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Income Tax Act 2007
Income Tax Act 2007
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Income Tax Act 2007
Part C Income
Subpart CA—General rules
CA 1 Amounts that are income
Amounts specifically identified
(1)
An amount is income of a person if it is their income under a provision in this Part.
Ordinary meaning
(2)
An amount is also income of a person if it is their income under ordinary concepts.
Defined in this Act: amount, income
Compare: 2004 No 35 s CA 1
CA 2 Amounts that are exempt income or excluded income
What this section does
(1)
This section identifies the subparts in this Act that deal with exempt income and excluded income.
Exempt income
(2)
An amount of income of a person is exempt income if it is their exempt income under a provision in subpart CW (Exempt income) or CZ (Terminating provisions).
Excluded income
(3)
An amount of income of a person is excluded income if—
(a)
it is their excluded income under a provision in subpart CX (Excluded income) or CZ; and
(b)
it is not their non-residents’ foreign-sourced income.
Defined in this Act: amount, excluded income, exempt income, non-residents’ foreign-sourced income
Compare: 2004 No 35 s CA 2
Subpart CB—Income from business or trade-like activities
Contents
Business generally
CB 1 Amounts derived from business
Income
(1)
An amount that a person derives from a business is income of the person.
Exclusion
(2)
Subsection (1) does not apply to an amount that is of a capital nature.
Defined in this Act: amount, business, income
Compare: 2004 No 35 s CB 1
CB 2 Amounts received on disposal of business assets that include trading stock
When this section applies
(1)
This section applies in an income year when—
(a)
a person (person A) who owns or carries on a business disposes of some or all of the assets of the business to another person (person B); and
(b)
the disposal is made outside the ordinary course of the business, or to put an end to the business or a part of it; and
(c)
the assets consist of or include trading stock of the business, or a share or interest in trading stock.
Assessable income of person A
(2)
An amount that person A receives from the disposal of the trading stock is taken into account in determining their income for the income year. The amount is derived at the time of disposal referred to in subsection (1).
Price of acquisition by person B
(3)
In the calculation of the taxable income of person B for the income year or a later income year, person B is treated as acquiring the trading stock for the amount of the disposal referred to in subsection (2).
Disposal
(4)
In this section, a disposal—
(a)
includes the passing of property by an exchange, gift, distribution under a will or on intestacy; and
(b)
does not include a disposal under any of sections FC 3 to FC 8 (which relate to distributions after death) that is not at market value.
Relationship with section CB 1
(5)
This section overrides section CB 1.
Defined in this Act: amount, assessable income, business, dispose, distribution, income year, market value, property, taxable income, trading stock
Compare: 2004 No 35 s FB 3
Schemes for profit
CB 3 Profit-making undertaking or scheme
An amount that a person derives from carrying on or carrying out an undertaking or scheme entered into or devised for the purpose of making a profit is income of the person.
Defined in this Act: amount, income
Compare: 2004 No 35 s CB 2
Personal property
CB 4 Personal property acquired for purpose of disposal
An amount that a person derives from disposing of personal property is income of the person if they acquired the property for the purpose of disposing of it.
Defined in this Act: amount, income, personal property
Compare: 2004 No 35 s CB 3
CB 5 Business of dealing in personal property
An amount that a person derives from disposing of personal property is income of the person if their business is to deal in property of that kind.
Defined in this Act: amount, business, income, personal property
Compare: 2004 No 35 s CB 4
Land
CB 6A Disposal within 10 years: Bright-line test for residential land
When this section applies: relationship with subject matter
(1A)
This section applies if none of sections CB 6 to CB 12 apply.
When this section does not apply
(1AB)
This section does not apply to a person’s disposal of residential land if—
(a)
the person first acquired an estate or interest in the land before 27 March 2021:
(b)
the land meets the requirements of section CB 6AB, CB 6AC, CB 6AE, or FB 3A (Residential land), and the transferor first acquired an estate or interest in the land before 27 March 2021.
Some definitions
(1)
In this section,—
(a)
10-year test land means residential land to the extent to which, using a land area test, it is not new build land, and the land’s bright-line disposal date is within 10 years of the earliest of any of the applicable dates (bright-line acquisition dates) described in subsections (3) to (7C):
(b)
5-year test land means residential land to the extent to which, using a land area test, it is new build land, and—
(i)
the person acquires it no later than 12 months after the land becoming new build land; and
(ii)
the land’s bright-line disposal date is within 5 years of the earliest of any of the applicable dates (bright-line acquisition dates) described in subsections (3) to (7C); and
(iii)
at the time of its disposal or at the time the instrument to transfer the land to another person is registered as described in subsection (3)(a), it meets the requirements of paragraph (a), (b), (d), (e), or (f) of the definition of new build land or would have met 1 of those requirements but for the destruction of the relevant place by natural disaster or fire.
Income
(2)
Subject to quantification under subsection (8), an amount that a person derives from disposing of residential land is income of the person to the extent to which the amount is for residential land that is—
(a)
10-year test land:
(b)
5-year test land.
Exception: death
(2B)
This section does not apply to an amount that an executor or administrator described in section FC 1(1)(a) (Disposals to which this subpart applies), or a beneficiary described in section FC 1(1)(b), derives from disposing of residential land that was transferred to them on the death of a person (see also: section FC 9 (Residential land transferred to executor, administrator, or beneficiary on death of person).
Disposal
(3)
In the case where none of subsections (4) to (7C) are applicable, the bright-line acquisition date for the purposes of the definitions of 10-year test land and 5-year test land is—
(a)
the date on which the instrument to transfer the land to the person was registered—
(i)
under the Land Transfer Act 2017; or
(ii)
under foreign laws of a similar nature to the Land Transfer Act 2017, if the land is outside New Zealand; or
(b)
the latest date on which the person acquires the estate or interest in the land, if an instrument to transfer the land to the person is not registered on or before the bright-line disposal date.
Change of trustees: disposal
(3B)
For the purposes of subsection (3), and despite subsection (3)(a), in the case of a transfer of land to a trustee of a trust from a trustee of the trust, the date on which the relevant instrument was registered is treated as—
(a)
the earliest date on which an instrument to transfer the land to a trustee of the trust was registered under the relevant law referred to in the subsection (the first date), if there has been no intervening transfer to a person who is not a trustee; or
(b)
the first date following the intervening transfer, if there has been an intervening transfer to a person who is not a trustee.
Subdivision
(4)
In the case where the residential land results from the person subdividing other land (the undivided land), the bright-line acquisition date for the purposes of the definitions of 10-year test land and 5-year test land is—
(a)
the date on which the instrument to transfer the undivided land to the person was registered—
(i)
under the Land Transfer Act 2017; or
(ii)
under foreign laws of a similar nature to the Land Transfer Act 2017, if the land is outside New Zealand; or
(b)
the latest date on which the person acquires the estate or interest in the undivided land, if the land is not registered as described in paragraph (a) at the bright-line date.
Change of trustees: subdivision
(4B)
For the purposes of subsection (4), and despite subsection (4)(a), in the case of a transfer of land to a trustee of a trust from a trustee of the trust, the date on which the relevant instrument was registered is treated as—
(a)
the earliest date on which an instrument to transfer the undivided land to a trustee of the trust was registered under the relevant law referred to in the subsection (the first undivided date), if there has been no intervening transfer to a person who is not a trustee; or
(b)
the first undivided date following the intervening transfer, if there has been an intervening transfer to a person who is not a trustee.
Leases with perpetual right of renewal
(5)
In the case where the residential land is a freehold estate in residential land, acquired as the owner of a leasehold estate with a perpetual right of renewal, the bright-line acquisition date for the purposes of the definitions of 10-year test land and 5-year test land is the date the leasehold estate was granted.
Joint tenancy converted to tenancy in common
(5B)
In the case and to the extent to which the residential land is held as a tenant in common in a share equal to all joint owners, converted subsequent to, and to the extent to which it was previously being held as a joint tenant nominally in the same share equal to the same joint owners, the bright-line acquisition date for the purposes of the definitions of 10-year test land and 5-year test land is the same as prior to the conversion.
Tenancy in common converted to joint tenancy
(5C)
In the case and to the extent to which the residential land is held as a joint tenant nominally in a share equal to all joint owners, converted subsequent to, and to the extent to which it was previously being held as a tenant in common in the same share equal to the same joint owners, the bright-line acquisition date for the purposes of the definitions of 10-year test land and 5-year test land is the same as prior to the conversion.
Land-owning person
(5D)
In the case and to the extent to which a person who owns land (pre-existing land) has more land transferred to them (the transfer land) or transfers part of their pre-existing land (also, the transfer land), the instrument of transfer for the transfer land is for the transfer land only and is treated as not being for the pre-existing land, for the purposes of the definition of bright-line acquisition date.
Estate or interest acquired upon completion of land development or subdivision
(6)
In the case where the residential land is acquired as the result of the completion of a land development or subdivision, the bright-line acquisition date for the purposes of the definitions of 10-year test land and 5-year test land is the date the person enters into the agreement under which they acquired the estate or interest upon the completion of the land development or subdivision.
Residential land transferred for certain family trusts
(7)
For residential land transferred to trustees or original settlors of certain family trusts, the bright-line acquisition date for the purposes of the definitions of 10-year test land and 5-year test land is given by section CB 6AB.
Residential land transferred to Maori authorities, or similar eligible persons, for certain family trusts
(7B)
For residential land transferred to Maori authorities, or similar eligible persons, for certain family trusts, the bright-line acquisition date for the purposes of the definitions of 10-year test land and 5-year test land is given by section CB 6AC.
Certain transfers of residential land included in settlement of claim under the Treaty of Waitangi
(7C)
For certain transfers of residential land included in settlement of claim under the Treaty of Waitangi, the bright-line acquisition date for the purposes of the definitions of 10-year test land and 5-year test land is given by section CB 6AE.
Quantification
(8)
Despite subsection (1), the amount of income that a person (person A) derives for disposing of 10-year test land or 5-year test land, as the case may be, is reduced by the amount calculated using the following formula:
unadjusted income × (exempted non-predominant main home days × main home percentage + exempted predominant main home days) / total days.
Definition of items in formula
(9)
The items in the formula are defined in subsections (10) to (11D), and subsection (11E) provides an exception.
Unadjusted income
(10)
Unadjusted income is person A’s amount of income for disposing of the 10-year test land or 5-year test land under subsection (2), ignoring this formula.
Exempted non-predominant main home days
(11)
Exempted non-predominant main home days is the total number of—
(a)
days within the land’s bright-line period that the land has been used for a dwelling that was the main home for 1 or more main home persons:
(b)
days in a period that is equal to or shorter than the exempt main home period limit if, for the period, the land has not been used for a dwelling that was the main home for 1 or more main home persons, and—
(i)
the start of the period adjoins either a day described in paragraph (a) or the start of the land’s bright-line period; and
(ii)
the end of the period adjoins either a day described in paragraph (a) or the end of the land’s bright-line period; but
(c)
does not include any exempted predominant main home days.
Main home percentage
(11B)
Main home percentage is the percentage area of the land that, during the exempted non-predominant main home days has been used as a main home.
Exempted predominant main home days
(11C)
Exempted predominant main home days is the total number of exempted predominant main home days under section CB 16A.
Total days
(11D)
Total days is the total number of days in the land’s bright-line period.
Exception to quantification
(11E)
Subsection (8) does not apply if person A is described in section CB 16A(3).
Relationship with subject matter
(15)
For the purposes of calculating a person’s net income in relation to the disposal of residential land for which they derive an amount of income under this section, sections FC 9B, FC 9C, and FC 9D (which relate to residential land) provide disposal and acquisition amounts for transactions that subsections (7) to (7C) of this section apply to.
Defined in this Act: bright-line acquisition date, bright-line date, bright-line period, dispose, estate, exempt main home period limit, exempted predominant main home day, interest, land, main home, , mortgage, new build land, person, residential land, trustee, year
Section CB 6A: replaced (with effect on 27 March 2021), on 30 March 2022, by section 48(1) (and see section 48(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 6A(1AB) heading: inserted (with effect on 27 March 2021), on 31 March 2023, by section 6(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6A(1AB): inserted (with effect on 27 March 2021), on 31 March 2023, by section 6(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6A(2B): amended, on 1 April 2023, by section 6(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6A(5B): amended (with effect on 27 March 2021), on 31 March 2023, by section 6(3) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6A(5B): amended (with effect on 27 March 2021), on 31 March 2023, by section 6(4) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6A(5C): amended (with effect on 27 March 2021), on 31 March 2023, by section 6(5) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6A(5C): amended (with effect on 27 March 2021), on 31 March 2023, by section 6(6) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6A(5D) heading: replaced, on 1 April 2023, by section 6(7) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6A(5D): replaced, on 1 April 2023, by section 6(7) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
CB 6AB Residential land transferred in relation to certain family trusts and other capacities
Family trusts: transfers to trusts
(1)
The bright-line acquisition date for land, when a trustee of a trust (trust A) disposes of the land, is the bright-line acquisition date that the transferors (the transferors) of the land to the trustee had, if the transferors transfer the land to the trustee on or after 1 April 2022 and—
(a)
trust A is a rollover trust and the transferors are settlors and, at the time that the transferors transfer the land to the trustee,—
(i)
the transferors are beneficiaries of trust A; and
(ii)
at least 1 transferor is a principal settlor of trust A:
(b)
the transferors are trustees of a trust (trust B) that is a rollover trust, and, for trust A,—
(i)
all the beneficiaries are the same as for trust B, and trust A is also a rollover trust:
(ii)
all the natural person beneficiaries are either the same as, or close family associates of a principal settlor of, trust B, and trust A is also a rollover trust.
Family trusts: transfers from trusts
(2)
When persons (the transferees) dispose of land that was transferred to them from a trustee of a trust (trust A), the bright-line acquisition date for the land is the bright-line acquisition date that the trustee of trust A had for the land, if the trustee transfers the land to the transferees on or after 1 April 2022 and—
(a)
the transferees are settlors of trust A and had transferred the land to the trustee; and
(b)
the transferees acquire proportionally the same amount of land they had transferred to the trustee and, at the time that the trustee transfers the land to the transferees,—
(i)
the transferees are beneficiaries of trust A; and
(ii)
at least 1 transferee is a principal settlor of trust A; and
(iii)
trust A is a rollover trust; and
(c)
trust A is a rollover trust and—
(i)
the transferees had not transferred the land to the trustee; and
(ii)
all transferees are principal settlors at the time that the trustee transfers the land to the transferees and also at the time that the trustee acquired the land.
Other capacities
(3)
For the purposes of applying subsections (1)(a) and (2), the transferors and transferees may have different capacities in relation to the different criteria in those subsections (for example: a transferee may be a settlor in their personal capacity and be a beneficiary as an LTC owner).
Transfer to self
(4)
If a person in 1 capacity transfers land to themselves in a different capacity, then the bright-line acquisition date for the land when they dispose of it to a third party in that different capacity is the bright-line acquisition date that the person first had for the land. The transfer to the different capacity must be on or after 1 April 2022.
Key term: rollover trust
(5)
Rollover trust means, at the time of a relevant transfer to or from a relevant trust,—
(a)
[Repealed](b)
all principal settlors are beneficiaries of the trust; and
(c)
all principal settlors are close family associates; and
(d)
all beneficiaries are close family beneficiaries.
Key term: close family beneficiary
(6)
Close family beneficiary means, for the relevant trust, a beneficiary that is 1 or more of the following:
(a)
a principal settlor:
(ab)
a trustee of another trust and at least 1 beneficiary of the other trust is a close family associate of a beneficiary of the relevant trust:
(ac)
any association, club, institution, society, organisation, or trust not carried on for the private profit of any person whose funds are applied wholly or principally to any civic, community, charitable, philanthropic, religious, benevolent, or cultural purpose, whether in New Zealand or elsewhere, and, in the case of it having 1 principal settlor only, the trust has 1 or more beneficiaries who are close family associates of the principal settlor:
(b)
a close family associate of another beneficiary who is also a principal settlor:
(c)
a company in which a 50% or more voting interest, or a 50% or more market value interest if a market value circumstance exists, is owned by a beneficiary of the trust that is—
(i)
a principal settlor of the trust:
(ii)
a close family associate of another beneficiary that is a principal settlor of the trust:
(d)
a charity registered under the Charities Act 2005.
Key term: close family associates
(7)
Two persons are close family associates if 1 or more of the following applies:
(a)
they are within 4 degrees of blood relationship:
(b)
they are married, in a civil union, or in a de facto relationship:
(c)
1 person is within 4 degrees of blood relationship to the other person’s spouse, civil union partner, or de facto partner.
Exception
(8)
This section does not apply for the transfer of shares in an LTC to or from a trustee.
Section CB 6AB: inserted (with effect on 27 March 2021), on 30 March 2022, by section 48(1) (and see section 48(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 6AB(1) heading: replaced (with effect on 27 March 2021), on 31 March 2023, by section 7(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AB(1): replaced (with effect on 27 March 2021), on 31 March 2023, by section 7(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AB(2) heading: replaced (with effect on 27 March 2021), on 31 March 2023, by section 7(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AB(2): replaced (with effect on 27 March 2021), on 31 March 2023, by section 7(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AB(2)(c): inserted, on 1 April 2023, by section 7(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AB(3) heading: replaced (with effect on 27 March 2021), on 31 March 2023, by section 7(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AB(3): replaced (with effect on 27 March 2021), on 31 March 2023, by section 7(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AB(4): amended (with effect on 27 March 2021), on 31 March 2023, by section 7(3) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AB(4): amended (with effect on 27 March 2021), on 31 March 2023, by section 7(4) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AB(5)(a): repealed, on 1 April 2023, by section 7(5) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AB(5)(d): replaced (with effect on 27 March 2021), on 31 March 2023, by section 7(6) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AB(6)(ab): inserted (with effect on 27 March 2021), on 31 March 2023, by section 7(7) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AB(6)(ac): inserted (with effect on 27 March 2021), on 31 March 2023, by section 7(7) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AB(6)(c): replaced, on 1 April 2023, by section 7(8) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
CB 6AC Residential land transferred in relation to certain Māori family trusts
Transfers to trusts
(1)
The bright-line acquisition date for land, when a Māori trustee of a trust (trust A) disposes of the land, is the bright-line acquisition date that the transferors (the transferors) of the land to the Māori trustee had, if the transferors transfer the land to the Māori trustee on or after 1 April 2022 and—
(a)
trust A is a Māori rollover trust and the transferors are settlors and, at the time that the transferors transfer the land to the trustee, the transferors are beneficiaries of trust A:
(b)
the transferors are Māori trustees of a trust (trust B) that is a Māori rollover trust, and, for trust A, all the beneficiaries are the same as for trust B, and trust A is also a Māori rollover trust.
Transfers from trusts
(2)
When persons (the transferees) dispose of land that was transferred to them from a Māori trustee of a trust (trust A), the bright-line acquisition date for the land is the bright-line acquisition date that the Māori trustee of trust A had for the land, if the Māori trustee transfers the land to the transferees on or after 1 April 2022 and—
(a)
the transferees are settlors of trust A and had transferred the land to the Māori trustee; and
(b)
the transferees acquire proportionally the same amount of land they had transferred to the Māori trustee and, at the time that the Māori trustee transfers the land to the transferees,—
(i)
the transferees are beneficiaries of trust A; and
(ii)
trust A is a Māori rollover trust; and
(iii)
the transferees are settlors of trust A.
Other capacities
(3)
For the purposes of applying subsections (1)(a) and (2), the transferors and transferees may have different capacities in relation to the different criteria in those subsections (for example: a transferee may be a settlor in their personal capacity and be a beneficiary as an LTC owner).
Key term: Māori rollover trust
(4)
Māori rollover trust means, at the time of a relevant transfer to or from a relevant trust,—
(a)
[Repealed](b)
all beneficiaries are—
(i)
members of the same iwi or hapu:
(ii)
descendants of the same tipuna; and
(c)
the land is subject to Te Ture Whenua Maori Act 1993.
Key term: Māori trustee
(5)
Māori trustee means a trustee of a trust that is either a Maori authority, or eligible to elect to be a Maori authority.
Section CB 6AC: inserted (with effect on 27 March 2021), on 30 March 2022, by section 48(1) (and see section 48(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 6AC(1) heading: replaced (with effect on 27 March 2021), on 31 March 2023, by section 8(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AC(1): replaced (with effect on 27 March 2021), on 31 March 2023, by section 8(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AC(2) heading: replaced (with effect on 27 March 2021), on 31 March 2023, by section 8(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AC(2): replaced (with effect on 27 March 2021), on 31 March 2023, by section 8(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AC(3) heading: replaced (with effect on 27 March 2021), on 31 March 2023, by section 8(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AC(3): replaced (with effect on 27 March 2021), on 31 March 2023, by section 8(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AC(4)(a): repealed, on 1 April 2023, by section 8(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 6AC(5): amended (with effect on 27 March 2021), on 31 March 2023, by section 8(3) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
CB 6AE Certain transfers of residential land included in settlement of claim under the Treaty of Waitangi
What this section applies to
(1)
This section applies to a transfer by a person (a transferor) of residential land that is subject to Te Ture Whenua Maori Act 1993 and is part of the settlement of a claim under the Treaty of Waitangi to a trustee of a trust that is a Maori authority (a recipient (person A)), or eligible to elect to be a Maori authority, under section HF 2(3)(e)(i) (Who is eligible to be a Maori authority?) (also recipient (person A)).
Sections CB 6A and CZ 39: bright-line acquisition date
(2)
For the purposes of sections CB 6A and CZ 39 (Disposal within 5 years: bright-line test for residential land: acquisition on or after 29 March 2018), the recipient (person A) of the transfer of the residential land has the bright-line acquisition date that the transferor had, if the transfer is made on or after 1 April 2022.
Defined in this Act: bright-line acquisition date, dispose, disallowed residential property, Maori authority, residential land, trust, trustee
Section CB 6AE: inserted (with effect on 27 March 2021), on 30 March 2022, by section 48(1) (and see section 48(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
CB 6 Disposal: land acquired for purpose or with intention of disposal
Income
(1)
An amount that a person derives from disposing of land is income of the person if they acquired the land—
(a)
for 1 or more purposes that included the purpose of disposing of it:
(b)
with 1 or more intentions that included the intention of disposing of it.
Exclusions
(2)
Subsection (1) is overridden by the exclusions for residential land in section CB 16 and for business premises in section CB 19.
Land partially disposed of or disposed of with other land[Repealed]
(3)
[Repealed]Defined in this Act: amount, business, dispose, income, land
Compare: 2004 No 35 ss CB 5, OB 1 “land”
paragraph (a)(i)
Section CB 6(3) heading: repealed (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 March 2017, pursuant to section 8(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CB 6(3): repealed (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 March 2017, by section 8(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CB 7 Disposal: land acquired for purposes of business relating to land
Income
(1)
An amount that a person (person A) derives from disposing of land is income of person A if—
(a)
both the following apply:
(i)
at the time person A acquired the land they, or an associated person, carried on a business of dealing in land; and
(ii)
person A acquired the land for the purpose of the business; or
(b)
both the following apply:
(i)
at the time person A acquired the land they, or an associated person, carried on a business of developing land or dividing land into lots; and
(ii)
person A acquired the land for the purpose of the business; or
(c)
all the following apply:
(i)
at the time person A acquired the land they, or an associated person, carried on a business of erecting buildings; and
(ii)
person A acquired the land for the purpose of the business; and
(iii)
before or after acquiring the land person A, or the associated person, made improvements to it.
Exclusions
(2)
Subsection (1) is overridden by the exclusions for residential land in section CB 16 and for business premises in section CB 19.
Defined in this Act: amount, associated person, business, dispose, improvements, income, land
Compare: 2004 No 35 s CB 6
CB 8 Disposal: land used for landfill, if notice of election
An amount that a person derives from disposing of land is income of the person if—
(a)
the person uses the land as a landfill before disposing of the land; and
(b)
at the time of disposal, the land is not being used as a landfill; and
(c)
the person acquiring the land is not an associated person; and
(d)
the person notifies the Commissioner of an election that the land be subject to this section by the day that is the later of the following:
(i)
the day that is 12 months after the day on which the person acquires the land:
(ii)
24 June 2006; and
(e)
the person makes an election under paragraph (d) for all land that the person acquires and uses as a landfill; and
(f)
any person associated with the person makes an election under paragraph (d) for all land that the associated person acquires and uses as a landfill.
Defined in this Act: associated person, Commissioner, dispose, notice, notify
Compare: 2004 No 35 s CB 6B
Section CB 8(c): substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 7(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CB 8(d): amended, on 2 June 2016, by section 5(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section CB 8 list of defined terms notice: inserted, on 2 June 2016, by section 5(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section CB 8 list of defined terms notify: inserted, on 2 June 2016, by section 5(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
CB 9 Disposal within 10 years: land dealing business
Income
(1)
An amount that a person derives from disposing of land is income of the person if—
(a)
they dispose of the land within 10 years of acquiring it; and
(b)
at the time they acquired the land, they carried on a business of dealing in land, whether or not the land was acquired for the purpose of the business.
Income: associated person in business of dealing in land
(2)
An amount that a person (person A) derives from disposing of land within 10 years of acquiring it is income of person A if a person (person B) associated with them at the time the land was acquired carried on a business of dealing in land, whether or not—
(a)
person A carried on a business of dealing in land; or
(b)
the land was acquired for the purpose of person B’s business.
Exclusions
(3)
Subsection (2) is overridden by the exclusions in sections CB 15C and CB 15D, for bodies linked or associated with a local authority and for companies in the same wholly-owned group as Kāinga Ora–Homes and Communities, and subsections (1) and (2) are overridden by the exclusions in sections CB 16 and CB 19, for residential land and for business premises.
Defined in this Act: amount, associated person, business, dispose, income, Kāinga Ora–Homes and Communities, land, year
Compare: 2004 No 35 s CB 7
Section CB 9(3): replaced (with effect on 1 July 2017), on 18 March 2019, by section 116 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CB 9(3): amended (with effect on 1 October 2019), on 23 March 2020, by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CB 9 list of defined terms Kāinga Ora–Homes and Communities: inserted (with effect on 1 October 2019), on 23 March 2020, by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CB 10 Disposal within 10 years: land development or subdivision business
Income
(1)
An amount that a person derives from disposing of land is income of the person if—
(a)
they dispose of the land within 10 years of acquiring it; and
(b)
at the time they acquired the land, they carried on a business of developing land or dividing land into lots, whether or not the land was acquired for the purpose of the business.
Income: associated person in business of developing or subdividing land
(2)
An amount that a person (person A) derives from disposing of land within 10 years of acquiring it is income of person A if a person (person B) associated with them at the time the land was acquired carried on a business of developing land or dividing land into lots, whether or not—
(a)
person A carried on a business of developing land or dividing land into lots:
(b)
the land was acquired for the purpose of person B’s business.
Exclusions
(3)
Subsection (2) is overridden by the exclusions in sections CB 15C and CB 15D, for bodies linked or associated with a local authority and for companies in the same wholly-owned group as Kāinga Ora–Homes and Communities, and subsections (1) and (2) are overridden by the exclusions in sections CB 16 and CB 19, for residential land and for business premises.
Defined in this Act: amount, associated person, business, dispose, income, Kāinga Ora–Homes and Communities, land, year
Compare: 2004 No 35 s CB 8
Section CB 10(3): replaced (with effect on 1 July 2017), on 18 March 2019, by section 117 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CB 10(3): amended (with effect on 1 October 2019), on 23 March 2020, by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CB 10 list of defined terms Kāinga Ora–Homes and Communities: inserted (with effect on 1 October 2019), on 23 March 2020, by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CB 11 Disposal within 10 years of improvement: building business
Income
(1)
An amount that a person derives from disposing of land is income of the person if they dispose of the land and—
(a)
within 10 years before the disposal, the person or an associate of the person completed improvements to the land; and
(b)
at the time the improvements were begun,—
(i)
the person carried on a business of erecting buildings:
(ii)
an associate of the person carried on a business of erecting buildings.
Person or associate
(2)
Subsection (1) applies whether or not the land was acquired for the person’s business or an associate’s business.
Exclusions
(3)
Subsection (1)(b)(ii) is overridden by the exclusions in sections CB 15C and CB 15D, for bodies linked or associated with a local authority and for companies in the same wholly-owned group as Kāinga Ora–Homes and Communities, and subsections (1) and (2) are overridden by the exclusions in sections CB 16 and CB 19, for residential land and for business premises.
Defined in this Act: amount, associated person, business, dispose, improvements, income, Kāinga Ora–Homes and Communities, land, year
Compare: 2004 No 35 s CB 9
Section CB 11(1) heading: replaced (with effect on 1 April 2008), on 18 March 2019, by section 118(1) (and see section 118(3) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CB 11(1): replaced (with effect on 1 April 2008), on 18 March 2019, by section 118(1) (and see section 118(3) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CB 11(2) heading: replaced (with effect on 1 April 2008), on 18 March 2019, by section 118(1) (and see section 118(3) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CB 11(2): replaced (with effect on 1 April 2008), on 18 March 2019, by section 118(1) (and see section 118(3) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CB 11(3): replaced (with effect on 1 July 2017), on 18 March 2019, by section 118(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CB 11(3): amended (with effect on 1 October 2019), on 23 March 2020, by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CB 11 list of defined terms Kāinga Ora–Homes and Communities: inserted (with effect on 1 October 2019), on 23 March 2020, by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CB 12 Disposal: schemes for development or division begun within 10 years
Income
(1)
An amount that a person derives from disposing of land is income of the person if the amount is derived in the following circumstances:
(a)
an undertaking or scheme, which is not necessarily in the nature of a business, is carried on; and
(b)
the undertaking or scheme involves the development of the land or the division of the land into lots; and
(c)
the person, or another person for them, carries on development or division work on or relating to the land; and
(d)
the development or division work is not minor; and
(e)
the undertaking or scheme was begun within 10 years of the date on which the person acquired the land.
Exclusions
(2)
Subsection (1) is overridden by the exclusions for residential land in section CB 17, for business premises in section CB 20, for farm land in section CB 21, and for investment land in section CB 23.
Defined in this Act: amount, business, dispose, income, land, year
Compare: 2004 No 35 s CB 10
CB 13 Disposal: amount from major development or division and not already in income
Income
(1)
An amount that a person derives from disposing of land is income of the person if—
(a)
the amount is not income under any of sections CB 6A to CB 12, CB 14, and CZ 39 (Disposal within 5 years: bright-line test for residential land: acquisition on or after 29 March 2018); and
(b)
the amount is derived in the following circumstances:
(i)
an undertaking or scheme, which is not necessarily in the nature of a business, is carried on; and
(ii)
the undertaking or scheme involves the development of the land or the division of the land into lots; and
(iii)
the person, or another person for them, carries on development or division work on or relating to the land; and
(iv)
the development or division work involves significant expenditure on channelling, contouring, drainage, earthworks, kerbing, levelling, roading, or any other amenity, service, or work customarily undertaken or provided in major projects involving the development of land for commercial, industrial, or residential purposes.
Exclusions
(2)
Subsection (1) is overridden by the exclusions for residential land in section CB 17, for business premises in section CB 20, for farm land in section CB 21, and for investment land in section CB 23.
Relationship with section DB 27
(3)
Section DB 27 (Amount from major development or division and not already in income) deals with a deduction for the value of the land.
Defined in this Act: amount, business, deduction, dispose, income, land
Compare: 2004 No 35 s CB 11
Section CB 13(1)(a): amended (with effect on 27 March 2021), on 30 March 2021, by section 7 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 13(1)(a): amended (with effect on 1 October 2015 and applying to a person’s disposal of residential land if the date that the person first acquires an estate or interest in the residential land is on or after that date), on 16 November 2015, by section 5(1) of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).
Section CB 13(2) heading: substituted, on 1 April 2008, by section 309 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CB 13(2): substituted, on 1 April 2008, by section 309 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
CB 14 Disposal: amount from land affected by change and not already in income
Income
(1)
An amount that a person derives from disposing of land is income of the person if—
(a)
the amount is not income under any of sections CB 6A to CB 12 and CZ 39 (Disposal within 5 years: bright-line test for residential land: acquisition on or after 29 March 2018); and
(b)
the person disposed of the land within 10 years of acquiring it; and
(c)
the total amount that they derive from its disposal is more than the cost of the land; and
(d)
at least 20% of the excess arises from a factor, or more than 1 factor, that—
(i)
relates to the land; and
(ii)
is described in subsection (2); and
(iii)
occurs after the person acquired the land, for the factors described in subsection (2)(c), (e), (g), and (i).
Factors for purposes of subsection (1)(d)
(2)
The factors referred to in subsection (1)(d) are—
(a)
the rules of an operative district plan under the Resource Management Act 1991:
(b)
the likelihood of the imposition of rules:
(c)
a change to the rules:
(d)
the likelihood of a change to the rules:
(e)
a consent granted under the Resource Management Act 1991:
(f)
the likelihood of a consent being granted:
(g)
a decision of the Environment Court made under the Resource Management Act 1991:
(h)
the likelihood of a decision being made:
(i)
the removal of a condition, covenant, designation, heritage order, obligation, prohibition, or restriction under the Resource Management Act 1991:
(j)
the likelihood of the removal of a condition, covenant, designation, heritage order, obligation, prohibition, or restriction:
(k)
an occurrence of a similar nature to any of the occurrences described in any of paragraphs (a) to (j):
(l)
the likelihood of an occurrence of a similar nature to any of the occurrences described in any of paragraphs (a) to (j).
Exclusions
(3)
Subsection (1) is overridden by the exclusions for residential property in section CB 18 and for farm land in section CB 22.
Defined in this Act: amount, dispose, income, land, year
Compare: 2004 No 35 s CB 12
Section CB 14(1)(a): amended (with effect on 27 March 2021), on 30 March 2021, by section 8 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 14(1)(a): amended (with effect on 1 October 2015 and applying to a person’s disposal of residential land if the date that the person first acquires an estate or interest in the residential land is on or after that date), on 16 November 2015, by section 6(1) of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).
Section CB 14(2)(a): amended, on 23 December 2023, by section 6 of the Resource Management (Natural and Built Environment and Spatial Planning Repeal and Interim Fast-track Consenting) Act 2023 (2023 No 68).
Section CB 14(2)(e): amended, on 23 December 2023, by section 6 of the Resource Management (Natural and Built Environment and Spatial Planning Repeal and Interim Fast-track Consenting) Act 2023 (2023 No 68).
Section CB 14(2)(g): amended, on 23 December 2023, by section 6 of the Resource Management (Natural and Built Environment and Spatial Planning Repeal and Interim Fast-track Consenting) Act 2023 (2023 No 68).
Section CB 14(2)(i): amended, on 23 December 2023, by section 6 of the Resource Management (Natural and Built Environment and Spatial Planning Repeal and Interim Fast-track Consenting) Act 2023 (2023 No 68).
CB 15 Transactions between associated persons
Income
(1)
An amount that a person (the transferee) derives from disposing of land is income of the transferee if—
(a)
the land has been transferred to the transferee from another person (the transferor); and
(b)
the transferor and the transferee are associated persons at the time of the transfer; and
(c)
the amount derived is more than the cost of the land to the transferee; and
(d)
the amount derived would have been income of the transferor under any of sections CB 6 to CB 14 if the transferor had retained and disposed of the land.
Exclusion for Kāinga Ora–Homes and Communities and wholly-owned group
(1B)
Subsection (1) is overridden by section CB 15D.
Date on which some transferees acquire land
(2)
For the purposes of sections CB 7 to CB 12 and CB 14, if a person (the transferor) transfers land to a person (the transferee) who is an associated person at the time of the transfer, the transferee is treated as acquiring the land on the date, other than under this subsection, on which the transferor acquired the land.
Defined in this Act: amount, associated person, dispose, income, land
Compare: 2004 No 35 s CB 13
Section CB 15(1): amended (with effect on 1 April 2008), on 18 March 2019, by section 119(1) (and see section 119(4) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CB 15(1B) heading: inserted (with effect on 1 July 2017), on 18 March 2019, by section 119(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CB 15(1B) heading: amended (with effect on 1 October 2019), on 23 March 2020, by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CB 15(1B): inserted (with effect on 1 July 2017), on 18 March 2019, by section 119(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CB 15(2): replaced (with effect on 1 April 2008), on 18 March 2019, by section 119(3) (and see section 119(4) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
CB 15B When land acquired
General rule
(1)
For the purposes of this subpart except sections CB 6A and CZ 39 (Disposal within 5 years: bright-line test for residential land: acquisition on or after 29 March 2018), a person acquires an estate, interest, or option that is land (the land) on the date that begins a period in which the person has an estate or interest in, or an option to acquire, the land, alone or jointly or in common with another person.
