“HM 58 Transition of rate for certain investors

• “When this section applies

  “(1) This section applies to a multi-rate PIE in relation to a person who is an investor in the PIE, and the person has, on 30 September 2010, a notified investor rate of 12.5%, 21%, or 30%.

  “Rate applying on and after 1 October 2010

  “(2) On and after 1 October 2010, the person's notified investor rate is––

  • “(a) 10.5%, if it was 12.5% on 30 September 2010:

  • “(b) 17.5%, if it was 21% on 30 September 2010:

  • “(c) 28%, if it was 30% on 30 September 2010.

  “Exception: new notified rate

  “(3) Subsection (2) does not apply if the person advises the PIE of a different notified investor rate.

  “Defined in this Act: multi-rate PIE, notified investor rate, notify”.

“Application of rate

• “(3) For an investor for an income year, a multi-rate PIE must apply the most recent notified investor rate to every day in every period for the income year. However, for the 2010–11 income year, the most recent notified investor rate on or after 1 October 2010 is applied only to every day on or after 1 October 2010. For a day before 1 October 2010, the multi-rate PIE must apply the notified investor rate that would have applied ignoring the Taxation (Budget Measures) Act 2010.”

“OZ 7 Memorandum accounts in transitional period

• Unless the context otherwise requires, sections OZ 8 to OZ 15 apply for a period (the transitional period)—

  • “(a) beginning the first day of a person's 2011–12 income year; and

  • “(b) ending on 31 March 2013.

  “Defined in this Act: income year”.

• “(a) a person—

  • “(i) derives a dividend in the transitional period, if the person is a new company tax rate person that is not a multi-rate PIE:

  • “(ii) derives a dividend in the period from 1 October 2010 to 31 March 2013, if the person is a new company tax rate person that is a multi-rate PIE; and”.

“RZ 3 Standard method: 2010–11 to 2012–13 income years

• “When this section applies

  “(1) This section applies to the calculation of a person's provisional tax liability, when section RC 5 (Methods for calculating provisional tax liability) applies,––

  • “(a) for instalments payable on or after 1 October 2010 for the 2010–11 income year and for instalments for the 2011–12 and 2012–13 income years, if the person is a new personal tax rate person:

  • “(b) for instalments payable for the 2011–12 and 2012–13 income years, if the person is a new company tax rate person.

  “Standard method modified: for 5% uplift

  “(2) The standard method under section RC 5(2) is modified so that––

  • “(a) for instalments payable on or after 1 October 2010 for the 2010–11 income year, instead of using 105%, the amount of provisional tax payable is calculated using 95%, if the person is a new personal tax rate person:

  • “(b) for the 2011–12 income year, instead of using 105%, the amount of provisional tax payable is calculated using––

    • “(i) 95%, if the person is a new personal tax rate person; or

    • “(ii) 100%, if the person is a new company tax rate person.

  “Standard method modified: for 10% uplift

  “(3) The standard method under section RC 5(3) is modified so that––

  • “(a) for instalments payable on or after 1 October 2010 for the 2010–11 income year, instead of using 110%, the amount of provisional tax payable is calculated using 95%, if the person is a new personal tax rate person:

  • “(b) for the 2011–12 income year, instead of using 110%, the amount of provisional tax payable is calculated using––

    • “(i) 95%, if the person is a new personal tax rate person; or

    • “(ii) 105%, if the person is a new company tax rate person:

  • “(c) for the 2012–13 income year, instead of using 110%, the amount of provisional tax payable is calculated using––

    • “(i) 100%, if the person is a new personal tax rate person; or

    • “(ii) 105%, if the person is a new company tax rate person.

  “Defined in this Act: amount, income year, new company tax rate person, new personal tax rate person, pay, provisional tax

“RZ 4 GST ratio method: 2010–11 to 2013–14 income years

• “When this section applies

  “(1) This section applies to the calculation of a person's provisional tax liability, when section RC 8 (GST ratio method) applies and requires an amount of residual income tax or an assessment of income tax for the calculation of the GST ratio,––

  • “(a) for instalments payable on or after 1 October 2010 for the 2010–11 income year and for instalments for the 2011–12, 2012–13, and 2013–14 income years, if the person is a new personal tax rate person:

  • “(b) for instalments payable for the 2011–12, 2012–13, and 2013–14 income years, if the person is a new company tax rate person.

  “(2) The GST ratio method under section RC 8 is modified so that––

  • “(a) for instalments payable on or after 1 October 2010 for the 2010–11 income year, and for the 2011–12 income year, if the person is a new personal tax rate person,––

    • “(i) the amount of residual income tax or the amount of an assessment of income tax for the preceding year, as applicable, is reduced by multiplying the amount by 0.90:

    • “(ii) the amount of residual income tax or the amount of an assessment of income tax for the tax year before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.85:

    • “(iii) the amount of residual income tax or the amount of an assessment of income tax for the year that is 2 years before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.80:

  • “(b) for instalments payable for the 2012–13 income year, if the person is a new personal tax rate person,––

    • “(i) the amount of residual income tax or the amount of an assessment of income tax for the tax year before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.90:

    • “(ii) the amount of residual income tax or the amount of an assessment of income tax for the year that is 2 years before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.85:

  • “(c) for instalments payable for the 2013–14 income year, if the person is a new personal tax rate person, the amount of residual income tax or the amount of an assessment of income tax for the year that is 2 years before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.90:

  • “(d) for instalments payable for the 2011–12 income year, if the person is a new company tax rate person,––

    • “(i) the amount of residual income tax or the amount of an assessment of income tax for the preceding year, as applicable, is reduced by multiplying the amount by 0.95:

    • “(ii) the amount of residual income tax or the amount of an assessment of income tax for the tax year before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.95:

    • “(iii) the amount of residual income tax or the amount of an assessment of income tax for the year that is 2 years before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.95:

  • “(e) for instalments payable for the 2012–13 income year, if the person is a new company tax rate person,––

    • “(i) the amount of residual income tax or the amount of an assessment of income tax for the tax year before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.95:

    • “(ii) the amount of residual income tax or the amount of an assessment of income tax for the year that is 2 years before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.95:

  • “(f) for instalments payable for the 2013–14 income year, if the person is a new company tax rate person, the amount of residual income tax or the amount of an assessment of income tax for the year that is 2 years before the preceding year or the transitional year, as applicable, is reduced by multiplying the amount by 0.95.

