive months, or, where the Commissioner is of the opinion that the economic life of the lease asset is less than 36 months, a period equal to the economic life of that lease asset; and
“(ii)
Any one or more of the following provisions applies:
“(A)
Ownership of the lease asset is to be transferred to the lessee at the end of the lease term:
“(B)
The lessee has the option to purchase on the expiry of the lease term the lease asset at a price which, in the opinion of the Commissioner, will be significantly lower than the value which will at the time of that expiry be the market value of the lease asset:
“(C)
The sum of the aggregate of the amounts of the lease payments and the amount of the guaranteed residual value, if any, exceeds an amount that is equal to, or to a small extent less than, the cost price of the lease asset:
“(D)
It is agreed between the lessor and the lessee that the lessee shall be liable for the payment of all, or nearly all, expenditure incurred in respect of the costs of repair and maintenance and any other incidental costs arising during the lease term in respect of the use of the lease asset,—
and includes any lease in respect of a lease asset where the ownership of that lease asset is acquired (whether directly or indirectly) by any means whatsoever, subsequently by the lessee from the lessor, or from any other person.
“(2)
For the purposes of subsection (1) of this section, where under 2 or more consecutive leases the same lease asset is leased to the same lessee or to lessees who, in relation to one another, are associated persons, or 2 or more successive leases (not being consecutive leases) ought in the opinion of the Commissioner, having regard to the tenor of this section, fairly to be regarded as consecutive leases to the same lessee in respect of the same lease asset, those leases shall be deemed to be one lease of that lease asset, and the lease term shall be deemed to run from the commencement of the first of those terms to the expiry of the last of those leases.
“(3)
Every reference in this section and sections 222b to 222e of this Act to an income year shall, where the taxpayer furnishes a return of income under section 15 of this Act for an accounting year ending with an annual balance date other than the 31st day of March, be deemed to be a reference to the accounting year corresponding with that income year, and, in every such case, those sections shall, with any necessary modifications, apply accordingly.
“222b Effect of specified lease on lessor and lessee
“(1)
This section shall apply notwithstanding anything in this Act.
“(2)
The leasing of any lease asset pursuant to any specified lease shall be deemed to be a sale of that lease asset, made at the commencement of the lease term, by the lessor to the lessee, and the lessee shall be deemed to have incurred, pursuant to that sale, capital expenditure of an amount equal to the cost price of that lease asset.
“(3)
The lessor in any specified lease shall be deemed to have advanced to the lessee in that specified lease a loan of an amount equal to the cost price of the lease asset and the lessee shall be deemed to have applied that loan in the financing of the acquisition of that lease asset.
“(4)
In calculating the assessable income derived by any lessor in any income year in which he leases, pursuant to a specified lease, any lease asset to any lessee, no deduction by way of depreciation shall be allowed in respect of that lease asset.
“(5)
On the expiry of the lease term, where the lease asset is not purchased by the lessee under the terms of that lease or on the exercise of any option under that lease, the lease asset shall be deemed to have been sold on the expiry of the lease term to the lessor for—
“(a)
An amount equal to the guaranteed residual value (if any) specified, in respect of the lease asset, in the specified lease; or
“(b)
Where no guaranteed residual value is so specified, no consideration.
“(6)
In any case where a specified lease is terminated before the expiry of the lease term, (whether by cancellation, surrender, or otherwise)—
“(a)
The lease asset in relation to that lease shall be deemed to be sold, on the date of that termination, to the lessor by the lessee at a price equal to the amount by which the amount of the outstanding balance (at the time of that termination) of any loan advanced by the lessor to the lessee exceeds the amount or the sum of the amounts payable by the lessee to the lessor in consideration for the release by the lessor of the lessee from the obligations of the lessee under the lease:
“Provided that where, in relation to the amount of the said outstanding balance and to the amount or the sum of the amounts payable by the lessee to the lessor, no such excess arises, that lease asset shall be deemed to have been so sold for no consideration:
“(b)
Where the value of the consideration payable by the lessee to the lessor in respect of that termination exceeds the amount of the outstanding balance (at the time of that termination) of any loan advanced by the lessor to the lessee, an amount equal to the amount of that excess shall be deemed to be assessable income derived by the lessor in the income year in which the said lease is so terminated.