First exception: acquisition of land by company to be formed
(2)
If a person, on behalf of a company to be formed, enters an agreement under which the company will have land, the company is treated, for the purposes of this subpart in relation to the land, as existing from when the person enters the agreement.
Second exception: land from exercise of option
(3)
A person that exercises an option to acquire land and acquires the land, is treated as acquiring the land at the time when they exercise the option.
Relationship with subparts FB and FC
(4)
Subsections (1) to (3) are overridden, for a transaction, by a provision in subpart FB or FC (which relate to transfers of property) providing for the timing of the transaction.
Defined in this Act: company, estate, interest, land
Section CB 15B: inserted (with effect on 22 November 2013 and applying for disposals of land occurring on or after that date), on 30 June 2014, by section 7(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CB 15B(1): amended (with effect on 27 March 2021), on 30 March 2021, by section 9 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 15B(1): amended (with effect on 1 October 2015 and applying to a person’s disposal of residential land if the date that the person first acquires an estate or interest in the residential land is on or after that date), on 16 November 2015, by section 7(1) of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).
Section CB 15B(3) heading: replaced (with effect on 22 November 2013), on 21 February 2017, by section 63 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CB 15B(3): replaced (with effect on 22 November 2013), on 21 February 2017, by section 63 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CB 15B(3) heading: replaced (with effect on 14 May 2016), on 21 February 2017, by section 64 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CB 15B(3): replaced (with effect on 14 May 2016), on 21 February 2017, by section 64 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Exclusions for bodies controlled by local authorities
Heading: inserted (with effect on 1 September 2015), on 30 March 2017, by section 12 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CB 15C Council-controlled organisations and other companies
Exclusion from application of some land provisions: kinds of associated persons
(1)
Sections CB 9(2), CB 10(2), and CB 11(1)(b)(ii) do not apply to a person (person A) despite the activities of an associated person (person B) if—
(a)
person A is a local authority or—
(i)
a council-controlled organisation that is linked by ownership or control to the local authority:
(ii)
an entity referred to in section 6(4)(a) to (ca) of the Local Government Act 2002, that is linked by ownership or control to the local authority:
(iii)
an entity that is associated with the local authority other than under section YB 14 (Tripartite relationship); and
(b)
person B is—
(i)
the local authority or an organisation or entity of a kind referred to in paragraph (a)(i) to (iii):
(ii)
a person that is not associated with person A other than under section YB 14.
Exclusion from application of some land provisions: members of consolidated group
(2)
If person A and person B are members of a consolidated group, and subsection (1) applies to prevent an amount from being income of person A, the amount is not income of person A under section CV 2 (Consolidated groups: income of company in group).
Defined in this Act: associated person, consolidated group, council-controlled organisation, local authority
Section CB 15C: inserted (with effect on 1 September 2015), on 30 March 2017, by section 12 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CB 15C(1): amended (with effect on 1 September 2015), on 18 March 2019, by section 120 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Exclusions for Kāinga Ora–Homes and Communities and wholly-owned group
Heading: inserted (with effect on 1 July 2017), on 18 March 2019, by section 121 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Heading: amended (with effect on 1 October 2019), on 23 March 2020, by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CB 15D Kāinga Ora–Homes and Communities and wholly-owned group
Exclusion from application of some land provisions
(1)
Sections CB 9(2), CB 10(2), CB 11(1)(b)(ii), and CB 15(1) do not apply to Kāinga Ora–Homes and Communities or a company in the same wholly-owned group of companies as Kāinga Ora–Homes and Communities.
Exclusion for group members and members of consolidated group
(2)
If subsection (1) applies to prevent an amount from being income of a person who is a member of a wholly-owned group of companies or a consolidated group, the amount is not income of the person under section CV 1 or CV 2 (which apply to group companies and to consolidated groups).
Defined in this Act: amount, company, consolidated group, income, Kāinga Ora–Homes and Communities, wholly-owned group of companies
Section CB 15D: inserted (with effect on 1 July 2017), on 18 March 2019, by section 121 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CB 15D heading: amended (with effect on 1 October 2019), on 23 March 2020, by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CB 15D(1): amended (with effect on 1 October 2019), on 23 March 2020, by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CB 15D list of defined terms Kāinga Ora–Homes and Communities: inserted (with effect on 1 October 2019), on 23 March 2020, by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Exclusions for residential land
CB 16A Main home exclusion for disposal within 10 years
Main home exclusion
(1)
Section CB 6A does not apply to a person (person A) who disposes of residential land if, for the residential land (an exempt main home), all the days in the relevant bright-line period are exempted predominant main home days.
Key term: exempted predominant main home day
(1B)
Exempted predominant main home day means, for person A and residential land,—
(a)
a day within the land’s bright-line period that the land has been used predominantly for a dwelling that was the main home for 1 or more main home persons:
(b)
a day in a period that is equal to or shorter than the exempt main home period limit, if, for the period, the land has not been used predominantly for a dwelling that was the main home for 1 or more main home persons, but—
(i)
the start of the period adjoins either a day described in paragraph (a) or the start of the land’s bright-line period; and
(ii)
the end of the period adjoins either a day described in paragraph (a) or the end of the land’s bright-line period.
Key term: exempt main home period limit
(1C)
Exempt main home period limit means 365 days or, in the case of a period during which person A constructs a dwelling used as a main home for 1 or more main home persons, the length of that period, if it is reasonable.
Key term: main home person
(1D)
Main home person means, for person A, 1 or more of the following people:
(a)
person A:
(b)
a beneficiary of a trust, if person A is a trustee of the trust that owns the residential land disposed of, and—
(i)
a principal settlor of the trust does not have a main home; or
(ii)
if a principal settlor of the trust does have a main home, it is that main home that is being disposed of.
Criteria[Repealed]
(2)
[Repealed]When this section does not apply
(3)
The exclusion in subsection (1) does not apply to person A if—
(a)
the exclusion has been used by person A 2 or more times within the 2 years immediately preceding the bright-line date for the residential land:
(b)
person A has engaged in a regular pattern of acquiring and disposing of exempt main homes described in subsection (1).
Regular patterns undertaken by groups of persons
(4)
For the purposes of subsection (3)(b), in relation to exempt main homes described in subsection (1), person A includes a group of persons if the requirements of subsection (5) are met.
Meaning of group of persons
(5)
For the purposes of subsection (4), a group of persons—
(a)
means 2 or more persons when together all of the persons occupy, or have occupied, an exempt main home described in subsection (1); and
(b)
includes a person other than a natural person (the non-natural person), if another person referred to in paragraph (a) has significant involvement in, or control of, the activities of the non-natural person. For the avoidance of doubt, if the other person is able to direct, alone or as part of a group, the activities of the non-natural person, they have significant involvement in, or control of, the activities of the non-natural person.
Special rule: counted days[Repealed]
(6)
[Repealed]A definition[Repealed]
(7)
[Repealed]Defined in this Act: beneficiary, bright-line date, bright-line period, dispose, dwelling, exempt main home, exempt main home period limit, exempted predominant main home day, land, main home, main home person, person, principal settlor, residential land, settlement, settlor, trustee, year
Section CB 16A: replaced (with effect on 27 March 2021), on 30 March 2021, by section 10(1) (and see section 10(2) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 16A(1) heading: replaced (with effect on 27 March 2021), on 30 March 2022, by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A(1): replaced (with effect on 27 March 2021), on 30 March 2022, by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A(1B) heading: inserted (with effect on 27 March 2021), on 30 March 2022, by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A(1B): inserted (with effect on 27 March 2021), on 30 March 2022, by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A(1C) heading: inserted (with effect on 27 March 2021), on 30 March 2022, by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A(1C): inserted (with effect on 27 March 2021), on 30 March 2022, by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A(1D) heading: inserted (with effect on 27 March 2021), on 30 March 2022, by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A(1D): inserted (with effect on 27 March 2021), on 30 March 2022, by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A(2) heading: repealed (with effect on 27 March 2021), on 30 March 2022, pursuant to section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A(2): repealed (with effect on 27 March 2021), on 30 March 2022, by section 49(1) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A(3)(b): amended (with effect on 27 March 2021), on 30 March 2022, by section 49(2) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A(4): amended (with effect on 27 March 2021), on 30 March 2022, by section 49(3) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A(5)(a): amended (with effect on 27 March 2021), on 30 March 2022, by section 49(4) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A(6) heading: repealed (with effect on 27 March 2021), on 30 March 2022, pursuant to section 49(5) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A(6): repealed (with effect on 27 March 2021), on 30 March 2022, by section 49(5) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A(7) heading: repealed (with effect on 27 March 2021), on 31 March 2023, pursuant to section 9 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 16A(7): repealed (with effect on 27 March 2021), on 31 March 2023, by section 9 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CB 16A list of defined terms exempt main home: inserted (with effect on 27 March 2021), on 30 March 2022, by section 49(6) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A list of defined terms exempt main home period limit: inserted (with effect on 27 March 2021), on 30 March 2022, by section 49(6) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A list of defined terms exempted predominant main home day: inserted (with effect on 27 March 2021), on 30 March 2022, by section 49(6) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 16A list of defined terms main home person: inserted (with effect on 27 March 2021), on 30 March 2022, by section 49(6) (and see section 49(7) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
CB 16 Residential exclusion from sections CB 6 to CB 11
Exclusion
(1)
Sections CB 6 to CB 11 do not apply if—
(a)
the person (person A)—
(i)
acquired the land with a dwellinghouse on it; or
(ii)
acquired the land and erected a dwellinghouse on it; and
(b)
the dwellinghouse was occupied mainly as a residence by,—
(i)
person A:
(ii)
if members of person A’s family live with them, person A and members of person A’s family living with them:
(iii)
if person A is a trustee, 1 or more beneficiaries of the trust.
What exclusion applies to
(2)
The exclusion applies to the land that has the dwellinghouse on it. It also applies to land related to the land that has the dwellinghouse on it if the total area of the related land is—
(a)
4,500 square metres or less; or
(b)
more than 4,500 square metres, if the larger area is required for the reasonable occupation and enjoyment of the dwellinghouse.
Exception
(3)
The exclusion does not apply when—
(a)
section CB 6(1) applies to the disposal; and
(b)
person A has engaged in a regular pattern of acquiring and disposing of land described in subsection (1).
Regular patterns undertaken by groups of persons
(4)
For the purposes of subsection (3), in relation to land described in subsection (1), person A includes a group of persons if the requirements of subsection (5) are met.
Meaning of group of persons
(5)
For the purposes of subsection (4), a group of persons—
(a)
means 2 or more persons when together all of the persons occupy, or have occupied, land described in subsection (1); and
(b)
includes a person other than a natural person (the non-natural person), if another person referred to in paragraph (a) has significant involvement in, or control of, the activities of the non-natural person. For the avoidance of doubt, if the other person is able to direct, alone or as part of a group, the activities of the non-natural person, they have significant involvement in, or control of, the activities of the non-natural person.
Defined in this Act: dispose, group of persons, land, trustee
Compare: 2004 No 35 s CB 14
Section CB 16(1)(a): amended, on 30 March 2021, by section 11(1)(a) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 16(1)(b): replaced (with effect on 1 April 2008), on 18 March 2019, by section 123(1) (and see section 123(3) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CB 16(1)(b)(i): amended, on 30 March 2021, by section 11(1)(b) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 16(1)(b)(ii): amended, on 30 March 2021, by section 11(1)(b) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 16(1)(b)(ii): amended, on 30 March 2021, by section 11(1)(c) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 16(1)(b)(iii): amended, on 30 March 2021, by section 11(1)(b) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 16(3) heading: replaced, on 30 March 2021, by section 11(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 16(3): replaced, on 30 March 2021, by section 11(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 16(4) heading: inserted, on 30 March 2021, by section 11(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 16(4): inserted, on 30 March 2021, by section 11(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 16(5) heading: inserted, on 30 March 2021, by section 11(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 16(5): inserted, on 30 March 2021, by section 11(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 16 list of defined terms group of persons: inserted, on 30 March 2021, by section 11(3) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
CB 17 Residential exclusion from sections CB 12 and CB 13
Exclusion: developing or dividing land for residential use
(1)
Sections CB 12 and CB 13 do not apply if—
(a)
the work involved in the undertaking or scheme is to create or effect a development, division, or improvement; and
(b)
the development, division, or improvement is for use in, and for the purposes of, the residing on the land of,—
(i)
the person:
(ii)
if members of the person’s family live with them, the person and members of the person’s family living with them.
Exclusion: dividing residential land
(2)
Sections CB 12 and CB 13 do not apply if—
(a)
the land is a lot that came out of a larger area of land that the person divided into 2 or more lots; and
(b)
the larger area of land was 4,500 square metres or less immediately before it was divided and was occupied mainly as residential land for,—
(i)
the person:
(ii)
if members of the person’s family live with them, the person and members of their family living with them.
Defined in this Act: land
Compare: 2004 No 35 s CB 15
Section CB 17(1): amended, on 1 April 2008, by section 310 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CB 17(1)(b): replaced (with effect on 1 April 2008), on 18 March 2019, by section 124(1) (and see section 124(3) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CB 17(2)(b): replaced (with effect on 1 April 2008), on 18 March 2019, by section 124(2) (and see section 124(3) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
CB 18 Residential exclusion from section CB 14
Exclusion
(1)
Section CB 14 does not apply if—
(a)
the person acquired the land and used it or intended to use it for residential purposes; and
(b)
they disposed of the land to another person who acquired it for residential purposes.
Purpose of acquisition for purposes of subsection (1)(b)
(2)
For the purposes of subsection (1)(b), the purpose of the acquisition by the other person is ascertained from the circumstances of the disposal and other relevant matters.
Meaning of residential purposes
(3)
In this section, residential purposes—
(a)
means a purpose that the person has of using the land or intending to use the land mainly as a residence for,—
(i)
the person:
(ii)
if members of the person’s family live with them, the person and members of the person’s family living with them; and
(b)
includes the purpose of erecting a dwellinghouse on the land to be occupied as such a residence.
Defined in this Act: dispose, land, residential purposes
Compare: 2004 No 35 s CB 16
Section CB 18(3)(a): replaced (with effect on 1 April 2008), on 18 March 2019, by section 125(1) (and see section 125(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Exclusions for business premises
CB 19 Business exclusion from sections CB 6 to CB 11
Exclusion
(1)
Sections CB 6 to CB 11 do not apply to a disposal of land by a person (person A) if—
(a)
the land is the premises of a business; and
(b)
person A acquired and occupied, or erected and occupied, the premises mainly to carry on a substantial business from them.
Exception
(2)
The exclusion does not apply when—
(a)
section CB 6(1) applies to the disposal; and
(b)
person A has engaged in a regular pattern of acquiring and disposing of land described in subsection (1).
When regular patterns undertaken by groups of persons
(2B)
For the purposes of subsection (2), person A includes a group of persons if the requirements of subsection (2C) are met.
Meaning of group of persons
(2C)
For the purposes of subsection (2B), a group of persons means 2 or more persons if—
(a)
the persons occupy premises mainly to carry on a substantial business from them as described in subsection (1)(b), irrespective of the nature of any business carried on from the premises; and
(b)
a person, whether or not they occupy premises as described in subsection (1)(b), has significant involvement in, or control of, the activities of all persons referred to in paragraph (a) (the occupiers). For the avoidance of doubt, if the person is able to direct, alone or as part of a group, the activities of the occupiers, they have significant involvement in, or control of, the activities of the occupiers.
Meaning of land
(3)
In this section, land includes land that—
(a)
is reserved, with the premises, for the use of the business; and
(b)
is of an area no greater than that required for the reasonable occupation of the premises and the carrying on of the business.
Defined in this Act: business, dispose, group of persons, land
Compare: 2004 No 35 s CB 17
Section CB 19(1): amended, on 30 March 2021, by section 12(1)(a) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 19(1)(b): amended, on 30 March 2021, by section 12(1)(b) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 19(2) heading: replaced, on 30 March 2021, by section 12(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 19(2): replaced, on 30 March 2021, by section 12(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 19(2B) heading: inserted, on 30 March 2021, by section 12(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 19(2B): inserted, on 30 March 2021, by section 12(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 19(2C) heading: inserted, on 30 March 2021, by section 12(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 19(2C): inserted, on 30 March 2021, by section 12(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 19 list of defined terms group of persons: inserted, on 30 March 2021, by section 12(3) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
CB 20 Business exclusion from sections CB 12 and CB 13
Sections CB 12 and CB 13 do not apply if—
(a)
the work involved in the undertaking or scheme is to create or effect a development, division, or improvement; and
(b)
the development, division, or improvement is for use in, and for the purposes of, the carrying on of a business by the person on the land; and
(c)
the business does not consist of the undertaking or scheme.
Defined in this Act: business, land
Compare: 2004 No 35 s CB 18
Section CB 20: amended, on 1 April 2008, by section 311(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CB 20 heading: amended, on 1 April 2008, by section 311(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Exclusions for farm land
CB 21 Farm land exclusion from sections CB 12 and CB 13
Exclusion
(1)
Sections CB 12 and CB 13 do not apply if—
(a)
the land is a lot resulting from the division of a larger area of land into 2 or more lots; and
(b)
immediately before the land was divided, the larger area of land was occupied or used by the person, their spouse, civil union partner or de facto partner, or both of them, mainly for the purposes of a farming or agricultural business carried on by either or both of them; and
(c)
the area and nature of the land disposed of mean that it is then capable of being worked as an economic unit as a farming or agricultural business; and
(d)
the land was disposed of mainly for the purpose of using it in a farming or agricultural business.
Circumstances for purposes of subsection (1)(d)
(2)
The circumstances of the disposal of the land are relevant to the decision on whether the land was disposed of mainly for the purpose of using it in a farming or agricultural business. The circumstances include—
(a)
the consideration for the disposal of the land:
(b)
current prices paid for land in that area:
(c)
the terms of the disposal:
(d)
a zoning or other classification relating to the land:
(e)
the proximity of the land to any other land being used or developed for uses other than farming or agricultural uses.
Defined in this Act: business, dispose, land, pay
Compare: 2004 No 35 s CB 19
CB 22 Farm land exclusion from section CB 14
Exclusion
(1)
Section CB 14 does not apply if—
(a)
the person (person A) acquired the land, and they, their spouse, civil union partner or de facto partner, or both of them used or intended to use the land mainly for the purposes of a farming or agricultural business carried on by them, their spouse, civil union partner, or de facto partner, or both of them; and
(b)
they disposed of the land to another person (person B) mainly for the purposes of the continuing use of the land in a farming or agricultural business.
Purposes of acquisition for purposes of subsection (1)(b)
(2)
For the purposes of subsection (1)(b), person B’s purposes in acquiring the land are ascertained from circumstances of the disposal arising after person A acquired the land and other relevant matters, not including the factors described in section CB 14(1).
Defined in this Act: business, dispose, land
Compare: 2004 No 35 s CB 20
Exclusion for investment land
CB 23 Investment exclusion from sections CB 12 and CB 13
Sections CB 12 and CB 13 do not apply if—
(a)
the work involved in the undertaking or scheme is to create or effect a development, division, or improvement; and
(b)
the development, division, or improvement is for use in, and for the purposes of, the person’s deriving from the land income of the kind described in section CC 1 (Land).
Defined in this Act: income, land
Compare: 2004 No 35 s CB 21
Section CB 23: amended, on 1 April 2008, by section 312(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CB 23 heading: amended, on 1 April 2008, by section 312(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
CB 23B Land partially disposed of or disposed of with other land
Sections CB 6A to CB 23, CZ 39, and CZ 40 (which relate to the bright-line test for residential land) apply to an amount derived from the disposal of land if the land is—
(a)
part of the land to which the relevant section applies:
(b)
the whole of the land to which the relevant section applies:
(c)
disposed of together with other land.
Defined in this Act: amount, dispose, land
Compare: 2004 No 35 s CB 5A
Section CB 23B: inserted, on 1 April 2008, by section 313 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CB 23B heading: amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CB 23B: amended (with effect on 27 March 2021), on 30 March 2021, by section 13 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CB 23B: amended (with effect on 1 October 2015 and applying to a person’s disposal of residential land if the date that the person first acquires an estate or interest in the residential land is on or after that date), on 16 November 2015, by section 9(1) of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).
Timber
CB 24 Disposal of timber or right to take timber
Income
(1)
An amount is income of a person if they derive it from—
(a)
disposing of timber; or
(b)
disposing of a right to take timber.
Whether or not person owns land
(2)
Subsection (1) applies whether or not the person owns the land on which the timber is situated.
Disposal for below market value
(3)
Section GC 2 (Disposals of timber rights or standing timber) may apply to treat a person as deriving an amount on the grant of a right to take timber or disposal of standing timber.
Defined in this Act: amount, dispose, income, own, right to take timber, standing timber
Compare: 2004 No 35 s CB 22
CB 25 Disposal of land with standing timber
When this section applies
(1)
This section applies when a person disposes of land with standing timber on it.
Exclusions
(2)
This section does not apply when the standing timber is of 1 of the following kinds:
(a)
trees that are ornamental or incidental, as evidenced by a certificate given under section 44C of the Tax Administration Act 1994; or
(b)
trees in a crop subject to a forestry right, as defined in section 2 of the Forestry Rights Registration Act 1983, registered under the Land Transfer Act 2017; or
(c)
trees subject to a right to take a benefit (in the form of a profit a prendre) granted before 1 January 1984.
Income
(3)
The amount that the person derives from disposing of the standing timber is income of the person.
Defined in this Act: amount, dispose, income, standing timber
Compare: 2004 No 35 s CB 23
Section CB 25(2)(b): amended, on 12 November 2018, by section 250 of the Land Transfer Act 2017 (2017 No 30).
Investments
CB 26 Disposal of certain shares by portfolio investment entities
When this section applies
(1)
This section applies when—
(a)
the income from the disposal by a person (the entity) of the share is excluded income under section CX 55 (Proceeds from disposal of investment shares); and
(ab)
the share is not in a listed PIE; and
(b)
a dividend from the share is—
(i)
declared before the disposal; and
(ii)
paid to a holder of the share who, after the disposal, becomes entitled to the dividend; and
(c)
the entity attributes the proceeds from the disposal to investors who are not entitled to the benefit of the dividend.
Income
(2)
The entity is treated as deriving an amount of income calculated using the formula—
(shares at declaration − shares on distribution) × dividend.
Definition of items in formula
(3)
In the formula,—
(a)
shares at declaration is the number of shares held by the entity when the dividend is declared:
(b)
shares on distribution is the number of shares for which the entity derives a dividend:
(c)
dividend is the amount of the dividend per share or, for a share issued by an ICA company, the amount of the dividend per share that is not fully imputed.
Positive result
(4)
The result of the formula must be a positive amount.
Defined in this Act: amount, company, dividend, excluded income, fully imputed, ICA company, income, listed PIE, pay, portfolio investment entity, share
Compare: 2007 No 97 s CB 26
Section CB 26: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 8(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CB 26(1)(ab): inserted, on 30 June 2014, by section 8(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CB 26(1)(b)(ii): amended (with effect on 1 April 2012), on 17 July 2013, by section 4 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CB 26(1)(c): inserted (with effect on 1 April 2012), on 17 July 2013, by section 4 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CB 26 list of defined terms listed PIE: inserted, on 30 June 2014, by section 8(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Farming, forestry, or fishing
CB 27 Income equalisation schemes
Income derived by a person, as timed and quantified under any of the following provisions, is income of the person:
(a)
sections EH 11, EH 14, EH 16, EH 18, EH 20 to EH 22, EH 24, and EH 26 (which relate to the main income equalisation scheme):
(b)
[Repealed](c)
sections EH 72, EH 74, and EH 76 (which relate to the thinning operations income equalisation scheme).
Defined in this Act: income, main income equalisation scheme, person, thinning operations income equalisation scheme
Compare: 2004 No 35 s CB 24
Section CB 27(b): repealed, on 18 March 2019, by section 126(1) (and see section 126(3) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CB 27 list of defined terms adverse event income equalisation scheme: repealed, on 18 March 2019, by section 126(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
CB 27B Entering partners’ livestock income
[Repealed]Section CB 27B: repealed (with effect on 1 April 2009), on 6 October 2009, by section 9(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Environmental restoration
CB 28 Environmental restoration accounts
Income from refund
(1)
A person who receives a refund for a tax year under section EK 12 (Refund if application or excess balance) derives for the person’s corresponding income year an amount of income calculated using the formula—
refund ÷ tax rate.
Income from transfer from environmental restoration account
(2)
If there is a transfer from a person’s environmental restoration account under section EK 15, EK 16, or EK 19 (which relate to environmental restoration accounts), the person derives for the corresponding income year an amount of income calculated using the formula—
transfer ÷ tax rate.
Definitions of items in formulas
(3)
The items in the formulas are defined in subsections (4) to (6).
Refund
(4)
Refund is the amount of the refund.
Tax rate
(5)
Tax rate is the highest rate of income tax on taxable income that—
(a)
is set out in schedule 1 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits); and
(b)
would apply to the person for the tax year if the person had sufficient taxable income.
Transfer
(6)
Transfer is the amount in the environmental restoration account that is transferred.
Income arising from renewal of resource consent
(7)
A person who incurs expenditure of a type listed in schedule 19, part A, clauses 2 to 5 (Expenditure in avoiding, remedying, or mitigating detrimental effects of discharge of contaminant or making of noise) and not in schedule 19, part C derives income under subsection (8) if—
(a)
the deduction under section DB 46 (Avoiding, remedying, or mitigating effects of discharge of contaminant or making of noise) for the expenditure is determined by the period for which a resource consent is granted; and
(b)
the period of the grant of the resource consent is extended by more than 50% in a later income year or a new resource consent is granted for a period that is more than 50% of the total period of the resource consent.
Amount of income
(8)
The person derives for the income year in which the period of the resource consent is extended, or the new resource consent is granted, an amount of income equal to the greater of zero and the difference between—
(a)
the total deduction under section DB 46 for the person for the period from the grant of the resource consent to the beginning of the income year:
(b)
the total deduction for the expenditure that the person would have had under section DB 46 for the period referred to in paragraph (a), if the period of the resource consent at the time of the grant had been 35 years.
Defined in this Act: apply, corresponding income year, environmental restoration account, income, income tax, resource consent, taxable income, tax year
Compare: 2004 No 35 s CB 24B
Section CB 28(1): amended, on 2 June 2016, by section 6(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section CB 28(5)(a): amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CB 28(7): amended (with effect on 1 April 2018), on 18 March 2019, by section 127(a) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CB 28(7)(a): amended (with effect on 1 April 2018), on 18 March 2019, by section 127(b) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CB 28 list of defined terms apply: inserted, on 2 June 2016, by section 6(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Minerals
CB 29 Disposal of minerals
Income
(1)
An amount that a person derives from disposing of minerals taken from land is income of the person.
Whether or not person owns land
(2)
Subsection (1) applies whether or not the person owns the land from which the minerals are taken.
Defined in this Act: amount, dispose, income, mineral, own
Compare: 2004 No 35 s CB 25
Intellectual property
CB 30 Disposal of patent applications or patent rights
If a person derives an amount from the disposal of a patent application with a complete specification or from the disposal of patent rights, the amount is income of the person.
Defined in this Act: amount, income, patent rights
Compare: 2004 No 35 s CB 26
Section CB 30 heading: amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CB 30: amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Transfer of business
CB 31 Disposal of business: transferred employment income obligations
When this section applies
(1)
This section applies when section DC 10 (Disposal of business: transferred employment income obligations) applies and the reduction in the consideration is more than the amount the buyer actually pays for the transferred obligation.
Income
(2)
The excess is income of the buyer.
Timing of income
(3)
The income is allocated to the income year in which the reduction of the transferred provision is required to be recognised by the buyer under generally accepted accounting practice.
Defined in this Act: amount, generally accepted accounting practice, income, income year, pay
Compare: 2004 No 35 s CB 27
Section CB 31 heading: amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CB 31(1): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Stolen property
CB 32 Property obtained by theft
Income
(1)
If a person obtains possession or control of property without claim of right, an amount equal to the market value of the property is income of the person.
Timing of income
(2)
The income is allocated to the income year in which the person obtains possession or control of the property.
Whether or not constructive trust
(3)
Subsection (1) applies whether or not the person holds the property as a trustee under a constructive trust.
Defined in this Act: amount, claim of right, income, income year, possession, property, trustee
Compare: 2004 No 35 s CB 28
Look-through companies
Heading: inserted, on 1 April 2011 (applying for income years beginning on or after 1 April 2011), by section 26(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
CB 32B Owners of look-through companies
A person who has an effective look-through interest for a look-through company has an amount of income to the extent to which an amount of income results from the application of subpart HB (Look-through companies) or section HZ 8 (Retrospective transitional provision for market valuation under section HB 4) to them and the look-through company.
Defined in this Act: amount, effective look-through interest, income, look-through company
Section CB 32B: inserted, on 1 April 2011 (applying for income years beginning on or after 1 April 2011), by section 26(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CB 32B: amended, on 1 April 2017, by section 13 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CB 32C Dividend income for first year of look-through company
When this section applies
(1)
This section applies for an income year when, in the income year, the person has—
(a)
an effective look-through interest for a look-through company (LTC) on the first day of that year, and the company existed in the previous income year, but was not a look-through company in that previous year:
(b)
an effective look-through interest for a look-through company on the day after the LTC amalgamates in that year with a company that ceases to exist after the amalgamation (the amalgamating company), and the amalgamating company was not a look-through company immediately before the amalgamation.
Income
(2)
The person has an amount of income under—
(a)
subsection (4); or
(b)
subsection (8), if—
(i)
the relevant LTC was a qualifying company in the relevant previous year; and
(ii)
a dividend under subsection (4) would not be fully imputed.
Dividend
(3)
An amount of income under subsection (4) or (8) is treated as a dividend including an attached imputation credit, as provided by the relevant subsection.
Formula
(4)
For the purposes of subsection (2)(a), the amount of income is a positive amount calculated using the formula—
(untaxed reserves + reserves imputation credit) × effective interest.
Definition of items in formula
(5)
In the formula in subsection (4),—
(a)
untaxed reserves is the amount given by the formula in subsection (6):
(b)
reserves imputation credit is the total amount given by the formula in subsection (7B), up to the maximum permitted ratio for the untaxed reserves under section OA 18 (Calculation of maximum permitted ratios) and is treated as an attached imputation credit included in the dividend calculated under this section:
(c)
effective interest is the person’s effective look-through interest for an LTC on the relevant day under subsection (1)(a) or (b).
Formula
(6)
For the purposes of subsection (5)(a), the amount of untaxed reserves is calculated using the formula—
dividends – assessable income – exit exemption.
Definition of items in formula
(7)
In the formula in subsection (6),—
(a)
dividends is the sum of the amounts that would be dividends if the following events occurred for the company or the amalgamating company (the company), immediately before it became an LTC or amalgamated with an LTC:
(i)
it disposed of all of its property, other than cash, to an unrelated person at market value for cash; and
(ii)
it met all of its liabilities at market value, including income tax liabilities for the disposal year but excluding income tax liabilities that would arise solely from meeting all of its liabilities at market value or from disposing of all of its property; and
(iii)
it was liquidated, with the amount of cash remaining being distributed to shareholders without imputation credits attached:
(b)
assessable income is the total assessable income that the company would derive by taking the actions described in paragraph (a)(i) and (ii) less the amount of any deduction that the company would have for taking those actions:
(c)
exit exemption is the amount given by the formula in section CX 63(2) (Dividends derived after ceased to be look-through company), treating the amount described in paragraph (a) as a dividend paid by the company for the purposes of section CX 63(1), if section CX 63 would apply to a dividend paid by the company.
Formula
(7B)
For the purposes of subsection (5)(b), the amount of reserves imputation credit is calculated using the formula—
current credits + future amounts.
Definition of items in formula
(7C)
In the formula in subsection (7B),—
(a)
current credits is the amount of the balance in the company’s imputation credit account on the relevant day:
(b)
future amounts is an amount of income tax payable for an earlier income year but not paid on or before the relevant day, less refunds due for the earlier income year but paid after the relevant day.
Formula
(8)
For the purposes of subsection (2)(b), the amount of income is a positive amount calculated using the formula—
((balances ÷ tax rate – balances) + balances imputation credit) × effective interest.
Definition of items in formula
(9)
In the formula in subsection (8),—
(a)
balances is the sum of the following amounts:
(i)
the balance in the company’s imputation credit account on the relevant day:
(ii)
an amount of income tax payable for an earlier income year but not paid on or before the relevant day, less refunds due for the earlier income year but paid after the relevant day:
(b)
tax rate is the basic tax rate for the income year of the company that contains the relevant day described in subsection (10):
(c)
balances imputation credit is the amount of the item balances in paragraph (a), and is treated as an attached imputation credit included in the dividend calculated under this section:
(d)
effective interest is the person’s effective look-through interest for an LTC on the relevant day under subsection (1)(a) or (b).
Relevant day
(10)
In this section, the relevant day for measuring relevant items in the formulas is—
(a)
the last day of the income year before the income year described in subsection (1)(a), as applicable; or
(b)
the day of the amalgamation described in subsection (1)(b), as applicable.
Income tax and refund
(11)
For the purposes of subsections (7C)(b) and (9)(a)(ii),—
(a)
income tax payable is income tax that would, when paid, give rise to a credit in the company’s imputation credit account under sections OB 4 to OB 29 (which relate to imputation credits):
(b)
a refund of income tax due is the amount that would, when paid, give rise to a debit to the company’s imputation credit account under sections OB 30 to OB 59 (which relate to imputation debits).
Defined in this Act: amalgamating company, amalgamation, amount, assessable income, basic tax rate, company, deduction, dispose, dividend, effective look-through interest, fully imputed, imputation credit, imputation credit account, income, income tax, income year, liquidation, look-through company, qualifying company
Section CB 32C: replaced, on 1 April 2017 (applying for the 2017–18 and later income years), by section 14(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CB 32C(5)(b): replaced, on 29 March 2018 (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 8(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CB 32C(7)(a)(ii): replaced, on 29 March 2018 (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 8(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CB 32C(7B) heading: inserted, on 29 March 2018 (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 8(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CB 32C(7B): inserted, on 29 March 2018 (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 8(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CB 32C(7C) heading: inserted, on 29 March 2018 (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 8(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CB 32C(7C): inserted, on 29 March 2018 (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 8(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CB 32C(9)(a)(i): amended, on 29 March 2018 (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 8(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CB 32C(9)(a)(ii): amended, on 29 March 2018 (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 8(4)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CB 32C(10): amended, on 29 March 2018 (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 8(5) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CB 32C(11): amended, on 29 March 2018 (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 8(6) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Mutual associations
CB 33 Amounts derived by mutual associations
When this section applies
(1)
This section applies when an association enters into a transaction of a kind described in section HE 2 (Classes of mutual transaction) with—
(a)
1 or more members; or
(b)
1 or more members along with 1 or more persons who are not members of the association.
Income: other income provisions
(2)
If the association derives from the transaction an amount that would, in the absence of this subsection, be income under a provision in this Part but for the mutual character of the transaction, the amount is income of the association.
Defined in this Act: amount, association, income, income year, member
Compare: 2004 No 35 s HF 1(1)
Section CB 33(2) heading: substituted (with effect on 1 April 2008), on 7 September 2010 (applying for the 2008–09 and later income years), by section 5(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section CB 33(2): substituted (with effect on 1 April 2008), on 7 September 2010 (applying for the 2008–09 and later income years), by section 5(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CB 34 Amounts derived by members from mutual associations
When this section applies
(1)
This section applies when an association, in relation to a mutual transaction, pays an association rebate to a member in an income year in circumstances where a payment for the transaction would be taken into account in determining the taxable income of the member.
Income
(2)
The amount of the association rebate is income of the member in the income year but only to the extent of the amount of the association’s deduction under section DV 19 (Association rebates).
Statutory producer boards: timing of payment
(3)
If a statutory producer board pays an association rebate to a member that is a mutual association, the association is treated as deriving the amount in the income year in which the producer board chooses under section DV 19(7) to have the amount as the deduction.
When amount paid
(4)
For the purposes of this section, an amount is treated as having been paid to a person when it is credited in account or dealt with in some way in their interest or on their behalf. Subsection (3) overrides this subsection.
Relationship with dividend rules
(5)
An association rebate—
(a)
is not a dividend to the extent to which it is a payment of the kind described in subsection (2) and is no more than the amount of the deduction the association is allowed under section DV 19; and
(b)
for an association that is not a company, and to the extent to which it is more than the amount of the deduction the association is allowed under section DV 19, is income of the member.