  “Defined in this Act: amount, assessment, GST ratio, income tax, income year, new company tax rate person, new personal tax rate person, pay, provisional tax, residual income tax

“RZ 5 Calculating amounts under standard method: 2010–11 to 2012–13 income years

• “When this section applies

  “(1) This section applies to the calculation of a person's provisional tax liability, when section RC 10 (Calculating amount of instalment under standard and estimation methods) applies,––

  • “(a) for instalments payable on or after 1 October 2010 for the 2010–11 income year and for instalments for the 2011–12 and 2012–13 income years, if the person is a new personal tax rate person:

  • “(b) for instalments payable for the 2011–12 and 2012–13 income years, if the person is a new company tax rate person.

  “Calculation modified: for 5% uplift

  “(2) In the calculation of the amount of an instalment, in section RC 10(3)(a), subparagraph (i) is modified so that––

  • “(a) for instalments payable on or after 1 October 2010 for the 2010–11 income year, instead of using a 5% uplift, a 5% reduction is used, if the person is a new personal tax rate person:

  • “(b) for the 2011–12 income year, instead of using a 5% uplift, the amount of provisional tax payable is calculated using––

    • “(i) a 5% reduction, if the person is a new personal tax rate person; or

    • “(ii) no uplift, if the person is a new company tax rate person.

  “Calculation modified: for 10% uplift

  “(3) In the calculation of the amount of an instalment, in section RC 10(3)(a), subparagraph (ii) is modified so that––

  • “(a) for instalments payable on or after 1 October 2010 for the 2010–11 income year, instead of using a 10% uplift, a 5% reduction is used, if the person is a new personal tax rate person:

  • “(b) for the 2011–12 income year, instead of using a 10% uplift, the amount of provisional tax payable is calculated using––

    • “(i) a 5% reduction, if the person is a new personal tax rate person; or

    • “(ii) a 5% uplift, if the person is a new company tax rate person:

  • “(c) for the 2012–13 income year, instead of using a 10% uplift, the amount of provisional tax payable is calculated using––

    • “(i) no uplift, if the person is a new personal tax rate person; or

    • “(ii) a 5% uplift, if the person is a new company tax rate person.

  “Defined in this Act: amount, income year, new company tax rate person, new personal tax rate person, pay, provisional tax”.

“new company tax rate person,––

• “(a) means a person who uses a 28% basic tax rate for the 2011–12 income year or later income years:

• “(b) includes, for the purposes of subpart OZ (Terminating provisions), a multi-rate PIE:

• “(c) does not include, for the purposes of subpart RZ (Terminating provisions), a multi-rate PIE

“new personal tax rate person means a person whose basic rate of income tax is calculated under schedule 1, part A, clause 1 for the 2010–11 income year or a later income year”.

Table 1

Row	ESCT rate threshold amount	Tax rate
1	$0 – $16,800	0.105
2	$16,801 – $57,600	0.175
3	$57,601 – $84,000	0.300
4	$84,001 upwards	0.330
How to use this table:Find the range in the second column for the last dollar of the amount of salary or wages under section RD 69(1), and apply the relevant rate in the third column.

Table 2

Row	Conditions			Payment rate
1	The payer of the interest has not been supplied with the tax file number of a person who is paid the interest.			0.330
2	The payer of the interest—
	(a)		has been supplied with the tax file number of a person who opens a new account after 31 March 2010 and who is paid the interest; and
	(b)		has not received a payment rate election from the recipient of the interest:
	(c)		is not required to use a rate notified by the Commissioner under section 25A of the Tax Administration Act 1994.	0.330
3	The payer of the interest—
	(a)		has been supplied with the tax file number of a person who is paid the interest; and
	(b)		has received a payment rate election from the recipient of the interest––
		(i)	before 1 October 2010, choosing the 0.390 or 0.380 payment rate, and the payer is not required to use a rate notified by the Commissioner under section 25A of the Tax Administration Act 1994:
		(ii)	on or after 1 October 2010, choosing the 0.330 payment rate.	0.330
4	The payer of the interest—
	(a)		has been supplied with the tax file number of a person who is paid the interest; and
	(b)		has received a payment rate election from the recipient of the interest––
		(i)	before 1 October 2010, choosing the 0.330 payment rate, and the payer is not required to use a rate notified by the Commissioner under section 25A of the Tax Administration Act 1994:
		(ii)	on or after 1 October 2010, choosing the 0.300 payment rate.	0.300
5	The payer of the interest—
	(a)		has been supplied with the tax file number of a person who has not opened a new account after 31 March 2010 and who is paid the interest; and
	(b)		has not received a payment rate election from the recipient of the interest; and
	(c)		is not required to use a rate notified by the Commissioner under section 25A of the Tax Administration Act 1994.	0.175
6	The payer of the interest—
	(a)		has been supplied with the tax file number of a person who is paid the interest; and
	(b)		has received a payment rate election from the recipient of the interest––
		(i)	before 1 October 2010, choosing the 0.195 or 0.210 payment rate, and the payer is not required to use a rate notified by the Commissioner under section 25A of the Tax Administration Act 1994:
		(ii)	on or after 1 October 2010, choosing the 0.175 payment rate.	0.175
7	The payer of the interest—
	(a)		has been supplied with the tax file number of a person, other than a trustee, who is paid the interest; and
	(b)		has received a payment rate election from the recipient of the interest––
		(i)	before 1 October 2010, choosing the 0.125 payment rate, and the payer is not required to use a rate notified by the Commissioner under section 25A of the Tax Administration Act 1994:
		(ii)	on or after 1 October 2010, choosing the 0.105 payment rate; and
	(c)		the recipient has a reasonable expectation at the time of the election that their income for the income year will be $14,000 or less.	0.105
8	The payer of the interest—
	(a)		has been supplied with the tax file number of a person who is paid the interest as a trustee of a testamentary trust to which section HC 37 applies; and
	(b)		has received a payment rate election from the recipient of the interest––
		(i)	before 1 October 2010, choosing the 0.125 payment rate, and the payer of the interest is not required to use a rate notified by the Commissioner under section 25A of the Tax Administration Act 1994:
		(ii)	on or after 1 October 2010, choosing the 0.105 payment rate.	0.105
How to use this table:Find the applicable condition in the second column, in order to find the relevant rate to apply, in the third column.