“(7)
Where on or after the expiry of the lease term in relation to any specified lease the lease asset in relation to that lease is sold, assigned, or leased under a specified lease by the lessor to another person and the value of the consideration in respect of that sale, or that assignment, or that lease—
“(a)
Exceeds the amount determined, in respect of that first-mentioned specified lease, under subsection (5) of this section, that amount so determined shall be increased by such further amount as is equal to such part (if any) of the excess as is paid by the lessor to the lessee:
“(b)
Is less than the amount determined, in respect of that first-mentioned specified lease, under subsection (5)(a) of this section and the lessee is required to make a further payment to the lessor equal to the difference between the guaranteed residual value in relation to that lease value and that value of that consideration, that amount so determined shall be reduced by the amount of that further payment:
“Provided that in any case where the value of the consideration in respect of that sale, or that assignment, or that lease exceeds the amount determined under subsection (5) of this section, such part (if any) of that excess as is not paid to the lessee shall be deemed to be assessable income derived by the lessor in the income year in which the said lease term expires.
“(8)
In any case where the lessee in any specified lease, or any other person where that other person and that lessee are associated persons, at any time purchased or otherwise acquired that lease asset and sold or otherwise disposed of that lease asset and the value of the consideration for that sale or other disposal exceeds the value of the consideration for which he purchased or otherwise acquired it, the Commissioner shall include in the assessable income derived by the lessee in the income year in which that lease asset was sold or otherwise disposed of, an amount equal to that excess.
“222c Income of lessor under specified lease
“(1)
For the purposes of this Act the income of any lessor derived pursuant to any specified lease shall be deemed to be income derived from interest.
“(2)
The amount of the income so derived by any lessor shall be deemed to be—
“(a)
During the lease term, derived during the initial period and each instalment period of an amount that, either—
“(i)
Is calculated, on the outstanding balance in relation to that initial period and each instalment period, at such a rate and in such a manner that the aggregate of all of the amounts so calculated is equal to the amount first mentioned in paragraph (b) of this subsection; or
“(ii)
Is calculated, in relation to that initial period and to each instalment period, pursuant to such other method commonly applied in commercial usage as, in the opinion of the Commissioner, having regard to the lease term and to the frequency of the lease payments, results in the allocation to that initial period and to each instalment period of an amount that is fair and reasonable and results in the sum of all such amounts so allocated being equal to the amount first mentioned in the said paragraph (b):
“(b)
In relation to the lease term, of such amount as is equal to the sum of the amounts of the lease payments in relation to the specified lease and the amount of the guaranteed residual value (if any) in relation to the specified lease, reduced by the cost price of the lease asset.
“(3)
The income so derived by any lessor shall, in relation to any income year, be deemed to be of an amount equal to the sum of such of the amounts (being amounts calculated in accordance with subsection (2)(a) of this section), as are calculated in relation to the initial period (if any) and to each instalment period that ends in that income year.
“222d Deduction to lessee under specified lease
Notwithstanding anything in this Act, in calculating the assessable income derived in any income year by any lessee, no deduction shall be allowed of any expenditure incurred by him pursuant to a specified lease except to the extent that that expenditure does not exceed the sum of such of the amounts (being amounts calculated in accordance with section 222c(2)(a) of this Act) as are calculated in relation to the initial period (if any) and to each instalment period that ends in that income year.
“222E Deduction to lessee in non-specified lease
Notwithstanding anything in this Act, every lease payment made pursuant to any lease of personal property that is not a specified lease shall be deemed to be paid in respect of the lease term, and in calculating the assessable income derived in any income year by the lessee in the lease, a deduction shall be allowed of an amount calculated in accordance with the following formula:
_eqn3.JPG)
Where—
a
is that part of the lease term that falls within that income year; and
b
is the lease term; and
c
is the sum of the lease payments.”
(2)
Section 118(1) of the principal Act is hereby consequentially amended by repealing the definition of the expression “residual value”
.
(3)
Section 118(1) of the principal Act is hereby further consequentially amended by repealing the definition of the expression “qualifying lease”
, and substituting the following definition,—
“‘Qualifying lease’, in relation to new plant or machinery, means any specified lease as defined in section 222a of this Act:”.
(4)
Subsection (1) of this section shall apply with respect to every lease entered into on or after the 6th day of August 1982.
(5)
Subsections (2) and (3) of this section shall apply with respect to every lease entered into on or after the 6th day of August 1982, not being a lease in respect of which section 119(4a)(a)(ii)(as inserted by section 19(2) of this Act), subsection (2a)(a)(ii) or subsection (4a)(a)(ii) of section (as inserted by section 20(2) and (3) of this Act), or section 123(5a)(a)(ii)(as inserted by section 21(2) of this Act) of the principal Act applies.