Defined in this Act: amount, association, association rebate, deduction, dividend, income, income year, member, pay, statutory producer board
Compare: 2004 No 35 s HF 1(3)(c), (5), (6)
Partners and partnerships
Heading: added, on 1 April 2008, by section 5(1) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).
CB 35 Amounts of income for partners
A person who is a partner has an amount of income to the extent to which an amount of income results from the application of subpart HG (Joint venturers, partners, and partnerships) to them and their partnership.
Defined in this Act: amount, income, partner, partnership
Section CB 35: added, on 1 April 2008, by section 5(1) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).
Emissions units under Climate Change Response Act 2002
Heading: substituted (with effect on 1 January 2009), on 6 October 2009, by section 10 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CB 36 Disposal of emissions units
When this section applies
(1)
This section applies when a person disposes of an emissions unit.
Income
(2)
The amount that the person derives on the disposal is income.
Surrender of unit: deemed sale at given value
(3)
If the disposal is by surrender under the Climate Change Response Act 2002, the person is treated as having sold the unit, at the time of the surrender, to an unrelated person for an amount equal to—
(a)
the unit’s cost, if none of paragraphs (b) to (f) applies; or
(b)
the unit’s value under section ED 1(7B) (Valuation of excepted financial arrangements), if that subsection applies and none of paragraphs (c) to (f) apply; or
(c)
zero, if subsection (4) applies; or
(d)
zero, if subsection (5) applies; or
(e)
the unit’s market value, if subsection (6) applies; or
(f)
the unit’s market value, if subsection (7) applies.
Surrender of unit: emissions relating to post-1989 forest land
(4)
The person is treated as selling the unit for an amount of zero if the person surrenders the emissions unit in relation to post-1989 forest land.
Surrender of unit: under forest sink covenant
(4B)
The person is treated as selling the unit for an amount of zero if the person transfers the emissions unit to the Crown under a forest sink covenant under section 67Y of the Forests Act 1949.
Surrender of unit: deforestation of some pre-1990 forest land
(5)
The person is treated as selling the unit for an amount of zero if—
(a)
the person surrenders the emissions unit in relation to the deforestation of pre-1990 forest land; and
(b)
the person would derive income, other than exempt income or excluded income, from a disposal of the land without timber at the time of the surrender.
Surrender of post-1989 forest land emissions unit or forest sink emissions unit: for other purposes
(6)
The person is treated as selling a post-1989 forest land emissions unit or forest sink emissions unit for an amount equal to the unit’s market value if the person surrenders the emissions unit other than—
(a)
for emissions in relation to post-1989 forest land:
(b)
by a transfer to the Crown required by a permanent forestry scheme.
Surrender of unit: free unit other than forest land unit
(7)
The person is treated as selling a unit that is not a forest land emissions unit for an amount equal to the unit’s market value if—
(a)
the person surrenders the unit when it has a value of zero; and
(b)
the unit was transferred to the person under Part 4, subpart 2 of the Climate Change Response Act 2002 at a price of zero.
Converted unit treated as sold
(8)
If a person converts a New Zealand emissions unit, other than a forest land emissions unit, into something else under the Climate Change Response Act 2002, the person is treated as having sold the converted unit for an amount equal to—
(a)
the unit’s value under section ED 1(7B), if that subsection applies; or
(b)
the unit’s cost, otherwise.
Cancellation of historic approved overseas unit and replacement with New Zealand emissions unit
(8B)
If a person transfers an approved overseas unit as defined in section 4(1) of the Climate Change Response Act 2002 for cancellation under schedule 1AA, clause 14(2) of that Act and is transferred a New Zealand emissions unit under schedule 1AA, clause 14(3) of that Act, the person is treated as having sold the approved overseas unit for an amount equal to—
(a)
the unit’s value under section ED 1(7B), if that subsection applies; or
(b)
the unit’s cost, otherwise.
Surrender of forest sink emissions unit for entitlement to New Zealand emissions unit
(8C)
If a person surrenders a forest sink emissions unit under schedule 1AA, clause 30(2) of the Climate Change Response Act 2002 and receives an entitlement to a New Zealand emissions unit under schedule 1AA, clause 30(4) of that Act, the person is treated as having sold the forest sink emissions unit for an amount equal to—
(a)
the unit’s value under section ED 1(7B), if that subsection applies; or
(b)
the unit’s cost, otherwise.
Cancellation of unit
(8D)
If a person cancels an emissions unit, the person is treated as selling the unit for an amount of zero.
Excluded income: pre-1990 forest land emissions unit
(9)
Section CX 51B (Disposal of pre-1990 forest land emissions units) applies to the disposal to another person of a pre-1990 forest land emissions unit.
Excluded income: fishing quota emissions unit
(10)
Section CX 51C (Disposal of fishing quota emissions units) applies to the disposal to another person of a fishing quota emissions unit.
Defined in this Act: amount, convert, emissions unit, fishing quota emissions unit, forest land emissions unit, forest sink emissions unit, New Zealand emissions unit, permanent forestry scheme, pre-1990 forest land emissions unit, post-1989 forest land emissions unit, surrender
Section CB 36: substituted (with effect on 1 January 2009), on 6 October 2009, by section 10 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CB 36(4): amended (with effect on 1 July 2010), on 17 July 2013, by section 5 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CB 36(4B) heading: inserted (with effect on 1 January 2009), on 7 September 2010, by section 6(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section CB 36(4B): inserted (with effect on 1 January 2009), on 7 September 2010, by section 6(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section CB 36(6) heading: substituted (with effect on 1 January 2009), on 7 September 2010, by section 6(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section CB 36(6): substituted (with effect on 1 January 2009), on 7 September 2010, by section 6(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section CB 36(6)(b): replaced, on 23 June 2020, by section 279 of the Climate Change Response (Emissions Trading Reform) Amendment Act 2020 (2020 No 22).
Section CB 36(7): substituted (with effect on 1 July 2010), on 21 December 2010, by section 27 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CB 36(8): amended, on 23 June 2020, by section 279 of the Climate Change Response (Emissions Trading Reform) Amendment Act 2020 (2020 No 22).
Section CB 36(8B) heading: inserted, on 23 June 2020, by section 279 of the Climate Change Response (Emissions Trading Reform) Amendment Act 2020 (2020 No 22).
Section CB 36(8B): inserted, on 23 June 2020, by section 279 of the Climate Change Response (Emissions Trading Reform) Amendment Act 2020 (2020 No 22).
Section CB 36(8C) heading: inserted, on 23 June 2020, by section 279 of the Climate Change Response (Emissions Trading Reform) Amendment Act 2020 (2020 No 22).
Section CB 36(8C): inserted, on 23 June 2020, by section 279 of the Climate Change Response (Emissions Trading Reform) Amendment Act 2020 (2020 No 22).
Section CB 36(8D) heading: inserted (with effect on 1 January 2009), on 30 March 2022, by section 50(1) (and see section 50(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 36(8D): inserted (with effect on 1 January 2009), on 30 March 2022, by section 50(1) (and see section 50(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CB 36(9) heading: substituted (with effect on 1 January 2009), on 7 September 2010, by section 6(3) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section CB 36(10) heading: added (with effect on 1 July 2010), on 7 September 2010, by section 6(4) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section CB 36(10): added (with effect on 1 July 2010), on 7 September 2010, by section 6(4) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section CB 36 list of defined terms fishing quota emissions unit: inserted (with effect on 1 July 2010), on 7 September 2010, by section 6(5)(a) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section CB 36 list of defined terms forest sink emissions unit: inserted (with effect on 1 January 2009), on 7 September 2010, by section 6(5)(b) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section CB 36 list of defined terms Kyoto emissions unit: repealed (with effect on 1 January 2009), on 27 February 2014, by section 5 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CB 36 list of defined terms permanent forestry scheme: inserted, on 23 June 2020, by section 279 of the Climate Change Response (Emissions Trading Reform) Amendment Act 2020 (2020 No 22).
Subpart CC—Income from holding property (excluding equity)
Contents
Land use
CC 1 Land
Income
(1)
An amount described in subsection (2) is income of the owner of land if they derive the amount from—
(a)
a lease, licence, or easement affecting the land; or
(b)
the grant of a right to take the profits of the land.
Amounts
(2)
The amounts are—
(a)
rent:
(b)
a fine:
(c)
a premium:
(d)
a payment for the goodwill of a business:
(e)
a payment for the benefit of a statutory licence:
(f)
a payment for the benefit of a statutory privilege:
(g)
other revenues.
Amounts derived from certain assets
(2B)
Despite subsections (1) and (2), an amount referred to in section CW 8B (Certain amounts derived from use of assets) is not a payment of rent or another amount for the purposes of this section.
Exception for amount from grant of easement[Repealed]
(2C)
[Repealed]Relationship with section GC 5
(3)
The treatment of leases of property to related parties for less than an adequate rent is dealt with in section GC 5 (Leases for inadequate rent).
Defined in this Act: amount, business, income, lease, own, pay
Compare: 2004 No 35 s CC 1
Section CC 1(2B) heading: inserted (with effect on 1 April 2013 and applying for the 2013–14 and later income years), on 17 July 2013, by section 6(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CC 1(2B): inserted (with effect on 1 April 2013 and applying for the 2013–14 and later income years), on 17 July 2013, by section 6(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CC1(2C) heading: repealed (with effect on 1 April 2015), on 23 March 2020, pursuant to section 85 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CC1(2C): repealed (with effect on 1 April 2015), on 23 March 2020, by section 85 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CC 1B Consideration relating to grant, renewal, extension, or transfer of leasehold estate or licence
When this section applies
(1)
This section applies when a person (the payee) derives an amount—
(a)
in relation to a right (the land right) that is—
(i)
a leasehold estate not including a perpetual right of renewal:
(ii)
a licence to use land; and
(b)
as consideration for—
(i)
the agreement by the payee to the grant, renewal, extension, or transfer of the land right:
(ii)
the grant, renewal, extension, or transfer of the land right.
Income
(2)
The amount is income of the payee.
Exception for payment as consideration for transfer of land right
(3)
The amount is not income of the payee if—
(a)
the payee is the holder of the land right; and
(b)
the amount is consideration for the transfer of the land right to the person paying the amount; and
(c)
the amount is not sourced from funds provided, by the owner of the estate in land from which the land right is granted, for purposes that include obtaining the surrender or termination of the land right; and
(d)
each of the payee and the person paying the amount is not associated with the owner of the estate in land from which the land right is granted.
Exception for tenant or licensee of residential premises
(4)
The amount is not income of the payee if the payee—
(a)
is a natural person and derives the amount as a tenant or licensee of residential premises whose expenditure on the residential premises does not meet the requirements of the general permission; and
(b)
is not associated with the owner of the estate in land from which the land right is granted.
Exception for payment of capital contribution
(5)
The amount is not income of the payee if the amount is derived as a capital contribution.
Exception for payment as consideration for grant of permanent easement
(6)
The amount is not income of the payee if—
(a)
the payee is the owner of a fee simple estate in land; and
(b)
the amount—
(i)
is consideration for the grant, for the duration of the estate, of an easement over the land; and
(ii)
is not a periodic payment.
Defined in this Act: amount, associated, capital contribution, estate, general permission, income, land, leasehold estate, own, pay
Section CC 1B: replaced, on 1 April 2015 (applying to an amount derived on or after that date), by section 10(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CC 1B(1): amended (with effect on 1 April 2013, until the replacement of section CC 1B on 1 April 2015), on 23 March 2020, by section 86(1) (and see section 86(2) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CC 1B(1)(a): amended (with effect on 1 April 2015), on 23 March 2020, by section 87(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CC 1B(1)(b)(ii): replaced (with effect on 1 April 2015), on 23 March 2020, by section 87(2) (and see section 87(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CC 1B(6) heading: inserted (with effect on 1 April 2015), on 23 March 2020, by section 87(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CC 1B(6): inserted (with effect on 1 April 2015), on 23 March 2020, by section 87(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CC 1C Consideration for agreement to surrender leasehold estate or terminate licence
When this section applies
(1)
This section applies when—
(a)
a person (the payee) is the owner of—
(i)
an estate in land from which is granted a right (the land right) that is a leasehold estate not including a perpetual right of renewal, or is a licence to use land:
(ii)
the land right; and
(b)
derives an amount as consideration for the agreement by the payee to the surrender or termination of the land right.
Income
(2)
The amount is income of the payee.
Exception for tenant or licensee of residential premises
(3)
The amount is not income if the payee is a natural person and derives the amount as a tenant or licensee of residential premises whose expenditure on the residential premises does not meet the requirements of the general permission.
Defined in this Act: amount, general permission, income, land, leasehold estate, own
Section CC 1C: inserted (with effect on 1 April 2013 and applying to an amount that is derived on or after that date), on 17 July 2013, by section 7(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CC 1C(1): replaced (with effect on 1 April 2013 and applying to an amount derived on or after that date), on 30 June 2014, by section 11(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CC 2 Non-compliance with covenant for repair
When this section applies
(1)
This section applies when a person who is a lessor of land derives an amount for non-compliance by the lessee with an obligation under a lease of the land—
(a)
to maintain the land; or
(b)
to make repairs to improvements on the land.
Income
(2)
The amount is income of the lessor.
Timing of income
(3)
The income is allocated to the income year in which the lessor receives the amount.
Relationship with sections EI 5 and EI 6
(4)
Subsection (3) is overridden by sections EI 5 (Amount paid to lessor for non-compliance with covenant for repair) and EI 6 (Amount paid for non-compliance: when lessor ceases to own land).
Defined in this Act: amount, income, income year, lease, repairs
Compare: 2004 No 35 s CC 2
Financial instruments
CC 3 Financial arrangements
Income: party to financial arrangement
(1)
If a person who is a party to a financial arrangement is treated as deriving an amount of income under the financial arrangement under subpart EW (Financial arrangements rules), the amount is income of the person.
Income: trustee
(2)
Income derived by a trustee in the circumstances described in section EW 50 (Income when debt forgiven to trustee) is income of the trustee.
Defined in this Act: amount, financial arrangement, income, trustee
Compare: 2004 No 35 s CC 3
CC 4 Payments of interest
Income
(1)
Interest derived by a person is income of the person.
Apportionment
(2)
Interest due but unpaid on the date on which a person disposes of a security is apportioned between the person disposing of the security and the person acquiring it.
Non-resident financial arrangement income
(3)
Non-resident financial arrangement income derived by a person is income of the person.
Defined in this Act: income, interest, non-resident financial arrangement income, pay
Compare: 2004 No 35 s CC 4
Section CC 4(3) heading: inserted, on 30 March 2017, by section 15(1) (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CC 4(3): inserted, on 30 March 2017, by section 15(1) (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CC 4 list of defined terms non-resident financial arrangement income: inserted, on 30 March 2017, by section 15(2) (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CC 5 Annuities
Income
(1)
An annuity derived by a person is income of the person.
Apportionment
(2)
Income under an annuity due but unpaid on the date on which a person disposes of the annuity is apportioned between the person disposing of the annuity and the person acquiring it.
Relationship with sections CW 4 and CW 30
(3)
This section is overridden by sections CW 4 (Annuities under life insurance policies) and CW 30 (Annuities from Crown Bank Accounts).
Defined in this Act: income, pay
Compare: 2004 No 35 s CC 5
CC 6 Prizes received under Building Societies Act 1965
Income
(1)
A prize received by a person under section 31A of the Building Societies Act 1965 is income of the person, whether they take it as cash or as an advance.
Timing of income
(2)
The income is allocated as follows:
(a)
a cash prize is allocated to the day on which the bonus ballot giving rise to the prize is held; and
(b)
an advance is allocated to the day on which the advance is made or, if the advance is made in a series of advances, to the first day on which an advance is made.
Defined in this Act: income
Compare: 2004 No 35 s CC 6
CC 7 Consideration other than in money
When this section applies
(1)
This section applies when—
(a)
a lender provides money to a borrower for use in a business that the borrower carries on in New Zealand; and
(b)
the borrower provides to the lender, as some or all of the consideration, a tangible or intangible benefit that—
(i)
is not interest; and
(ii)
may or may not be relief from an obligation; and
(iii)
may or may not be convertible into money; and
(c)
the borrowing is a commercial transaction under which the borrower would have been liable to pay interest at the current commercial rate, given the nature and term of the loan, if the borrower had not provided the benefit, whether or not the contract between the borrower and the lender provides for the payment of interest if the benefit is not provided.
Income
(2)
The amount described in subsection (3) is income of the lender.
Amount of income
(3)
The amount is the interest that the borrower would have been liable to pay if the lender had lent the money to the borrower in consideration of the payment of interest at the current commercial rate, given the nature and term of the loan, reduced by the amount of any interest that the borrower pays.
Defined in this Act: amount, business, income, interest, New Zealand, pay
Compare: 2004 No 35 s CC 7
CC 8 Use of money interest payable by Commissioner
Income
(1)
Interest payable by the Commissioner to a person under Part 7 of the Tax Administration Act 1994 is income of the person.
Timing of income
(2)
Interest to which this section applies is allocated under section EF 4 (Use of money interest payable by Commissioner).
Relationship with financial arrangements rules
(3)
Interest to which this section applies is disregarded for the purposes of the financial arrangements rules.
Defined in this Act: Commissioner, financial arrangements rules, income, interest, pay
Compare: 2004 No 35 s CC 8
CC 8B Certain commercial bills: non-resident holders
When this section applies
(1)
This section applies when a non-resident holder of a commercial bill who is required to calculate and allocate income and expenditure under neither the financial arrangements rules nor the old financial arrangements rules because of the application of section EW 9(2) to (4) or EZ 45(e) (which relate to the application of the rules)—
(a)
disposes of the commercial bill other than by redemption; or
(b)
redeems a commercial bill whose issuer is an associated person of the non-resident.
Income: disposal
(2)
The value of the commercial bill on the day the non-resident holder disposes of it is income of the person.
Income: redemption
(3)
The amount that the non-resident holder receives on redemption is income of the person.
Defined in this Act: amount, commercial bill, financial arrangements rules, income, non-resident, old financial arrangements rules
Compare: 2004 No 35 s CZ 8
Section CC 8B: inserted (with effect on 1 April 2008), on 6 October 2009, by section 11(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Royalties
CC 9 Royalties
Income
(1)
A royalty derived by a person is income of the person.
Meaning of royalty
(2)
Royalty includes a payment of any kind derived as consideration for—
(a)
the use of, or right to use, a copyright, patent, plant variety rights, trademark, design or model, plan, secret formula or process, or other similar property or right:
(b)
the use of, or right to use, a mine or quarry:
(c)
the extraction, removal, or other exploitation of standing timber or a natural resource:
(d)
the right to extract, remove, or otherwise exploit standing timber or a natural resource:
(e)
the use of, or right to use, a film, a videotape, or a tape in connection with radio broadcasting:
(f)
the supply of scientific, technical, industrial, or commercial knowledge or information:
(g)
the total or partial forbearance of the use of, or the grant of a right to use, property or a right referred to in any of paragraphs (a) to (e):
(h)
the supply of assistance that enables the application or use of anything in any of paragraphs (a) to (f):
(i)
the total or partial forbearance of the supply of knowledge or information or assistance referred to in paragraph (f) or (h).
Relevance of description of payment
(3)
For the purposes of subsection (2), none of the following is relevant:
(a)
how the payment is described or computed:
(b)
whether the payment is periodical or otherwise:
(c)
whether the payment is an instalment of the purchase price of real property:
(d)
whether the payment is an instalment of the purchase price of personal property.
Defined in this Act: income, natural resource, pay, royalty, standing timber
Compare: 2004 No 35 s CC 9
Section CC 9 list of defined terms natural resource: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
CC 10 Films
When this section applies
(1)
This section applies when a person has a right or interest of any of the kinds described in subsection (2) in or to—
(a)
a film; or
(b)
a print of the film; or
(c)
publicity material for the film; or
(d)
any other tangible asset relating to the film.
Right or interest
(2)
The right or interest is a right or interest, including a future or contingent right or interest, of any of the following kinds:
(a)
copyright in the film:
(b)
a licence relating to the copyright:
(c)
an equitable right in the copyright:
(d)
an equitable right in a licence relating to the copyright:
(e)
any other right existing in or attaching to the film:
(f)
a right to income, or a share of income, from the rental, sale, use, or other exploitation of the film.
Income
(3)
The following amounts are income of the person:
(a)
an amount received or receivable by the person for—
(i)
the use of, or the right to use, the film or a right or interest in a right in the film:
(ii)
the granting of a licence for a future right in the film:
(iii)
the disposal of some or all of a right or interest in a right in the film:
(iv)
the assignment of a right or an interest in a right:
(v)
the assignment of a right to derive income from the use of a right or interest; and
(b)
an amount derived by the person from the rental, sale, use, or other exploitation of the film.
Relationship with sections CV 17 and YD 7[Repealed]
(4)
[Repealed]Defined in this Act: amount, film, income
Compare: 2004 No 35 s CC 10
Section CC 10(4) heading: repealed, on 2 November 2012, by section 5 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CC 10(4): repealed, on 2 November 2012, by section 5 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Finance leases
CC 11 Lessee acquiring lease asset on expiry of term of lease
When this section applies
(1)
This section applies for the purposes of section FA 9 (Treatment when lease ends: lessee acquiring asset), when, after the term of a finance lease, a lessee acquires the personal property lease asset and then disposes of it.
Income of lessee
(2)
If the lessee disposes of the lease asset for an amount that is more than the consideration paid for it, the difference is income of the lessee in the income year in which they dispose of the asset.
Defined in this Act: consideration, finance lease, income, lessee, pay, personal property lease asset, tax year
Compare: 2004 No 35 s FC 8E
CC 12 Lessor acquiring lease asset on expiry of term of lease
When this section applies
(1)
This section applies for the purposes of section FA 10(3) (Treatment when lease ends: lessor acquiring asset), when, after the term of a finance lease,—
(a)
a lessor under the lease sells, assigns, or leases the personal property lease asset to another person under another finance lease; and
(b)
the consideration is more than the amount determined under section FA 10(2).
Income of lessor
(2)
To the extent to which the difference between the amount determined under section FA 10(2) and the consideration is not paid by the lessor to the lessee under the original finance lease, the amount is income of the lessor in the income year in which the original lease term ends.
Defined in this Act: consideration, finance lease, income, lessee, lessor, pay, personal property lease asset, tax year
Compare: 2004 No 35 s FC 8D(2)
Hire purchase agreements
CC 13 Amounts paid in income years after hire purchase agreement ends
When this section applies
(1)
This section applies for the purposes of section FA 18 (Treatment of amounts paid in income years after agreement ends), when an amount that is liable to be paid under a hire purchase agreement is paid in an income year that is later than the income year in which the agreement ends.
Income of seller
(2)
An amount that the buyer is liable to pay under the terms of the agreement is income of the seller in the income year in which they receive it.
Income of buyer
(3)
An amount paid by the seller to the buyer under section FA 18(3)(b) is income of the buyer in the income year in which the amount is paid.
Defined in this Act: amount, hire purchase agreement, income, income year, pay
Compare: 2004 No 35 s FC 10(5)(d)–(f)
IFRS leases
Heading: inserted (with effect on 1 January 2019), on 30 March 2021, by section 14(1) (and see section 14(2) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
CC 14 NZ IFRS 16 leases
When this section applies
(1)
This section applies when a person has, under section EJ 10B (IFRS leases), an amount of income for their IFRS lease.
Amount, and timing, of income
(2)
The person has income quantified and allocated under section EJ 10B.
Defined in this Act: amount, income, person
Section CC 14: inserted (with effect on 1 January 2019), on 30 March 2021, by section 14(1) (and see section 14(2) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Subpart CD—Income from equity
Contents
Income
CD 1 Dividend
Income
(1)
A dividend derived by a person is income of the person.
Timing of income: dividends other than non-cash dividends
(2)
The income is allocated to the income year in which the person receives the dividend if the dividend is a dividend other than a non-cash dividend.
Exception: certain dividends derived by dual resident companies
(3)
Despite subsection (2), the income is allocated to the income year of the person in which the DRCD deferral date falls if the dividend—
(a)
is derived by a New Zealand resident company that is treated under a double tax agreement as not being resident in New Zealand; and
(b)
meets the requirements set out in section CW 10(1)(b) to (d), (5), and (6) (Dividend within New Zealand wholly-owned group).
Defined in this Act: company, dividend, double tax agreement, DRCD deferral date, income, income year, New Zealand resident, non-cash dividend, resident in New Zealand
Compare: 2004 No 35 s CD 1
Section CD 1(1) heading: inserted (with effect on 1 April 2020), on 30 March 2021, by section 15(1) (and see section 15(4) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CD 1(2) heading: inserted (with effect on 1 April 2020), on 30 March 2021, by section 15(2) (and see section 15(4) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CD 1(2): inserted (with effect on 1 April 2020), on 30 March 2021, by section 15(2) (and see section 15(4) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CD 1(3) heading: inserted (with effect on 30 August 2022), on 31 March 2023, by section 10(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CD 1(3): inserted (with effect on 30 August 2022), on 31 March 2023, by section 10(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CD 1 list of defined terms company: inserted (with effect on 30 August 2022), on 31 March 2023, by section 10(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CD 1 list of defined terms double tax agreement: inserted (with effect on 30 August 2022), on 31 March 2023, by section 10(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CD 1 list of defined terms DRCD deferral date: inserted (with effect on 30 August 2022), on 31 March 2023, by section 10(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CD 1 list of defined terms income year: inserted (with effect on 1 April 2020), on 30 March 2021, by section 15(3) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CD 1 list of defined terms New Zealand resident: inserted (with effect on 30 August 2022), on 31 March 2023, by section 10(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CD 1 list of defined terms non-cash dividend: inserted (with effect on 1 April 2020), on 30 March 2021, by section 15(3) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CD 1 list of defined terms resident in New Zealand: inserted (with effect on 30 August 2022), on 31 March 2023, by section 10(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
CD 2 Distribution excluded from being dividend
A distribution, derived by a member of a co-operative company, that is excluded by section CD 34B from being a dividend is income of the member.
Defined in this Act: co-operative company, dividend, income
Compare: 2004 No 35 s CD 1B
Section CD 2: amended (with effect on 1 April 2010), on 7 September 2010, by section 7 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
What is a dividend?
CD 3 Meaning of dividend
Sections CD 4 to CD 20 define what is a dividend.
Defined in this Act: dividend
Compare: 2004 No 35 s CD 2
Section CD 3: amended, on 18 March 2019, by section 128 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
CD 4 Transfers of company value generally
Transfers of company value from company
(1)
A transfer of company value from a company to a person is a dividend if—
(a)
the cause of the transfer is a shareholding in the company, as described in section CD 6; and
(b)
none of the exclusions in sections CD 22 to CD 37 applies to the transfer.
Calculation rules
(2)
Sections CD 38 to CD 42 apply for the purposes of calculating the amount of the dividend.
Defined in this Act: company, dividend, transfer of company value
Compare: 2004 No 35 s CD 3
Section CD 4 heading: amended, on 23 March 2020, by section 88(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 4(1) heading: amended, on 23 March 2020, by section 88(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 4(1): amended, on 23 March 2020, by section 88(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 4 list of defined terms transfer of company value: inserted, on 23 March 2020, by section 88(4) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 4 list of defined terms transfer of value: repealed, on 23 March 2020, by section 88(4) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CD 5 What is a transfer of company value?
General test
(1)
A transfer of company value from a company to a person occurs when—
(a)
the company provides money or money’s worth to the person; and
(b)
if the person provides any money or money’s worth to the company under the same arrangement, the market value of what the company provides is more than the market value of what the person provides.
Release of debt
(2)
A company (the creditor) provides money’s worth to a person (the debtor) if the debtor is released from an obligation to pay money to the creditor, either by agreement or by operation of law, except to the extent to which—
(a)
the obligation the debtor is released from is an amount of debt to which section EW 46C(4) (Consideration when debt remitted within economic group) applies; and
(b)
at the time the debtor is released, the debtor is a company that is a member of the same wholly-owned group as the creditor, and the debtor is described in section EW 46C(1)(a) or (b).
When shares are cancelled
(2B)
The market value of any transfer from the shareholder to the company on the cancellation of a share or the shareholder’s rights as a shareholder is zero.
Provision of services for less than market value
(3)
Despite subsection (1), a transfer of company value does not occur to the extent to which the money’s worth provided by the company is only the provision of services.
Limit to subsection (3)
(4)
Subsection (3) does not apply to the provision of services by a company that is a close company, if the provision is the benefit of expenditure of the company.
Defined in this Act: arrangement, close company, company, market value, pay, services, share, shareholder, transfer of company value, wholly-owned group of companies
Compare: 2004 No 35 s CD 4
Section CD 5 heading: amended, on 23 March 2020, by section 89(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 5(1): amended, on 23 March 2020, by section 89(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 5(2): replaced (with effect on 1 April 2008), on 30 March 2017, by section 16(1) (and see section 16(3)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 5(2)(a): amended (with effect on 1 April 2008), on 30 March 2022, by section 51 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CD 5(2)(a): amended (with effect on 1 April 2008), on 18 March 2019, by section 129(1) (and see section 129(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CD 5(2B) heading: inserted (with effect on 1 April 2008), on 6 October 2009, by section 12(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 5(2B): inserted (with effect on 1 April 2008), on 6 October 2009, by section 12(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 5(2B): amended, on 29 March 2018 (with effect on 1 April 2008 and applying for the 2008–09 and later income years), by section 9(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 5(3): amended, on 23 March 2020, by section 89(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 5 list of defined terms market value: inserted (with effect on 1 April 2008), on 6 October 2009, by section 12(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 5 list of defined terms share: inserted (with effect on 1 April 2008), on 6 October 2009, by section 12(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 5 list of defined terms shareholder: inserted (with effect on 1 April 2008), on 6 October 2009, by section 12(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 5 list of defined terms transfer of company value: inserted, on 23 March 2020, by section 89(4) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 5 list of defined terms transfer of value: repealed, on 23 March 2020, by section 89(4) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 5 list of defined terms wholly-owned group of companies: inserted (with effect on 1 April 2008), on 30 March 2017, by section 16(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CD 6 When is a transfer caused by a shareholding relationship?
General test
(1)
A transfer of company value from a company to a person (the recipient) is caused by a shareholding in the company if—
(a)
the recipient at any relevant time—
(i)
holds shares in the company; or
(ii)
is associated with a shareholder; and
(iii)
[Repealed](b)
the company makes the transfer because of that shareholding of the relevant shareholder.
Indication that test met
(2)
One indication that a transfer is caused by a shareholding is if the terms of the arrangement that results in the transfer are different from the terms on which the company would enter into a similar arrangement if no shareholding were involved.
Deductible distributions of producer boards
(3)
Despite subsection (1), a transfer of company value by a statutory producer board to a member is not caused by a shareholding if—
(a)
the transfer is a cash distribution; and
(b)
the distribution is a deduction under section DV 19 (Association rebates) or any other provision of this Act; and
(c)
the board does not choose to treat the distribution as a dividend under section OB 73 (Statutory producer boards attaching imputation credits to cash distributions).
Deductible distributions of co-operative companies
(4)
Despite subsection (1), a transfer of company value by a co-operative company to a shareholder is not caused by a shareholding if—
(a)
the transfer is a cash distribution; and
(b)
the distribution is a deduction under section DV 19 or any other provision of this Act; and
(c)
the company does not choose to treat the distribution as a dividend under section OB 82 (When and how co-operative company makes election).
Relationship with sections DV 18 and DV 19
(5)
For the purposes of subsections (3)(b) and (4)(b), section DV 19 is not overridden by section DV 18 (Statutory producer boards and co-operative companies).
Defined in this Act: arrangement, associated person, company, co-operative company, deduction, share, shareholder, statutory producer board, transfer of company value, trustee
Compare: 2004 No 35 s CD 5
Section CD 6(1): amended, on 23 March 2020, by section 90(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 6(1)(a)(ii): amended, on 1 April 2010 (applying for the 2010–11 and later income years), by section 13(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 6(1)(a)(iii): repealed, on 1 April 2010 (applying for the 2010–11 and later income years), by section 13(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 6(3): amended, on 23 March 2020, by section 90(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 6(3)(b): amended (with effect on 1 April 2008), on 18 March 2019, by section 130(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CD 6(4): amended, on 23 March 2020, by section 90(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 6(4)(b): amended (with effect on 1 April 2008), on 18 March 2019, by section 130(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CD 6(5) heading: amended (with effect on 1 April 2008), on 18 March 2019, by section 130(3)(a) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CD 6(5): amended (with effect on 1 April 2008), on 18 March 2019, by section 130(3)(b) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CD 6 list of defined terms transfer of company value: inserted, on 23 March 2020, by section 90(4) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 6 list of defined terms transfer of value: repealed, on 23 March 2020, by section 90(4) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CD 7 Bonus issues in lieu of dividend
Bonus issues in lieu
(1)
A bonus issue in lieu is a dividend.
Amount of dividend
(2)
The amount of the dividend is the money or money’s worth offered as an alternative.
Defined in this Act: amount, bonus issue in lieu, dividend, pay, RWT
Compare: 2004 No 35 s CD 6
Section CD 7(2): amended (with effect on 1 October 2012), on 2 November 2012, by section 6 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
CD 7B Shares issued under profit distribution plans
Profit distribution plan shares
(1)
A share issued by a company under a profit distribution plan is a dividend.
Amount of dividend
(2)
The amount of the dividend is the amount offered by the company for the repurchase of the share.
Relationship with section CD 22
(3)
Section CD 22 does not apply in relation to a share issued under a profit distribution plan and repurchased by the company as part of the plan.
Defined in this Act: amount, company, dividend, profit distribution plan, RWT, share
Section CD 7B: inserted (with effect on 1 October 2012), on 2 November 2012, by section 7 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
CD 8 Elections to make bonus issue into dividend
Treating bonus issues as dividends
(1)
A bonus issue that is not a bonus issue in lieu or a share issued under a profit distribution plan is a dividend if—
(a)
the bonus issue—
(i)
is issued fully paid from reserves of the company:
(ii)
if a dividend, would not be exempt income under section CW 10 (Dividend within New Zealand wholly-owned group); and
(b)
the company chooses under this section to treat the bonus issue as a dividend.
Form of election
(2)
A company chooses to treat a bonus issue as a dividend by—
(a)
resolving, when it makes the bonus issue, that it is a dividend; and
(b)
resolving, when it makes the bonus issue, the amount to be treated as a dividend, which must be more than zero; and
(c)
giving notice to the Commissioner under section 63 of the Tax Administration Act 1994 of the election and the amount.
Amount of dividend
(3)
The amount of the dividend is the amount chosen by the company.
Defined in this Act: amount, bonus issue, bonus issue in lieu, Commissioner, company, dividend, notice, pay, profit distribution plan, share
Compare: 2004 No 35 s CD 7
Section CD 8(1): amended (with effect on 1 October 2012), on 2 November 2012, by section 8(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CD 8(1)(a)(ii): amended (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 4(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CD 8 list of defined terms profit distribution plan: inserted (with effect on 1 October 2012), on 2 November 2012, by section 8(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CD 8 list of defined terms share: inserted (with effect on 1 October 2012), on 2 November 2012, by section 8(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
CD 9 Interests in money or property of foreign unit trust
Interest absolutely vested in unit holder
(1)
If a beneficial interest in money or property of a unit trust that is a foreign company vests absolutely in a unit holder, the money or property is a dividend for the unit holder.
Amount of dividend
(2)
The amount of the dividend is the value of the money or property.
Defined in this Act: dividend, foreign company, unit holder, unit trust
Compare: 2004 No 35 s CD 7B
CD 10 Bonus issue by foreign unit trust instead of money or property
Interest absolutely vested in unit holder
(1)
A bonus issue made to a unit holder by a unit trust that is a foreign company is a dividend for the unit holder if the issue is made under an arrangement or decision that the unit trust will make the bonus issue instead of causing a beneficial interest in money or property of the unit trust to vest absolutely in the unit holder.
Amount of dividend
(2)
The amount of the dividend is the value of the money or property in which a beneficial interest would have vested in the unit holder if the bonus issue had not been made.
Defined in this Act: bonus issue, dividend, foreign company, unit holder, unit trust
Compare: 2004 No 35 s CD 7C
CD 11 Avoidance arrangements
An amount treated as a dividend under any of the following sections is a dividend:
(a)
section GB 1 (Arrangements involving dividend stripping):
(b)
section GB 23(7) (Excessive remuneration to relatives):
(c)
section GB 25 (Close company remuneration to shareholders, directors, or relatives).