3	The payer of the interest—
	(a)		has been supplied with the tax file number of a person who is paid interest; and
	(b)		has received a payment rate election from the recipient of the interest,––
		(i)	on or after 1 October 2010, choosing the 0.33 payment rate:
		(ii)	before 1 October 2010, choosing the 0.39 or 0.38 payment rate.	0.33
4	The payer of the interest has not been supplied with the tax file number of a person who is paid the interest.			0.33

Table 5

Row	Conditions		Payment rate
1	The person responsible for withholding RSCT—
	(a)	has been notified under section 28C of the Tax Administration Act 1994 that 12.5 or 10.5 cents in the dollar is the person's retirement scheme prescribed rate; and
	(b)	has been supplied with the tax file number of the person.	0.105
2	The person is a non-resident and a distribution of no more than $200 is made to them by a retirement scheme contributor that is a Maori authority.		0.105
3	The person responsible for withholding RSCT—
	(a)	has been notified under section 28C of the Tax Administration Act 1994 that 21 or 17.5 cents in the dollar is equal to or greater than the person's retirement scheme prescribed rate; and
	(b)	has been supplied with the tax file number of the person.	0.175
4	The person responsible for withholding RSCT—
	(a)	has been notified under section 28C of the Tax Administration Act 1994 that 33 or 30 cents in the dollar is equal to or greater than the person's retirement scheme prescribed rate; and
	(b)	has been supplied with the tax file number of the person.	0.300
5	When none of rows 1 to 4 apply.		0.330
How to use this table:Find the applicable condition in the second column, in order to find the relevant rate to apply, in the third column.

Table 1

Row	Condition	Tax rate
1	Section RD 17(2)(a) applies and the sum is $14,000 or less.	0.105
2	Section RD 10(2)(a) or RD 17(2)(b) applies.	0.175
3	Section RD 10(2)(b) or RD 17(2)(c) applies.	0.300
4	Section RD 10(2)(c) or RD 17(2)(d) applies.	0.330
How to use this table:Find the applicable condition in the second column, in order to find the relevant rate to apply, in the third column.

“140C Transitional imputation penalty tax payable in some circumstances

• “(1) This section applies when a company has an end of year debit balance under section OA 3(3) and (4) of the Income Tax Act 2007 for its imputation credit account as at 31 March 2013, if the company is treated, for the purposes of this section, as having only the balances and adjustments referred to in subsections (2) and (3).

  “(2) For the purposes of subsection (1), for the transitional period, the following adjustments must be made to the company's ICA balance at the end of the company's 2010–11 income year for transactions occurring after the end of that income year:

  • “(a) first, the company must subtract any overpayment of income tax for the 2010–11 or earlier income year in which the company was an ICA company:

  • “(b) secondly, the company must subtract––

    • “(i) any payment for an income year after the 2010–11 income year:

    • “(ii) any amount that is or would be refundable for an income year after the 2010–11 income year:

  • “(c) thirdly, the company must add any income tax paid for the 2010–11 or earlier income year in which the company was an ICA company.

  “(3) For the purposes of subsection (1), the company must include in its ICA balance the ICA credits and debits for transactions occurring after the end of the company's 2010–11 income year to the extent to which those credits and debits relate to memorandum account debits, credits, and balances dealt with, arising, or calculated using an old company tax rate, but excluding any amount taken into account under subsection (2).

  “(4) The company is liable for a special tax known as imputation penalty tax.

  “(5) The amount of imputation penalty tax is 10% of the positive difference between zero and the end of year debit balance described in subsection (1).”

“21CB Rate for change of use before 1 October 2010

• For a registered person who is treated as supplying goods and services as described in sections 21 and 21D, the rate of goods and services tax used for attributing output tax under section 21C for the supply of those goods and services is the rate that applied for the supply of goods and services immediately before 1 October 2010 if,––

  • “(a) before 1 October 2010, the goods and services are applied for a purpose other than making taxable supplies; and

  • “(b) the registered person chooses to apply this section.”

• “(4) For the purposes of this section, COU tax fraction means––

  • “(a) the tax fraction, if paragraph (b) does not apply:

  • “(b) the tax fraction that applied at the time that the goods and services referred to in section 21E were acquired by the person, if, before 1 October 2010, the goods and services are applied in a taxable period for a purpose of making taxable supplies either by the person or, if the person is a member of a partnership, by the partnership.”

• “(4B) Despite subsection (4)(b), for a registered person who is treated as supplying entertainment as described in subsection (4), the time of supply for that entertainment is treated as being 30 September 2010 if––

  • “(a) the relevant expenditure or loss for the entertainment is incurred before 1 October 2010; and

  • “(b) the registered person chooses to apply this section.”