38 New sections relating to film owners inserted
The principal Act is hereby further amended by inserting, after section 224, the heading “Film Owners”
and the following sections:
“224A Costs of acquiring any film or any right in any film
“(1)
For the purposes of this section—
“‘Broadcaster’ means a person who operates a television station or network or a cable television system:
“‘Completed’, in relation to a film, means the completion of the film to the double head finecut stage of production or equivalent production stage:
“‘Copyright’, in relation to a film, includes all rights and choses in action (whether present or future, actual or contingent) in or in relation to—
“(a)
The film; and
“(b)
The prints of the film; and
“(c)
Publicity material in relation to the film; and
“(d)
All other tangible assets in relation to the film:
“‘Cost of acquisition’, in relation to the acquisition of any film or of any right in any film, means—
“(a)
In the case of a film owner to whom subsection (3)(a) of this section applies, the amount that represents the share borne by the owner of the cost of producing the film; and
“(b)
In the case of a film owner to whom subsection (3)(b) of this section applies, the cost of such acquisition; and ‘cost of acquiring’ has a corresponding meaning:
“‘Cost of production’, in relation to a film, means the sum of the film expenditure incurred in producing the film and all other film expenditure incurred after the completion of the film, being in each case film expenditure incurred in relation to the production of the film; but does not include any expenditure directly incurred in marketing or selling the film; and ‘cost of producing’ has a corresponding meaning:
“‘Depreciation loss’, in relation to a film, means an amount equal to the amount of the allowance or, as the case may be, the aggregate of the amounts of the allowances by way of depreciation, in respect of any asset (being an asset used in producing the film) that, had that asset been used in the production of assessable income derived in the income years in which the cost of production of the film was incurred, would have been allowable as a deduction under this Act in calculating that assessable income:
“‘Double head finecut stage of production’, in relation to a film, means the stage, in the production of the film, where the film has been completely edited, shot by shot, to its final length:
“‘Feature film’ means a film produced for, primarily and principally, exhibition in a cinema, being a film which is to be so exhibited in 35 millimetre gauge and which will, when so exhibited, have a continuous running time of not less than 75 minutes:
“‘Film’ means a cinematograph film; and includes a videotape, and any other material record of visual moving images that is capable of being used for the subsequent projection of those images in a fixed sequence on to any screen; and also includes any part of any such film, or any copy or part of a copy of the whole or any part of a film; but does not include—
“(a)
A film which is intended for exhibition as an advertising programme or as a commercial; or
“(b)
A film which, under section 224c of this Act, is determined to have commenced on or before the 5th day of August 1982:
“‘Film expenditure’, in relation to a film, means any expenditure (not being expenditure incurred in acquiring any asset in respect of which a deduction by way of depreciation is provided in this Act) in respect of which a deduction in calculating assessable income is provided in this Act; and includes any loss in respect of which a deduction in calculating assessable income is provided in section 104 of this Act and any depreciation loss:
“‘Film owner’, in relation to a film, means the person who owns the film or any rights in it:
“‘Residual value’, in relation to a film and to any right in relation thereto, and to any taxpayer, and to any income year, means the amount of the cost of acquisition of the film or the right in relation thereto incurred prior to the end of the income year, reduced by so much of the said amount as has been allowed as a deduction in calculating the assessable income derived by the taxpayer in any income year preceding that income year:
“‘Right’, in relation to a film, means any copyright and any licence in respect thereof and any other right which subsists in or attaches to the film (including any right to income or any share of income from the sale, use, rental, or other exploitation of that film); and includes any equitable right in respect of any copyright in that film or in respect of any licence under such copyright:
“‘Specified deduction’, in relation to an income year and to any feature film, means an amount calculated in accordance with the following formula:
_eqn4.JPG)
Where—
x
is the number of complete months in the period that commenced on the later of the first day of the month in which the film is completed and the first day of the income year, and ends on the last day of the income year; and
y
is 24, reduced by such number (if any) as is equal to the number of complete months in the period that commences on the first day of the month in which the film is completed and ends on the last day of the income year that immediately precedes the income year first mentioned in this definition; and
z
is an amount equal to the sum of the residual value, in relation to that income year, in relation to that film and to any right in that film.
“(2)
Notwithstanding anything in any other section of this Act, other than section 106a, where in any income year any person has, in relation to any film, incurred any expenditure consisting of the whole or any part of the cost of production, or any expenditure in acquiring howsoever any right and has, as a result, become possessed of that film or any right in that film, no deduction in respect of that expenditure shall, except to the extent provided in this section, be allowed in calculating the assessable income derived in any income year by that person:
“Provided that this subsection shall not apply to any person, being a broadcaster, who has in any income year incurred any expenditure consisting of the whole or any part of the cost of production of that film, or incurred any expenditure in acquiring howsoever that film or any right in that film, and that film or, as the case may be, that right was acquired primarily and principally for the purpose of enabling that broadcaster to broadcast that film in New Zealand.