Defined in this Act: amount, close company, director, dividend, relative, shareholder
Compare: 2004 No 35 ss GB 1(3), GD 3(1), (2), GD 5
CD 12 Superannuation schemes entering trust rules
When this section applies
(1)
This section applies when a superannuation scheme that is treated as a company because it is a unit trust becomes a superannuation fund.
Treatment as liquidated
(2)
The company is treated as liquidated immediately before the date on which the scheme becomes a superannuation fund.
Defined in this Act: company, liquidation, superannuation fund, superannuation scheme
Compare: 2004 No 35 s HH 1(9)
CD 13 Notional distributions of producer boards and co-operative companies
Notional distributions of producer boards
(1)
A notional distribution of a statutory producer board is a dividend if the board determines to attach an imputation credit to the notional distribution under section OB 74 (Statutory producer boards attaching imputation credits to notional distributions).
Calculation: section OB 75
(2)
The amount of the dividend is calculated under section OB 75 (Statutory producer boards’ notional distributions that are dividends).
Notional distributions of co-operative companies
(3)
A notional distribution of a co-operative company is a dividend if the company determines to attach an imputation credit to the notional distribution under section OB 79 (Co-operative companies attaching imputation credits to notional distributions).
Calculation: section OB 80
(4)
The amount of the dividend is calculated under section OB 80 (Co-operative companies’ notional distributions that are dividends).
Corresponding payments not dividends
(5)
Section CD 33 means that a payment that corresponds to a notional distribution may not be a dividend.
Defined in this Act: amount, co-operative company, dividend, imputation credit, pay, statutory producer board
Compare: 2004 No 35 s CD 8
CD 14 Notional distributions of emigrating companies
Dividend
(1)
A notional distribution of an emigrating company under section FL 2 or FL 3 (which relate to the treatment of emigrating companies and their shareholders) is a dividend for a shareholder of the company.
Amount of dividend
(2)
The amount of the dividend is determined by a shareholder’s entitlement in the circumstances set out in section FL 2 or FL 3, as applicable.
Defined in this Act: amount, dividend, emigrating company, shareholder
Compare: 2004 No 35 s FCB 2(b)
Section CD 14(1): amended (with effect on 30 August 2022), on 31 March 2023, by section 11(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CD 14(2): amended (with effect on 30 August 2022), on 31 March 2023, by section 11(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
CD 15 Tax credits linked to dividends
Imputation credits and withholding taxes
(1)
The amount of a dividend includes—
(a)
an imputation credit attached to the dividend subject to any limitation to the imputation credit made under section LE 5 where the person is a beneficiary:
(b)
an amount of RWT or NRWT, as applicable, withheld from or paid in relation to the dividend.
Relationship with sections CD 16 and CD 17
(2)
Subsection (1) is overridden by sections CD 16 and CD 17.
When subsection (1) does not apply
(3)
Subsection (1) does not apply in—
(a)
Part L (Tax credits and other credits), except for subpart LP (Tax credits for supplementary dividends); or
(b)
Part M (Tax credits paid in cash); or
(c)
Part O (Memorandum accounts); or
(d)
Part R (General collection rules).
Beneficiary income
(3B)
Despite subsection (1)(b) and for the purposes of section HC 6 (Beneficiary income), an amount excluded from beneficiary income under section HC 6(2)(c) is not included in the amount of a dividend.
Arrangement for dividend from another company
(4)
Section GB 37 (Arrangements for payment of dividend by other companies) may apply to treat an imputation credit as not being included in the amount of a dividend.
Defined in this Act: amount, arrangement, dividend, imputation credit, income, NRWT, pay, RWT, RWT substitution payment, tax, tax credit
Compare: 2004 No 35 s CD 9
Section CD 15(1) heading: replaced, on 29 March 2018, by section 10(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 15(1): replaced, on 29 March 2018, by section 10(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 15(1)(a): amended (with effect on 1 April 2008), on 31 March 2023, by section 12(1) (and see section 12(2) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CD 15(3B) heading: inserted, on 29 March 2018 (with effect on 1 April 2008), by section 10(2) (and see section 10(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 15(3B): inserted, on 29 March 2018 (with effect on 1 April 2008), by section 10(2) (and see section 10(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 15 list of defined terms FDP credit: repealed, on 1 April 2017, by section 17(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 15 list of defined terms NRWT: inserted, on 29 March 2018, by section 10(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 15 list of defined terms pay: inserted, on 29 March 2018, by section 10(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 15 list of defined terms RWT: inserted, on 29 March 2018, by section 10(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 15 list of defined terms RWT substitution payment: inserted, on 29 March 2018, by section 10(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 15 list of defined terms tax credit: inserted, on 29 March 2018, by section 10(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CD 16 Certain dividends not increased by tax credits
When this section applies
(1)
This section applies when a unit trust manager, in the ordinary course of their management activities for a unit trust,—
(a)
acquires units from unit holders under the terms on which the units were offered to potential unit holders; and
(b)
derives a dividend from the redemption or other cancellation of units in the unit trust.
Credit not included
(2)
Relationship with section FA 3
(3)
To the extent to which subsection (2) applies, section FA 3 (Recharacterisation of certain dividends: recovery of cost of shares held on revenue account) does not apply.
Some definitions
(4)
In this section,—
unit trust manager includes—
(a)
a person nominated by the unit trust manager; or
(b)
a trustee or a manager of a group investment fund that derives category A income; or
(c)
a person nominated by the trustee or the manager of the group investment fund.
Defined in this Act: amount, cancellation, dividend, imputation credit, pay, tax, unit trust, unit trust manager
Compare: 2004 No 35 s CD 10
Section CD 16(4) imputation credit: repealed, on 1 April 2017, by section 18(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 16 list of defined terms FDP credit: repealed, on 1 April 2017, by section 18(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CD 17 Credit transfer notice
When this section applies
(1)
This section applies when a share user under a share-lending arrangement—
(a)
derives a dividend for the original share, with an imputation credit attached; and
(b)
issues a credit transfer notice for the dividend.
Credit not included
(2)
The dividend derived by the share user does not include the amount of the imputation credit.
Income
(3)
The amount of the imputation credit is income derived by the share supplier when the credit transfer notice is issued.
Meaning of imputation credit[Repealed]
(4)
[Repealed]Defined in this Act: amount, credit transfer notice, dividend, imputation credit, original share, share-lending arrangement, share supplier, share user
Compare: 2004 No 35 s CD 10B
Section CD 17(4) heading: repealed, on 1 April 2017, pursuant to section 19(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 17(4): repealed, on 1 April 2017, by section 19(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 17 list of defined terms FDP credit: repealed, on 1 April 2017, by section 19(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CD 18 Dividend reduced if foreign tax paid on company’s income
When this section applies
(1)
This section applies when a person—
(a)
derives a dividend from a company that is a foreign company; and
(b)
has a liability under the laws of a country or territory outside New Zealand for income tax on income of the company corresponding to the liability that the person would have under the laws of New Zealand for income tax on income of the company if the company were a partnership in which the person were a partner; and
(c)
pays the income tax; and
(d)
provides to the Commissioner upon request, in the time allowed by the Commissioner, sufficient information to satisfy the Commissioner as to the amount of income tax paid.
Amount of dividend reduced
(2)
The amount of the dividend is reduced by the greater of zero and the amount calculated using the formula—
total tax paid − earlier reductions.
Definition of items in formula
(3)
In the formula,—
(a)
total tax paid is the total amount of income tax on income of the company that the person has paid in the country or territory by the time that the person derives the dividend:
(b)
earlier reductions is the total amount of reductions under this section that, by the time that the person derives the dividend, have affected other dividends derived by the person from the company.
Defined in this Act: Commissioner, company, dividend, foreign company, income, income tax, New Zealand, pay, request
Compare: 2004 No 35 s CD 10C
Section CD 18(3)(a): amended, on 24 February 2016, by section 73 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CD 18 list of defined terms request: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
CD 19 Foreign tax credits and refunds linked to dividends
Foreign tax credits
(1)
If a double tax agreement gives a person a tax credit in a foreign country when they derive a dividend from that country, the amount of the dividend is increased by the tax credit.
Foreign tax refunds
(2)
When a person who has derived a dividend from outside New Zealand also derives a refund of income tax of a foreign country, the refund is treated as a dividend if—
(a)
the company paying the dividend was entitled to deduct the tax from the dividend; and
(b)
the person was not personally liable to pay the tax.
Defined in this Act: amount, company, dividend, double tax agreement, income tax, New Zealand, pay, tax
Compare: 2004 No 35 s CD 11
CD 20 Benefits of shareholder-employees or directors
Unclassified fringe benefits
(1)
A non-cash benefit provided by a company to an employee is a dividend if—
(a)
the benefit is an unclassified benefit; and
(b)
the employee is a shareholder in the company; and
(c)
the company chooses, under section CX 17(2) (Benefits provided to employees who are shareholders or investors), to treat the benefit as a dividend.
Non-executive directors’ non-cash benefits
(2)
A non-cash benefit provided by a company to a non-executive director of the company is a dividend if the director is a shareholder in the company, even if the benefit is provided solely because the director is a non-executive director.
Other shareholder-employee benefits
(3)
In any other case of a non-cash benefit provided by a company to a person who is both an employee and a shareholder, the benefit is not a dividend if—
(a)
the application of section CX 17(2) means it is a fringe benefit; and
(b)
section CD 32 accordingly excludes it from being a dividend.
Meaning of non-executive director
(4)
In this section, non-executive director means a person whose only services to the company as an employee are the formal occupation of the role of director and compliance with the associated statutory obligations.
Defined in this Act: company, director, dividend, employee, fringe benefit, non-executive director, shareholder, unclassified benefit
Compare: 2004 No 35 s CD 12
CD 21 Attributed repatriations from controlled foreign companies
[Repealed]Section CD 21: repealed (with effect on 30 June 2009), on 6 October 2009, by section 14(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
What is not a dividend?
CD 22 Returns of capital: off-market share cancellations
When this section applies
(1)
This section applies when a company pays an amount to a shareholder because of the off-market cancellation of a share in the company, other than on liquidation of the company.
Ordering rule
(2)
The amount is not a dividend to the extent to which it is less than or equal to the available subscribed capital per share calculated under the ordering rule, if—
(a)
1 of the bright line tests in subsection (3) is met; and
(b)
the company is not an unlisted trust that has chosen the slice rule for the share under subsection (4); and
(c)
the anti-avoidance rule in subsection (6) does not apply.
Bright line tests
(3)
The bright line tests referred to in subsection (2)(a) are as follows:
(a)
the cancellation is part of a pro rata cancellation that results in a fifteen percent capital reduction for the company:
(b)
the cancellation is part of a pro rata cancellation that results in a ten percent capital reduction for the company and the Commissioner has given a notice under subsection (8):
(c)
the cancellation is not part of a pro rata cancellation and results in the shareholder suffering a fifteen percent interest reduction:
(d)
the company is an unlisted trust and the cancellation is not part of a pro rata cancellation:
(e)
the share is a non-participating redeemable share.
Unlisted trusts choosing slice rule
(4)
If the company is an unlisted trust, it may issue a share on terms that the ordering rule does not apply and that instead the slice rule applies to the cancellation. If this happens, the amount paid is not a dividend to the extent to which it is less than or equal to the available subscribed capital per share calculated under the slice rule (but still subject to the anti-avoidance rule in subsection (6)).
Calculation concessions for foreign unlisted widely-held trusts
(5)
If a company is an unlisted widely-held trust not resident in New Zealand and a shareholder cannot obtain sufficient information to calculate the available subscribed capital per share under the ordering rule,—
(a)
the share is treated as if it were issued under subsection (4) on terms that the slice rule applies; and
(b)
the available subscribed capital under the slice rule is—
(i)
the amount paid for the issue of the share, if subparagraph (ii) does not apply; or
(ii)
the value of the money or property in which a beneficial interest would have vested in the shareholder had the share not been issued, if the share is a taxable bonus issue under paragraph (d) of the definition of the term.
Overriding anti-avoidance rule
(6)
Neither subsection (2) nor (4) excludes an amount paid by a company on cancellation of a share from being a dividend if any part of the payment is in lieu of the payment of a dividend.
Factors relevant in applying anti-avoidance rule
(7)
For the purposes of applying subsection (6), the following factors must be considered:
(a)
the nature and amount of dividends paid by the company before or after the cancellation; and
(b)
the issue of shares in the company after the cancellation; and
(c)
the expressed purpose or purposes of the cancellation; and
(d)
any other relevant factor.
Commissioner notifying view
(8)
If no part of a payment on cancellation of a share is in lieu of the payment of a dividend, the Commissioner may give notice to the company that subsection (6) does not apply to the cancellation.
Some definitions
(9)
In this section,—
counted associate means—
(a)
a person associated with the shareholder other than merely by virtue of being a relative; or
(b)
a spouse, civil union partner or de facto partner, or minor child of the shareholder, or a trustee of a trust under which a spouse, civil union partner or de facto partner, or minor child of the shareholder has benefited or is eligible to benefit
fifteen percent capital reduction means the circumstance in which the total amount paid by the company on account of the cancellation (or on account of any other pro rata cancellation of participating shares in the company occurring at the same time) is at least 15% of the market value of all participating shares in the company at the time the company first gave notice to shareholders of the cancellation
fifteen percent interest reduction means the circumstance in which, immediately after and as a result of the cancellation (together with any other cancellation of participating shares in the company occurring at the same time),—
(a)
the total direct voting interests in the company of the shareholder and any counted associates is 85% or less of their total direct voting interests in the company immediately before the cancellation; and
(b)
if at the time of the cancellation a market value circumstance exists, the total direct market value interests in the company of the shareholder and any counted associates is 85% or less of their total direct market value interests immediately before the cancellation
non-participating redeemable share means a share that meets the following conditions
(a)
the share is issued, under the company’s constitution or establishing legislation, on terms that involve the share being required or allowed to be redeemed or repaid before the company is liquidated; and
(b)
the share is—
(i)
a redeemable share under section 68 of the Companies Act 1993 or an equivalent provision of foreign law; or
(ii)
issued under 1 of New Zealand’s Acts relating to co-operative companies; or
(iii)
subject to sections FA 2 (Recharacterisation of certain debentures) and FZ 1 (Treatment of interest payable under debentures issued before certain date) or section FA 2B(2) (Stapled debt securities); or
(iv)
a unit in a unit trust that is not a widely-held trust; and
(c)
the share is either a fixed-rate share or a share for which the amount payable on cancellation is no more than the available subscribed capital per share calculated under the slice rule; and
(d)
the shareholder does not have shareholder decision-making rights in relation to the share except—
(i)
a protective right; or
(ii)
if the company is subject to 1 of New Zealand’s Acts relating to co-operative companies
participating share means a share that is not a non-participating redeemable share
protective right means a shareholder decision-making right that—
(a)
arises only if the shareholder’s position may be altered to the shareholder’s detriment or if the company defaults on its obligations under the terms of the share; and
(b)
is granted to the shareholder only to assist the shareholder to prevent the alteration or to remedy the default; and
(c)
when the share is issued is not expected to arise
ten percent capital reduction means the circumstance in which the total amount paid by the company on account of the cancellation, or paid on account of any other pro rata cancellation of participating shares in the company occurring at the same time, is at least 10% of the market value of all participating shares in the company at the time the company first gave notice to shareholders of the cancellation
unlisted trust means a unit trust or group investment fund, the units or interests in which are not quoted on the official list of a recognised exchange.
Defined in this Act: amount, associated person, available subscribed capital, cancellation, Commissioner, company, co-operative company, counted associate, direct market value interest, direct voting interest, dividend, fifteen percent capital reduction, fifteen percent interest reduction, fixed-rate share, group investment fund, liquidation, market value circumstance, New Zealand, non-participating redeemable share, notice, off-market cancellation, ordering rule, participating share, pay, pro rata cancellation, protective right, recognised exchange, relative, resident in New Zealand, share, shareholder, shareholder decision-making right, slice rule, taxable bonus issue, ten percent capital reduction, trustee, unit trust, unlisted trust, unlisted widely-held trust, widely-held trust
Compare: 2004 No 35 s CD 14
Section CD 22(9) counted associate paragraph (b): amended, on 1 April 2010 (applying for the 2010–11 and later income years), by section 15(1)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 22(9) non-participating redeemable share paragraph (b)(iii): amended (with effect on 1 April 2008), on 6 October 2009, by section 15(1)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CD 23 Ordering rule and slice rule
Ordering rule
(1)
Under the ordering rule, the available subscribed capital per share is calculated for a share using the formula—
available subscribed capital of class ÷ shares being cancelled of class.
Definition of items in formula
(2)
In the formula in subsection (1),—
(a)
available subscribed capital of class is the available subscribed capital, of all shares of the same class as the share, at the relevant time for the calculation:
(b)
shares being cancelled of class is the number of shares of the same class as the share, including the share, being cancelled at the time.
Slice rule
(3)
Under the slice rule, the available subscribed capital per share is calculated for a share using the formula—
available subscribed capital of class ÷ shares of class.
Definition of items in formula
(4)
In the formula in subsection (3),—
(a)
available subscribed capital of class is the available subscribed capital, of all shares of the same class as the share, at the relevant time for the calculation:
(b)
shares of class is the number of shares of the same class as the share, including the share, on issue at the time.
Amount when foreign company information inadequate
(5)
Despite subsections (2) to (4), the available subscribed capital per share calculated under the ordering rule is zero if—
(a)
the company is not resident in New Zealand; and
(b)
the relevant shareholder cannot obtain sufficient information to calculate the actual available subscribed capital per share using the relevant rule.
Defined in this Act: available subscribed capital, cancellation, foreign company, ordering rule, resident in New Zealand, share, shareholder, shares of the same class, slice rule
Compare: 2004 No 35 s CD 15
CD 23B Returns of capital: shares repurchased under profit distribution plans
When this section applies
(1)
This section applies when a company has issued a share to a shareholder under a profit distribution plan and the shareholder exercises the option to have the share repurchased by the company.
Amount paid
(2)
The amount paid by the company to repurchase the share is not a dividend.
Defined in this Act: amount, company, dividend, pay, profit distribution plan, share, shareholder
Section CD 23B: inserted (with effect on 1 October 2012), on 2 November 2012, by section 9 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
CD 24 Returns of capital: on-market share cancellations
Companies acquiring own shares
(1)
An amount paid by a company in acquiring any of its shares in an on-market cancellation is not a dividend.
When excess amount relevant
(2)
Despite subsection (1), any excess of the amount paid over the available subscribed capital per share calculated under the ordering rule—
(a)
is treated as a dividend and not a return of capital when applying—
(i)
(ii)
(iii)
section GA 1(4) (Commissioner’s power to adjust); and
(b)
gives rise to an imputation credit account debit under section OB 42 (ICA on-market cancellation).
Defined in this Act: amount, available subscribed capital, company, dividend, imputation credit account, on-market cancellation, ordering rule, pay, share
Compare: 2004 No 35 s CD 16
Section CD 24(2)(a)(i): amended (with effect on 1 April 2008), on 21 December 2010 (applying for the 2008–09 and later income years), by section 28(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
CD 25 Treasury stock acquisitions
Treasury stock generally
(1)
An amount paid by a company in acquiring any of its shares is not a dividend if—
(a)
the shares acquired by the company are held by the company in itself, including shares acquired by the company as the result of the application of section CE 6 (Trusts are nominees) and, in the case of shares acquired other than as the result of the application of section CE 6, section 67A(1) of the Companies Act 1993 or section 24 of the Co-operative Companies Act 1996 apply to provide that the shares are not deemed to be cancelled; and
(b)
the acquisition is not part of a pro rata cancellation or something that is in substance a pro rata cancellation.
Reversion to on-market cancellation treatment
(2)
Subsections (4) to (6) apply in the case of an acquisition of a share to which subsection (1) or section CD 17(1) of the Income Tax Act 2004 or section CF 3(1)(d) or (da) of the Income Tax Act 1994 applies if,—
(a)
before the first anniversary of the acquisition, the company cancels the share; or
(b)
at the first anniversary, the company has failed to transfer a share of the same class in an arm’s length transfer and has failed to allocate a share or right to a share, of the same class to an employee share scheme beneficiary under an employee share scheme, except if the company is established under New Zealand co-operative company legislation; or
(c)
after the first anniversary, the company, which is established under New Zealand co-operative company legislation, cancels the share.
Requirement for arm’s length transfers
(3)
When subsection (2)(b) is applied,—
(a)
a transfer is arm’s length only if it is—
(i)
to a person not associated with the company; or
(ii)
in a transaction that occurs on a recognised exchange, through a broker or some other agent independent of the company, and that is not preceded by any arrangement between the transferee and the company for the transfer; and
(b)
each arm’s length transfer of a share is taken into account only in relation to a single share acquisition to which subsection (1) has applied.
Reduction of available subscribed capital
(4)
If subsection (2) applies, then, with effect from the cancellation or the first anniversary, depending on which first causes subsection (2) to apply, the available subscribed capital of the class of the share is reduced by the lesser of—
(a)
the amount paid to the shareholder on the acquisition; and
(b)
the available subscribed capital per share calculated under the ordering rule and, in the case of the first anniversary, calculated as if the share and any other shares to which this subsection applies on that date were cancelled on that date.
Imputation credit account debit
(5)
If subsection (2) applies, then, with effect from the date of the acquisition by the company, section OB 42 (ICA on-market cancellation) applies as if the original acquisition were an on-market cancellation but item “ASC per share excess”
of the formula in section OB 42 were equal to only the excess of the amount received by the shareholder over the reduction described in subsection (4).
Relief from imputation penalty tax
(6)
No imputation penalty tax is imposed under section 140B of the Tax Administration Act 1994 (nor any late payment penalty imposed under that Act in relation to the imputation penalty tax) if it would not have arisen had subsection (5) applied only with effect from the date of cancellation or first anniversary, depending on which first causes subsection (2) to apply.
Employee share schemes
(7)
For the purposes of subsection (2), if the company has, before the first anniversary, allocated a share or right to a share to an employee share scheme beneficiary under an employee share scheme but subsequently the allocation is cancelled, the shares acquired under subsection (1) by the company are treated as acquired by the company on the date of cancellation for the amount the company paid for their acquisition under subsection (1).
Defined in this Act: agent, amount, arrangement, associated person, available subscribed capital, cancellation, company, co-operative company, dividend, employee share scheme, employee share scheme beneficiary, imputation credit account, imputation penalty tax, New Zealand, on-market cancellation, ordering rule, pay, pro rata cancellation, recognised exchange, share, shareholder
Compare: 2004 No 35 s CD 17
Section CD 25(1)(a): replaced, on 29 September 2018, by section 11(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 25(2)(b): replaced, on 29 September 2018, by section 11(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 25(4): substituted (with effect on 1 April 2008), on 6 October 2009, by section 16(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 25(7) heading: inserted, on 29 September 2018, by section 11(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 25(7): inserted, on 29 September 2018, by section 11(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 25 list of defined terms employee share scheme: inserted, on 29 September 2018, by section 11(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 25 list of defined terms employee share scheme beneficiary: inserted, on 29 September 2018, by section 11(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CD 26 Capital distributions on liquidation or emigration
When this section applies
(1)
This section applies when a shareholder—
(a)
is paid an amount in relation to a share on the liquidation of the company:
(b)
is treated under section FL 2 or FL 3 (which relate to the treatment of emigrating companies and their shareholders) as being paid an amount in relation to a share in the company.
Return of subscribed capital or capital gains
(2)
The amount paid is a dividend only to the extent to which it is more than—
(a)
the available subscribed capital per share calculated under the ordering rule; and
(b)
the available capital distribution amount calculated under section CD 44.
Statutory producer board capital levies
(3)
If the company is a statutory producer board, the amount is not a dividend to the extent to which it is a return of a levy charged specifically for capital development.
Non-deductible capital
(4)
An amount that is not a dividend as a result of subsection (3) is nevertheless treated as a return of capital for the purposes of the capital limitation.
Defined in this Act: amount, available capital distribution amount, available subscribed capital, capital limitation, company, dividend, emigrating company, levy, liquidation, ordering rule, pay, share, shareholder, statutory producer board
Compare: 2004 No 35 s CD 18
Section CD 26(1)(b): amended (with effect on 30 August 2022), on 31 March 2023, by section 13 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
CD 27 Property made available intra-group
When this section applies
(1)
This section applies when—
(a)
a transfer of company value is made by a company (the first company) to another company (the associated company); and
(b)
in the absence of this section, the transfer would be a dividend under section CD 6(1)(a)(ii) because the associated company is associated with a shareholder in the first company.
Intra-group property arrangements worth $10,000 or less
(2)
The transfer of company value is not a dividend if—
(a)
the transfer consists of making property available for less than market value; and
(b)
the transfer is not a loan; and
(c)
in the income year of the first company in which the transfer occurs, the total amount of transfers of company value by the first company to the associated company that would be dividends for the year in the absence of this section, is $10,000 or less.
Downward transfers of company value
(3)
The transfer of company value is also not a dividend if—
(a)
either—
(i)
the first company has a voting interest in the associated company; or
(ii)
the first company is associated with a company (the parent company) that has a voting interest in the associated company and that could have received the transfer of company value without the transfer being assessable income or non-resident passive income; and
(b)
the associated company does not have a voting interest in the first company; and
(c)
no person, other than the parent company, has both—
(i)
a voting interest or, if there is a market value circumstance in relation to either the first company or the associated company, a market value interest in the first company; and
(ii)
a voting interest or, if there is a market value circumstance in relation to either the first company or the associated company, a market value interest in the associated company, of more than 10%.
Relationship with section FA 3
(4)
Subsection (3) does not apply to a transfer of company value that is subject to section FA 3 (Recharacterisation of certain dividends: recovery of cost of shares held on revenue account).
Rules for identifying voting interests
(5)
For the purposes of subsection (3)(a) and (b),—
(a)
for the purposes of determining if a company has a voting interest in another company, the look-through rule in section YC 4 (Look-through rule for corporate shareholders) does not apply to treat the initial company’s voting interest as held by its shareholders or anyone else; and
(b)
a zero voting interest is not a voting interest.
Rules for identifying voting and market value interests
(6)
For the purposes of subsection (3)(c),—
(a)
for the purposes of determining the extent to which a person, other than the parent company, has a voting interest or market value interest in the first company or the associated company, the look-through rule in section YC 4 does not apply to treat the person’s voting interest or market value interest as held by the person’s shareholders or anyone else unless the person treated as holder is the parent company; and
(b)
for the purposes of determining the extent to which a person, other than the parent company, has a voting interest or market value interest of more than 10% in the associated company, the look-through rule in section YC 4 does not apply to treat a voting interest or market value interest of the first company or the parent company in the associated company as held by their respective shareholders or anyone else; and
(c)
a zero voting interest is not a voting interest and a zero market value interest is not a market value interest.
Defined in this Act: amount, assessable income, associated person, company, dividend, income year, loan, market value circumstance, market value interest, non-resident passive income, shareholder, tax year, transfer of company value, trustee, voting interest
Compare: 2004 No 35 s CD 19
Section CD 27(1)(a): amended, on 23 March 2020, by section 91(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 27(1)(b): substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 17(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 27(2): amended, on 23 March 2020, by section 91(2)(a) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 27(2)(c): amended, on 23 March 2020, by section 91(2)(b) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 27(3) heading: amended, on 23 March 2020, by section 91(3)(a) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 27(3): amended, on 23 March 2020, by section 91(3)(b) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 27(3)(a)(ii): substituted (with effect on 30 June 2009), on 6 October 2009, by section 17(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 27(3)(a)(ii): amended, on 23 March 2020, by section 91(3)(c) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 27(4): amended, on 23 March 2020, by section 91(4) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 27 list of defined terms FDP: repealed (with effect on 30 June 2009), on 6 October 2009, by section 17(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 27 list of defined terms transfer of company value: inserted, on 23 March 2020, by section 91(5) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 27 list of defined terms transfer of value: repealed, on 23 March 2020, by section 91(5) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CD 28 Transfers of certain excepted financial arrangements within wholly-owned groups
When section ED 2 (Transfers of certain excepted financial arrangements within wholly-owned groups) applies to a transfer of an excepted financial arrangement within a wholly-owned group of companies, the transfer does not give rise to a dividend.
Defined in this Act: dividend, excepted financial arrangement, wholly-owned group of companies
Compare: 2004 No 35 s CD 20
CD 29 Non-taxable bonus issues
A non-taxable bonus issue is not a dividend.
Defined in this Act: dividend, non-taxable bonus issue
Compare: 2004 No 35 s CD 21
CD 29B Issues to shareholders of rights to subscribe for or sell back shares
Issue of rights to subscribe for shares
(1)
The issue by a company to a shareholder of a right to subscribe for a share, or to sell or otherwise dispose of a share in the company to the company, is not a dividend.
Issue of shares under rights to subscribe for shares
(2)
The issue by a company of a share to a person for consideration less than the market value, immediately before the issue, of a share in the same class of shares, is not a dividend if—
(a)
the person subscribes for the share under a right (a subscription right) issued by the company to a shareholder holding shares before the issue of the right; and
(b)
the company does not, as part of the issue of the subscription right, give the person a right to dispose of the share to the company.
Premiums from issue of rights to subscribe for shares
(3)
A distribution by a company to a shareholder is not a dividend if—
(a)
the company issues to the shareholder a right (the shareholder right) to subscribe for, or dispose of to the company, a share in the company at a given price (the shareholder price); and
(b)
the shareholder fails or is ineligible to exercise the shareholder right; and
(c)
another person pays to the company an amount—
(i)
for the shareholder right:
(ii)
greater than the shareholder price, for the issue of a share under the shareholder right; and
(d)
the distribution is from the amount of the payment that does not increase the company’s available subscribed capital.
Defined in this Act: available subscribed capital, bonus issue in lieu, company, consideration, dividend, pay, share, shareholder
Section CD 29B: inserted (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on 17 July 2013, by section 8(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CD 29B(1): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CD 29C Transfers to shareholders by ASX-listed Australian company of shares in subsidiary
A transfer of company value is not a dividend to the extent to which it is a transfer of value that is not a dividend under section ED 2B(7) (Transfers to shareholders by ASX-listed Australian company of shares in subsidiary).
Defined in this Act: dividend, transfer of company value
Section CD 29C: replaced (with effect on 1 April 2016), on 18 March 2019, by section 131(1) (and see section 131(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CD 29C: amended, on 23 March 2020, by section 92(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 29C list of defined terms transfer of company value: inserted, on 23 March 2020, by section 92(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 29C list of defined terms transfer of value: repealed, on 23 March 2020, by section 92(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CD 30 Transfer by unit trust of legal interest after beneficial interest vests
If money or property of a unit trust is a dividend under section CD 9 for a unit holder, a transfer to the unit holder of the legal interest in the money or property is not a dividend.
Defined in this Act: dividend, unit holder, unit trust
Compare: 2004 No 35 s CD 21B
CD 31 Flat-owning companies
Occupation rights
(1)
If a flat-owning company makes residential property available to a person, that is not a dividend.
Meaning of flat-owning company
(2)
In this section, flat-owning company means a company—
(a)
whose constitution provides that every registered shareholder is entitled to the use of a specific residential property in New Zealand owned by the company; and
(b)
whose only significant assets are residential properties available for use by specific shareholders and funds reserved for meeting the company’s costs.
Defined in this Act: company, dividend, flat-owning company, New Zealand, shareholder
Compare: 2004 No 35 s CD 22
CD 32 Employee benefits
FBT rules
(1)
A benefit provided to an employee is not a dividend if—
(a)
it is a fringe benefit subject to fringe benefit tax; or
(b)
it would be a fringe benefit subject to fringe benefit tax if an election had not been made under section CX 17(4B) (Benefits provided to employees who are shareholders or investors).
Board
(2)
An amount that is employment income under section CE 1B (General rule: accommodation provided by employers) is not a dividend.
Defined in this Act: amount, dividend, employee, employment income, FBT rules, fringe benefit, fringe benefit tax
Compare: 2004 No 35 s CD 23
Section CD 32(1): replaced, on 1 April 2017 (applying for the 2017–18 and later income years), by section 65(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CD 32(2): amended, on 1 April 2015, by section 12 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CD 32 list of defined terms employee: inserted (applying for the 2017–18 and later income years), on 1 April 2017, by section 65(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
CD 33 Payments corresponding to notional distributions of producer boards and co-operative companies
Statutory producer board payments
(1)
An amount paid by a statutory producer board to a person in relation to an income year is not a dividend if—
(a)
the person was a member of the board at some time during the income year; and
(b)
unless the Commissioner allows otherwise, the amount is calculated on the basis of the member’s share of—
(i)
the total produce transactions of members with the board during the income year; or
(ii)
the total levies payable by members to the board for the income year; and
(c)
the amount corresponds to a notional distribution amount treated as a dividend under section CD 13(1).
Co-operative company payments
(2)
An amount paid by a co-operative company to a person in relation to an income year is not a dividend if—
(a)
the person was a shareholder of the company at some time during the income year; and
(b)
the amount is calculated on the basis of the shareholder’s share of the total produce transactions of shareholders with the company during the income year; and
(c)
the amount corresponds to a notional distribution amount treated as a dividend under section CD 13(3).
Non-deductible capital
(3)
An amount that is not a dividend as a result of this section is nevertheless treated as a return of capital for the purposes of the capital limitation.
Defined in this Act: amount, capital limitation, Commissioner, co-operative company, dividend, income year, levy, member, pay, produce transactions, producer board, shareholder, statutory producer board
Compare: 2004 No 35 s CD 24
CD 34 Distribution to member of co-operative company based on member’s transactions
[Repealed]Section CD 34: repealed (with effect on 1 April 2010), on 7 September 2010, by section 8 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CD 34B Distributions to members of co-operative companies
What this section applies to
(1)
This section applies to a distribution by a co-operative company, or by a company (a subsidiary) in which the co-operative company has a voting interest of 100%, if—
(a)
the distribution is made after the co-operative company has notified the Commissioner that they have elected to apply this section; and
(b)
the election has not been revoked.
General rule: co-operative company distributions not dividends
(2)
If the requirements in subsection (4) are met, a distribution by a co-operative company, or by a subsidiary, to a member of the co-operative company is not a dividend, to the extent to which the distribution is for their—
(a)
transaction shares:
(b)
projected transactions shareholding:
(c)
limited non-transaction shares.
Exception: distributions for excess shareholdings
(3)
Subsection (2)(c) is ignored,—
(a)
for a distribution to a member, if the member holds shares in the co-operative company that—
(i)
are not transaction shares, are not their projected transactions shareholding, and are not limited non-transaction shares; and
(ii)
may entitle members to enter trading transactions:
(b)
for all distributions to all members, if the constitution of the co-operative company permits any member to hold shares that—
(i)
are not transaction shares, are not their projected transaction shareholding, and are not limited non-transaction shares; and
(ii)
may entitle members to enter trading transactions.
Requirements
(4)
For the purposes of subsection (2), the requirements are—
(a)
the co-operative company is resident in New Zealand for the period to which the distribution relates; and
(b)
the company making the distribution is resident in New Zealand for the period to which the distribution relates; and
(c)
the co-operative company believes on reasonable grounds that the member at the time of the distribution—
(i)
is resident in New Zealand:
(ii)
has a fixed establishment in New Zealand.
Meaning of transaction shares
(5)
In this section, transaction shares means the number of shares in the co-operative company that the member holds for trading transactions that occurred in the period to which the distribution relates. The number of shares must determine the value of the trading transactions.
Meaning of limited non-transaction shares
(6)
In this section, limited non-transaction shares means the member’s shares that are not the member’s transaction shares or their projected transactions shareholding, and that may entitle the member to enter trading transactions, if the number of those shares is less than or equal to the greater of the following:
(a)
20% of the member’s transaction shares on the date of entitlement for the distribution under section 125 of the Companies Act 1993:
(b)
20% of the member’s projected transactions shareholding on the date of entitlement for the distribution under section 125 of that Act.
Meaning of projected transactions shareholding
(7)
In this section, projected transactions shareholding means the number of shares in the co-operative company that the member would have had to hold if the trading transactions actually had occurred that the member had projected, using reasonable assumptions, would occur in the period to which the distribution relates. The number of shares must determine the value of the trading transactions.
Meaning of trading transactions
(8)
In this section, trading transactions means transactions between the member and the co-operative company or subsidiary that are—
(a)
the disposal and acquisition of trading stock of the vendor that is not intangible property; and
(b)
not subject to section CB 2 (Amounts received on disposal of business assets that include trading stock).