• “(a) the person's part 1 return furnished under section 78A of this Act; or

• “(b) the return for the taxable period ending with the day preceding the date on which the new rate of tax comes into force, if the person is not required to furnish a part 1 return.”

• “(c) to the extent that it cannot be so set off, refunded to the person, subject to section 46(6).”

“183AA Remission for GST transitional taxable periods

• “(1) This section applies to––

  • “(a) a late filing penalty imposed under section 139AAA in respect of a GST return required to be furnished for a GST transitional taxable period:

  • “(b) a late payment penalty imposed under section 139B in respect of unpaid tax for a GST transitional taxable period:

  • “(c) interest payable under Part 7 in respect of unpaid tax for a GST transitional taxable period.

  “(2) The Commissioner must remit a taxpayer's penalty or interest to the extent to which, objectively, the penalty or interest are imposed because of the taxpayer's acts or omissions in respect of the change in the rate of goods and services tax on 1 October 2010.

  “(3) Subsection (2) does not apply if the taxpayer is liable for a shortfall penalty in respect of a GST transitional taxable period, if the liability is attributable wholly or in part to the taxpayer's acts or omissions in respect of the change in the rate of goods and services tax on 1 October 2010.

  “(4) In this section, GST transitional taxable period means, for a taxpayer,—

  • “(a) a taxable period, as defined in the Goods and Services Tax Act 1985 (a GST taxable period), that includes 1 October 2010:

  • “(b) a GST taxable period that includes 1 October 2010 and a later GST taxable period, if that later GST taxable period ends on or before 31 December 2010:

  • “(c) a GST taxable period for which the taxpayer is required to make a return that includes an adjustment under section 78B of the Goods and Services Tax Act 1985 because of the change in the rate of goods and services tax on 1 October 2010.”

“MF 4D Calculation of instalments: 1 April 2010 to 30 September 2010

• “When this section applies

  “(1) This section applies for calculating the amount of an instalment by way of tax credit under section MD 1 (Abating WFF tax credit), or as applicable, sections MD 1 and ME 1 (Minimum family tax credit) for the period starting on 1 April 2010 and finishing on 30 September 2010.

  “Family tax credit formula: section MD 3

  “(2) The instalments for the relevant tax credit are calculated using, for the calculation of the family tax credit, the following formula:

  	prescribed amount ×	days
  		365.

  “Definition of items in formula in subsection (2)

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

  “Prescribed amount

  “(4) Prescribed amount is the sum of the following amounts:

  • “(a) for the eldest dependent child for whom the person is a principal caregiver during the entitlement period, 1 of the following, as applicable:

    • “(i) $4,487, if the child is younger than 16:

    • “(ii) $5,198, if the child is 16 or older:

    • “(iii) a weighted average of the amounts in subparagraphs (i) and (ii) that reflects the proportion of the period for which those subparagraphs apply to the child, if the child turns 16 during the entitlement period; and

  • “(b) for each dependent child for whom the person is a principal caregiver during the entitlement period, other than the eldest dependent child, 1 of the following, as applicable:

    • “(i) $3,119, if the child is younger than 13:

    • “(ii) $3,557, if the child is 13, 14, or 15:

    • “(iii) $4,651, if the child is 16 or older:

    • “(iv) a weighted average of the amounts in subparagraphs (i) and (ii) that reflects the proportion of the period for which those subparagraphs apply to the child, if the child turns 13 during the entitlement period:

    • “(v) a weighted average of the amounts in subparagraphs (ii) and (iii) that reflects the proportion of the entitlement period for which those subparagraphs apply to the child, if the child turns 16 during the entitlement period.

  “Days

  “(5) Days is the number of days in the entitlement period.

  “When another person cares for dependent child

  “(6) A family tax credit must be reduced in proportion to the time in the entitlement period that a dependent child spends in the exclusive care of another person who qualifies under section MC 2 (Who qualifies for entitlements under family scheme?).

  “Family credit abatement formula: section MD 13

  “(7) The instalments for the relevant tax credit are calculated using, for the calculation of the family credit abatement, the following formula:

  	full-year abatement ×	days
  		365.

  “Definition of items in formula in subsection (7)

  “(8) In the formula,—

  • “(a) full-year abatement is,—

    • “(i) if the person has no spouse, civil union partner, or de facto partner during the entitlement period, and the person’s family scheme income for the relationship period containing the entitlement period is more than $36,827, 20 cents for each complete dollar of the excess; or

    • “(ii) if the person has a spouse, civil union partner, or de facto partner during the entitlement period, and the person’s family scheme income, the family scheme income of their spouse, civil union partner, or de facto partner, or the sum of those incomes for the relationship period containing the entitlement period is more than $36,827, 20 cents for each complete dollar of the excess:

  • “(b) days is the number of days in the entitlement period excluding the days of any calendar months in which the person receives protected family tax credit as described in section MD 14 (Person receiving protected family tax credit).

  “When 56-day period includes 31 March

  “(9) If a person who qualifies under section MC 2 receives instalments of the parental tax credit in a 56-day period that includes 31 March, the formula is applied so that—

  • “(a) instalments of the parental tax credit received in the first tax year are abated against the person’s family scheme income, the family scheme income of their spouse, civil union partner, or de facto partner, or the sum of those incomes for that tax year; and

  • “(b) instalments of the parental tax credit received in the second tax year are abated against the person’s family scheme income, the family scheme income of their spouse, civil union partner, or de facto partner, or the sum of those incomes for that tax year.

  “Relationship with subject matter

  “(10) Sections MD 14 to MD 16 (which relate to family credit abatement), with necessary modifications, apply to the calculation of the family credit abatement in subsection (7).