“(3)
This section shall apply in relation to any film, and to any film owner who—
“(a)
Becomes a film owner by reason of being the person who first owns a right in relation to that film and, before so owning that right, incurred expenditure directly in the production of that film; or
“(b)
Being a film owner other than the film owner referred to in paragraph (a) of this subsection, incurs expenditure in purchasing or otherwise acquiring a film or a right in that film:
“Provided that this section shall not apply to any person, being a broadcaster, in relation to any film or to any right in any film to which the proviso to subsection (2) of this section refers.
“(4)
For the purposes of this Act, where a film owner incurs any expenditure in respect of which a deduction has been or is to be allowed under this section, or where a film owner incurs any expenditure in acquiring any asset in respect of which a deduction by way of depreciation loss has been or is to be allowed under this section, no other deduction shall be allowed under any other provision of this Act (including sections 119 to 123)—
“(a)
In respect of that expenditure; or
“(b)
To that film owner by way of depreciation in respect of any asset acquired by him, or of which he has become possessed, as a result of that expenditure.
“(5)
Where in any income year any taxpayer who is or becomes in that income year a film owner, owns or becomes the owner of any completed feature film or any right therein and remains the owner thereof until the end of that income year, a deduction shall be allowed in calculating the assessable income derived by that taxpayer in that income year of an amount that, in relation to that feature film, is equal to the lesser of—
“(a)
The amount of the specified deduction in relation to that income year:
“(b)
An amount equal to the residual value in relation to that income year:
“Provided that in any case where the income derived by that taxpayer from the sale, use, rental, or other exploitation of that film or that right in that income year exceeds the specified deduction, in relation to that film, for that year, the taxpayer shall be entitled to a deduction of such amount of the cost of acquisition of that film or of that right in that income year as is equal to the lesser of—
“(c)
The amount of the residual value of that film or of that right in relation to that income year:
“(d)
The income derived from the sale, use, rental, or other exploitation of that film or of that right which was derived during that income year.
“(6)
Where, at any time during an income year, a taxpayer becomes the owner of any completed film other than a feature film, or of any right in any completed film other than a feature film, that taxpayer shall be entitled to deduct the cost of acquisition of that film or of that right (to the extent that that cost of acquisition was incurred by that taxpayer during that income year) in calculating the assessable income derived by him in that income year and in the immediately succeeding income year in the following proportions—
“(a)
Fifty percent in the income year in which that film or that right was acquired; and
“(b)
The balance in the income year immediately succeeding the income year in which that film or that right was acquired:
“Provided that in any case where the income derived from the sale, use, rental, or other exploitation of that film or of that right, in the income year in which that film or that right was acquired exceeds 50 percent of the cost of acquisition of that film or that right which was incurred by that taxpayer prior to the end of that income year, that taxpayer shall be entitled to a deduction in that income year of an amount equal to the lesser of—
“(c)
The cost of acquisition of that film or that right which was incurred by that taxpayer prior to the end of that income year:
“(d)
The income from the sale, use, rental, or other exploitation of that film or that right which was derived during that income year,—
and the amount of the deduction that would, but for this proviso, have been allowed in the next succeeding income year shall be reduced to an amount equal to the amount (if any) which remains after deducting from the total cost of acquisition of that film or of that right the income derived from that film or from that right in that income year.
“(7)
Where, in any income year, any taxpayer, being the owner of a film or any right in any film, or being the owner of a film and of any right in that film, ceases to own that film or every right in that film, or, as the case may be, ceases to own that film and every right in that film which he possessed at any time during that income year, the balance of any cost of acquiring that film or that right or, as the case may be, any cost of acquiring that film and that right or, where that film is a feature film the balance of the residual value in relation to that feature film, which has not been allowed as a deduction in calculating the assessable income derived by that taxpayer in any income year, shall be allowable as a deduction in calculating the assessable income derived by that taxpayer in the income year in which he so ceases to own that film or that right.
“(8)
Where, in relation to any income year and to any taxpayer who is a film owner to whom subsection (3)(a) of this section applies,—
“(a)
An amount (in this subsection referred to as the ‘specified amount’) is contributed by the taxpayer or is contingently liable to be contributed in payment of the cost of acquisition of any film, or of any right in any film; and
“(b)
In respect of all or any part of so much of the specified amount as relates to the provision of services or the supply of goods the liability for payment of the cost of which has, in terms of an agreement entered into between the provider of those services or the supplier of those goods and any other person, been deferred, the period between the time of provision of those services or the supply of those goods and the time of the payment of the cost thereof is, in the opinion of the Commissioner, excessive, or the liability for payment of that cost is dependent on a contingency, the expenditure in the acquiring of those services or those goods shall be deemed to be incurred at the time or times of the making of that payment or those payments.