Companies Act 1993
(9)
The 20 working day rule for fixing a date in section 125(2) of the Companies Act 1993 does not apply to members’ entitlements to receive distributions that are for transaction shares, projected transaction shareholdings, limited non-transaction shares, or shares described in subsection (3), if—
(a)
the co-operative company or the subsidiary, as the case may be, has given a copy of the election described in subsection (1) to the Registrar of Companies before the relevant distributions are paid; and
(b)
for the purposes of section 125(1) of the Companies Act 1993, the co-operative company or the subsidiary, as the case may be, fixes a date in relation to members’ entitlements to receive distributions before the entitlements arise, and that date is within the year or period to which the distributions relate.
Defined in this Act: Commissioner, company, co-operative company, dividend, limited non-transaction shares, notify, projected transaction shareholding, resident in New Zealand, share, trading stock, trading transactions, transaction shares
Section CD 34B: inserted (with effect on 1 April 2010), on 7 September 2010, by section 9 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section CD 34B(1)(a): replaced, on 2 June 2016, by section 7(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section CD 34B(8)(a): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CD 34B list of defined terms notify: inserted, on 2 June 2016, by section 7(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
CD 35 Resident’s restricted amalgamations
An amount derived by an amalgamated company on a resident’s restricted amalgamation from an amalgamating company that ends its existence on the amalgamation is not a dividend if it arises from—
(a)
the amalgamated company acquiring property of the amalgamating company; or
(b)
the amalgamated company being relieved of an obligation owed to the amalgamating company.
Defined in this Act: amalgamated company, amalgamating company, amalgamation, amount, dividend, resident’s restricted amalgamation
Compare: 2004 No 35 s CD 25
CD 36 Foreign investment fund income
Amount not dividend
(1)
An amount paid by a company to a person is not a dividend if,—
(a)
at the time the person derives the amount, the person’s interest in the company is an attributing interest, or would have been if the company had not been liquidated; and
(b)
the person calculates their foreign investment fund (FIF) income or loss in relation to the interest and the period in which the amount is paid under—
(i)
the comparative value method:
(ii)
the deemed rate of return method:
(iii)
the cost method:
(iv)
the fair dividend rate method; and
(c)
[Repealed](d)
the amount is excluded income under section CX 57B (Amounts derived during periods covered by calculation methods).
Exclusion for interests in FIFs resident in Australia
(2)
Subsection (1)(b)(iv) does not apply if the person’s interest in the company is included, at the beginning of the income year in which the payment is made, in a direct income interest of 10% or more in a FIF that, at the beginning of the income year,—
(a)
meets the requirements of section EX 35(b)(i) to (iii) (Exemption for interest in FIF resident in Australia); and
(b)
does not have its liability for income tax reduced by an exemption, allowance, or relief referred to in section EX 35(c)(i) or (ii); and
(c)
is not a unit trust or is a unit trust subject under Australian law to income tax on its income in the same way as a company.
Application of rule for certain managed funds
(3)
Subsection (2) does not apply if—
(a)
the person is a portfolio investment entity, an entity eligible to be a portfolio investment entity, or a life insurance company; and
(b)
the FIF is a foreign PIE equivalent.
Distribution by Australian unit trust of funds from attributing interest in a foreign investment fund
(4)
An amount paid by a CFC to a person (the CFC distribution) is not a dividend—
(a)
if the CFC—
(i)
is a unit trust that is not subject under Australian law to income tax on its income in the same way as a company; and
(ii)
has an interest in a foreign investment fund (the FIF); and
(b)
if the interest of the CFC in the FIF is an attributing interest of the person (the indirect FIF interest) that meets the requirements of section EX 59(1) in all the time that the interest is an attributing interest of the person or of an associated person; and
(c)
to the extent to which the CFC distribution is funded directly or indirectly from the indirect FIF interest.
Defined in this Act: amount, attributing interest, company, comparative value method, cost method, deemed rate of return method, direct income interest, dividend, excluded income, fair dividend rate method, FIF income, foreign investment fund, foreign PIE equivalent, income year, life insurance, liquidation, loss, pay, portfolio investment entity
Compare: 2004 No 35 s CD 26
Section CD 36(1) heading: inserted (with effect on 1 April 2008), on 6 October 2009, by section 19(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 36(1)(b): substituted, on 1 April 2008, by section 315(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CD 36(1)(b)(iv): amended, on 29 March 2018, by section 13(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 36(1)(c): repealed (with effect on 1 April 2008), on 6 October 2009, by section 19(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 36(1)(d): inserted, on 29 March 2018, by section 13(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 36(2) heading: replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 5(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CD 36(2): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 5(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CD 36(2)(b): amended (with effect on 1 July 2014), on 31 March 2023, by section 14(1)(a) (and see section 14(3) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CD 36(2)(c): inserted (with effect on 1 July 2014), on 31 March 2023, by section 14(1)(b) (and see section 14(3) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CD 36(3) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 19(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 36(3): added (with effect on 1 April 2008), on 6 October 2009, by section 19(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 36(3)(b): substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 19(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 36(4) heading: inserted, on 1 April 2023, by section 14(2) (and see section 14(4) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CD 36(4): inserted, on 1 April 2023, by section 14(2) (and see section 14(4) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CD 36 list of defined terms direct income interest: inserted (with effect on 1 April 2008), on 6 October 2009, by section 19(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 36 list of defined terms excluded income: inserted, on 29 March 2018, by section 13(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 36 list of defined terms foreign investment vehicle: repealed, on 1 April 2010, by section 19(6) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 36 list of defined terms foreign PIE equivalent: inserted, on 1 April 2010, by section 19(6) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 36 list of defined terms grey list company: repealed (with effect on 1 July 2011), on 7 May 2012, by section 5(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CD 36 list of defined terms income year: inserted, on 1 April 2008, by section 315(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CD 36 list of defined terms life insurance: inserted (with effect on 1 April 2008), on 6 October 2009, by section 19(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 36 list of defined terms portfolio investment entity: added (with effect on 1 April 2008), on 6 October 2009, by section 19(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CD 36B Foreign superannuation withdrawals and pensions from foreign superannuation scheme
An amount paid to a person by a company that is a foreign superannuation scheme is not a dividend if the person derives the amount as a—
(a)
foreign superannuation withdrawal:
(b)
pension.
Defined in this Act: company, dividend, foreign superannuation withdrawal
Section CD 36B: inserted, on 1 April 2014, by section 6 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CD 37 Maori authority distributions
A Maori authority distribution is not a dividend except for the purposes of section CW 10 (Dividend within New Zealand wholly-owned group).
Defined in this Act: dividend, Maori authority, wholly-owned group
Compare: 2004 No 35 s HI 4(2)
Calculation rules
CD 38 General calculation rule for transfers of company value
Difference in value
(1)
The amount of a dividend that is a transfer of company value from a company to a person is calculated using the formula—
value from company − value from person.
Definition of items in formula
(2)
In the formula,—
(a)
value from company is the market value of the money or money’s worth that the company provides to the person:
(b)
value from person—
(i)
is the market value of the money or money’s worth, if any, that the person provides to the company as consideration for the transfer. To the extent to which the person provides a loan that is cross-border related borrowing under section GC 6(3B) (Purpose and application of rules and nature of arrangements), the market value of the money or money’s worth that the person provides is determined using the interest rate for a loan made on the same terms, including credit rating, as used for the adjustment to the interest made in accordance with sections GC 6 to GC 18 (which relate to transfer pricing arrangements), if any; and
(ii)
excludes any amount that is attributable merely to the holding or giving up of rights as a shareholder in the company.
Relationship with sections CD 39 to CD 42
(3)
This section is overridden by sections CD 39 to CD 42.
Defined in this Act: amount, company, dividend, shareholder, transfer of company value
Compare: 2004 No 35 s CD 27
Section CD 38 heading: amended, on 23 March 2020, by section 93(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 38(1): amended, on 23 March 2020, by section 93(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 38(2)(b)(i): replaced, on 1 April 2022, by section 52(1) (and see section 52(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CD 38 list of defined terms transfer of company value: inserted, on 23 March 2020, by section 93(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CD 38 list of defined terms transfer of value: repealed, on 23 March 2020, by section 93(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CD 39 Calculation of amount of dividend when property made available
How this section applies
(1)
This section applies to determine the amount of a dividend that arises under section CD 3 because a company makes property available to a person.
Amounts calculated quarterly
(2)
The amount of the dividend is calculated for each quarter during which the property is made available.
Date when amounts treated as paid
(3)
The amount of the dividend calculated for a quarter is treated as being paid by the company to the person and as being derived by the person 6 months after the end of the company’s income year. However, if the company gives notice to the shareholder on an earlier date of the amount of the dividend for that quarter, the amount is treated as being paid and derived on that earlier date instead.
Using FBT rules
(4)
Unless the property made available is a loan, the amount of the dividend for each quarter is the value of the fringe benefit for that quarter calculated under the fringe benefit tax (FBT) rules as if—
(a)
making the property available were the provision of a fringe benefit by the company to an employee in relation to employment, despite anything in sections CX 6 to CX 38 (which relate to fringe benefits); and
(b)
the company were not to choose to pay fringe benefit tax on an income year basis under section RD 60 (Close company option).
Using difference from benchmark rate
(5)
If the property made available is a loan, the amount of the dividend for each quarter is the excess, if any, of interest, calculated for the quarter on the basis of the daily balance of the loan and the benchmark rate specified in subsections (6) to (8), over the actual amount of interest accruing on the loan in the quarter. However, the company may choose instead to calculate the dividend as the excess of the benchmark interest rate amount over the amount of income accruing to the company in the quarter calculated under the yield to maturity method.
Benchmark rate: fringe benefit tax rate for certain loans
(6)
For the purposes of subsection (5), the benchmark rate of interest is the prescribed rate of interest if—
(a)
all amounts payable to the company for the loan are expressed in New Zealand dollars; and
(b)
either the borrower is not a company or, if the borrower is another company, the company making the loan notifies the Commissioner that this subsection is to apply to the loan and the quarter.
Setting benchmark rate
(7)
For the purposes of subsection (5), the benchmark rate is the rate set by the Commissioner if—
(a)
all amounts payable to the company in relation to the loan are payable in a single currency other than New Zealand dollars; and
(b)
the Commissioner has set a benchmark rate for that currency and the quarter; and
(c)
either the borrower is not a company or, if the borrower is another company, the company making the loan notifies the Commissioner that this subsection is to apply to the loan and the quarter.
Default benchmark rate
(8)
For the purposes of subsection (5), if neither subsection (6) nor (7) applies, the benchmark rate of interest is a market rate determined at the end of the quarter for a loan made on the same terms between persons at arm’s length.
Daily loan balance: certain repayments backdated
(9)
For the purposes of subsection (5), in determining the daily balance of a loan during a tax year, an amount repaid during the tax year is treated as having been applied in repayment of the loan at the start of the company’s tax year or, if later, the day the loan was made, if—
(a)
the amount is repaid by applying any salary, wages, extra pay, dividends, or interest payable by the company to the borrower; and
(b)
the amount payable by the company is income of the borrower in the tax year or an earlier tax year; and
(c)
the amount payable by the company is—
(i)
payable without any amount of tax being withheld and paid under the PAYE rules, the RWT rules, or the NRWT rules:
(ii)
a fully imputed dividend.
Daily loan balance: company nominating amount
(10)
Subject to subsection (9), for the purposes of subsection (5), the daily balance of the loan for a tax year is treated as being equal to the notional balance chosen under subsection (11) by the company making the loan if—
(a)
the borrower is a company; and
(b)
the loan is a variable principal debt instrument; and
(c)
the company making the loan notifies the Commissioner that this subsection applies for the loan and the tax year; and
(d)
the amount of the dividend calculated as a result for the loan, the borrower, and the tax year is no more than 30% greater or less than the amount that would be calculated if this section did not apply.
Notional balance options
(11)
The notional balance referred to in subsection (10) is whichever of the following is chosen by the company making the loan and notified to the Commissioner:
(a)
the average of the outstanding balances of the loan at the end of each month in the company’s tax year:
(b)
the average of—
(i)
the outstanding balance of the loan at the start of the tax year or the first time during the tax year at which the loan exists, whichever is later; and
(ii)
the outstanding balance of the loan at the end of the tax year or the last time during the tax year at which the loan exists, whichever is earlier.
Notice generally by tax returns
(12)
Reference in this section to a company notifying the Commissioner is a reference to—
(a)
a notice given to the Commissioner with the company’s return of income for the relevant tax year; or
(b)
if no return is required, a notice given by the date on which a return would be required to be filed for the tax year if a return had been required.
Attributed repatriation dividends[Repealed]
(13)
[Repealed]When loan disregarded[Repealed]
(14)
[Repealed]Defined in this Act: accounting period, amount, amount of tax, CFC, Commissioner, company, dividend, employee, extra pay, FBT rules, fringe benefit, fringe benefit tax, fully imputed, income, income year, interest, loan, New Zealand, notice, notify, NRWT rules, pay, PAYE rules, prescribed rate of interest, quarter, return of income, RWT rules, shareholder, tax year, variable principal debt instrument
Compare: 2004 No 35 s CD 28
Section CD 39(9)(c): replaced (with effect on 1 April 2008), on 30 March 2017, by section 20(1) (and see section 20(3)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 39(9)(c)(ii): amended, on 29 March 2018 (with effect on 1 April 2008 and applying for the 2008–09 and later income years), by section 14(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 39(13) heading: repealed, on 24 February 2016, pursuant to section 74(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CD 39(13): repealed, on 24 February 2016, by section 74(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CD 39(14) heading: repealed, on 24 February 2016, pursuant to section 74(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CD 39(14): repealed, on 24 February 2016, by section 74(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CD 39 list of defined terms attributed repatriation: repealed, on 24 February 2016, by section 74(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CD 39 list of defined terms fully-imputed dividend: repealed, on 29 March 2018 (with effect on 1 April 2008 and applying for the 2008–09 and later income years), by section 14(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 39 list of defined terms fully imputed: inserted, on 29 March 2018 (with effect on 1 April 2008 and applying for the 2008–09 and later income years), by section 14(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 39 list of defined terms New Zealand repatriation amount: repealed, on 24 February 2016, by section 74(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CD 40 Adjustment if dividend recovered by company
When dividends recovered
(1)
If a company recovers a dividend from a shareholder under section 56 of the Companies Act 1993 or an equivalent provision of foreign law, this section applies to the extent necessary to ensure that—
(a)
the recovered dividend and any attached imputation credit are disregarded for the purposes of this Act; and
(b)
the resulting refunds are made.
Amendment of assessments
(2)
Section 113B of the Tax Administration Act 1994 requires the Commissioner, if given notice of the recovery of the dividend from a shareholder, to amend an assessment of the company or the shareholder in relation to income tax, or under the imputation rules, the NRWT rules, the RWT rules, or under subpart LP (Tax credits for supplementary dividends), as applicable.
Refunds
(3)
If the Commissioner has been notified of the recovery and has amended an assessment as described in subsection (2), the Commissioner must refund any relevant—
(a)
income tax of the shareholder; and
(b)
non-resident withholding tax (NRWT) or resident withholding tax (RWT) of the company.
Relationship with subpart RM
(4)
The refund is made despite sections RM 2 to RM 5 (which relate to refunds of excess tax) and RM 18 to RM 21 (which relate to limits on refunds), but subject to the other provisions of this Act.
Adjustments to accounts
(5)
If the Commissioner has been notified of the recovery and has amended an assessment as described in subsection (2), a credit or debit (as applicable) arises as at the date of recovery, and must be recorded in—
(a)
the imputation credit account of the company; or
(b)
if the shareholder is an imputation credit account (ICA) company, the imputation credit account of the shareholder.
Defined in this Act: assessment, Commissioner, company, dividend, ICA company, imputation credit, imputation credit account, imputation rules, income tax, notice, notify, NRWT, NRWT rules, RWT, RWT rules, shareholder
Compare: 2004 No 35 s CD 29
Section CD 40(1)(a): amended, on 1 April 2017, by section 21(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 40(2): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 June 2014, by section 13(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CD 40(2): amended, on 1 April 2017, by section 21(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 40(3): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 June 2014, by section 13(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CD 40(3)(a): replaced, on 1 April 2017, by section 21(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 40(4): amended (with effect on 1 April 2013), on 17 July 2013, by section 9 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CD 40(5): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 June 2014, by section 13(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CD 40(5)(b): replaced, on 1 April 2017, by section 21(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 40 list of defined terms FDP: repealed, on 1 April 2017, by section 21(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 40 list of defined terms FDP account: repealed, on 1 April 2017, by section 21(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 40 list of defined terms FDP credit: repealed, on 1 April 2017, by section 21(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 40 list of defined terms FDP penalty tax: repealed, on 1 April 2017, by section 21(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 40 list of defined terms FDP rules: repealed, on 1 April 2017, by section 21(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 40 list of defined terms FDPA company: repealed, on 1 April 2017, by section 21(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 40 list of defined terms imputation rules: inserted (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 June 2014, by section 13(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CD 40 list of defined terms notify: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section CD 40 list of defined terms NRWT rules: inserted (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 June 2014, by section 13(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CD 40 list of defined terms RWT rules: inserted (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 June 2014, by section 13(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CD 41 Adjustment if amount repaid later
When released debt repaid
(1)
If the release by a company of a shareholder’s obligation to pay money to the company has been treated as a dividend and the released amount is later repaid to the company, this section applies to the extent necessary to ensure that—
(a)
the dividend is disregarded for the purposes of this Act; and
(b)
the resulting refunds are made.
When close company expenditure repaid
(2)
If any expenditure of a close company that shareholders in the company believed on reasonable grounds was only for the benefit of the company is nevertheless a dividend and the expenditure is later repaid to the company, this section applies to the extent necessary to ensure that—
(a)
the dividend is disregarded for the purposes of this Act; and
(b)
the resulting refunds are made.
Amendment of assessments
(3)
Section 113B of the Tax Administration Act 1994 requires the Commissioner to amend assessments if given notice of the repayment.
Refunds
(4)
If the Commissioner is given notice of the repayment, the Commissioner must refund any relevant tax of the shareholder.
Relationship with sections RM 2 to RM 5
(5)
The refund is made despite sections RM 2 to RM 5 (which relate to refunds of excess tax), but subject to the other provisions of this Act.
Repayment of pre-1992 loans
(6)
Subsection (1) also applies to the repayment of an amount treated as a dividend under section 4(1)(b) of the Income Tax Act 1976 (as it applied before 1 April 1992 to give the Commissioner a discretion to treat loans as dividends), as if the amount repaid were a released amount that is repaid.
Defined in this Act: amount, assessment, close company, Commissioner, company, dividend, notice, pay, shareholder, tax
Compare: 2004 No 35 s CD 30
Section CD 41(5) heading: amended (with effect on 1 April 2013), on 17 July 2013, by section 10(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CD 41(5): amended (with effect on 1 April 2013), on 17 July 2013, by section 10(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
CD 42 Adjustment if additional consideration paid
Differences from market value
(1)
If a dividend from a company arises because of a difference between the market value of property provided by or to the company and the consideration paid for it, the dividend is disregarded for the purposes of this Act if the conditions in subsections (2) to (4) are met.
Market value
(2)
The consideration paid must have been an amount that the company considered was the market value, having taken reasonable steps at the time of the transaction to ascertain a market value.
Difference paid
(3)
The recipient of the dividend must have later paid to the company—
(a)
sufficient additional consideration to reflect the actual market value of the property at the time of the transaction; or
(b)
a refund of any excess consideration paid by the company.
Accounts adjusted
(4)
Any necessary adjustments must have been made to the accounts of the company and the recipient for the additional consideration or refund.
Defined in this Act: amount, company, dividend, pay
Compare: 2004 No 35 s CD 31
CD 43 Available subscribed capital (ASC) amount
Formula for calculating amount of available subscribed capital
(1)
For a share (the share) in a company at any relevant time (the calculation time), the amount of available subscribed capital is calculated using the formula—
1 July 1994 balance + subscriptions − returns − look-through company returns.
Definition of items in formula
(2)
In the formula in subsection (1),—
(a)
1 July 1994 balance is,—
(i)
if the company existed before 1 July 1994, the amount calculated under subsection (3); and
(ii)
in any other case, zero:
(b)
subscriptions, subject to subsections (6) to (21), is the total amount of consideration that the company received, after 30 June 1994 and before the calculation time, for the issue of shares of the same class (the class) as the share, ignoring section HB 1 (Look-through companies are transparent), and including consideration for the issue of shares by the company as a result of the application of section CE 6 (Trusts are nominees):
(c)
returns, subject to subsections (22) and (23), is the total amount of consideration that the company paid, after 30 June 1994 and before the calculation time, on the cancellation of shares in the relevant class and that was not a dividend because of section CD 22, CD 23B, or CD 24 or a corresponding provision of an earlier Act:
(d)
look-through company returns is the total amount of consideration that the company paid, before the calculation time, on the cancellation or buyback of shares in the relevant class while the company was a look-through company, ignoring section HB 1.
1 July 1994 balance
(3)
The 1 July 1994 balance is calculated using the formula—
((paid-up capital + premiums) ÷ all shares issued) × 30 June 1994 shares.
Definition of items in formula
(4)
In the formula in subsection (3),—
(a)
paid-up capital, subject to subsection (5) relating to bonus issues, is the total amount of capital paid up before 1 July 1994 for shares in the class:
(b)
premiums is the total amount of qualifying share premium paid to the company before 1 July 1994 for shares in the class, but not including amounts applied before 1 July 1994 in paying up capital:
(c)
all shares issued is the number of shares in the class ever issued at the end of 30 June 1994:
(d)
30 June 1994 shares is the number of shares in the class on issue at the end of 30 June 1994.
1 July 1994 balance: bonus issues after 30 September 1988
(5)
The capital amount included in calculating the 1 July 1994 amount does not include an amount paid up by way of a bonus issue made after 30 September 1988, unless—
(a)
the bonus issue was a taxable bonus issue; or
(b)
the amount was paid up by application of an amount of qualifying share premium.
Subscriptions amount: taxable bonus issues and debt capitalisations
(6)
The subscriptions amount includes,—
(a)
in the case of a bonus issue in lieu, the amount offered as an alternative to the bonus issue; and
(ab)
in the case of a share issued under a profit distribution plan, the amount offered by the company for the repurchase of the share; and
(b)
in the case of a taxable bonus issue that is not a bonus issue in lieu or a share issued under a profit distribution plan, the amount of the dividend arising from the taxable bonus issue; and
(c)
in the case of shares issued on conversion of, or as consideration for the release of, a debt claim against the company, the amount of debt converted or released.
When subsection (6D) applies
(6B)
Subsection (6D) applies for a company (the calculation company) for which the calculation in subsection (1) is being performed if—
(a)
section EW 46C(1)(a) or (b) (Consideration when debt remitted within economic group) applies to a creditor and debtor that are in the same wholly-owned group of companies as the calculation company; and
(b)
[Repealed](c)
section EW 46C(3) does not apply; and
(d)
the calculation company is the debtor, or the calculation company holds, before section YC 4 (Look-through rule for corporate shareholders) is applied to the calculation company, voting interests or, if a market value exists for a company that is part of the wholly-owned group of companies, market value interests, in the debtor.
When subsection (6D) applies
(6C)
Subsection (6D) also applies if section EW 46C(1)(c) applies to a creditor or single creditor group under that section, and the company for which the calculation in subsection (1) is being performed (the calculation company)—
(a)
is the creditor’s debtor, to whom section EW 46C(1)(c) applies:
(b)
has, before the application of section YC 4, either voting interests in the creditor’s debtor, to whom section EW 46C(1)(c) applies, or market value interests in the creditor’s debtor, to whom section EW 46C(1)(c) applies, if a market value circumstance exists for the debtor.
Subscriptions amount: debt remitted within economic group
(6D)
For the calculation company, the subscriptions amount is treated as including the amount of debt to which section EW 46C(5) applies for the creditor, for the class of shares that the creditor has the most voting interests for, or, if the creditor is the single creditor group under section EW 46C(1)(c), for the class of shares for which a member has the most voting interests. The maximum subscriptions amount included for an amount of debt for a calculation company is—
(a)
if the calculation company is the debtor, the amount of debt:
(b)
if the calculation company is not the debtor, the amount of debt multiplied by 1 of the following interests, determined before the application of section YC 4:
(i)
the calculation company’s voting interests in the creditor’s debtor; or
(ii)
the calculation company’s market value interest in the creditor’s debtor, if there is a market value circumstance.
Subscriptions amount increase: employee share scheme
(6E)
Unless subsection (6F) applies, when the company is part of an employee share scheme, the subscriptions amount includes, in addition to any amount under subsection (2)(b), the following amounts:
(a)
if the company has a deduction under section DV 27(6) (Employee share schemes) (the employer company) for the employee share scheme and employee, then the subscriptions amount includes the positive amount calculated using the formula in subsection (6G), and the subscriptions amount is—
(i)
for shares of the same class as the shares issued under the employee share scheme by the employer company; or
(ii)
if the employer company does not issue shares under the employee share scheme, for shares of the class most similar to the shares issued under the employee share scheme:
(b)
the subscriptions amount for shares of the same class as the shares issued by the company under the employee share scheme (the issuer company) includes the amount of the employer company’s deduction under section DV 27(6) for the employee share scheme and employee, if,—
(i)
the issuer company is not the employer company; and
(ii)
the company is a member of a wholly-owned group of companies of which the employer company is a member; and
(iii)
before the application of section YC 4 (Look-through rule for corporate shareholders), no member of the wholly-owned group has a voting interest in the issuer company.
Exception to subsection (6E) by election
(6F)
Subsection (6E) does not apply if—
(a)
the shares issued under the employee share scheme are issued for market value or a reasonable estimate of market value; and
(b)
the company elects to apply this subsection.
Formula: employer companies
(6G)
For the purposes of subsection (6E)(a), the amount is calculated using the formula—
subscription amount − consideration paid.
Definition of items in formula
(6H)
In the formula in subsection (6G),—
(a)
subscription amount is the amount of the company’s deduction under section DV 27(6) for the employee share scheme and employee:
(b)
consideration paid is the amount of consideration paid by the company to another company that is a member of the same wholly-owned group of companies (the payee company) for the issue of the shares to the employee under the employee share scheme.
Employer companies’ negative amounts
(6I)
If the amount calculated using the formula in subsection (6G) is negative, then the absolute value of the amount is subtracted from the company’s subscriptions amount for the issue of shares of the class most similar to the shares issued under the employee share scheme.
Formula: employer companies’ negative amounts
(6J)
If the amount calculated using the formula in subsection (6G) is negative, then a positive amount calculated using the formula in this subsection is a dividend paid by the company to the payee company—
formula amount − ASC.
Definition of items in formula
(6K)
In the formula in subsection (6J),—
(a)
formula amount is the absolute value of the amount calculated using the formula in subsection (6G):
(b)
ASC is the amount of available subscribed capital under this section, before the application of subsection (6I), for shares of the class most similar to the shares issued under the employee share scheme.
Subscriptions amount: exclusions for bonus issues
(7)
The subscriptions amount does not include—
(a)
an amount for a bonus issue if none of subsection (6)(a), (ab), or (b) applies:
(ab)
an amount for an imputation credit attached to the dividend arising from a taxable bonus issue if subsection (6)(b) applies:
(b)
an amount for a taxable bonus issue made to a shareholder to whom the bonus issue was exempt income under section CW 9 (Dividend derived by company from overseas) or CW 10 (Dividend within New Zealand wholly-owned group), or under a corresponding repealed provision, except to the extent to which the taxable bonus issue is fully credited.
Subscriptions amount: reinvested exempt dividends
(8)
The subscriptions amount does not include—
(a)
an amount received by the company that is mainly attributable, directly or indirectly, to the company paying a dividend to a shareholder,—
(i)
if the dividend was exempt income of the shareholder under section CW 9 or CW 10, or a corresponding provision of an earlier Act; and
(ii)
[Repealed](iii)
to the extent to which the dividend is not fully credited; or
(b)
an amount received by the company if the amount is mainly attributable, directly or indirectly, to the payment by the company of a dividend to a controlled foreign company at a time when the company is also a controlled foreign company, regardless of whether either company is a grey list company or non-attributing Australian CFC.
Subscriptions amount: share-for-share exchanges
(9)
Subsection (10) applies if—
(a)
the company receives an amount, directly or indirectly, for the issue of shares in the class that is in the form of shares in another company; and
(b)
immediately after the issue there are 1 or more persons whose common voting interests (or common market value interests), as measured in section IC 3(3) to (5) (Common ownership: group of companies), in the company and the other company total 10% or greater; and
(c)
the receipt is not on an amalgamation.
Subscriptions amount: no uplift for share-for-share exchanges
(10)
If subsection (9) applies, the subscriptions amount does not include the amount received to the extent to which it is more than the total available subscribed capital per share, calculated under the slice rule and calculated after deducting any ineligible capital amount described in subsections (13) and (14) of the shares in the other company at the date on which the amount is received.
Subscriptions amount: company share capital reorganisation
(11)
Subsection (12) applies if a company receives an amount for the issue of shares in the class in the form of—
(a)
a shareholder giving up rights of membership in the company; or
(b)
a shareholder giving up rights of membership in a company associated with the company or that is in substance the same company.
Subscriptions amount: no uplift for share capital reorganisation
(12)
If subsection (11) applies, the subscriptions amount does not include the amount received to the extent to which it is more than the total available subscribed capital per share of the rights given up at the date they are given up, calculated—
(a)
under the slice rule; and
(b)
after deducting any ineligible capital amount described in subsections (13) and (14); and
(c)
as if the rights given up were shares, if they are not shares.
Subscriptions amount: when ineligible capital arises
(13)
For the purposes of subsections (10) and (12), an ineligible capital amount arises if—
(a)
a company (the acquiring company) issues shares in consideration for acquiring, directly or indirectly, shares in another company (the acquired company); and
(b)
the acquired company has issued shares in anticipation of the shares being acquired by the acquiring company; and
(c)
those shares issued in anticipation are not a fully credited taxable bonus issue; and
(d)
the acquiring company pays an amount in consideration for acquiring the shares in the acquired company in addition to issuing shares in the acquiring company.
Subscriptions amount: amount of ineligible capital
(14)
The ineligible capital amount is the lesser of—
(a)
the total of the available subscribed capital per share calculated under the slice rule of the shares in the acquired company that is attributable to the shares issued in anticipation, except to the extent to which the shares issued in anticipation are a fully credited taxable bonus issue; and
(b)
the total additional amount paid by the acquiring company referred to in subsection (13)(d).
Subscriptions amount: amalgamated company
(15)
The subscriptions amount for a company that is an amalgamated company resulting from an amalgamation—
(a)
includes an amount, as if it were consideration received at the time of the amalgamation for the issue of the amalgamated company’s shares, equal to the available subscribed capital, at the time of the amalgamation, of all shares in the amalgamating companies that are—
(i)
of an equivalent class to the class; and
(ii)
not held directly or indirectly by an amalgamating company; and
(iii)
not shares in the amalgamated company:
(b)
does not include any other amount for the agreement of shareholders of an amalgamating company to the amalgamation and the resulting property acquisitions by the amalgamated company.
Subscriptions amount: emigrating company
(16)
If a company has been treated under section FL 2 or FL 3 (which relate to the treatment of emigrating companies and their shareholders) as paying a distribution to shareholders, the subscriptions amount includes the amount of the distribution that is a dividend.
Subscriptions amount: Maori authority
(17)
If the company is a Maori authority, the subscriptions amount includes the taxable income derived by the Maori authority in the 2003–04 tax year or an earlier tax year.
Subscriptions amount: no double counting
(18)
The subscriptions amount does not include amounts included in calculating the 1 July 1994 balance.
Subscriptions amount: treasury stock disposals excluded
(19)
The subscriptions amount does not include the amount of consideration received by a company for disposing of a share if the disposal is taken into account under section CD 25 to determine that the amount paid by the company on a previous share acquisition is not subject to section CD 25(4) to (6).
Subscriptions amount: superannuation fund’s interest in GIF
(20)
The subscriptions amount of a company that is a group investment fund includes the value of the interest of a superannuation fund in the group investment fund at the end of 31 March 1999.
Subscriptions amount exclusion: employee share scheme
(20B)
The subscriptions amount does not include an amount of consideration that the company received for the issue of shares, if the payer of the consideration for the issue of shares is a member of the same wholly-owned group of companies as the company, and the company has, before the application of section YC 4 to the company, voting interests in the payer.
1 July 1994 and subscriptions amount: foreign currency conversions
(21)
If an amount of consideration that a company receives for the issue of shares is payable in a foreign currency, the amount paid is treated, for the purposes of this section, as if it were converted into New Zealand currency at the calculation time.
Returns amount: on-market cancellations by associate
(22)
If the acquisition of a share by an associate of the company is within the meaning of an acquisition under paragraph (d) of the definition of on-market cancellation, it is treated in the same way for the purposes of calculating the returns amount.
Returns amount: recovered amounts
(23)
The returns amount does not include any amount recovered by the company before the calculation time under section 56 of the Companies Act 1993 or an equivalent provision of foreign law.
Returns amount: shares cancelled on amalgamation
(24)
If shares in an amalgamated company held by an amalgamating company are cancelled on the amalgamation, the returns amount included in calculating the available subscribed capital amount of a share in the amalgamated company that is of the same class as the cancelled shares is increased by the amount calculated using the formula—
cancelled shares × asc per share.
Definition of items in formula
(25)
In the formula in subsection (24),—
(a)
cancelled shares is the number of cancelled shares:
(b)
asc per share is the available subscribed capital per share calculated under the slice rule of each cancelled share immediately before the amalgamation.
Meaning of fully credited
(26)
In this section, the part of a dividend that is fully credited is the part that is calculated using the formula—
dividend excluding credits × actual ratio ÷ maximum ratio.
Definition of items in formula
(27)
In the formula in subsection (26),—
(a)
dividend excluding credits is the dividend excluding any attached imputation credit:
(b)
actual ratio is the imputation ratio of the dividend (section OZ 13 (Fully credited dividends: modifying actual ratio) may apply to modify this paragraph):
(c)
maximum ratio is the maximum imputation ratio specified in section OA 18 (Calculation of maximum permitted ratios).
Meaning of qualifying share premium
(28)
In this section, qualifying share premium means an amount of premium paid to a company for the issue of a share by the company if—
(a)
the amount was credited to a share premium account in the company’s books; and
(b)
the issue of shares was not in consideration for the acquisition, directly or indirectly, of shares in another company.
Subscriptions amount decrease: employee share scheme
(29)
An amount equal to the amount of the company’s income under section CV 20 (Employee share schemes) or equal to the amount of income under section CV 20 for another company in the same wholly-owned group of companies, as the case may be, is subtracted from the subscriptions amount—
(a)
for shares of the same class as the shares issued under the employee share scheme by the company; or
(b)
if the company does not issue shares under the employee share scheme, for shares of the class most similar to the shares issued under the employee share scheme.