  “Minimum family tax credit formula: section ME 1

  “(11) The instalments for the relevant tax credit are calculated using, for the calculation of the minimum family tax credit, the following formula:

  	prescribed amount – net family scheme income ×	weekly periods
  		52.

  “Definition of items in formula in subsection (11)

  “(12) In the formula,—

  • “(a) prescribed amount is $20,800:

  • “(b) net family scheme income is the net family scheme income, calculated using the formula in section ME 3 (Meaning of net family scheme income), for a relationship period containing the entitlement period, of––

    • “(i) the person; or

    • “(ii) their spouse, civil union, or de facto partner; or

    • “(iii) the person and their spouse, civil union, or de facto partner:

  • “(c) weekly periods is the number of periods of 1 week in the entitlement period for which the person is a full-time earner.

  “Relationship with subject matter

  “(13) Sections ME 2 (Meaning of employment for this subpart) and ME 3, with necessary modifications, apply to the calculation of the minimum family tax credit in subsection (11).

  “Defined in this Act: amount, child, civil union partner, de facto partner, dependent child, entitlement period, family credit abatement, family scheme income, family tax credit, full-time earner, minimum family tax credit, net family scheme income, parental tax credit, principal caregiver, protected family tax credit, relationship period, spouse, tax credit, tax year

“MF 4E Calculation of instalments: 1 October 2010 to 31 March 2011

• “When this section applies

  “(1) This section applies for calculating the amount of an instalment by way of tax credit under section MD 1 (Abating WFF tax credit), or as applicable, sections MD 1 and ME 1 (Minimum family tax credit) for the period starting on 1 October 2010 and finishing on 31 March 2011.

  “Family tax credit formula: section MD 3

  “(2) The instalments for the relevant tax credit are calculated using, for the calculation of the family tax credit, the following formula:

  	prescribed amount ×	days
  		365.

  “Definition of items in formula in subsection (2)

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

  “Prescribed amount

  “(4) Prescribed amount is the sum of the following amounts:

  • “(a) for the eldest dependent child for whom the person is a principal caregiver during the entitlement period, 1 of the following, as applicable:

    • “(i) $4,578, if the child is younger than 16:

    • “(ii) $5,303, if the child is 16 or older:

    • “(iii) a weighted average of the amounts in subparagraphs (i) and (ii) that reflects the proportion of the period for which those subparagraphs apply to the child, if the child turns 16 during the entitlement period; and

  • “(b) for each dependent child for whom the person is a principal caregiver during the entitlement period, other than the eldest dependent child, 1 of the following, as applicable:

    • “(i) $3,182, if the child is younger than 13:

    • “(ii) $3,629, if the child is 13, 14, or 15:

    • “(iii) $4,745, if the child is 16 or older:

    • “(iv) a weighted average of the amounts in subparagraphs (i) and (ii) that reflects the proportion of the period for which those subparagraphs apply to the child, if the child turns 13 during the entitlement period:

    • “(v) a weighted average of the amounts in subparagraphs (ii) and (iii) that reflects the proportion of the entitlement period for which those subparagraphs apply to the child, if the child turns 16 during the entitlement period.

  “Days

  “(5) Days is the number of days in the entitlement period.

  “When another person cares for dependent child

  “(6) A family tax credit must be reduced in proportion to the time in the entitlement period that a dependent child spends in the exclusive care of another person who qualifies under section MC 2 (Who qualifies for entitlements under family scheme?).

  “Family credit abatement formula: section MD 13

  “(7) The instalments for the relevant tax credit are calculated using, for the calculation of the family credit abatement, the following formula:

  	full-year abatement ×	days
  		365.

  “Definition of items in formula in subsection (7)

  “(8) In the formula,—

  • “(a) full-year abatement is,—

    • “(i) if the person has no spouse, civil union partner, or de facto partner during the entitlement period, and the person’s family scheme income for the relationship period containing the entitlement period is more than $36,827, 20 cents for each complete dollar of the excess; or

    • “(ii) if the person has a spouse, civil union partner, or de facto partner during the entitlement period, and the person’s family scheme income, the family scheme income of their spouse, civil union partner, or de facto partner, or the sum of those incomes for the relationship period containing the entitlement period is more than $36,827, 20 cents for each complete dollar of the excess:

  • “(b) days is the number of days in the entitlement period excluding the days of any calendar months in which the person receives protected family tax credit as described in section MD 14 (Person receiving protected family tax credit).

  “When 56-day period includes 31 March

  “(9) If a person who qualifies under section MC 2 receives instalments of the parental tax credit in a 56-day period that includes 31 March, the formula is applied so that—

  • “(a) instalments of the parental tax credit received in the first tax year are abated against the person’s family scheme income, the family scheme income of their spouse, civil union partner, or de facto partner, or the sum of those incomes for that tax year; and

  • “(b) instalments of the parental tax credit received in the second tax year are abated against the person’s family scheme income, the family scheme income of their spouse, civil union partner, or de facto partner, or the sum of those incomes for that tax year.

  “Relationship with subject matter

  “(10) Sections MD 14 to MD 16 (which relate to family credit abatement), with necessary modifications, apply to the calculation of the family credit abatement in subsection (7).

  “Minimum family tax credit formula: section ME 1

  “(11) The instalments for the relevant tax credit are calculated using, for the calculation of the minimum family tax credit, the following formula:

  	prescribed amount – net family scheme income ×	weekly periods
  		52.