“(9)
Where, in relation to any income year and to any taxpayer to whom subsection (3)(a) of this section applies, the Commissioner is satisfied, having regard to any connection between the owner and any person who supplied goods to, or provided services for, the owner in relation to that film or that right, or to any other circumstances which he considers relevant in the circumstances of the particular case, that—
“(a)
The owner and that person were not dealing with each other at arm’s length in relation to the supply of those goods or the provision of those services; and
“(b)
The amount of the expenditure incurred by the owner in relation to the acquisition of that film or that right exceeds the amount that would have been incurred by the owner if the owner and that person had dealt with each other at arm’s length,—
the cost of acquisition of that film or of that right to the owner for the purposes of this section shall be deemed to be the amount of the expenditure that, in the opinion of the Commissioner, might have been expected to have been incurred by the owner if the owner and that other person had dealt with each other at arm’s length.
“(10)
Where any amount by way of depreciation loss has been included in the cost of acquisition of any film or any right in a film or in any part of that cost of acquisition, and any cost of acquisition has been allowed as a deduction in calculating the assessable income derived by any taxpayer in any income year, and the asset in relation to which that depreciation loss was calculated is sold or otherwise disposed of or used otherwise than in producing the film to which that cost of acquisition relates, the Commissioner shall, to the extent of an amount which is, or amounts which in the aggregate are, not greater than that amount of depreciation loss, make such adjustments as he considers fair and equitable.
“(11)
Where, in relation to any income year and to any taxpayer who is a film owner to whom subsection (3)(b) of this section applies,—
“(a)
The Commissioner is satisfied, having regard to any connection between the film owner and the person from whom any film or the right in any film was purchased or to any other relevant circumstances, that the film owner and that person were not dealing with each other at arm’s length in relation to the purchase; and
“(b)
The amount of the expenditure incurred by the film owner on the purchase of that film or that right—
“(i)
Exceeds the amount that was the cost of acquisition of that film or that right to the owner who was the owner thereof immediately preceding that film owner; or
“(ii)
Does not exceed the amount that was the cost of that film or that right to that owner who was that immediately preceding owner but exceeds the value of that film or of that right at the time of acquisition by the film owner first mentioned in this subsection,—
the cost of that film or that right to the film owner for the purposes of this section shall be deemed to be the cost of that film or of that right to that immediately preceding owner or its value at the time of purchase by the film owner first mentioned in this subsection, whichever is the less:
“Provided that any reference in this subsection to the cost of any film or any right in any film to that immediately preceding owner, or to the value of that film or that right at the time of purchase by the film owner first mentioned in this subsection shall, if the purchase is a purchase of a share of a right of another person, be construed as a reference to such part of that cost or of that value, as the case may be, as the Commissioner determines.
“(12)
Where, in relation to any income year and to any taxpayer who is a film owner to whom subsection (3)(b) of this section applies, any film or the right in any film was purchased or otherwise acquired by the film owner together with other property and no separate price was allocated to that film or that right, the amount of the expenditure incurred by the film owner in the purchase or acquisition of that film or that right shall, for the purposes of this section, be deemed to be so much of the cost of the purchase or other acquisition of that film or that right and that other property as the Commissioner determines.
“(13)
Where, in relation to any income year and to any taxpayer, the Commissioner is satisfied that arrangements have been made between the taxpayer and another person with a view to the affairs of the taxpayer and of that other person being so arranged or conducted that any of the provisions of this section would, but for this subsection, have effect more favourably in that income year in relation to that taxpayer than would otherwise have been the case, the amount of the deduction to which that taxpayer is entitled under this section in that income year shall not exceed the amount to which that taxpayer would, in the opinion of the Commissioner, have been entitled if those arrangements had not been made.
“(14)
This section shall apply subject to section 106a of this Act.
“(15)
Every reference in this section to an income year shall, where the taxpayer or, as the case may be, the partnership of which he is a member, furnishes a return of income under section 15 of this Act for an income year ending with an annual balance date other than the 31st day of March, be deemed to be a reference to the accounting year corresponding with that income year, and, in every such case, this section shall, with the necessary modifications, apply accordingly.
“224b Income derived from films
“(1)
For the purposes of this section—
“‘Film’ means a cinematograph film; and includes a videotape, and any other material record of visual moving images that is capable of being used for the subsequent projection of those images in a fixed sequence on to any screen; and also includes any part, or any copy or part of a copy of the whole or any part of a film; and also includes any right therein:
“‘Film owner’, in relation to a film, means the person who owns the film:
“‘Income from a film’, in relation to a film owner and to any film, means any income derived by the film owner from the sale, use, rental, or other exploitation of the film; and includes—
“(a)
Any amount received or receivable by him as consideration for the use of, or the right to use, the film or any right or interest in a right in the film; and
“(b)
Any amount received or receivable by him as consideration for the granting of any licence in respect of any future right in the film; and
“(c)
Any amount received or receivable by him as consideration in respect of the disposal of the whole or any part of any right or interest in any right in the film, or in respect of the assignment of any right or any interest in any right, or in respect of the assignment of any right to derive income from the use of such a right or interest:
“‘Right’ means a right within the meaning of section 224A of this Act.