Defined in this Act: amalgamated company, amalgamating company, amalgamation, amount, associated person, available subscribed capital, bonus issue, bonus issue in lieu, cancellation, common market value interest, common voting interest, company, consideration, controlled foreign company, deduction, dividend, employee, employee share scheme, exempt income, fully credited, grey list company, group investment fund, imputation credit, imputation ratio, look-through company, market value circumstance, market value interest, Maori authority, New Zealand, non-attributing Australian CFC, non-resident company, on-market cancellation, pay, profit distribution plan, qualifying share premium, share, shareholder, shares of the same class, slice rule, superannuation fund, tax year, taxable bonus issue, taxable income, voting interest, wholly-owned group of companies
Compare: 2004 No 35 s CD 32
Section CD 43(1) formula: amended, on 1 April 2011 (applying for income years beginning on or after 1 April 2011), by section 29(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CD 43(2)(b): amended, on 30 March 2021, by section 16 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CD 43(2)(b): amended, on 1 April 2011 (applying for income years beginning on or after 1 April 2011), by section 29(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CD 43(2)(c): amended (with effect on 1 October 2012), on 2 November 2012, by section 10(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CD 43(2)(c): amended, on 1 April 2011 (applying for income years beginning on or after 1 April 2011), by section 29(3) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CD 43(2)(d): added, on 1 April 2011 (applying for income years beginning on or after 1 April 2011), by section 29(3) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CD 43(6)(ab): inserted (with effect on 1 October 2012), on 2 November 2012, by section 10(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CD 43(6)(b): amended (with effect on 1 October 2012), on 2 November 2012, by section 10(3) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CD 43(6B) heading: inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(1) (and see section 22(10)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43(6B): inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(1) (and see section 22(10)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43(6B)(a): amended (with effect on 1 April 2008), on 30 March 2022, by section 53(1) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CD 43(6B)(b): repealed (with effect on 30 March 2017), on 30 March 2022, by section 53(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CD 43(6C) heading: inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(1) (and see section 22(10)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43(6C): inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(1) (and see section 22(10)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43(6D) heading: inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(1) (and see section 22(10)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43(6D) heading: amended (with effect on 1 April 2008), on 30 March 2022, by section 53(3) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CD 43(6D): inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(1) (and see section 22(10)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43(6E) heading: inserted, on 29 September 2018, by section 15(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(6E): inserted, on 29 September 2018, by section 15(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(6F) heading: inserted, on 29 September 2018, by section 15(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(6F): inserted, on 29 September 2018, by section 15(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(6G) heading: inserted, on 29 September 2018, by section 15(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(6G): inserted, on 29 September 2018, by section 15(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(6H) heading: inserted, on 29 September 2018, by section 15(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(6H): inserted, on 29 September 2018, by section 15(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(6I) heading: inserted, on 29 September 2018, by section 15(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(6I): inserted, on 29 September 2018, by section 15(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(6J) heading: inserted, on 29 September 2018, by section 15(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(6J): inserted, on 29 September 2018, by section 15(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(6K) heading: inserted, on 29 September 2018, by section 15(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(6K): inserted, on 29 September 2018, by section 15(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(7) heading: replaced, on 30 March 2017, by section 22(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43(7)(a): amended, on 30 March 2017, by section 22(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43(7)(a): amended (with effect on 1 October 2012), on 2 November 2012, by section 10(4) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CD 43(7)(ab): inserted, on 30 March 2017, by section 22(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43(8)(a)(ii): repealed, on 1 April 2017, by section 22(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43(8)(b): substituted (with effect on 30 June 2009), on 6 October 2009, by section 20(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 43(9)(b): amended (with effect on 1 April 2008), on 7 September 2010 (applying for the 2008–09 and later income years), by section 10(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section CD 43(16): amended (with effect on 30 August 2022), on 31 March 2023, by section 15 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CD 43(19) heading: amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CD 43(20B) heading: inserted, on 29 September 2018, by section 15(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(20B): inserted, on 29 September 2018, by section 15(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(27)(a): amended, on 1 April 2017, by section 22(6) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43(27)(b): replaced, on 1 April 2017, by section 22(7) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43(29) heading: inserted, on 29 September 2018, by section 15(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43(29): inserted, on 29 September 2018, by section 15(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43 list of defined terms consideration: inserted (with effect on 1 April 2008), on 6 October 2009, by section 20(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 43 list of defined terms deduction: inserted, on 29 September 2018, by section 15(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43 list of defined terms employee: inserted, on 29 September 2018, by section 15(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43 list of defined terms employee share scheme: inserted, on 29 September 2018, by section 15(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 43 list of defined terms FDP: repealed, on 1 April 2017, by section 22(8) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43 list of defined terms FDP credit: repealed, on 1 April 2017, by section 22(8) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43 list of defined terms FDP ratio: repealed, on 1 April 2017, by section 22(8) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43 list of defined terms look-through company: inserted, on 1 April 2011, by section 29(4) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CD 43 list of defined terms market value circumstance: inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(9) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43 list of defined terms market value interest: inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(9) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43 list of defined terms non-attributing Australian CFC: inserted (with effect on 30 June 2009), on 6 October 2009, by section 20(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 43 list of defined terms non-resident company: inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(9) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43 list of defined terms profit distribution plan: inserted (with effect on 1 October 2012), on 2 November 2012, by section 10(5) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CD 43 list of defined terms voting interest: inserted (with effect on 1 April 2008), on 30 March 2017, by section 22(9) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 43 list of defined terms wholly-owned group of companies: inserted, on 29 September 2018, by section 15(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CD 44 Available capital distribution amount
Formula for calculating amount of available capital distribution
(1)
For a share (the share) on the liquidation of the company, the available capital distribution amount is calculated using the formula—
(receipt − asc per share) × (capital gains +
(capital property distributed − cost) − capital losses)
÷ (total receipts − total asc).
Definition of items in formula
(2)
In the formula,—
(a)
receipt is the amount received by the shareholder on the liquidation for the share:
(b)
asc per share is the available subscribed capital per share calculated under the ordering rule for the share at the time of the liquidation:
(c)
capital gains is the total of the capital gain amounts available for distribution to shareholders in the company on the liquidation, but excluding any gain occurring when the company distributes property to a shareholder on the liquidation:
(d)
capital property distributed is the total market value of capital property of the company distributed to shareholders on the liquidation:
(e)
cost is the total cost to the company of the capital property included in the capital property distributed item:
(f)
capital losses is the total of capital loss amounts of the company arising in the 1992–93 tax year or a later tax year, but excluding any loss occurring when the company distributes property to shareholders on the liquidation:
(g)
total receipts is the total of all amounts received by shareholders on the liquidation:
(h)
total asc is the total of the available subscribed capital of all shares in the company at the time of the liquidation.
Positive amounts
(3)
Despite subsection (1), the available capital distribution amount per share is zero if either multiplier in the formula is negative.
When foreign company information inadequate
(4)
Despite subsection (1), the available capital distribution amount is zero if—
(a)
the company is not resident in New Zealand; and
(b)
the shareholder cannot obtain sufficient information to calculate the actual available capital distribution amount.
Capital gain amount: bonus issued capital gains
(5)
A capital gain amount is treated as still being available for distribution to the extent to which—
(a)
it has been applied to pay up a bonus issue made after 30 September 1988; and
(b)
the bonus issue is a non-taxable bonus issue; and
(c)
the bonus issued share is still on issue at the time of the company’s liquidation.
This subsection is overridden by subsection (6).
Capital gain amount: capital gains after 31 March 1988 and before 1992–93
(6)
A capital gain amount, derived after 31 March 1988 and before the 1992–93 tax year, is not available for distribution to the extent to which a capital loss amount has arisen for the company in the tax year in which the capital gain amount was derived or in a later tax year before the 1992–93 tax year. Capital loss amounts are offset against capital gain amounts in the chronological order in which each arose and, to the extent offset, are then disregarded for the purposes of this subsection.
Capital gain amount: when capital gain amounts arise
(7)
For the purposes of this section, a company derives a capital gain amount if,—
(a)
after 31 March 1988, it disposes of capital property for an amount of consideration that is more than the cost of the property to the company, including a disposal that the company is treated as making under section DB 26 (Amount from profit-making undertaking or scheme and not already in income) or DB 27 (Amount from major development or division and not already in income); the capital gain amount is the excess; or
(b)
after 31 March 1988, it receives a capital gain, including a gift, and no part is assessable income of the company; the capital gain amount is the amount of the capital gain; or
(c)
an amount is derived by the company from another company on liquidation of the other company that is excluded from being a dividend as a result of section CD 26(2)(b) and this section; or
(d)
an amount is derived by the company that is attributable to a revaluation of livestock in the 1992–93 tax year or a later tax year under section 86D of the Income Tax Act 1976 or section EC 16 (Valuation under herd scheme) or EC 20 (Herd livestock disposed of before values determined); or
(db)
an amount is derived by the company that is attributable to the difference between the consideration for disposal or acquisition of livestock and the value of that livestock under section EC 4C (Value and timing of transfers); or
(e)
the amount is described in section CZ 9(1) (Available capital distribution amount: 1965 and 1985–1992).
Disposal of shares received in a share-for-share exchange
(7B)
A company that sells or transfers to a person that is not associated, for consideration, shares that are capital property, and the shares were received by the company in a share-for-share exchange to which section CD 43(9) and (10) (Available subscribed capital (ASC) amount) apply, has a capital gain amount, in addition to any other capital gain amount, equal to the subscriptions amount not included, because of the application of section CD 43(10), for the relevant issue of the company’s shares in the share-for-share exchange.
Capital gain amount: amalgamated company inheriting gain
(8)
An amalgamated company is treated as deriving a capital gain amount at the time of the amalgamation equal to a capital gain amount of an amalgamating company to the extent to which—
(a)
the amalgamating company ends its existence on the amalgamation; and
(b)
the amalgamating company’s capital gain amount was available for distribution at the time and was not distributed to anyone other than the amalgamated company.
Capital gain amount: consideration when debt remitted within economic group
(8B)
The amount of a debt to which section EW 46C (Consideration when debt remitted within economic group) applies does not give rise to a capital gain amount if section CD 43(6D) does not apply to it.
Capital gain amount: FIF income calculated using fair dividend rate or cost methods
(8C)
A company derives a capital gain amount for the purposes of this section in relation to an attributing interest in a FIF for which the company uses the fair dividend rate method or the cost method to calculate their FIF income for a period. The capital gain amount is an amount equal to the greater of—
(a)
the total amount of dividends and gains on disposal derived from the interest in the period that is excluded income under section CX 57B (Amounts derived during periods covered by calculation methods) reduced by the total amount of FIF income the company has from that interest for the same period; and
(b)
zero.
Gains on disposal
(8D)
For the purposes of subsection (8C)(a), a gain on disposal is the difference between the consideration on disposal of the interest and the cost of acquisition of the interest.
When capital losses arise
(9)
For the purposes of this section, a company incurs a capital loss if it disposes of capital property for an amount of consideration that is less than—
(a)
for property that is a building for which no depreciation loss arises under section EE 48(2) and (3) (Effect of disposal or event), the adjusted tax value of the property at the date of disposal, if the property is an item of depreciable property; or
(b)
the cost of the property to the company at the date of disposal, if the property is not an item of depreciable property.
Capital loss amount
(9BA)
The capital loss amount for a disposal referred to in subsection (9) is equal to the deficit referred to in that subsection for the disposal.
Capital losses amount: herd scheme
(9B)
For the purposes of this section, a company incurs a capital loss if it incurs a loss that is attributable to the difference between the consideration for disposal or acquisition of livestock and the value of that livestock under section EC 4C.
Capital losses amount: company existing before 1 April 1988
(10)
In the case of a company that existed before 1 April 1988, the capital losses amount cannot be more than the total of—
(a)
the amount of the capital gains item in the formula in subsection (1) to the extent derived after 31 March 1988; and
(b)
the amount of the capital property distributed item, minus the amount of the cost item, in the formula.
Company common interest transactions
(10B)
An amount derived or incurred by a company (company A) on disposing of property (the property) to another company (company B) is not a capital gain amount or a capital loss amount if—
(a)
at the time of the disposal, a group of persons holds, for companies A and B,—
(i)
common voting interests that add up to at least 85%; and
(ii)
if a market value circumstance exists for company A or company B, common market value interests that add up to at least 85%; and
(b)
on the liquidation of company A, the aggregate total given by applying the formula in subsection (10C) for all companies that own part of the property (owning companies) is 85% or more.
Formula
(10C)
For the purposes of subsection (10B)(b), for an owning company, the formula is—
commonality interest × ownership interest.
Definition of items in formula
(10D)
In the formula in subsection (10C),—
(a)
commonality interest is, if the owning company is company A, 100%, or, if the owning company is not company A, the percentage of common holding by a group of persons, for the owning company and company A, of—
(i)
common voting interests; or
(ii)
if a market value circumstance exists for the owning company or company A, common market value interests, if they are greater than the common voting interests:
(b)
ownership interest is the percentage ownership of the property, by market value, for the owning company.
Relationship between subsections
(10E)
Subsection (10B) is overridden by subsection (7)(c).
Related person transactions[Repealed]
(11)
[Repealed]Close companies liquidations[Repealed]
(12)
[Repealed]Reinvested exempt dividends
(13)
When a capital gain amount, a capital loss amount, or the cost of capital property is determined, the cost of any shares subscribed for by the company in another company does not include any consideration for the subscribed shares that is excluded from the available subscribed capital of the other company under section CD 43(7)(b) or (8).
Amounts written up
(14)
When a capital gain amount, a capital loss amount, or the cost of capital property is determined, the cost of the relevant capital property is increased to the extent to which—
(a)
the value of the property is written up in the company’s books; and
(b)
because it was attributed to the write-up,—
(i)
an amount paid before 11 June 1965 is treated as described in section CZ 9(2)(a); or
(ii)
an issue of a share before 1 April 1988 is treated as described in section CZ 9(2)(b).
Relationship with section CZ 9B[Repealed]
(14B)
[Repealed]Meaning of related person[Repealed]
(15)
[Repealed]Look-through relatives and nominees[Repealed]
(16)
[Repealed]Look-through interposed companies[Repealed]
(17)
[Repealed]Meaning of capital property
(18)
In this section, capital property means property of the company that is not revenue account property, and includes an attributing interest in a FIF for which income is calculated using either the fair dividend rate method or the cost method.
Defined in this Act: adjusted tax value, amalgamated company, amalgamating company, amalgamation, amount, assessable income, attributing interest, available capital distribution amount, available subscribed capital, bonus issue, capital property, close company, company, cost method, depreciable property, dividend, fair dividend rate method, FIF, FIF income, group of persons, income, liquidation, market value circumstance, market value interest, non-taxable bonus issue, ordering rule, pay, relative, resident in New Zealand, revenue account property, share, shareholder, tax year, trustee, voting interest
Compare: 2004 No 35 s CD 33
Section CD 44(7)(b): amended (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 4(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CD 44(7)(db): inserted (with effect on 28 March 2012), on 24 February 2016, by section 75(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CD 44(7B) heading: inserted, on 30 March 2022, by section 54(1) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CD 44(7B): inserted, on 30 March 2022, by section 54(1) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CD 44(8B) heading: inserted (with effect on 1 April 2008), on 30 March 2017, by section 23(1) (and see section 23(8)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(8B) heading: amended (with effect on 1 April 2008), on 30 March 2022, by section 54(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CD 44(8B): inserted (with effect on 1 April 2008), on 30 March 2017, by section 23(1) (and see section 23(8)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(8B): amended (with effect on 1 April 2008), on 30 March 2022, by section 54(3) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CD 44(8C) heading: inserted, on 29 March 2018, by section 16(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 44(8C): inserted, on 29 March 2018, by section 16(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 44(8D) heading: inserted, on 29 March 2018, by section 16(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 44(8D): inserted, on 29 March 2018, by section 16(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 44(9) heading: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 March 2017, by section 23(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(9): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 March 2017, by section 23(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(9)(a): amended, on 29 March 2018 (with effect on 1 April 2008 and applying for the 2008–09 and later income years), by section 16(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 44(9BA) heading: inserted (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 March 2017, by section 23(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(9BA): inserted (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 March 2017, by section 23(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(9B) heading: inserted (with effect on 28 March 2012), on 24 February 2016, by section 75(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CD 44(9B): inserted (with effect on 28 March 2012), on 24 February 2016, by section 75(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CD 44(10B) heading: replaced, on 30 March 2017, by section 23(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(10B): amended (with effect on 1 April 2010), on 30 March 2017, by section 23(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(10B): replaced, on 30 March 2017, by section 23(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(10C) heading: replaced, on 30 March 2017, by section 23(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(10C): replaced, on 30 March 2017, by section 23(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(10D) heading: inserted, on 30 March 2017, by section 23(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(10D): inserted, on 30 March 2017, by section 23(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(10E) heading: inserted, on 30 March 2017, by section 23(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(10E): inserted, on 30 March 2017, by section 23(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(11) heading: repealed, on 1 April 2010 (applying for the 2010–11 and later income years), pursuant to section 21(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 44(11): repealed, on 1 April 2010 (applying for the 2010–11 and later income years), by section 21(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 44(12) heading: repealed, on 1 April 2010 (applying for the 2010–11 and later income years), pursuant to section 21(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 44(12): repealed, on 1 April 2010 (applying for the 2010–11 and later income years), by section 21(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 44(14B) heading: repealed, on 30 March 2017 (applying for the 2008–09 and later income years), pursuant to section 23(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(14B): repealed, on 30 March 2017 (applying for the 2008–09 and later income years), by section 23(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44(15) heading: repealed, on 1 April 2010 (applying for the 2010–11 and later income years), pursuant to section 21(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 44(15): repealed, on 1 April 2010 (applying for the 2010–11 and later income years), by section 21(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 44(16) heading: repealed, on 1 April 2010 (applying for the 2010–11 and later income years), pursuant to section 21(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 44(16): repealed, on 1 April 2010 (applying for the 2010–11 and later income years), by section 21(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 44(17) heading: repealed, on 1 April 2010 (applying for the 2010–11 and later income years), pursuant to section 21(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 44(17): repealed, on 1 April 2010 (applying for the 2010–11 and later income years), by section 21(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 44(18): amended, on 29 March 2018, by section 16(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 44 list of defined terms adjusted tax value: inserted (with effect on 1 April 2008), on 30 March 2017, by section 23(6) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44 list of defined terms assessable income: inserted (with effect on 1 April 2008), on 29 August 2011, by section 4(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CD 44 list of defined terms attributing interest: inserted, on 29 March 2018, by section 16(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 44 list of defined terms cost method: inserted, on 29 March 2018, by section 16(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 44 list of defined terms depreciable property: inserted (with effect on 1 April 2008), on 30 March 2017, by section 23(6) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44 list of defined terms fair dividend rate method: inserted, on 29 March 2018, by section 16(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 44 list of defined terms FIF: inserted, on 29 March 2018, by section 16(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 44 list of defined terms FIF income: inserted, on 29 March 2018, by section 16(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CD 44 list of defined terms group of persons: inserted, on 30 March 2017, by section 23(7) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44 list of defined terms market value circumstance: inserted, on 30 March 2017, by section 23(7) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44 list of defined terms market value interest: inserted, on 30 March 2017, by section 23(7) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 44 list of defined terms related person: repealed, on 1 April 2010, by section 594 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 44 list of defined terms voting interest: inserted, on 30 March 2017, by section 23(7) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Attributed repatriation calculation rules[Repealed]
Heading: repealed (with effect on 30 June 2009), on 6 October 2009, by section 22(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CD 45 When does a person have attributed repatriation from a controlled foreign company?
[Repealed]Section CD 45: repealed (with effect on 30 June 2009), on 6 October 2009, by section 22(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CD 46 New Zealand repatriation amount
[Repealed]Section CD 46: repealed (with effect on 30 June 2009), on 6 October 2009, by section 22(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CD 47 New Zealand property amount
[Repealed]Section CD 47: repealed (with effect on 30 June 2009), on 6 October 2009, by section 22(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CD 48 Cost of tangible property
[Repealed]Section CD 48: repealed (with effect on 30 June 2009), on 6 October 2009, by section 22(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CD 49 Cost of associated party equity
[Repealed]Section CD 49: repealed (with effect on 30 June 2009), on 6 October 2009, by section 22(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CD 50 Outstanding balances of financial arrangements
[Repealed]Section CD 50: repealed (with effect on 30 June 2009), on 6 October 2009, by section 22(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CD 51 Property transfers between associated persons
[Repealed]Section CD 51: repealed (with effect on 30 June 2009), on 6 October 2009, by section 22(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CD 52 Unrepatriated income balance
[Repealed]Section CD 52: repealed (with effect on 30 June 2009), on 6 October 2009, by section 22(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Prevention of double taxation
CD 53 Prevention of double taxation of share cancellation dividends
When this section applies
(1)
This section applies when—
(a)
a person derives an amount from the cancellation of a share in a company; and
(b)
the amount is income of the person under 1 of the following provisions (the other rules):
(i)
section CB 1 (Amounts derived from business); or
(ii)
section CB 3 (Profit-making undertaking or scheme); or
(iii)
section CB 4 (Personal property acquired for purpose of disposal); or
(iv)
section CB 5 (Business of dealing in personal property); or
(v)
any other provision of this Act outside this subpart.
Treatment of amount
(2)
For the purposes of the other rules, the amount derived by the person from the company is treated as if it were reduced, but not below zero, by the amount of any dividend derived by the person in relation to the cancellation, excluding any attached imputation credit.
Non-taxable dividends
(3)
Subsection (2) does not apply to the extent to which the dividend is exempt income of the person under sections CW 9 and CW 10 (which relate to income from equity).
Subsection (3)(b): formula[Repealed]
(4)
[Repealed]Definition of items in formula[Repealed]
(5)
[Repealed]Relationship of dividend exclusions to other provisions
(6)
Subject to subsection (2), the amount derived by the person from the company may be income of the person despite the fact that the amount is excluded from being a dividend by any of sections CD 22 to CD 27.
Relationship with section FA 3
(7)
This section is overridden by section FA 3 (Recharacterisation of certain dividends: recovery of cost of shares held on revenue account).
Defined in this Act: amount, cancellation, company, dividend, exempt income, imputation credit, income, income tax, share, tax year
Compare: 2004 No 35 s CD 42
Section CD 53(2): amended, on 1 April 2017, by section 24 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CD 53(3) heading: substituted (with effect on 30 June 2009), on 6 October 2009, by section 23(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 53(3): substituted (with effect on 30 June 2009), on 6 October 2009, by section 23(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 53(3): amended (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 6(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CD 53(4) heading: repealed (with effect on 30 June 2009), on 6 October 2009, pursuant to section 23(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 53(4): repealed (with effect on 30 June 2009), on 6 October 2009, by section 23(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 53(5) heading: repealed (with effect on 30 June 2009), on 6 October 2009, pursuant to section 23(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 53(5): repealed (with effect on 30 June 2009), on 6 October 2009, by section 23(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 53(5)(b): amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CD 53(5)(b): amended, on 1 April 2008, by section 318 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CD 53 list of defined terms FDP: repealed (with effect on 30 June 2009), on 6 October 2009, by section 23(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CD 53 list of defined terms FDP credit: repealed (with effect on 30 June 2009), on 6 October 2009, by section 23(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Returning share transfers
CD 54 Replacement payments
The amount of a replacement payment derived by a person under a returning share transfer is income of the person when it is paid to the person.
Defined in this Act: income, pay, replacement payment, returning share transfer
Compare: 2004 No 35 s CD 43
Subpart CE—Employee or contractor income
Contents
Employment income
CE 1 Amounts derived in connection with employment
Income
(1)
The following amounts derived by a person in connection with their employment or service are income of the person:
(a)
salary or wages or an allowance, bonus, extra pay, or gratuity:
(b)
expenditure on account of an employee that is expenditure on account of the person:
(bb)
the value of accommodation referred to in sections CE 1B to CE 1E:
(c)
[Repealed](d)
a benefit received under an employee share scheme:
(e)
directors’ fees:
(f)
compensation for loss of employment or service:
(g)
any other benefit in money.
Benefit of accommodation[Repealed]
(1B)
[Repealed]Unrepaid overpayments
(1C)
A person who receives an amount that is an unrepaid PAYE income overpayment is treated as deriving the amount in connection with their employment or service—
(a)
for the income year in which they receive the amount, if paragraph (b) does not apply; or
(b)
on the payday for which the employment income information of the employer who paid the amount to the person includes an upwards adjustment for the amount under regulations made under section 23N of the Tax Administration Act 1994.
Repaid overpayments
(1D)
An amount received by a person that is a PAYE-related overpayment is not income of the person to the extent to which—
(a)
the amount has been repaid to the employer who paid the amount to the person:
(b)
the amount is repayable to that employer by the person under an agreement between them and none of the following apply:
(i)
the person breaches the agreement and does not remedy the breach within 2 months:
(ii)
that employer considers that the person will not comply with the agreement in the future:
(c)
the amount is recoverable under section 248 of the Accident Compensation Act 2001.
Meaning of accommodation
(2)
For the purposes of this section, and sections CE 1B to CE 1E, CW 16B to CW 16F, CW 17CB, CZ 23, CZ 29, and CZ 30 (which relate to accommodation provided in connection with employment), accommodation—
(a)
includes—
(i)
board or lodging:
(ii)
the use of a house or living premises, or the use of part of a house or living premises, whether permanent or temporary:
(b)
does not include—
(i)
a berth, room, or other lodging provided on a mobile workplace, for example, a ship, a truck, an oil rig, or other similar workplace:
(ii)
a station in Antarctica:
(iii)
a room or lodging that is provided for a shift worker who is required in the performance of their employment duties periodically to sleep at their workplace when the accommodation is provided only for the duration of the performance of those duties, for example, fire-fighters, ambulance staff, care-givers, and other similar employees:
(iv)
the use of a room or other dwelling provided at a remote location outside New Zealand when a person’s employment duties require them to work at the location for a period and also require them to be absent from the location for a period, for example, miners in Australia who regularly fly to and from a mining camp and other similar employees.
Meaning of employer
(3)
Employer,—
(a)
in this section, in sections CE 1B, and CW 16B to CW 16F, CZ 29, and CZ 30 (which relate to accommodation provided in connection with employment) and in the definition of employee, paragraph (e), includes a person, whether resident or non-resident, who, in connection with the employment or service of an employee of the employer,—
(i)
provides accommodation for the employee at a distant workplace; or
(ii)
pays an amount for the employee’s accommodation at a distant workplace:
(b)
in sections CW 16B to CW 16F, CZ 29, and CZ 30, includes a company that is part of the same group of companies as the employer.
Persons on shadow payrolls
(3B)
For the treatment of PAYE income payments made to a cross-border employee who undertakes employment services in New Zealand, see section CE 1F.
Amendment of exclusions by Order in Council
(4)
For the purposes of subsection (2), the Governor-General may by Order in Council make regulations to add to the types of accommodation that are excluded by paragraph (b) of the definition of accommodation from the rules relating to accommodation provided in connection with employment.
Application of Order in Council
(5)
An Order in Council under subsection (4) may—
(a)
come into force on a date that is not earlier than 1 April 2015:
(b)
apply for income years that do not precede the 2015–16 income year.
Secondary legislation
(6)
An Order in Council under subsection (4)—
(a)
is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements); but
(b)
commences in accordance with subsection (5), even if it is not yet published.
Defined in this Act: accommodation, amount, cross-border employee, employee share scheme, employer, employment income information, expenditure on account of an employee, extra pay, income, income year, New Zealand, non-resident, payday, PAYE income payment, PAYE-related overpayment, salary or wages, unrepaid PAYE income overpayment
Compare: 2004 No 35 s CE 1
| Legislation Act 2019 requirements for secondary legislation made under this section | ||||
| Publication | PCO must publish it on the legislation website and notify it in the Gazette | LA19 s 69(1)(c) | ||
| Presentation | The Minister must present it to the House of Representatives | LA19 s 114, Sch 1 cl 32(1)(a) | ||
| Disallowance | It may be disallowed by the House of Representatives | LA19 ss 115, 116 | ||
| This note is not part of the Act. | ||||
Section CE 1(1) heading: inserted (with effect on 1 April 2008), on 6 October 2009, by section 24(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CE 1(1)(bb): inserted, on 1 April 2015, by section 14(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 1(1)(c): repealed (with effect on 1 April 2008), on 21 December 2010 (applying for the 2008–09 and later income years), by section 30(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CE 1(1)(d): amended, on 29 September 2018, by section 17(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 1(1B) heading: repealed, on 1 April 2015, pursuant to section 14(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 1(1B): repealed, on 1 April 2015, by section 14(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 1(1C) heading: inserted, on 1 April 2019, by section 132(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CE 1(1C): inserted, on 1 April 2019, by section 132(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CE 1(1D) heading: inserted, on 1 April 2019, by section 132(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CE 1(1D): inserted, on 1 April 2019, by section 132(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CE 1(2) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 24(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CE 1(2): replaced, on 1 April 2015, by section 14(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 1(3) heading: inserted, on 1 April 2015, by section 14(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 1(3): inserted, on 1 April 2015, by section 14(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 1(3B) heading: inserted, on 1 April 2019, by section 17(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 1(3B): replaced, on 1 April 2023, by section 16(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CE 1(4) heading: inserted, on 1 April 2015, by section 14(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 1(4): inserted, on 1 April 2015, by section 14(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 1(5) heading: inserted, on 1 April 2015, by section 14(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 1(5): inserted, on 1 April 2015, by section 14(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 1(6) heading: inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section CE 1(6): inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section CE 1 list of defined terms accommodation: inserted (with effect on 1 April 2008), on 6 October 2009, by section 24(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CE 1 list of defined terms cross-border employee: inserted, on 1 April 2023, by section 16(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CE 1 list of defined terms employee share scheme: inserted, on 29 September 2018, by section 17(3)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 1 list of defined terms employer: inserted, on 1 April 2019, by section 17(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 1 list of defined terms employment income information: inserted, on 1 April 2019, by section 17(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 1 list of defined terms income year: inserted, on 1 April 2019, by section 132(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CE 1 list of defined terms New Zealand: inserted, on 1 April 2019, by section 17(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 1 list of defined terms non-resident: inserted, on 1 April 2019, by section 17(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 1 list of defined terms payday: inserted, on 1 April 2019, by section 132(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CE 1 list of defined terms PAYE income payment: inserted, on 1 April 2019, by section 17(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 1 list of defined terms PAYE-related overpayment: inserted, on 1 April 2019, by section 132(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CE 1 list of defined terms share purchase agreement: repealed, on 29 September 2018, by section 17(3)(c) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 1 list of defined terms unrepaid PAYE income overpayment: inserted, on 1 April 2019, by section 132(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
CE 1B General rule: accommodation provided by employers
Value of accommodation
(1)
The value of accommodation provided to a person is income of the person when it is provided in relation to their employment or service. The value is an amount equal to the market rental value of the accommodation.
Value of accommodation allowances
(2)
The value of an accommodation allowance provided to a person is income of the person when it is provided in relation to their employment or service. The value is equal to the amount of the allowance paid to the person.
Payments and reimbursements
(3)
An amount paid for or towards the provision of accommodation for a person, whether as expenditure on account of an employee or as a reimbursement, is income of the person when it is paid in relation to their employment or service.
Adjustments to values
(4)
The value under subsection (1) may be adjusted as follows:
(a)
when more than 1 person referred to in that subsection shares in the accommodation provided, the amount may be—
(i)
apportioned equally among the number of persons referred to in that subsection who are sharing in the accommodation; or
(ii)
if the persons referred to in that subsection who are sharing in the accommodation agree with the person providing the accommodation, apportioned on another reasonable basis:
(b)
when the person to whom the accommodation is provided contributes towards their occupation of the accommodation, the amount may be reduced by the amount contributed:
(c)
when the person to whom the accommodation is provided uses part of the accommodation wholly or mainly for work purposes related to their employment or service, the amount may be apportioned between business use and private use.
Adjustments: allowances and amounts paid
(5)
Subsection (4)(b) and (c) may apply to adjust the value of an accommodation allowance or an amount paid for or towards the provision of accommodation under subsections (2) and (3).
Exceptions
(6)
Sections CE 1C and CE 1E override this section.
Defined in this Act: accommodation, amount, business, employer, employment, expenditure on account of an employee, income, pay
Section CE 1B: inserted, on 1 April 2015, by section 15 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CE 1C Exception: overseas accommodation
Relevant local rental
(1)
Despite section CE 1B, if accommodation is provided at or near a work location that is overseas, the value of the accommodation is an amount equal to the relevant market rental value of accommodation in New Zealand. The relevant market rental value is determined taking into account—
(a)
the location where the person would be likely to work for their employer in New Zealand; and
(b)
the equivalent accommodation in New Zealand that the person would be likely to occupy; and
(c)
the average or median market rental value in the vicinity of the location referred to in paragraph (a).
Inclusion of allowances or payments
(1B)
For the purposes of subsection (1), the provision of accommodation at or near an overseas work location includes an accommodation allowance or an amount paid for or towards the provision of the accommodation when the amount of the allowance or payment is—
(a)
the actual cost to the employee for the accommodation; or
(b)
a reasonable estimate of the expenditure that is likely to be incurred by the employee, or group of employees, for whom the amount is payable.
When overseas rental is less than New Zealand equivalent
(2)
For the purposes of subsection (1), if the value of the accommodation in the overseas location is less than the New Zealand equivalent market rental value, the value that must be used is the value in the overseas location.
When location in New Zealand is uncertain
(3)
For the purposes of subsection (1)(a), if the location where the person would be likely to work for their employer in New Zealand is uncertain, the relevant market rental value is taken as either the average market rental value or the median market rental value, as applicable, for the whole of New Zealand.
Defined in this Act: accommodation, amount, New Zealand
Section CE 1C: inserted, on 1 April 2015, by section 15 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 1C(1): amended (with effect on 1 April 2015), on 24 February 2016, by section 76(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CE 1C(1B) heading: inserted (with effect on 1 April 2015), on 24 February 2016, by section 76(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CE 1C(1B): inserted (with effect on 1 April 2015), on 24 February 2016, by section 76(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CE 1D Exception: accommodation provided by Defence Force
When this section applies
(1)
This section applies for the purposes of section CE 1B(1) when accommodation is provided to a person who is a member of the Defence Force by the Navy, Army, or Air Force, as those terms are defined in the Defence Act 1990.
Market rental value
(2)
The market rental value of the accommodation is an amount equal to the lesser of—
(a)
the market rental value for the accommodation; and
(b)
the market rent payable for the national New Zealand Defence Force benchmark property for the type of accommodation provided to the person, less the discount applying to the type of accommodation.
National benchmark properties and discounts
(3)
For the purposes of this section, the Commissioner and the Chief of the Defence Force, in consultation with a registered valuer, must determine—
(a)
the number and location of national benchmark properties:
(b)
the types of accommodation represented by the benchmark properties:
(c)
a market rental value for each type of accommodation in the benchmark properties:
(d)
a discount applying to each type of accommodation in the benchmark properties.
Three-yearly review
(4)
A determination under subsection (3)(c) and (d) must be reviewed every 3 years. Either the Commissioner or the Chief of the Defence Force may instigate the review.
Defined in this Act: accommodation, amount, Commissioner, pay
Section CE 1D: inserted, on 1 April 2015, by section 15 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CE 1E Exception: accommodation provided to ministers of religion
Income
(1)
Despite section CE 1B(1) and to the extent described in subsection (2), the value of accommodation that is provided to a person who is a minister of religion is income of the person when the property in which the accommodation is provided is supplied by the religious society or organisation of which they are a minister.
Limited amount
(2)
The amount of income for an income year is calculated using the formula—
remuneration × (1 − adjustment) + excess rental.
Definition of items in formula
(3)
In the formula,—
(a)
remuneration is the amount that equals 10% of the remuneration that the person receives for the income year for the performance of their duties as a minister from the religious society or organisation of which they are a minister:
(b)
adjustment is the adjustment referred to in subsection (4), and is the part of the amount that is the value of the accommodation for the income year apportioned to work-related use, expressed as a decimal fraction of the total value of the accommodation:
(c)
excess rental is the amount that is not less than zero that is the difference between—
(i)
the market rental value for the income year of the accommodation provided; and
(ii)
the market rental value for the income year of accommodation that is reasonably commensurate with the duties of the person as a minister and for the location in which they perform their duties.
Calculation of remuneration for purposes of section
(3B)
For the purposes of subsection (3)(a), the calculation of the amount of the item remuneration excludes the value of accommodation described in subsection (1) that is provided to the person.
Adjustments
(4)
An adjustment referred to in subsection (3)(b) is as follows:
(a)
if the person to whom the accommodation is provided uses part of the accommodation wholly or mainly for work purposes related to their duties as a minister, the amount is apportioned between that business use and private use:
(b)
if more than 1 person referred to in subsection (1) shares in the accommodation provided, the amount is apportioned equally between them.
Part-year
(5)
For the purposes of this section, if accommodation is provided for part of an income year, the reference to income year is read as a reference to the relevant part of the income year.
Meaning of minister of religion
(6)
For the purposes of this section, minister of religion—
(a)
means a person—
(i)
who is ordained, commissioned, appointed, or otherwise holds an office or position, regardless of their title or designation, as a minister of a religious denomination or community that meets the charitable purpose of the advancement of religion; and
(ii)
whose duties are related mainly to the practice, study, teaching, or advancement of religious beliefs; and
(iii)
whose accommodation is used as an integral part of performing their duties:
(b)
does not include a member of a religious society or order referred to in section CW 25 (Value of board for religious society members).
Defined in this Act: accommodation, amount, business, income year, minister of religion
Section CE 1E: inserted, on 1 April 2015, by section 15 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 1E(3B) heading: inserted (with effect on 1 April 2015), on 24 February 2016, by section 77 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CE 1E(3B): inserted (with effect on 1 April 2015), on 24 February 2016, by section 77 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CE 1F Treatment of amounts derived by cross-border employees
When this section applies
(1)
This section applies in certain circumstances when an employer pays a PAYE income payment to a cross-border employee who provides services in New Zealand. For this purpose, the payment may include an amount paid to the person after they have left New Zealand that is a payment for services provided by the person while they were in New Zealand.