  “Definition of items in formula in subsection (11)

  “(12) In the formula,—

  • “(a) prescribed amount is $21,216:

  • “(b) net family scheme income is the net family scheme income, calculated using the formula in section ME 3 (Meaning of net family scheme income), for a relationship period containing the entitlement period, of––

    • “(i) the person; or

    • “(ii) their spouse, civil union, or de facto partner; or

    • “(iii) the person and their spouse, civil union, or de facto partner:

  • “(c) weekly periods is the number of periods of 1 week in the entitlement period for which the person is a full-time earner.

  “Relationship with subject matter

  “(13) Sections ME 2 (Meaning of employment for this subpart) and ME 3, with necessary modifications, apply to the calculation of the minimum family tax credit in subsection (11).

  “Defined in this Act: amount, child, civil union partner, de facto partner, dependent child, entitlement period, family credit abatement, family scheme income, family tax credit, full-time earner, minimum family tax credit, net family scheme income, parental tax credit, principal caregiver, protected family tax credit, relationship period, spouse, tax credit, tax year”.

• “(1) An employer who chooses to pay their FBT liability under the single rate option must pay FBT at the rate of––

  • “(a) 61% of the taxable value of a fringe benefit for each of the first 2 quarters of a tax year:

  • “(b) 49.25% of the taxable value of a fringe benefit for each of the last 2 quarters of a tax year.”

• “(1) An employer who chooses to pay their FBT liability under the single rate option must pay FBT at the rate of 49.25% of the taxable value of a fringe benefit for each of the 4 quarters of a tax year.”

• “(3) The employer must pay FBT at the rate of––

  • “(a) 61% of the taxable value of a fringe benefit for any of the first 2 quarters of a tax year for which they do not pay at the rate of 49% under subsection (2):

  • “(b) 49% of the taxable value of a fringe benefit for the 3rd quarter of a tax year for which they do not pay at the rate of 43% under subsection (2).”

• “(3) The employer must pay FBT at the rate of 49.25% of the taxable value of a fringe benefit for any of the first 3 quarters of a tax year for which they do not pay at the rate of 43% under subsection (2).”

Table 1

Row	Range of dollar in taxable income	Tax rate
1	$0 – $14,000	0.1150
2	$14,001 – $48,000	0.1925
3	$48,001 – $70,000	0.3150
4	$70,001 upwards	0.3550
How to use this table:Find the range in the second column for each dollar in the person's taxable income, and apply the relevant rate for the dollar in the third column.

Table 1

Row	Range of dollar in taxable income	Tax rate
1	$0 – $14,000	0.105
2	$14,001 – $48,000	0.175
3	$48,001 – $70,000	0.300
4	$70,001 upwards	0.330
How to use this table:Find the range in the second column for each dollar in the person's taxable income, and apply the relevant rate for the dollar in the third column.

Table 1

Row	Range of dollar in all-inclusive pay	Tax rate
1	$0 – $12,390	0.1299
2	$12,391 – $39,845	0.2384
3	$39,846 – $54,915	0.4599
4	$54,916 upwards	0.5504
How to use this table:Find the range in the second column for each dollar in the person's all-inclusive pay under section RD 51, and apply the relevant rate for the dollar in the third column.

Table 1

Row	Range of dollar in all-inclusive pay	Tax rate
1	$0 – $12,530	0.1173
2	$12,531 – $40,580	0.2121
3	$40,581 – $55,980	0.4286
4	$55,981 upwards	0.4925
How to use this table:Find the range in the second column for each dollar in the person's all-inclusive pay under section RD 51, and apply the relevant rate for the dollar in the third column.

“CG 8 Capital contributions

• “When this section applies

  “(1) This section applies for the income year (the first year) in which a person derives a capital contribution and for the 9 income years after that first year.

  “Income

  “(2) For an income year, the amount given by the following formula is income of the person derived in that income year:

  	capital contribution
  	10.

  “Definition of item in formula

  “(3) In the formula, capital contribution is the capital contribution that the person derives in the first year.

  “Exception

  “(4) This section does not apply for the capital contribution if the person has chosen, in accordance with section DB 64(1)(c) (Capital contributions), to apply section DB 64 instead.

  “Defined in this Act: amount, capital contribution, income, income year, return of income”.

“Capital contributions

“DB 64 Capital contributions

• “When this section applies

  “(1) This section applies if,––

  • “(a) a person has derived a capital contribution after 20 May 2010; and

  • “(b) in the absence of this section, the person would be allowed a deduction for an amount of depreciation loss for an item of depreciable property for which the capital contribution is a contribution (see: definition of capital contribution); and

  • “(c) the person has chosen to apply this section in a return of income for the income year in which the capital contribution is derived.

  “Deduction

  “(2) For the purposes of quantifying the amount of depreciation loss for the income year under subpart EE (Depreciation), the item's adjusted tax value, base value, cost, or value, as applicable, is reduced by the amount of the capital contribution.

  “Links with subpart DA

  “(3) This section overrides the general permission.

  “Defined in this Act: adjusted tax value, amount, capital contribution, deduction, general permission, income, income year, return of income”.

“Rate for item acquired after 20 May 2010

• “(3) The rate, if subsection (2) does not apply and the person acquires the item, or enters into a binding contract for the purchase or construction of the item, after 20 May 2010, is 1 of the following:

  • “(a) the item's economic rate, special rate, or provisional rate, for an item not described in paragraph (b):

  • “(b) a diminishing value rate of 15% or a straight-line rate of 10% for an international aircraft.”

“No special rate for excluded depreciable property, special excluded depreciable property, or building

• “(2) A special rate may not be set for an item of excluded depreciable property, an item of special excluded depreciable property, or a building.”

• “(a) a person who uses the diminishing value method or the straight-line method for the item that was improved may choose to apply subsection (4) or (5), if paragraph (ab) does not apply:

• “(ab) a person who uses the diminishing value method or the straight-line method for the item that was improved must use subsection (3B) if––

  • “(i) the person makes the improvement, or enters into a binding contract for the purchase or construction of the improvement, after 30 July 2009; and

  • “(ii) the item that was improved is a grandparented structure:”.