“(2)
In calculating the assessable income derived in any income year by any taxpayer who is a film owner, there shall be included all income from a film derived by him in that income year.
“224c Determination as to whether film commenced on or before 5 August 1982
“(1)
The Commissioner shall, for the purposes of sections 106a and 224a of this Act, determine whether a film commenced on or before the 5th day of August 1982.
“(2)
Without limiting the generality of subsection (1) of this section it is hereby declared that the Commissioner shall not make a determination that a film commenced on or before the 5th day of August 1982 unless he is satisfied that work on that film had, on or before that date, proceeded beyond the investigatory stages and that a firm commitment to make that film either wholly or partially in New Zealand was clearly evident on or before that date.
“(3)
Where, under this section, the Commissioner has determined that a film commenced on or before the 5th day of August 1982, and that film has not, on or before—
“(a)
The 30th day of September 1984; or
“(b)
Such later date as, in the opinion of the Commissioner, is the date before which that film cannot reasonably be expected to reach the double head finecut stage of production (as defined in section 224A of this Act) notwithstanding that the making of that film has at all times proceeded with expedition and is continuing to so proceed,—
reached the double head finecut stage of production (as so defined), that film shall (notwithstanding that determination of the Commissioner) be deemed for the purposes of sections 106a and 224a of this Act not to have commenced on or before the 5th day of August 1982.”
39 Trustees of non-exempt superannuation schemes
(1)
The principal Act is hereby further amended by repealing section 225, and substituting the following section:
“225
“(1)
For the purposes of this section—
“‘Non-exempt superannuation scheme’ means—
“(a)
A superannuation category 2 scheme; or
“(b)
A superannuation category 3 scheme:
“‘Superannuation policy’ means a policy of life insurance upon human life in New Zealand—
“(a)
That is vested in the trustees of a superannuation scheme; or
“(b)
That was—
“(i)
Effected for the purposes of a superannuation scheme; or
“(ii)
Accepted by the person maintaining a superannuation scheme for the purposes of the scheme,—
not being in any case a policy that has ceased to be a policy for the purposes of such a scheme:
“‘Trustee’, in relation to a non-exempt superannuation scheme, includes a person by whom that non-exempt superannuation scheme is managed or controlled.
“(2)
For the purposes of this section, the amount of any profit derived or loss incurred in any income year on the sale or other disposal of any investment of any trustee of a non-exempt superannuation scheme, being a profit or, as the case may be, a loss which is taken into account in calculating the assessable income of that trustee in that income year, shall be ascertained as follows,—
“(a)
In any case where that investment was made or acquired on or before the last day of the income year that commenced on the 1st day of April 1982, by calculating the amount of the difference between—
“(i)
The amount of the consideration received or receivable on the sale or disposal of that investment; and
“(ii)
The greater of—
“(A)
The cost price or acquisition value of that investment:
“(B)
The market value of that investment on the last day of the income year that commenced on the 1st day of April 1982:
“(b)
In any other case, by calculating the amount of the difference between—
“(i)
The amount of the consideration received or receivable on the sale or disposal of that investment; and
“(ii)
The cost price or acquisition value of that investment.
“(3)
The trustee of a non-exempt superannuation scheme shall, subject to this section, be assessable and liable for income tax (at the rate of tax calculated by reference to that income alone) on the income derived by the non-exempt superannuation scheme for any income year as if he were beneficially entitled to that income.
“(4)
Notwithstanding anything in this Act,—
“(a)
The assessable income of the trustee of a non-exempt superannuation scheme shall include the profits derived on the sale of investments:
“(b)
The assessable income of the trustee of a non-exempt superannuation scheme shall not include contributions made to the non-exempt superannuation scheme:
“(c)
In calculating the assessable income of the trustee of a non-exempt superannuation scheme for any income year a deduction shall be allowed for any loss incurred on sale of investments:
“(d)
The trustee of a non-exempt superannuation scheme shall not be entitled to—
“(i)
Any deduction in respect of benefits paid from the non-exempt superannuation scheme; or
“(ii)
Any deduction for expenditure which is recoverable from any contributor; or
“(iii)
Any deduction for expenditure incurred by or on behalf of the non-exempt superannuation scheme in respect of developing, marketing, selling, promoting, and advertising for members to the non-exempt superannuation scheme; or
“(iv)
Any deduction by way of special exemption; or
“(v)
Any rebate under any of the provisions of sections 50a to 55 of this Act:
“(e)
Nothing in sections 226 to 231 of this Act shall apply with respect to a trustee of a non-exempt superannuation scheme.