Amounts treated as derived 20 days after payment
(2)
When the employee remains on the employer’s payroll system in a country or territory outside New Zealand, the PAYE income payment is treated as derived by them on the 20th day after payment when the employer chooses to deliver their employment income information under section 23J(3) of the Tax Administration Act 1994.
Employees undertaking tax obligations
(3)
When an amount of tax is not withheld or when payment is insufficient as described in section RD 21, RD 62B, or RD 71B, as applicable, and the employee must undertake the relevant tax obligations in relation to employment, they must do so as if an employer, and, for this purpose, may pay the initial amount of tax for the payment as a lump sum.
Meaning of cross-border employee
(4)
For the purposes of this section and sections CE 1(3B), RA 15(4B), RD 62B, RD 65, and RD 71B, and sections 23IB, 120B, and 141ED of the Tax Administration Act 1994, a cross-border employee—
(a)
means—
(i)
for a person providing a service in New Zealand, an employee of a non-resident employer:
(ii)
for a person providing a service outside New Zealand, a resident employee; and
(b)
includes a secondee or a person who provides a service for or on behalf of a person who is not resident in New Zealand.
Defined in this Act: amount of tax, cross-border employee, employee, employer, employment income information, fringe benefit, New Zealand, non-resident, pay, PAYE income payment, resident
Section CE 1F: inserted, on 1 April 2023, by section 17 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
CE 2 Benefits under employee share schemes
Benefit
(1)
A person who is an employee share scheme beneficiary described in section CE 7(a)(i) or (ii) receives a benefit for the purposes of section CE 1(1)(d) in relation to shares or related rights under the employee share scheme equal to the positive amount calculated on the share scheme taxing date using the formula—
share value − consideration paid + consideration received − previous income.
Definition of items in formula
(2)
In the formula in subsection (1),—
(a)
share value is the market value of the shares or related rights owned by an employee share scheme beneficiary on the share scheme taxing date, if the share scheme taxing date is not triggered by a transfer or cancellation of the shares or related rights:
(b)
consideration paid is the amount of consideration paid or payable by an employee share scheme beneficiary in relation to the transfer of the shares or related rights under the employee share scheme:
(c)
consideration received is the amount of consideration paid or payable to an employee share scheme beneficiary in relation to a transfer or cancellation of the shares or related rights under the employee share scheme, not including relevant shares or related rights under a replacement employee share scheme:
(d)
previous income is the total amount of income under section CE 1(1)(d) that the employee share scheme beneficiary has in relation to the shares or related rights before the date that is 6 months after the date of Royal assent for the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018.
Negative amount: deduction
(3)
A negative amount calculated using the formula in subsection (1) is a deduction of the person.
Positive and negative amount: cost of revenue account property
(4)
A positive or negative amount calculated using the formula in subsection (1) is added to the consideration paid by the person for acquiring the shares, for the purposes of section DB 23 (Cost of revenue account property).
Apportionment
(5)
For the person’s benefit under subsection (1), the portion of that benefit calculated using the formula is treated as non-residents’ foreign-sourced income—
benefit before reduction × offshore period ÷ earning period.
Definition of items in formula
(6)
In the formula in subsection (5),—
(a)
benefit before reduction is the amount of the benefit under subsection (1):
(b)
offshore period is the number of days in the item earning period on which—
(i)
the person is not resident in New Zealand; and
(ii)
any services the person performs for the relevant employer give rise to an amount of income that is a foreign-sourced amount:
(c)
earning period is the period ending with the vesting of shares or relevant rights in the employee share scheme beneficiary and starting with the earlier of—
(i)
the first date used to measure the person’s right in relation to the vesting of shares or relevant rights:
(ii)
the first date that the person has a right in relation to the vesting of shares or relevant rights.
When subsection (8) applies
(7)
Subsection (8) applies when an employer is required to provide employment income information under sections RD 22(3) (Providing employment income information to Commissioner) and 23E to 23H of the Tax Administration Act 1994, as modified by section 23K of that Act, in relation to a benefit received under an employee share scheme.
Deferral of income recognition
(8)
Despite section CE 1(1)(d), the employee share scheme beneficiary is treated as deriving employment income in relation to the benefit on the ESS deferral date.
Meaning of ESS deferral date
(9)
For the purposes of this section and sections RD 6 and RD 7B (which relate to employee share schemes), the ESS deferral date is the 20th day after the share scheme taxing date for the employee share scheme beneficiary.
Defined in this Act: amount, amount of tax, consideration, deduction, employee, employee share scheme, employee share scheme beneficiary, employer, employment income, employment income information, ESS deferral date, foreign-sourced amount, income, market value, non-residents’ foreign-sourced income, pay, replacement employee share scheme, resident in New Zealand, share, share scheme taxing date
Section CE 2: replaced, on 29 September 2018, by section 19 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 2(7): replaced, on 1 April 2019, by section 20(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 2(8): amended, on 1 April 2019, by section 20(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 2(9) heading: inserted, on 1 April 2019, by section 20(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 2(9): inserted, on 1 April 2019, by section 20(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 2 list of defined terms employer monthly schedule: repealed, on 1 April 2019, by section 20(4)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 2 list of defined terms employment income information: inserted, on 1 April 2019, by section 20(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 2 list of defined terms ESS deferral date: inserted, on 1 April 2019, by section 20(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 2 list of defined terms PAYE income payment form period: repealed, on 1 April 2019, by section 20(4)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CE 3 Restrictions on disposal of shares under share purchase agreements
[Repealed]Section CE 3: repealed, on 29 September 2018, by section 19 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CE 4 Adjustments to value of benefits under share purchase agreements
[Repealed]Section CE 4: repealed, on 29 September 2018, by section 19 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Definitions
CE 5 Meaning of expenditure on account of an employee
Meaning
(1)
Expenditure on account of an employee means a payment made by an employer relating to expenditure incurred by an employee or to be incurred by an employee.
Inclusion[Repealed]
(2)
[Repealed]Exclusions
(3)
Expenditure on account of an employee does not include—
(a)
expenditure for the benefit of an employee, or a payment made to reimburse an employee, under section CW 17 (Expenditure on account, and reimbursement, of employees):
(b)
an amount paid under—
(i)
sections CW 16B to CW 16F (which relate to accommodation expenditure):
(ii)
section CW 17B (Relocation payments):
(iii)
section CW 17C (Payments for overtime meals and certain other allowances):
(iv)
section CW 17CB (Payments for certain work-related meals):
(v)
section CW 17CC (Payments for distinctive work clothing):
(vi)
section CW 18 (Allowance for additional transport costs):
(bb)
[Repealed](c)
expenditure, other than an amount to which paragraph (a) applies, that an employee pays in connection with their employment or service to the extent to which—
(i)
the amount of the expenditure is incurred by or on behalf of their employer; and
(ii)
the employee pays the amount on their employer’s behalf:
(d)
expenditure on an employment-related loan to which the fringe benefit tax (FBT) rules apply:
(e)
an employer’s superannuation contribution:
(f)
[Repealed](g)
[Repealed](h)
[Repealed](i)
[Repealed](j)
a premium for income protection insurance that an employer is liable to pay or make a contribution towards for the benefit of an employee.
Defined in this Act: additional transport costs, amount, contribution, employee, employer, employer’s superannuation contribution, employment, employment-related loan, expenditure on account of an employee, FBT rules, pay, premium
Compare: 2004 No 35 s CE 5
Section CE 5(1): replaced (with effect on 1 April 2008), on 2 November 2012 (applying for the 2008–09 and later income years), by section 11(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CE 5(2) heading: repealed, on 30 March 2017, pursuant to section 25(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CE 5(2): repealed, on 30 March 2017, by section 25(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CE 5(3)(b): replaced, on 1 April 2015, by section 16(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 5(3)(bb): repealed, on 1 April 2015, by section 16(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 5(3)(c): replaced, on 1 April 2015, by section 16(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 5(3)(f): repealed, on 30 March 2017, by section 25(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CE 5(3)(g): repealed, on 30 March 2017, by section 25(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CE 5(3)(h): repealed, on 30 March 2017, by section 25(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CE 5(3)(i): repealed, on 30 March 2017, by section 25(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CE 5 list of defined terms amount: inserted, on 1 April 2015, by section 16(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 5 list of defined terms associated person: repealed, on 29 March 2018, by section 21 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 5 list of defined terms close company: repealed, on 29 March 2018, by section 21 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 5 list of defined terms dividend: repealed, on 29 March 2018, by section 21 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 5 list of defined terms employment: inserted, on 1 April 2015, by section 16(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CE 5 list of defined terms life insurance policy: repealed, on 29 March 2018, by section 21 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 5 list of defined terms superannuation category 1 scheme: repealed, on 29 March 2018, by section 21 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 5 list of defined terms superannuation category 2 scheme: repealed, on 29 March 2018, by section 21 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 5 list of defined terms superannuation category 3 scheme: repealed, on 29 March 2018, by section 21 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 5 list of defined terms trustee: repealed, on 29 March 2018, by section 21 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CE 6 Trusts are nominees
A trustee is treated as the nominee of a company (company A) to the extent to which the trustee’s activities relate to an employee share scheme or an exempt ESS and—
(a)
shares or related rights in company A are issued or transferred under the scheme:
(b)
shares or related rights are issued or transferred to company A’s employees, shareholder-employees, or associates of them, under the scheme.
Defined in this Act: associated person, company, employee, employee share scheme, exempt ESS, share, shareholder-employee, trustee
Section CE 6: replaced, on 29 September 2018, by section 22 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CE 6: amended, on 30 March 2021, by section 17(1) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CE 6 list of defined terms exempt ESS: inserted, on 30 March 2021, by section 17(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
CE 7 Meaning of employee share scheme
Employee share scheme means—
(a)
an arrangement with a purpose or effect of issuing or transferring shares in a company (company A) to a person—
(i)
who will be, is, or has been an employee of company A or of another company that is a member of the same group of companies as company A, if the arrangement is connected to the person’s employment or service:
(ii)
who will be, is, or has been a shareholder-employee in relation to company A or in relation to another company that is a member of the same group of companies as company A, if the arrangement is connected to the person’s employment or service:
(iii)
who is an associate of a person described in subparagraph (i) or (ii) (person A), if the arrangement is connected to person A’s employment or service; but
(b)
does not include an arrangement that—
(i)
is an exempt ESS:
(ii)
requires market value consideration to be paid by a person described in paragraph (a) for the transfer of shares in the company on the share scheme taxing date:
(iii)
requires a person described in paragraph (a) to put shares, acquired by them for market value consideration, at risk, if the arrangement provides no protection against a fall in the value of the shares and none of the consideration for acquiring the shares is provided to the person under an agreement that it is used for acquiring the shares.
Defined in this Act: arrangement, associated person, company, consideration, employee, employment, exempt ESS, group of companies, market value, share, share scheme taxing date, shareholder-employee
Section CE 7: replaced, on 29 September 2018, by section 22 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CE 7B Meaning of share scheme taxing date
Meaning
(1)
Share scheme taxing date means, in relation to shares or related rights under an employee share scheme, the earlier of the following dates:
(a)
the first date when the shares are held by or for the benefit of an employee share scheme beneficiary (beneficial ownership) and after which, under the provisions of the scheme,—
(i)
there is no material risk that beneficial ownership may change or that a right or requirement in relation to the transfer or cancellation of the shares may operate; and
(ii)
there is no benefit accruing to the employee share scheme beneficiary in relation to a fall in value of the shares; and
(iii)
there is no material risk that there will be a change in the terms of the shares affecting the value of the shares:
(b)
the date when the shares or related rights of an employee share scheme beneficiary are cancelled or are transferred to a person who is not associated with a beneficiary described in section CE 7(a)(i) or (ii).
Exclusions
(2)
For the purposes of applying subsection (1), the following requirements and rights are ignored:
(a)
a right or requirement in relation to transfer by the employee share scheme beneficiary for market value consideration at the time of the transfer:
(b)
a right or requirement that is not contemplated by the employee share scheme’s provisions:
(c)
a right or requirement that, at the time it came into existence, had no material risk of operating or no material commercial significance:
(d)
a right or requirement in relation to the transfer of shares, if the right or requirement is 1 that also applies to shares not under the employee share scheme.
Example 1 – Simple vesting period
Acme Limited transfers shares worth $10,000 to a trustee on trust for an employee, Alice, of Acme Limited. Under the terms of the trust, Alice forfeits, for no consideration, any contingent interest or beneficial ownership in the shares if she leaves the employ of Acme Limited within 3 years of the transfer of the shares to the trustee. Alice stays for 3 years, and, under the terms of the trust, the shares are transferred absolutely to her on her 3rd anniversary of employment. It is a material risk, for the 3 years after the transfer to the trustee, that the terms of the trust will operate to forfeit any contingent interest or beneficial ownership in the shares. Consequently, the share scheme taxing date for Alice’s shares is her 3rd anniversary of employment.
Example 2 – Vesting subject to misconduct
Acme Limited transfers shares worth $10,000 to a trustee on trust for an employee, Bob, of Acme Limited. Under the terms of the trust, Bob forfeits, for no consideration, any contingent interest or beneficial ownership in the shares if he leaves the employ of Acme Limited because he is dismissed for serious misconduct within 3 years of the transfer of the shares to the trustee. It is not a material risk that the terms of the trust will operate to forfeit any contingent interest or beneficial ownership in the shares. The risk that Bob will be dismissed for serious misconduct within 3 years is not material. Consequently, the share scheme taxing date for Bob’s shares is the date when the shares are transferred to the trustee.
Defined in this Act: associated person, consideration, employee share scheme, employee share scheme beneficiary, market value, share
Section CE 7B: inserted, on 29 September 2018, by section 22 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CE 7C Meaning of employee share scheme beneficiary
Employee share scheme beneficiary means, for an employee share scheme,—
(a)
a person (person A) who is described in section CE 7(a):
(b)
a person who is an associate of person A.
Defined in this Act: associated person, employee share scheme
Section CE 7C: inserted, on 29 September 2018, by section 22 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CE 7CB Meaning of market value
Market value, for an employee share scheme—
(a)
has the same meaning as in section YA 1 (Definitions), definition of market value, paragraphs (a) and (b); and
(b)
includes, for a share or option quoted on the official list of a recognised exchange, at the time, an amount equal to the 5-day volume weighted average price or any other method that is accepted by the Commissioner or is comparable to the 5-day volume weighted average price, for such shares or options.
Section CE 7CB: inserted (with effect on 29 September 2018), on 23 March 2020, by section 94 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CE 7D Meaning of replacement employee share scheme
Replacement employee share scheme means, for an employee share scheme (the old scheme), another employee share scheme to which members of the old scheme are transferred.
Defined in this Act: employee share scheme
Section CE 7D: inserted, on 29 September 2018, by section 22 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Attributed income
CE 8 Attributed income from personal services
When this section applies
(1)
This section applies when, under sections GB 27 to GB 29 (which relate to the attribution rule), a person is required to attribute an amount to another person.
Income
(2)
The amount attributed is income of the person to whom it is attributed.
Timing of income
(3)
The amount is allocated to the income year in which it is attributed.
Defined in this Act: amount, income, income year
Compare: 2004 No 35 s CE 8
Restrictive covenants and exit inducement payments
CE 9 Restrictive covenants
When this section applies
(1)
This section applies when—
(a)
a person (person A) gives an undertaking that restricts, or is intended to restrict, their ability to perform services as an employee, office holder, or independent contractor, whether or not the undertaking is legally enforceable; and
(b)
a person, whether or not person A, derives an amount for the undertaking.
Income
(2)
The amount is income of person A.
Exclusion
(3)
Subsection (2) does not apply if—
(a)
person A derives the amount because person A or an associated person sells a business to another person (person B); and
(b)
person A or the associated person and person B agree in writing that the transaction is the sale of a business; and
(c)
person A derives the amount as consideration for an undertaking by person A not to provide goods or services in competition with the goods or services that person B provides from the business; and
(d)
person A does not provide services to person B after the sale of the business, other than temporarily providing services incidental to the sale.
Sale of all shares in company
(4)
For the purposes of subsection (3),—
(a)
the sale of a business includes the sale of shares in a company, but only if the sale is of all the shares in the company and the company—
(i)
carries on a business; or
(ii)
directly or indirectly wholly owns another company that carries on a business; and
(b)
in that case, the words “person B”
in subsection (3)(c) and (d) mean the company that carries on the business, whether the company referred to in paragraph (a)(i) or the company referred to in paragraph (a)(ii).
Sale of part of business
(5)
For the purposes of subsection (3), the sale of a business includes the sale of part of a business, if the part can be operated separately.
Avoidance arrangements
(6)
Section GB 30 (Arrangements to avoid taxation of restrictive covenant payments) may apply to treat an amount as income under this section.
Defined in this Act: amount, arrangement, associated person, business, company, employee, income, share
Compare: 2004 No 35 s CE 9
CE 10 Exit inducements
An amount is income of a person if they derive it for—
(a)
the loss of a vocation; or
(b)
the loss of a position; or
(c)
leaving a position; or
(d)
loss of status.
Defined in this Act: amount, income
Compare: 2004 No 35 s CE 10
Income protection insurance
CE 11 Proceeds from claims under policies of income protection insurance
When this section applies
(1)
This section applies when an employer is liable to pay, or contribute to the payment of, a premium under a policy of income protection insurance for the benefit of a person who is their employee.
Income
(2)
An amount that is or would be derived under the policy is income of the person.
Defined in this Act: amount, employee, employer, income, pay
Compare: 2004 No 35 s CE 11
Tax credits
CE 12 Tax credits for personal service rehabilitation payments
When this section applies
(1)
This section applies when a person has a tax credit in a tax year under section LB 7 (Tax credits related to personal service rehabilitation payments: providers).
Income
(2)
An amount equal to the credit is income of the person in the corresponding income year.
Defined in this Act: amount, corresponding income year, income, income year, personal service rehabilitation payment, tax credit, tax year
Compare: 2004 No 35 s CE 12
Section CE 12: substituted, on 1 July 2008, by section 319 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Subpart CF—Income from living allowances, foreign superannuation, compensation, and government grants
Subpart CF heading: amended, on 1 April 2014, by section 7 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Contents
CF 1 Benefits, pensions, compensation, and government grants
Income
(1)
The following amounts are income:
(a)
an accident compensation payment:
(b)
an education grant:
(c)
a payment of a main benefit:
(d)
[Repealed](e)
a New Zealand superannuation payment:
(f)
a parental leave payment or preterm baby payment paid under Part 7A of the Parental Leave and Employment Protection Act 1987:
(fb)
a payment of earnings compensation under the Compensation for Live Organ Donors Act 2016:
(g)
a pension:
(h)
a veteran’s pension:
(i)
a retirement lump sum paid under Part 5, subpart 7 of the Veterans’ Support Act 2014:
(j)
weekly income compensation paid under Part 3, subpart 4 of that Act:
(k)
weekly compensation paid under Part 4, subpart 5 of that Act:
Some definitions
(2)
In this section,—
accident compensation payment means—
(a)
a payment under the Accident Compensation Act 1982 of earnings-related compensation that is not recovered or recoverable by, or refunded to, the chief executive of the administering department:
(b)
a payment under section 80(4) of the Accident Compensation Act 1982 that is not recovered or recoverable by, or refunded to, the chief executive of the administering department:
(c)
a payment of any of the following kinds under the Accident Rehabilitation and Compensation Insurance Act 1992, none of which is recovered or recoverable:
(i)
a vocational rehabilitation allowance under section 25; or
(ii)
compensation for loss of earnings under any of sections 38, 39, and 43; or
(iii)
compensation for loss of potential earning capacity under section 45 or 46; or
(iv)
weekly compensation under any of sections 58, 59, and 60; or
(v)
continued compensation under section 138:
(d)
a payment under the Accident Insurance Act 1998 of weekly compensation that is not recovered or recoverable:
(e)
a payment under a policy of personal accident or sickness insurance under section 188(1)(a) of the Accident Insurance Act 1998, as it was immediately before its repeal by section 7 of the Accident Insurance Amendment Act 2000, of compensation for loss of earnings or loss of potential earning capacity as it relates to work-related personal injury:
(f)
a payment under the Accident Compensation Act 2001 paid by the Corporation as defined in that Act, of weekly compensation that is not recovered or recoverable under section 248 of that Act:
(g)
a payment under section 81(1)(b) of the Accident Compensation Act 2001 paid by the Corporation as defined in that Act, for attendant care as defined in schedule 1, clause 12 of that Act:
(h)
a personal service rehabilitation payment for a person under the Accident Compensation Act 2001
(i)
[Repealed]education grant means a basic grant or an independent circumstances grant under regulations made under section 645 of the Education and Training Act 2020
pension—
(a)
includes a gratuitous payment made to a person in return for services that the person, or their parent, child, spouse, civil union partner or de facto partner, former spouse, civil union partner or de facto partner, or dependant, provided to the payer when the payment would not have been made if the services had not been provided; and
(b)
does not include a payment made to the person because of, and within 1 year after, the death of that parent, child, spouse, civil union partner or de facto partner, former spouse, civil union partner or de facto partner, or dependant.
Defined in this Act: accident compensation payment, amount, chief executive of the administering department, education grant, income, main benefit, New Zealand superannuation, pay, pension, personal service rehabilitation payment, veteran’s pension, year
Compare: 2004 No 35 s CF 1
Section CF 1(1)(c): replaced, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CF 1(1)(d): repealed, on 2 September 2013 (applying for the 2011–12 tax year and later tax years), by section 16(1) of the Social Assistance (Living Alone Payments) Amendment Act 2013 (2013 No 11).
Section CF 1(1)(f): amended, on 1 April 2016, by section 83 of the Parental Leave and Employment Protection Amendment Act 2016 (2016 No 8).
Section CF 1(1)(fb): inserted, on 5 December 2017, by section 30 of the Compensation for Live Organ Donors Act 2016 (2016 No 96).
Section CF 1(1)(h): replaced (with effect on 7 December 2014), on 31 March 2015, by section 11(1) of the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 (2015 No 40).
Section CF 1(1)(i): replaced, on 31 March 2015, by section 11(2) of the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 (2015 No 40).
Section CF 1(1)(j): inserted, on 31 March 2015, by section 11(2) of the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 (2015 No 40).
Section CF 1(1)(k): inserted, on 31 March 2015, by section 11(2) of the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 (2015 No 40).
Section CF 1(1)(l): inserted, on 31 March 2015, by section 11(2) of the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 (2015 No 40).
Section CF 1(2) accident compensation payment paragraph (a): amended (with effect on 1 April 2008), on 7 December 2009, by section 7 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section CF 1(2) accident compensation payment paragraph (b): amended (with effect on 1 April 2008), on 7 December 2009, by section 7 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section CF 1(2) accident compensation payment paragraph (f): substituted (with effect on 1 April 2008), on 6 October 2009, by section 26 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CF 1(2) accident compensation payment paragraph (f): amended, on 21 December 2010, by section 189 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CF 1(2) accident compensation payment paragraph (g): substituted (with effect on 1 April 2008), on 6 October 2009, by section 26 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CF 1(2) accident compensation payment paragraph (g): amended, on 21 December 2010, by section 189 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CF 1(2) accident compensation payment paragraph (h): added (with effect on 1 April 2008), on 6 October 2009, by section 26 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CF 1(2) accident compensation payment paragraph (h): amended, on 21 December 2010, by section 189 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CF 1(2) accident compensation payment paragraph (i): repealed, on 31 March 2015, by section 11(3) of the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 (2015 No 40).
Section CF 1(2) education grant: amended, on 1 August 2020, by section 668 of the Education and Training Act 2020 (2020 No 38).
Section CF 1 list of defined terms income-tested benefit: repealed, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CF 1 list of defined terms living alone payment: repealed, on 2 September 2013 (applying for the 2011–12 tax year and later tax years), by section 16(1) of the Social Assistance (Living Alone Payments) Amendment Act 2013 (2013 No 11).
Section CF 1 list of defined terms main benefit: inserted, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CF 1 list of defined terms personal service rehabilitation payment: inserted, on 1 July 2008, by section 320(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
CF 2 Remission of specified suspensory loans
When this section applies
(1)
This section applies when a public authority—
(a)
grants a loan to a person for a business that the person carries on; and
(b)
designates the loan as a specified suspensory loan.
Income
(2)
An amount remitted on the specified suspensory loan is income of the person.
Timing of income
(3)
The amount is allocated in equal parts to the income year of remission and the following 2 income years. However, the person may choose to allocate some or all of the amount in the following 2 income years to an earlier income year that is 1 of the 3 income years.
Business ceasing
(4)
If the person stops carrying on the business for which the specified suspensory loan was granted, an amount remitted that is allocated to a later income year is allocated to the income year in which the person stops carrying on the business.
Defined in this Act: amount, business, income, income year, public authority
Compare: 2004 No 35 s CF 2
CF 3 Withdrawals from foreign superannuation scheme
When this section applies
(1)
This section applies when a New Zealand resident derives a benefit (a foreign superannuation withdrawal) that is not a pension or annuity and arises from an interest in a foreign superannuation scheme (the scheme) that—
(a)
is not a FIF superannuation interest and is acquired—
(i)
when the person is a non-resident or is treated under a double tax agreement as being resident in a foreign country or territory:
(ii)
in a transaction referred to in subsection (21)(b) or (d) from a person who acquired the interest in the scheme when being a non-resident or when treated under a double tax agreement as being resident in a foreign country or territory:
(b)
is a FIF superannuation interest (a low-value FIF superannuation interest) from which the person does not have FIF income or loss because the person, although not acting as a trustee, does not meet the requirements of sections CQ 5(1)(d) and DN 6(1)(d) (which relate to when FIF income and FIF loss arise).
Income
(2)
The foreign superannuation withdrawal is income of the person if the benefit is in the form of—
(a)
an amount derived by the person as a member or beneficiary of the scheme:
(b)
an interest of the person in the scheme, withdrawn for reinvestment as an interest of the person in a superannuation scheme in New Zealand:
(c)
an interest of the person in the scheme, outside Australia, withdrawn for reinvestment as an interest of the person in a superannuation scheme in Australia:
(d)
an interest of the person in the scheme withdrawn for reinvestment as an interest of another person in a superannuation scheme.
Exception
(3)
A foreign superannuation withdrawal is not income of the person under subsection (2)(d) if—
(a)
the benefit is an interest of the person in the scheme that is withdrawn on the death of the person or under a relationship agreement arising from an event (the relationship cessation) that occurs when,—
(i)
for a marriage or civil union of the person, the marriage or civil union is dissolved or the person and the person’s spouse or civil union partner separate or begin to live apart (whether or not they continue to live in the same residence):
(ii)
for a de facto relationship of the person, the de facto relationship ends; and
(b)
immediately before the death or the relationship cessation, the person is a New Zealand resident who is treated under no double tax agreement as being resident in a foreign country or territory; and
(c)
the interest withdrawn is immediately reinvested as an interest, in a foreign superannuation scheme outside Australia, of another person who is—
(i)
a spouse, civil union partner, or de facto partner of the person immediately before the death or the relationship cessation; and
(ii)
a New Zealand resident who is treated under no double tax agreement as being resident in a foreign country or territory.
Amounts within other provisions
(4)
A foreign superannuation withdrawal derived by a resident is subject to—
(a)
section CW 28B (Foreign superannuation withdrawal in initial period of residency), if the person—
(i)
is a resident under section YD 1; and
(ii)
derives the foreign superannuation withdrawal in the exemption period referred to in subsection (6):
(b)
section CW 28C (Foreign superannuation withdrawal exceeding given amount), if the foreign superannuation withdrawal is derived in the person’s assessable period referred to in subsection (8), to the extent to which the foreign superannuation withdrawal exceeds—
(i)
the amount referred to in subsection (10) as the assessable withdrawal amount, if the person uses the schedule method; or
(ii)
the amount referred to in subsection (16) as the assessable withdrawal amount, if the person uses the formula method.
Eligibility for exemption period
(5)
A person has an exemption period referred to in subsection (6) for an interest in the scheme, other than a low-value FIF superannuation interest, if the person—
(a)
does not have, before acquiring the interest, an exemption period for an interest in a foreign superannuation scheme; and
(b)
acquires the interest as a non-resident; and
(c)
owns the interest as a non-resident until a date (the exemption commencement), whether before or after the commencement of this Act, when the person becomes a New Zealand resident.
Exemption period
(6)
The period (the exemption period) in which a foreign superannuation withdrawal may be exempt income of the person under section CW 28B is the period from the exemption commencement to the earlier of—
(a)
the end of the period of 48 months beginning after the month in which the person meets the requirements of section YD 1(2) or (3) ignoring the rule in section YD 1(4):
(b)
the date on which the person becomes a non-resident again.
Assessable withdrawal amount
(7)
The part (the assessable withdrawal amount) of a foreign superannuation withdrawal that is treated as not being exempt income of the person depends on the total period (the assessable period) referred to in subsection (8) for the person and the interest in the scheme.
Assessable period
(8)
The assessable period for the person and a foreign superannuation withdrawal arising from an interest in the foreign superannuation scheme—
(a)
if the person is a non-resident when they acquire the interest, begins on the later of—
(i)
the date when the person becomes, for the first time after acquiring the interest in the scheme, a New Zealand resident who owns the interest in the scheme:
(ii)
the end of the person’s exemption period:
(ab)
if the person is a resident who is treated under a double tax agreement as being resident in a foreign country or territory when they acquire the interest in the scheme, begins on the date when the person becomes, for the first time after acquiring the interest, a New Zealand resident who is treated under no double tax agreement as being resident in a foreign country or territory and who owns the interest in the scheme:
(ac)
if the person is a resident when they acquire the interest and paragraph (ab) does not apply, begins when they acquire the interest:
(b)
ends on the date when the person derives the foreign superannuation withdrawal (the distribution time):
(c)
does not include a period in which the person is a non-resident.
Methods for determining assessable withdrawal amount
(9)
The assessable withdrawal amount for a foreign superannuation withdrawal derived by the person is calculated for—
(a)
the schedule method under subsection (10), if paragraph (b) does not apply; or
(b)
the formula method under subsection (16), if—
(i)
the scheme is a foreign defined contribution scheme; and
(ib)
the interest is not a low-value FIF superannuation interest; and
(ii)
the person has the information required for the application of the formula method; and
(iii)
the person derives no withdrawal, other than a pension or annuity, from the scheme before 1 April 2014; and
(iv)
the person has not used the schedule method for the interest in the scheme; and
(v)
for a person who acquires the interest in the scheme of a spouse, civil union partner, or de facto partner by a transfer referred to in subsection (21)(d), the other person did not use the schedule method for the interest in the scheme; and
(vi)
the person chooses to use the formula method for the interest in the scheme.
Schedule method: assessable withdrawal amount
(10)
The assessable withdrawal amount under the schedule method is calculated using the formula—
(super withdrawal − contributions left) × schedule year fraction.
Definition of items in formula in subsection (10)
(11)
In the formula in subsection (10),—
(a)
super withdrawal is the amount of the foreign superannuation withdrawal:
(b)
contributions left is the lesser of the amount of the item super withdrawal and the total amount of recognised contributions under subsection (19) made in the assessable period before the distribution time, reduced, for each withdrawal (the earlier withdrawal), other than a pension or annuity, made in the assessable period before the distribution time, by an amount equal to the lesser of—
(i)
the amount of the earlier withdrawal:
(ii)
the value of the item contributions left, immediately before the time of the earlier withdrawal:
(c)
schedule year fraction is the fraction given in schedule 33 (Default fractions of foreign superannuation withdrawals), column 2 of the row for which the entry in column 1 corresponds to the greater of 1 and the number of income years beginning—
(i)
in the assessable period under subsection (8); and
(ii)
before the distribution time.
Formula method: distributed gain
(12)
Under the formula method, the part (the distributed gain) of a foreign superannuation withdrawal that is treated as consisting of gains made by the scheme during the assessable period is calculated using the formula—
(super withdrawal × calculated gains fraction) − other gains.
Definition of items in formula in subsection (12)
(13)
In the formula in subsection (12),—
(a)
super withdrawal is the amount of the foreign superannuation withdrawal:
(b)
other gains is the total amount of distributed gains referred to in subsection (12) for foreign superannuation withdrawals in the assessable period before the distribution time.
Formula method: calculated gains fraction
(14)
In the formula in subsection (12), calculated gains fraction is the greater of zero and the amount calculated using the formula—
(predistribution + withdrawals − value − contributions) ÷ predistribution.
Definition of items in formula in subsection (14)
(15)
In the formula in subsection (14),—
(a)
predistribution is the value of the interest in the scheme immediately before the distribution time:
(b)
withdrawals is the total amount of foreign superannuation withdrawals from the interest in the scheme in the assessable period before the distribution time:
(c)
value is the value of the interest in the scheme at the beginning of the assessable period:
(d)
contributions is the amount of recognised contributions under subsection (19) made to the interest in the scheme in the assessable period before the distribution time.
Formula method: assessable withdrawal amount
(16)
The assessable withdrawal amount under the formula method is the amount calculated using the formula—
gain × (grow rate − 1) × tax rate × (assessable years − 1) + gain.
Formula method: grow rate
(17)
In the formula in subsection (16), grow rate is the amount calculated using the formula—
(accrued total ÷ value) (1 ÷ assessable years).
Definition of other items in formulas in subsections (16) and (17)
(18)
In the formulas in subsections (16) and (17),—
(a)
gain is the amount of the distributed gain referred to in subsection (12) for the foreign superannuation withdrawal:
(b)
tax rate is the tax rate referred to in schedule 6, table 1, row 1 (Prescribed rates: PIE investments and retirement scheme contributions):
(c)
assessable years is the greater of 1 and the number of tax years beginning in the assessable period and before the distribution time:
(d)
accrued total is the value of the interest in the scheme immediately before the distribution time, increased by the value of foreign superannuation withdrawals from the interest in the scheme in the assessable period before the distribution time, and reduced by the value of recognised contributions under subsection (19) made to the interest in the scheme in the assessable period before the distribution time:
(e)
value is the value of the interest in the scheme at the beginning of the assessable period.
Recognised contributions
(19)
The value of a payment to the scheme is taken into account in the formulas in subsections (10), (14), and (17) as a contribution (a recognised contribution) if the payment—
(a)
is made when the person is a New Zealand resident who is treated as a New Zealand resident under all applicable double tax agreements; and
(b)
is made by the person, by the person’s employer, or for the benefit of the person; and
(c)
is required by the rules of the scheme; and
(d)
is subject to employer superannuation contribution tax or fringe benefit tax if made by the person’s employer.
Interests in superannuation scheme
(20)
For the purposes of this section, if a person acquires, under an arrangement with a foreign superannuation scheme that provides for contributions to the superannuation scheme by or for the person, rights (benefit rights) in the foreign superannuation scheme to benefit as a member or beneficiary from distributions by the superannuation scheme, the person holds an interest in the foreign superannuation scheme under the arrangement for the period beginning when the person acquires benefit rights under the arrangement and ending when the arrangement ends.
When person acquires rights
(21)
In determining when a person who acquires rights in a foreign superannuation scheme acquires an interest in the foreign superannuation scheme,—
(a)
if none of paragraphs (b) to (d) apply, the person is treated as acquiring the rights when the first contribution is made to the superannuation scheme, in relation to the rights, by or for the person; or
(b)
if the person is converting existing rights of the person in another foreign superannuation scheme (the former scheme) to corresponding rights of the person in the superannuation scheme, the person is treated as acquiring the corresponding rights when the person acquired the rights in the former scheme; or
(c)
if the person is acquiring existing rights in the superannuation scheme from another person, other than by a transaction to which paragraph (d) applies, the person is treated as acquiring the existing rights when the person acquires the rights; or
(d)
if the person is acquiring existing rights in the superannuation scheme of a New Zealand resident (the former owner) as a surviving spouse, civil union partner, or de facto partner of the deceased former owner, or as a former spouse, civil union partner, or de facto partner of the former owner under a relationship agreement arising from the end of the marriage, civil union, or de facto relationship, the person is treated as—
(i)
having owned the existing rights from the time the former owner acquired the existing rights; and
(ii)
having made all payments to the scheme that were made by or for the former owner; and
(iii)
having derived all distributions from the scheme that the former owner derived; and
(iv)
having been a New Zealand resident who is treated under no double tax agreement as being resident in a foreign country or territory and as having owned the existing rights during the assessable period of the former owner, at the time of the transfer, for the interest consisting of the rights; and
(v)
continuing to own the existing rights from the time of the transfer.