• “(a) a person who uses the diminishing value method or the straight-line method for the item that was improved may choose to apply subsection (4) or (5), if paragraph (ab) does not apply:

• “(ab) a person who uses the diminishing value method or the straight-line method for the item that was improved must use subsection (3B) if––

  • “(i) the person makes the improvement, or enters into a binding contract for the purchase or construction of the improvement, after 20 May 2010; and

  • “(ii) the item that was improved is a grandparented structure, or is not a building, is not a used import car, is not an international aircraft, or has not been used or held for use in New Zealand as an item of depreciable property before the date on which the person acquires it:”.

“Improvement compulsorily treated as separate item

• “(3B) For the purposes of subsection (3)(ab), a person must treat the improvement as a separate item of depreciable property.”

• “(b) the amount given by subsections (1B) and (1C).”

“Amount for subsection (1)(b)

• “(1B) The amount for the purposes of subsection (1)(b) is given by the following formula:

  	item depreciation loss + CZ 11 item amount + DB 64 item amount.

“Definition of items in formula

• “(1C) In the formula in subsection (1B),—

  • “(a) item depreciation loss is the total of the amounts of depreciation loss for which the person has been allowed deductions for the item:

  • “(b) CZ 11 item amount is the amount of any deduction allowed for the acquisition of the item, for the person, if the item is one to which section CZ 11 (Recovery of deductions for software acquired before 1 April 1993) applies:

  • “(c) DB 64 item amount is the amount of the capital contribution for the item, for the person, if the item is one to which section DB 64 (Capital contributions) applies.”

“1995–1996 income year or later: buildings with estimated useful lives of 50 years or more

• “(3B) The rate is the rate set by section EE 31(2)(d), or by section EE 31(3)(c), as applicable, if the item is a building that––

  • “(a) has an economic rate or provisional rate of more than 0% due to an estimated useful life of 50 years or more; and

  • “(b) the person acquires in their 1995–96 income year or a later income year.”

“Special excluded depreciable property

• “(7B) The rate is 0% for all depreciation methods, if the item is an item of special excluded depreciable property that would be an item of excluded depreciable property but for the exclusion in section EE 64(3).”

“Another exclusion

• “(3) Excluded depreciable property does not include special excluded depreciable property.”

“special excluded depreciable property means all buildings that are items not specified in schedule 39 (Items for purposes of definition of special excluded depreciable property)”.

“Rate

• “(2) The rate is––

  • “(a) the item's economic rate, if the item is not a building that has an economic rate or provisional rate of more than 0% due to an estimated useful life of 50 years or more; or

  • “(b) the pre-1993 depreciation rate described in section EZ 14, if the person chooses under that section; or

  • “(c) 0%, for a building that has an economic rate or provisional rate of more than 0% due to an estimated useful life of 50 years or more.”

• “(1) An excess debt entity must apportion its interest expenditure for an income year under section FE 6 if,––

  • “(a) the excess debt entity is not a trustee and not an excess debt outbound company, or is a trustee who is not described in section FE 2(1)(g), and––

    • “(i) the debt percentage of its New Zealand group for the income year is more than 60%; and

    • “(ii) for a company or a trustee, the debt percentage of its New Zealand group for the income year is more than 110% of the debt percentage of the worldwide group; or

  • “(b) the excess debt entity is an excess debt outbound company, or is a trustee who is described in section FE 2(1)(g), and––

    • “(i) the debt percentage of its New Zealand group for the income year is more than 75%; and

    • “(ii) for a company or a trustee, the debt percentage of its New Zealand group for the income year is more than 110% of the debt percentage of the worldwide group.”

• “(3) A natural person must apportion their interest expenditure for an income year under section FE 6 if,––

  • “(a) they are not described in section FE 2(1)(g), and the debt percentage of their New Zealand group for the income year is more than 60%; or

  • “(b) they are described in section FE 2(1)(g), and the debt percentage of their New Zealand group for the income year is more than 75%.”

• “(e) threshold amount is, as applicable,––

  • “(i) if the excess debt entity is not a trustee and not an excess debt outbound company, or is a trustee who is not described in section FE 2(1)(g), the greater of 60% and 110% of the debt percentage of their worldwide group:

  • “(ii) if the person is a natural person who is not described in section FE 2(1)(g), 60%:

  • “(iii) if the excess debt entity is an excess debt outbound company, or is a trustee who is described in section FE 2(1)(g), the greater of 75% and 110% of the debt percentage of their worldwide group:

  • “(iv) if the person is a natural person who is described in section FE 2(1)(g), 75%.”

• “(5) The debt percentage of the worldwide group of an excess debt entity is treated as,––

  • “(a) 54.5454%, if the excess debt entity is not a trustee and not an excess debt outbound company, or is a trustee who is not described in section FE 2(1)(g), and––

    • “(i) the entity is unable to calculate the percentage and does not ask the Commissioner to make an estimate under subsection (4):

    • “(ii) the Commissioner cannot reasonably estimate the debt percentage under subsection (4):

    • “(iii) no member of the entity's worldwide group, other than the entity, is not resident in New Zealand; or

  • “(b) 68.1818%, if the excess debt entity is an excess debt outbound company, or is a trustee who is described in section FE 2(1)(g), and––

    • “(i) the entity is unable to calculate the percentage and does not ask the Commissioner to make an estimate under subsection (4):

    • “(ii) the Commissioner cannot reasonably estimate the debt percentage under subsection (4):

    • “(iii) no member of the entity's worldwide group, other than the entity, is not resident in New Zealand.”