“(5)
Where the trustee of a non-exempt superannuation scheme is a company, that trustee shall be deemed not to be a company for the purposes of this Act.
“(6)
Where the contributions received by the trustee of a non-exempt superannuation scheme are invested in whole or in part in a superannuation policy or policies, the income generated in respect of those policies shall be deemed not to be income derived by that trustee.
“(7)
Every reference in this section to an income year shall, where the trustee of a non-exempt superannuation scheme furnishes a return of income under section 15 of this Act for an accounting year ending with an annual balance date other than the 31st day of March, be deemed to be a reference to the accounting year corresponding with that income year, and, in every such case, this section shall, with any necessary modifications, apply accordingly.”
(2)
The National Provident Fund Act 1950 is hereby consequentially amended by adding to section 8 the following proviso:
“Provided that the exemption from income tax provided in this section shall not apply to the extent that any income derived from any such securities or property is allocated by the Board to superannuation category 2 schemes or superannuation category 3 schemes as defined in section 2 of the Income Tax Act 1976.”
(3)
This section shall apply with respect to the tax on income derived in the income year commencing the 1st day of April 1983, and in every subsequent year.
40 Bonus issue tax
(1)
The principal Act is hereby further amended—
(a)
By repealing Part VI:
(b)
By omitting from section 106(2)(a) the words “excess retention tax, and bonus issue tax”
, and substituting the words “and excess retention tax”
:
(c)
By omitting from section 106(2)(b) the words “excess retention tax, or bonus issue tax”
, and substituting the words “or excess retention tax”
:
(d)
By repealing paragraph (e) of the definition in section 246(1) of the expression “distributable portion of the income derived by a company in an accounting year”
:
(e)
By repealing clause 12 of the First Schedule.
(2)
The Income Tax (Annual) Act 1982 is hereby amended, as from its commencement, by inserting, after section 3, the following heading and section:
“Bonus Issue Tax
“3a Rate of bonus issue tax for year commencing 1 April 1982
For the year commencing on the 1st day of April 1982, bonus issue tax shall be assessed, levied, and paid pursuant to Part VI of the principal Act at the rate specified in clause 12 of Part A of the First Schedule to that Act.”
(3)
Subsection (1) of this section shall apply to every bonus issue made on or after the 1st day of April 1982:
Provided that subsection (1) of this section shall not apply to any distribution made before the 1st day of April 1985 (being a distribution of any amount capitalised by a bonus issue made before the 1st day of April 1982) which is deemed to be a further bonus issue pursuant to section 263 of the principal Act.
41 Keeping of business records
(1)
The principal Act is hereby further amended by repealing section 428, and substituting the following section:
“428
“(1)
For the purposes of this section, the term ‘records’ includes books of account (whether contained in a manual, mechanical, or electronic format) recording receipts or payments or income or expenditure, and also includes vouchers, bank statements, invoices, receipts, and such other documents as are necessary to verify the entries in any such books of account.
“(2)
Without limiting the generality of subsection (1) of this section, the records required to be kept and retained, pursuant to subsection (3) of this section, in respect of any business carried on during any income year by any person, shall contain—
“(a)
A record of the assets and liabilities of the person (in relation to that business); and
“(b)
A record of all entries from day to day of all sums of money received and expended by the person (in relation to that business) and the matters in respect of which the receipt and expenditure takes place; and
“(c)
Where that business involves dealing in goods—
“(i)
A record of all goods purchased, and of all goods sold in the carrying on of that business (except those sold in the course of cash retail trading customarily conducted in a business of the kind of which that business is one) showing the goods, and the sellers and buyers or, as the case may be, the agents of the sellers and buyers in sufficient detail to enable the goods, and the sellers and buyers, and the said agents to be readily identified by the Commissioner; and all invoices relating thereto; and
“(ii)
Statements (including quantities and values) of trading stock held by the person at the end of each such income year, and all records of stocktakings from which any such statement of trading stock has been, or is to be, prepared; and
“(d)
Where that business involves the provision of services, records of the services provided and all invoices relating thereto; and
“(e)
The charts and codes of accounts, the accounting instruction manuals, and the system and programme documentation which describes the accounting system used in each income year in the carrying on of that business.