“MB 3 When person carries on 1 or more businesses

• “When this section applies

  “(1) This section applies when a person carries on 1 or more businesses in the income year (each separate business, a single family scheme activity).

  “Ignore income and deductions for net loss activity

  “(2) The income and deductions for a person's family scheme activity for an income year are ignored when calculating the person's family scheme income for the year if, treating the person as having only the income and deductions of that activity, the person would have a net loss for that year.

  “Modification of what counts as 1 family scheme activity

  “(3) For the purposes of applying subsection (2), and despite subsection (1), 2 or more family scheme activities may be treated as a single business activity, if the Commissioner considers that the 2 or more activities are of the kind that are normally carried on in association with each other.

  “Apportionment of deductions between family scheme activities

  “(4) For the purposes of applying subsection (2) as modified by subsection (3), deductions that relate to an asset used in carrying on 2 or more family scheme activities must be appropriately apportioned between the activities on the basis of the use of that asset in those 2 or more activities.

  “Defined in this Act: business, deduction, family scheme income, income, income year, net loss

  “Compare: 2004 No 35 s KD 1(1)(f), (2)”.

“MB 3 When person carries on 1 or more businesses or investment activities

• “When this section applies

  “(1) This section applies when a person carries on 1 or more businesses in the income year, or has or carries on 1 or more investment activities in the income year (each separate business or investment activity, a single family scheme activity).

  “Ignore income and deductions for net loss activity

  “(2) The income and deductions for a person's family scheme activity for an income year are ignored when calculating the person's family scheme income for the year if, treating the person as having only the income and deductions of that activity, the person would have a net loss for that year.

  “Modification of what counts as 1 family scheme activity

  “(3) For the purposes of applying subsection (2), and despite subsection (1), 2 or more family scheme activities may be treated as a single family scheme activity, if the Commissioner considers that the 2 or more activities are of the kind that are normally carried on in association with each other.

  “Apportionment of deductions between family scheme activities

  “(4) For the purposes of applying subsection (2) as modified by subsection (3), deductions that relate to an asset used in carrying on 2 or more family scheme activities must be appropriately apportioned between the activities on the basis of the use of that asset in those 2 or more activities.

  “Definition

  “(5) In this section, investment activity includes passive holding of an investment asset, other than a variable principal debt instrument.

  “Defined in this Act: business, deduction, family scheme income, income, income year, investment activity, net loss, variable principal debt instrument”.

• “(cb) increase the amounts appearing as the amount of the threshold set out in section MD 13(3):”.

“How movement in CPI determined

• “(2B) For the purposes of subsections (1)(a)(i) and (2)(a) and (b), a movement in the New Zealand Consumers Price Index over a period is determined by comparing the following numbers:

  • “(a) the number that, when the period started, was the most recent quarterly index number of—

    • “(i) the New Zealand Consumers Price Index all groups, if the period starts before 29 April 2010; and

    • “(ii) the New Zealand Consumers Price Index all groups excluding cigarettes and other tobacco products, if the period starts after 28 April 2010:

  • “(b) the number that, when the period ended, was the most recent quarterly index number of—

    • “(i) the New Zealand Consumers Price Index all groups, if the period ends before 29 April 2010; and

    • “(ii) the New Zealand Consumers Price Index all groups excluding cigarettes and other tobacco products, if the period ends after 28 April 2010.”

“building, in subparts EE and EZ, does not include a grandparented structure”.

“capital contribution––

• “(a) in sections CG 8, DB 64, and EE 48 (which relate to capital contributions), means an amount that––

  • “(i) is paid by a person (the payer) to a person (the recipient) under an agreement between them that is not a contract of insurance; and

  • “(ii) is paid by the payer other than in their capacity of settlor, partner, or shareholder of the recipient; and

  • “(iii) is not income of the recipient, ignoring section CG 8; and

  • “(iv) is paid, under the express terms and conditions of the agreement, as a contribution for depreciable property owned or to be acquired by the recipient:

• “(b) is defined in section HG 11(12) (Limitation on deductions by partners in limited partnerships) for the purposes of that section”.

“grandparented structure means, for a person, any item on the following list, if the person acquired the item, or entered into a binding contract for the purchase or construction of the item, on or before 30 July 2009:

• “(a) barns, including barns (drying):

• “(b) carparks (buildings):

• “(c) chemical works:

• “(d) fertiliser works:

• “(e) powder drying buildings:

• “(f) site huts”.

“investment activity is defined in section MB 3 (When person carries on 1 or more businesses or investment activities) for the purpose of that section”.

“special excluded depreciable property is defined in section EE 67 (Other definitions)”.

1	The payer of the interest—
	(a)		has been supplied with the tax file number of a person who is paid interest; and
	(b)		has not received a payment rate election from the recipient of the interest, ignoring the receipt of an election for the 0.33 payment rate before 1 October 2010 (if any).	0.28
2	The payer of the interest—
	(a)		has been supplied with the tax file number of a person who is paid interest; and
	(b)		has received a payment rate election from the recipient of the interest, choosing the 0.28 payment rate.	0.28

Schedule 39 Items for purposes of definition of special excluded depreciable property

s EE 67

Carports (hired out to householders)

Portable huts

Cool-stores and freezing chambers

Slaughterhouses on farms

Fowl houses

Plastic hothouses and PVC tunnel houses

Glasshouses

Buildings affected by acid

Milking sheds

Roofed livestock yards

Wintering barns and simple loafing barns

Milk powder buildings

Temporary buildings

---

• “(1D) The Commissioner must write off an amount, not exceeding $30, of outstanding tax to the extent to which the amount––

  • “(a) is outstanding from the 2010–11 tax year; and

  • “(b) is tax payable under section MF 5(2) or MF 6(2) of the Income Tax Act 2007, or is otherwise the result of WFF tax credit overpayment or overcrediting.”