“(3)
Subject to subsection (4) of this section, every person who—
“(a)
Carries on any business in New Zealand:
“(b)
Carries on any other activity (not being the carrying on of employment as an employee) in New Zealand for the purpose of gaining or producing assessable income:
“(c)
Makes, holds, or disposes of, for the purpose of gaining or producing assessable income, any investment,—
shall keep in New Zealand sufficient records in the English language to enable the ascertainment readily by the Commissioner, or any officer authorised by him in that behalf, of—
“(d)
The assessable income derived by that person from, as the case may be, the carrying on of that business, or the carrying on of that other activity, or the making or holding or disposing of that investment; and
“(e)
The deductions allowable in the calculating of that assessable income,—
and shall retain all such records for a period of at least 10 years after the end of the income year to which they relate:
“Provided that the Commissioner may, in his discretion, on application in writing being made to him in that behalf, authorise any such person, by notification in writing, to keep outside New Zealand or, as the case may be, in a language other than the English language, such of those records as the Commissioner determines.
“(4)
This section shall not require the retention of any records—
“(a)
In respect of which the Commissioner has given notice in writing that retention is not required:
“(b)
Of a company which has been wound up and finally dissolved.
“(5)
Every reference in this section to an income year shall, where the person furnishes a return of income under section 15 of this Act for an accounting year ending with an annual balance date other than the 31st day of March, be deemed to be a reference to the accounting year corresponding with that income year, and, in every such case, this section shall, with any necessary modifications, apply accordingly.”
(2)
This section shall apply with respect to the keeping of records, by any person to whom section 428(3) of this Act (as substituted by this section) applies, in the income year commencing on the 1st day of April 1983 and in every subsequent year.
42 Basic rates of income tax
(1)
The First Schedule to the principal Act is hereby amended by inserting, after clause 2 of Part A, the following clause:
“2a Life insurance companies
On the amount of taxable income derived by a company to which section 204 of this Act applies from life insurance business carried on by it, the basic rate of income tax for every $1 of that amount shall be 31c.”
(2)
The First Schedule to the principal Act is hereby further amended by inserting, after clause 9 of Part A, the following clauses:
“9a Trustees of superannuation category 2 schemes
On the amount of taxable income derived by a trustee of a superannuation category 2 scheme, the basic rate of income tax for every $1 of that amount shall be 31c.
“9b Trustees of superannuation category 3 schemes
On the amount of taxable income derived by a trustee of a superannuation category 3 scheme, the basic rate of income tax for every $1 of that amount shall be 45c.”
(3)
The First Schedule to the principal Act is hereby consequentially amended by repealing paragraph (c) of clause 7.
(4)
This section shall apply with respect to the tax on income derived in the income year commencing on the 1st day of April 1983 and in every subsequent year.
43 Terminating dates of taxation incentives
(1)
The principal Act is hereby further amended by repealing the Third Schedule (as substituted by section 30 of the Income Tax Amendment Act 1981), and substituting the new Third Schedule set out in the Schedule to this Act.
(2)
The Income Tax Amendment Act 1981 is hereby consequentially amended by repealing section 30 and the Third Schedule thereto.
Schedule New Third Schedule to Principal Act
Section 43
“Third Schedule Terminating Dates
Section 2
| Section of Act | General Description | Terminating Date |
|---|---|---|
| 119 | Regional investment allowance | 31 March 1983 |
| 120 | Export investment allowance | 31 March 1983 |
| 121 | Industrial development plan investment allowance | 31 March 1986 |
| 121a | High priority activity investment allowance | 31 March 1984 |
| 122 | Farming and agriculture investment allowance | 31 March 1984 |
| 123 | Fishing investment allowance | 31 March 1983 |
| 127 | Development expenditure on farming or agricultural land | 31 March 1984 |
| 128 | Development expenditure on rock oyster, mussel, scallop, or freshwater fish farms | 31 March 1984 |
| 156 | Increased exports | 31 March 1983 |
| 156a | Export performance incentive for qualifying goods | 31 March 1985 |
| 156b | Export performance incentive for qualifying services | 31 March 1985 |
| 156d | Export performance incentive for qualifying overseas projects | 31 March 1985 |
| 156e | Export performance incentive for qualifying tourist services | 31 March 1985 |
| 156f | Export-market development and tourist-promotion incentive | 31 March 1985 |
| 156g | Export-market development (self-employed taxpayers) incentive | 31 March 1985 |
| 157 | Increased exports to new markets | 31 March 1981 |
| 158a | Export earnings from qualifying overseas projects | 31 March 1980 |
The reference in the second column of this Schedule to the nature of the deduction is by way of general description only and shall not be construed as limiting or extending the deduction under the section referred to in the first column of this Schedule.”
This Act is administered in the Inland Revenue Department.
Versions
Income Tax Amendment Act (No 2) 1982
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