Relationship with rest of Act
(22)
If the assessable period for a person and an interest begins before 1 April 2014, this section overrides any provision of this Act that would otherwise quantify and allocate income of the person, from the part of the interest unaffected by withdrawals derived before 1 April 2014,—
(a)
for the period of ownership before 1 April 2014; and
(b)
not assessed for tax before 1 April 2014.
Defined in this Act: amount, de facto partner, double tax agreement, FIF superannuation interest, foreign defined contribution scheme, foreign superannuation scheme, foreign superannuation withdrawal, income, income year, New Zealand resident, non-resident, relationship agreement, superannuation scheme, transitional resident
Section CF 3: inserted, on 1 April 2014, by section 8 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CF 3(1): replaced (with effect on 1 April 2015), on 24 February 2016, by section 78(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CF 3(1): replaced (with effect on 1 April 2014), on 24 February 2016, by section 78(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CF 3(3): replaced (with effect on 1 April 2014), on 24 February 2016, by section 78(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CF 3(5): amended (with effect on 1 April 2015), on 24 February 2016, by section 78(4) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CF 3(8)(a): amended (with effect on 1 April 2014), on 24 February 2016, by section 78(5) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CF 3(8)(ab): inserted (with effect on 1 April 2014), on 24 February 2016, by section 78(6) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CF 3(8)(ac): inserted (with effect on 1 April 2015), on 24 February 2016, by section 78(7) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CF 3(9)(b)(ib): inserted (with effect on 1 April 2015), on 24 February 2016, by section 78(8) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CF 3(20): replaced (with effect on 1 April 2014), on 24 February 2016, by section 78(9) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CF 3(21) heading: replaced (with effect on 1 April 2014), on 24 February 2016, by section 78(10) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CF 3(21): amended (with effect on 1 April 2014), on 24 February 2016, by section 78(11) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CF 3(21)(a): amended (with effect on 1 April 2014), on 24 February 2016, by section 78(12) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CF 3(21)(b): amended (with effect on 1 April 2014), on 24 February 2016, by section 78(13) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CF 3(21)(c): amended (with effect on 1 April 2014), on 24 February 2016, by section 78(14) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CF 3(21)(d)(i): replaced (with effect on 1 April 2014), on 24 February 2016, by section 78(15) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CF 3(21)(d)(iv): replaced (with effect on 1 April 2014), on 24 February 2016, by section 78(16) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CF 3(21)(d)(v): amended (with effect on 1 April 2014), on 24 February 2016, by section 78(17) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Subpart CG—Recoveries
Contents
CG 1 Amount of depreciation recovery income
An amount of depreciation recovery income that a person has is income of the person.
Defined in this Act: amount, depreciation recovery income, income
Compare: 2004 No 35 s CG 1
CG 2 Remitted amounts
When this section applies
(1)
This section applies when—
(a)
a person is allowed a deduction in an income year of an amount that the person is liable to pay; and
(b)
the person’s liability for the amount is later remitted or cancelled, wholly or partly; and
(c)
the remission or cancellation is not a dividend; and
(d)
the person is not required to calculate a base price adjustment by section EW 29 (When calculation of base price adjustment required).
Income
(2)
The amount to which the remission or cancellation applies is income of the person.
Timing of income
(3)
The income is allocated to the income year in which the remission or cancellation occurs.
How remission or cancellation occurs
(4)
Remission or cancellation occurs, for the purposes of this section, in 1 of the following ways:
(a)
a liability is remitted to the extent to which the person is discharged from it without fully adequate consideration in money or money’s worth:
(ab)
a liability is cancelled to the extent to which the person is released from it under the Insolvency Act 2006, except by—
(i)
being discharged from bankruptcy:
(b)
a liability is cancelled to the extent to which the person is released from it under the Companies Act 1993 or the laws of a country or territory other than New Zealand:
(c)
a liability is cancelled to the extent to which the person is released from it by a deed or agreement of composition with the person’s creditors:
(d)
a liability is cancelled to the extent to which it is irrecoverable or unenforceable through lapse of time.
Relationship with sections CG 2C to CG 2E
(5)
Sections CG 2C to CG 2E override this section.
Defined in this Act: amount, deduction, dividend, income, income year, New Zealand, pay
Compare: 2004 No 35 s CG 2
Section CG 2(4)(ab): inserted, on 30 March 2017, by section 26(1) (and see section 26(4)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CG 2(4)(b): amended, on 30 March 2017, by section 26(2) (and see section 26(4)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CG 2(5) heading: replaced, on 30 March 2017), by section 26(3) (and see section 26(4)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CG 2(5): replaced, on 30 March 2017, by section 26(3) (and see section 26(4)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CG 2B Remitted amounts on discharge from bankruptcy
[Repealed]Section CG 2B: repealed, on 30 March 2017, by section 27 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CG 2C Remitted and other amounts: companies in liquidation
When this section applies
(1)
This section applies when—
(a)
a company that is part of a group of companies (company A) is allowed a deduction for an amount that it is liable to pay; and
(b)
company A’s liability for the amount is later remitted or cancelled, wholly or partly; and
(c)
company A includes some or all of the amount of the deduction in the calculation of a net loss for a tax year; and
(d)
the net loss is a tax loss component included in a tax loss of company A for a tax year under section IA 2(2) or (3) (Tax losses); and
(e)
after the inclusion of the amount of the deduction in its net loss, company A makes some or all of the tax loss available to another company in the group (company B) to subtract from its net income for a tax year; and
(f)
after making the tax loss available to company B, and at a time when company A and company B are in the same group of companies, company A is liquidated, struck off, or otherwise removed from the register of companies.
Income of profit company
(2)
An amount equal to the amount remitted or cancelled is income of company B.
Timing of income
(3)
Company B is treated as deriving the income on the date on which company A is liquidated, struck off, or otherwise removed from the register of companies.
No application to financial arrangements
(4)
This section does not apply to a liability that is a financial arrangement, whether or not the liability has been remitted or cancelled.
Relationship with other provisions
(5)
This section—
(a)
overrides section CG 2:
(b)
is modified by section FM 5(4) (Liability when company leaves consolidated group):
(c)
does not apply to a company to which section FO 4 (Rights and obligations of amalgamating companies) applies, except to the extent to which paragraph (d) applies in relation to the company:
(d)
is modified by section FO 5 (Amalgamations and remitted liabilities) in relation to the treatment of liabilities assumed by an amalgamated company in an amalgamation:
(e)
is overridden by sections IC 11 and IC 12 (which relate to the tax losses of certain group companies) but only to the extent to which sections IC 11 and IC 12 apply to reduce a tax loss component arising in an earlier tax year that would otherwise be subject to this section.
Defined in this Act: amount, company, deduction, financial arrangement, group of companies, income, liquidation, net income, net loss, pay, tax loss, tax loss component, tax year
Section CG 2C: inserted (with effect on 22 November 2013 and applying when an event, listed in the following paragraphs, occurs after this date: (a) company A is removed from the register of companies; (b) company C is insolvent and leaves the group of companies; (c) company D leaves the group of companies), on 30 June 2014, by section 18(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CG 2D Remitted and other amounts: companies leaving groups
When this section applies
(1)
This section applies when—
(a)
a company that is part of a group of companies (company C) is allowed a deduction for an amount that it is liable to pay; and
(b)
company C includes some or all of the amount of the deduction in the calculation of a net loss for a tax year; and
(c)
the net loss is a tax loss component included in a tax loss of company C for the tax year under section IA 2(2) or (3) (Tax losses); and
(d)
after the inclusion of the amount of the deduction in the calculation of its net loss, company C makes some or all of the tax loss available to another company in the group (company D) to subtract from its net income for a tax year; and
(e)
after the tax loss is made available to company D,—
(i)
either company C or company D, or both, leave the group; and
(ii)
at the date of the departure, company C is in liquidation, receivership, or does not satisfy the solvency test set out in section 4 of the Companies Act 1993; and
(f)
the liability referred to in paragraph (a) remains unpaid at the date on which either company C or company D, or both, leaves the group.
Income of profit company
(2)
An amount equal to the amount of the unpaid liability referred to in subsection (1)(f) is income of company D.
Timing of income
(3)
Company D is treated as deriving the income immediately before the date on which either company C or company D, or both, leaves the group.
When subsection (5) applies
(4)
Subsection (5) applies for the purposes of subsection (1)(e)(ii) when—
(a)
a transaction results in an amount being received by a creditor of company C within a period of 2 years before either company C or company D, or both, leaves the group; and
(b)
the payment of the amount reduces, in whole or in part, the liability of company C so that company C satisfies the solvency test set out in section 4 of the Companies Act 1993.
Commissioner’s discretion
(5)
The Commissioner may treat company C as not satisfying the solvency test set out in section 4 of the Companies Act 1993 if the Commissioner considers—
(a)
the amount is paid when company C is insolvent; and
(b)
the payment has allowed the creditor to receive more towards the satisfaction of a debt owed by company C than the creditor would receive or would be likely to receive if company C were placed in liquidation on the day on which company C or company D, or both, leaves the group.
No application to financial arrangements
(6)
This section does not apply to a liability that is a financial arrangement, whether or not the liability has been remitted or cancelled.
Relationship with other provisions
(7)
This section—
(a)
overrides section CG 2:
(b)
is modified by section FM 5(4) (Liability when company leaves consolidated group):
(c)
is overridden by sections IC 11 and IC 12 (which relate to the tax losses of certain group companies) but only to the extent to which sections IC 11 and IC 12 apply to reduce a tax loss component arising in an earlier tax year that would otherwise be subject to this section.
Defined in this Act: amount, arrangement, Commissioner, company, deduction, financial arrangement, group of companies, income, liquidation, net income, net loss, pay, tax loss, tax loss component, tax year
Section CG 2D: inserted (with effect on 22 November 2013 and applying when an event, listed in the following paragraphs, occurs after this date: (a) company A is removed from the register of companies; (b) company C is insolvent and leaves the group of companies; (c) company D leaves the group of companies), on 30 June 2014, by section 18(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CG 2E Remitted and other amounts: income apportionment
When this section applies
(1)
This section applies when—
(a)
an amount of income is treated as having been derived by a company under section CG 2C or CG 2D; and
(b)
in relation to the income, some or all of a tax loss of a company that is part of a group of companies has been made available to more than 1 company in the group.
Apportionment
(2)
The company that is treated as deriving the income may choose to apportion the income among other companies in the group.
Limited amount
(3)
The amount of the income referred to in subsection (2) must be no more than the total tax loss referred to in section CG 2C(1)(e) or CG 2D(1)(d), as applicable, for all previous tax years.
Default apportionment
(4)
If the company that is treated as deriving the income does not make an apportionment under subsection (2), the income must be divided equally among the companies in the group.
Companies in group
(5)
For the purposes of subsections (2) and (4),—
(a)
the company that made the tax loss available is treated as excluded from the group:
(b)
the company must be part of the group of companies at the date on which section CG 2C(3) or CG 2D(3) applies.
Application to consolidated groups
(6)
This section does not apply to a company that is part of a consolidated group of companies, for which, see section FM 5(3) to (5) (Liability when company leaves consolidated group).
Defined in this Act: amount, company, consolidated group, group of companies, income, tax loss, tax year
Section CG 2E: inserted (with effect on 22 November 2013 and applying when an event, listed in the following paragraphs, occurs after this date: (a) company A is removed from the register of companies; (b) company C is insolvent and leaves the group of companies; (c) company D leaves the group of companies), on 30 June 2014, by section 18(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CG 3 Bad debt repayment
An amount received by a person for a bad debt for which the person has been allowed a deduction is income of the person.
Defined in this Act: amount, deduction, income
Compare: 2004 No 35 s CG 3
CG 4 Receipts for expenditure or loss from insurance, indemnity, or otherwise
When this section applies
(1)
This section applies when—
(a)
a person is allowed a deduction for expenditure or loss; and
(b)
the person derives an amount relating to the expenditure or loss, whether through insurance, indemnity, or otherwise; and
(c)
the amount, to the extent of the deduction, is not income of the person under any other provision of this Act.
Income
(2)
The amount derived is, to the extent of the deduction, income of the person.
Timing of income
(3)
The income is allocated to the later of—
(a)
the income year in which the expenditure or loss is incurred:
(b)
the income year in which the amount is derived.
Defined in this Act: amount, deduction, income year, loss
Section CG 4: replaced (with effect on 4 September 2010), on 2 November 2012, by section 12(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
CG 5 Recoveries or receipts by employers from superannuation schemes
When this section applies
(1)
This section applies when—
(a)
an employer makes an employer’s superannuation contribution to a superannuation scheme for their employee’s benefit; and
(b)
the employer is allowed a deduction for the contribution; and
(c)
the employer—
(i)
recovers the contribution from the superannuation scheme; or
(ii)
receives a benefit in money or money’s worth from the superannuation scheme, other than an amount paid to the employer under the scheme in return for contributions made by or for the employer in a personal capacity.
Income
(2)
The amount recovered or received is, to the extent of the deduction, income of the employer.
Timing of income
(3)
The income is allocated to the income year in which the amount is recovered or received.
Defined in this Act: amount, deduction, employee, employer, employer’s superannuation contribution, income, income year, pay, superannuation scheme
Compare: 2004 No 35 s CG 5
CG 5B Receipts from insurance, indemnity, or compensation for interruption or impairment of business activities
When this section applies
(1)
This section applies when a person receives an amount of insurance, indemnity, or compensation for an interruption or impairment of business activities resulting from an event.
Income
(2)
The amount is income of the person to the extent to which it is attributable to income (the replaced income) that—
(a)
the person would have derived if not for the event:
(b)
another person, who assigned the right to receive the amount to the person, would have derived if not for the event.
Timing of income
(3)
The income is allocated to the later of—
(a)
the income year to which the replaced income relates:
(b)
the earlier of—
(i)
the income year in which the amount is received:
(ii)
the income year in which the amount is reasonably able to be estimated.
Defined in this Act: amount, business, income, income year
Section CG 5B: inserted (with effect on 4 September 2010), on 29 August 2011, by section 5 of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CG 5B(2): replaced (with effect on 1 April 2011), on 26 June 2019, by section 45(1) (and see section 45(2) for application) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section CG 5B(3): replaced (with effect on 4 September 2010), on 2 November 2012, by section 13(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
CG 6 Receipts from insurance, indemnity, or compensation for trading stock
When this section applies
(1)
This section applies when a person receives an amount of insurance, indemnity, or compensation for the loss or destruction of, or damage to,—
(a)
trading stock:
(b)
anything acquired, manufactured, or produced for a purpose ancillary to a business of manufacturing or producing goods for sale or exchange.
Income
(2)
The part of the insurance, indemnity, or compensation that is attributable to the asset is income if—
(a)
the person is allowed a deduction in an income year for the cost of the asset; and
(b)
the deduction is not for an amount of depreciation loss.
Timing of income
(3)
The income is allocated to the income year in which the amount is received.
Defined in this Act: amount, business, deduction, depreciation loss, income, income year, trading stock
Compare: 2004 No 35 s CG 6
CG 7 Recoveries after deduction of payments under lease
When this section applies
(1)
This section applies, for the purposes of section FA 5 (Assets acquired and disposed of after deduction of payments under lease) when—
(a)
a person leases, rents, or hires an asset that is—
(i)
plant, machinery, or other equipment; or
(ii)
a motor vehicle; or
(iii)
a temporary building; and
(b)
they are allowed a deduction for the rental payments; and
(c)
they acquire the asset and later dispose of it for an amount that is more than the amount paid to acquire the asset.
Income
(2)
The amount described in subsection (3) is income of the person.
Consideration less payments or total deductions
(3)
The amount is the lesser of the amount by which the consideration on disposal is more than—
(a)
the sum of the payments made; or
(b)
the total amount of the deductions referred to in subsection (1)(b).
Timing of income
(4)
The income is allocated to the income year of the disposal of the asset.
Defined in this Act: amount, deduction, dispose, income, income year, motor vehicle, pay, temporary building
Compare: 2004 No 35 s FC 5(1)
CG 7B Disposals or applications after earlier deductions
When this section applies
(1)
This section applies when a person—
(a)
has a deduction under section DB 19, DB 37, or DB 40BA (which relate to expenditure on abortive or failed applications) for expenditure; and
(b)
acquires property (the application property) as a result of the expenditure; and
(c)
disposes of the application property for consideration or uses the application property in the lodging of a patent application with a complete specification or a design registration application, or in obtaining the grant of a resource consent or plant variety rights.
Income: affecting cost in section EE 25, base value in section EE 57
(2)
The person has income of the amount described in—
(a)
subsection (3), if the application property is disposed of for consideration, in the income year of the disposal; or
(b)
subsection (4), if the application property is used in the lodging of a patent application with a complete specification or a design registration application, or in obtaining the grant of a resource consent or plant variety rights, in the income year of the lodgement or grant.
Lesser of total deductions and consideration from disposal
(3)
The amount is—
(a)
the amount of the consideration derived for the disposal that is not income under another provision of this Act, if that amount is less than the total amount of deductions referred to in subsection (1)(a); or
(b)
the total amount of deductions referred to in subsection (1)(a), if paragraph (a) does not apply.
Deductions in acquiring property
(4)
The amount is the total amount of deductions referred to in subsection (1)(a) for expenditure incurred in acquiring the application property.
Defined in this Act: deduction, design registration application, dispose, income, plant variety rights
Section CG 7B: inserted (with effect on 1 April 2014 and applying for the 2014–15 and later income years), on 30 June 2014, by section 19(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CG 7B(1)(c): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 79(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CG 7B(2)(b): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 79(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CG 7B list of defined terms design registration application: inserted (with effect on 1 April 2015), on 24 February 2016, by section 79(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CG 7C Disposal or rerecognition of derecognised non-depreciable assets
When this section applies
(1)
This section applies when, for a non-depreciable intangible asset, a person has been allowed a deduction under section DB 34 (Research or development) because section DB 34(3) applies and—
(a)
the intangible asset is disposed of in an income year for consideration that is not income under another provision of this Act:
(b)
the intangible asset is rerecognised for financial reporting purposes in an income year.
Disposal for consideration
(2)
If subsection (1)(a) applies, an amount equal to the deduction described in subsection (1) is income of the person for the income year, unless subsection (3) applies.
Special case: disposal for consideration less than deduction
(3)
If subsection (1)(a) applies and the consideration is less than the deduction described in subsection (1), then, despite subsection (2), an amount equal to the consideration is income of the person for the income year.
Rerecognition
(4)
If subsection (1)(b) applies, an amount equal to the deduction described in subsection (1) is income of the person for the income year.
Relationship with subpart EE
(5)
For the purposes of subpart EE (Depreciation), the person is treated as never having the deduction described in subsection (1).
Defined in this Act: deduction, dispose, income, income year
Section CG 7C: inserted (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 80(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
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
Section CG 8: added (with effect on 20 May 2010), on 28 May 2010 (applying for capital contributions derived after 20 May 2010), by section 75(1) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
CG 8B Recoveries after deductions for high-priced bloodstock removed from New Zealand
When this section applies
(1)
This section applies when—
(a)
high-priced bloodstock is removed from New Zealand before being—
(i)
first raced in New Zealand:
(ii)
used for breeding in New Zealand; and
(b)
a person who is a prospective bloodstock breeder has been allowed a deduction in relation to the high-priced bloodstock; and
(c)
the high-priced bloodstock is expected, at the time of its removal from New Zealand, to be able to be used for future breeding.
Income
(2)
The person has an amount of income to the extent to which the greater of the high-priced bloodstock’s market value on the day on which it is removed from New Zealand and the total amount of deductions the person has been allowed in relation to the high-priced bloodstock exceeds the total of any amounts of income the person has derived in relation to the high-priced bloodstock.
Timing of income
(3)
The income is allocated to the income year in which the high-priced bloodstock is removed from New Zealand.
Defined in this Act: amount, deduction, high-priced bloodstock, income, income year, New Zealand, prospective bloodstock breeder
Section CG 8B: inserted (with effect on 1 January 2019), on 18 March 2019, by section 133(1) (and see section 133(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
CG 8C Recoveries after deductions for high-priced bloodstock disposed of to non-residents
When this section applies
(1)
This section applies when—
(a)
a person who is a prospective bloodstock breeder (person A) disposes of high-priced bloodstock to a non-resident (person B) for consideration before the high-priced bloodstock has been—
(i)
first raced in New Zealand:
(ii)
used for breeding in New Zealand:
(iii)
removed from New Zealand; and
(b)
person A has been allowed a deduction in relation to the high-priced bloodstock; and
(c)
the high-priced bloodstock is expected, at the time of the disposal, to be able to be used for future breeding.
Income
(2)
The amount described in subsection (3) is income of person A.
Amount of income
(3)
The amount is the greater of—
(a)
the amount of consideration receivable by person A for disposing of the high-priced bloodstock; and
(b)
the amount given by the formula in subsection (4).
Formula
(4)
For the purposes of subsection (3)(b), the amount is calculated using the formula—
ownership disposal percentage × total deductions.
Definition of items in formula
(5)
In the formula,—
(a)
ownership disposal percentage is the percentage of person A’s total share or interest in the high-priced bloodstock that they have disposed of to person B:
(b)
total deductions is the amount equal to the total amount of deductions person A has been allowed in relation to the high-priced bloodstock.
Timing of income
(6)
The income is allocated to the income year in which the high-priced bloodstock is disposed of.
Relationship with section CB 2
(7)
This section overrides section CB 2(2).
Defined in this Act: amount, deduction, dispose, high-priced bloodstock, income, income year, New Zealand, prospective bloodstock breeder
Section CG 8B: inserted (with effect on 1 January 2019), on 18 March 2019, by section 133(1) (and see section 133(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
CG 9 Recovery of deductions for aircraft engine overhaul
An amount of recovery income that a person has under section EJ 27 (Disposal of aircraft engine or aircraft) is income of the person.
Section CG 9: inserted, on 1 April 2017, by section 28 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Subpart CH—Adjustments
Contents
Matching rules: revenue account property, prepayments, and deferred payments
CH 1 Adjustment for closing values of trading stock, livestock, and excepted financial arrangements
When this section applies
(1)
This section applies when a person has some or all of the following at the end of an income year:
(a)
trading stock valued under subpart EB (Valuation of trading stock (including dealer’s livestock)):
(b)
livestock valued under subpart EC (Valuation of livestock):
(c)
excepted financial arrangements that are revenue account property valued under subpart ED (Valuation of excepted financial arrangements):
(d)
a share supplier’s share-lending right, if the original shares that relate to the right are excepted financial arrangements described in paragraph (c).
Income: closing value of trading stock
(2)
The value of the trading stock, calculated under section EB 3 (Valuation of trading stock), is income of the person in the income year.
Income: closing value of livestock
(3)
The value of the livestock, calculated under section EC 2 (Valuation of livestock), is income of the person in the income year.
Income: closing value of excepted financial arrangements
(4)
The value of the excepted financial arrangements or share-lending right, calculated under section ED 1 (Valuation of excepted financial arrangements), is income of the person in the income year.
Defined in this Act: excepted financial arrangement, income, income year, original share, revenue account property, share-lending right, share supplier, trading stock
Compare: 2004 No 35 s CH 1
CH 2 Adjustment for prepayments
When this section applies
(1)
This section applies when a person has, under section EA 3 (Prepayments), an unexpired amount of expenditure at the end of an income year.
Income
(2)
The unexpired amount is income of the person in the income year.
Defined in this Act: amount, income, income year
Compare: 2004 No 35 s CH 2
CH 3 Adjustment for deferred payment of employment income
When this section applies
(1)
This section applies when a person has, under section EA 4 (Deferred payment of employment income), an unpaid amount of expenditure on employment income that is to be treated as income in an income year.
Income
(2)
The unpaid amount is income of the person in the income year.
Defined in this Act: amount, employment income, income, income year, pay
Compare: 2004 No 35 s CH 3
Change to accounting practice
CH 4 Adjustment for change to accounting practice
When this section applies
(1)
This section applies when a person has, under section EG 2(2)(a) or (3)(a) (Adjustment for changes to accounting practice), an amount owing to them or an amount owed by them as quantified in those paragraphs.
Income
(2)
An amount quantified and allocated under section EG 2(2)(a) or (3)(a) is income of the person.
Defined in this Act: amount, income
Compare: 2004 No 35 s CH 4
Goods and services tax (GST)
CH 5 Adjustment for GST
Income
(1)
An adjustment taken into account under section 20(3)(e) of the Goods and Services Tax Act 1985 relating to the application of goods and services is income of a person.
Exclusion
(2)
This section does not apply to an adjustment made in relation to a capital asset.
Timing of income
(3)
The income is allocated to the income year in which the amount is calculated.
Defined in this Act: amount, income, income year
Compare: 2004 No 35 s CH 5
Section CH 5(1): amended, on 1 April 2011 (applying to taxable supplies made on or after 1 April 2011), by section 31(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CH 5(2): substituted, on 1 April 2011 (applying to taxable supplies made on or after 1 April 2011), by section 31(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CH 5(3) list of defined terms taxable supply: repealed, on 1 April 2011, by section 31(3) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Finance leases
CH 6 Adjustments for certain finance and operating leases
When this section applies
(1)
This section applies when an adjustment is made under section FA 11 or FA 11B (which relate to adjustments for leases that become finance leases and certain operating leases).
Income: leases that become finance leases
(2)
The amount of a positive adjustment under section FA 11 is income of the lessor or the lessee, as applicable, in the income year in which the lease becomes a finance lease.
Income: operating leases entered into before 20 June 2007
(3)
The amount of the adjustment under section FA 11B is income of the lessor in the income year after the income year in which 20 June 2007 falls.
Defined in this Act: amount, finance lease, income, income year, lease, operating lease
Compare: 2004 No 35 ss FC 8H(6), FC 8I(6)
Section CH 6: substituted, on 1 April 2008, by section 321 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Avoidance and non-market transactions
CH 7 Adjustment for avoidance arrangements
An amount treated as income of a person under any of the following sections is income of the person:
(a)
section GA 1 (Commissioner’s power to adjust):
(b)
section GB 23 (Excessive remuneration to relatives):
(c)
section GB 26 (Arrangements involving repatriation of commercial bills):
(d)
section GB 29 (Attribution rule: calculation):
(e)
section GB 46 (Deferral of surplus deductions from arrangements).
Defined in this Act: amount, arrangement, Commissioner, income, relative
CH 8 Market value substituted
Transfer pricing arrangements
(1)
An amount treated as income of a person under section GB 7 (Arrangements involving CFC control interests) is income of the person.
Disposal at below market value
(2)
A person may be treated as deriving an amount—
(a)
on disposal of trading stock under section GC 1 (Disposals of trading stock at below market value):
(b)
on the lease of a property under section GC 5 (Leases for inadequate rent).
Defined in this Act: amount, income, lease, trading stock
Interest apportionment on thin capitalisation
CH 9 Interest apportionment: excess debt entity
When this section applies
(1)
This section applies when an excess debt entity is required under section FE 6 (Apportionment of interest by excess debt entity) to apportion its interest expenditure.
Income
(2)
The amount calculated under section FE 6(2) is treated as income of the excess debt entity for the income year.
Defined in this Act: amount, excess debt entity, income, income year, interest
Compare: 2004 No 35 s FG 8(1)
CH 10 Interest apportionment: reporting bank
When this section applies
(1)
This section applies when a reporting bank is required under section FE 7 (Apportionment of interest by reporting bank) to apportion its interest expenditure.
Income
(2)
The amount calculated under section FE 7(2) is treated as income of the reporting bank for the income year in which the measurement period falls.
Defined in this Act: amount, income, income year, interest, measurement period, reporting bank
Compare: 2004 No 35 s FG 8B(1)
CH 10B Interest apportionment: public project debt
When this section applies
(1)
This section applies when an excess debt entity is required under section FE 7B (Interest on public project debt for certain excess debt entities) to apportion its interest expenditure arising from public project debt.
Income
(2)
The amount calculated under section FE 7B(3) is income of the excess debt entity for the income year.
Defined in this Act: amount, excess debt entity, income, income year, interest, public project debt
Section CH 10B: inserted, on 1 July 2018, by section 5(1) (and see section 5(2) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
Expenditure other than for entities’ purposes
Heading: inserted, on 21 March 2017, by section 26(2) of the Te Awa Tupua (Whanganui River Claims Settlement) Act 2017 (2017 No 7).
CH 11 Te Awa Tupua and Te Pou Tupua
When this section applies
(1)
This section applies when Te Pou Tupua, as defined in the Te Awa Tupua (Whanganui River Claims Settlement) Act 2017, incurs an amount of expenditure in an income year for a purpose outside the scope and effect of Part 2 of that Act.
Income: amount of expenditure
(2)
Te Pou Tupua is treated as deriving income for the income year of an amount equal to the amount of the expenditure.
Defined in this Act: amount, income, income year
Section CH 11: inserted, on 21 March 2017, by section 26(2) of the Te Awa Tupua (Whanganui River Claims Settlement) Act 2017 (2017 No 7).
Section CH 11(2): amended, on 29 March 2018 (with effect on 21 March 2017), by section 23(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CH 11 list of defined terms amount: inserted, on 29 March 2018 (with effect on 21 March 2017), by section 23(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CH 11 list of defined terms income: inserted, on 29 March 2018 (with effect on 21 March 2017), by section 23(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CH 11 list of defined terms income year: inserted, on 29 March 2018 (with effect on 21 March 2017), by section 23(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Financial instruments and hybrid mismatches
Heading: inserted, on 1 July 2018, by section 6(1) (and see section 6(2) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
CH 12 Income from hybrid mismatch arrangement
An amount is assessable income if it is treated as assessable income under subpart FH (Hybrid and branch mismatches of deductions and income from multi-jurisdictional arrangements).
Defined in this Act: amount, assessable income
Section CH 12: inserted, on 1 July 2018, by section 6(1) (and see section 6(2) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
Feasibility expenditure clawback
Heading: inserted (with effect on 1 April 2020), on 30 March 2021, by section 18(1) (and see section 18(2) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
CH 13 Feasibility expenditure clawback
When this section applies
(1)
This section applies when a person—
(a)
has deducted an amount under section DB 66(3) (Feasibility expenditure: spread deduction) for property in relation to which they abandoned further progress, with the result that the property was not completed, created, or acquired; and
(b)
subsequently completes or creates the property, or acquires the property or similar property.
When this section does not apply
(2)
Despite subsection (1), this section does not apply for an income year that is more than 7 years after the last income year for which a person has deducted an amount under section DB 66(3).
Income
(3)
The person has, in the income year in which they subsequently complete, create, or acquire the property or similar property, income equal to the amount of the total deductions under section DB 66(3) for the property.
Defined in this Act: amount, deduction, income, income year, person
Section CH 13: inserted (with effect on 1 April 2020), on 30 March 2021, by section 18(1) (and see section 18(2) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Subpart CO—Income from voluntary activities
Subpart CO: inserted (with effect on 1 April 2009), on 6 October 2009, by section 27(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Contents
CO 1 Income from voluntary activities
Income
(1)
An amount derived by a person in undertaking a voluntary activity is income of the person.
Relationship with section CW 62B
(2)
This section is overridden by section CW 62B (Voluntary activities).
Defined in this Act: amount, income
Section CO 1: inserted (with effect on 1 April 2009), on 6 October 2009, by section 27(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Subpart CP—Income from portfolio investment entities
CP 1 Attributed income of investors in multi-rate PIEs
When this section applies
(1)
This section applies when a multi-rate PIE attributes an amount of income for an income year calculated under sections HM 35, HM 35C, and HM 36 (which relate to the attribution of amounts to investors) to a person who is an investor in the PIE.
Income
(2)
The amount is income of the person in the income year of the person in which the PIE’s income year ends.
Defined in this Act: amount, income, income year, investor, multi-rate PIE, PIE
Compare: 2007 No 97 s CP 1
Section CP 1: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 28(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CP 1(1): amended, on 29 August 2011, by section 6 of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Subpart CQ—Attributed income from foreign equity
Contents
Attributed controlled foreign company income
CQ 1 Attributed controlled foreign company income
Attributed controlled foreign company (CFC) income of a person is income.
Defined in this Act: attributed CFC income, controlled foreign company, income
Compare: 2004 No 35 s CQ 1
CQ 2 When attributed CFC income arises
General rule
(1)
A person has attributed CFC income from a foreign company in an income year if—
(a)
the foreign company is a CFC at any time during 1 of its accounting periods, under sections EX 1 to EX 7 (which relate to the definition of a controlled foreign company); and
(b)
the accounting period ends during the income year; and
(bb)
the person is not a portfolio investment entity; and
(c)
the person has an income interest in the foreign company for the accounting period, under sections EX 8 to EX 13 (which relate to calculating a person’s income interest); and
(d)
at any time in the accounting period, the person is a New Zealand resident who is not a transitional resident; and
(e)
the person’s income interest is 10% or more for the part of the accounting period during which the person is a New Zealand resident who is not a transitional resident, under sections EX 14 to EX 17 (which relate to the 10% threshold); and
(f)
either—
(i)
the CFC has net attributable CFC income for the accounting period under section EX 20C (Net attributable CFC income or loss); or
(ii)
the special rule in section EX 19 (Taxable distribution from non-complying trust) applies because the CFC gets a distribution from a non-complying trust; and
(g)
[Repealed](h)
the CFC is not a non-attributing active CFC for the accounting period, under section EX 21B (Non-attributing active CFCs); and
(i)
the CFC is not a non-attributing Australian CFC for the accounting period, under section EX 22 (Non-attributing Australian CFCs).
Special rule: taxable distributions under the attributable FIF income method
(2)
A person also has attributed CFC income if section EX 50(5) (Attributable FIF income method) applies because—
(a)
the person has an attributing interest in a foreign investment fund (FIF); and
(b)
the person is using the attributable FIF income method to calculate FIF income; and
(c)
the FIF receives a taxable distribution from a non-complying trust.
Special rule: attributed CFC amount from personal services
(2B)
If a person and a non-attributing active CFC or non-attributing Australian CFC meet the requirements of subsection (1)(a) to (e) and the CFC derives income from personal services that is an attributable CFC amount under section EX 20B(3)(h) (Attributable CFC amount), the person has attributed CFC income from the CFC equal to the product of—
(a)
the person’s income interest in the CFC:
(b)
the amount by which the CFC’s income from personal services exceeds the expenditure incurred by the CFC in deriving the income from personal services.
Treated as derived while person New Zealand resident
(3)
Attributed CFC income of a person who has stopped being a New Zealand resident is treated as being derived while the person was a New Zealand resident.
Dividend income can arise[Repealed]
(4)
[Repealed]Defined in this Act: accounting period, attributable CFC amount, attributed CFC income, attributable FIF income method, attributing interest, CFC, distribution, dividend, FIF, FIF income, foreign company, grey list, income, income interest, income year, net attributable CFC income, New Zealand resident, non-attributing active CFC, non-attributing Australian CFC, non-complying trust, portfolio investment entity, taxable distribution, transitional resident
Compare: 2004 No 35 s CQ 2
Section CQ 2(1)(bb): inserted (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 7(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CQ 2(1)(f)(i): substituted (with effect on 30 June 2009), on 6 October 2009, by section 29(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CQ 2(1)(g): repealed (with effect on 30 June 2009), on 6 October 2009, by section 29(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CQ 2(1)(h): added (with effect on 30 June 2009), on 6 October 2009, by section 29(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CQ 2(1)(i): added (with effect on 30 June 2009), on 6 October 2009, by section 29(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CQ 2(2) heading: replaced, on 24 February 2016, by section 81(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CQ 2(2): amended (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 7(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CQ 2(2)(b): amended (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 7(3) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CQ 2(2B) heading: inserted (with effect on 30 June 2009), on 6 October 2009, by section 29(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CQ 2(2B): inserted (with effect on 30 June 2009), on 6 October 2009, by section 29(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CQ 2(4) heading: repealed (with effect on 30 June 2009), on 6 October 2009, pursuant to section 29(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CQ 2(4): repealed (with effect on 30 June 2009), on 6 October 2009, by section 29(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CQ 2 list of defined terms attributable CFC amount: inserted (with effect on 30 June 2009), on 6 October 2009, by section 29(5)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CQ 2 list of defined terms attributable FIF income method: inserted (with effect on 1 July 2011), on 7 May 2012, by section 7(4)(b) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CQ 2 list of defined terms attributed repatriation: repealed, on 24 February 2016, by section 81(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CQ 2 list of defined terms branch equivalent income: repealed (with effect on 30 June 2009), on 6 October 2009, by section 29(5)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CQ 2 list of defined terms branch equivalent method: repealed (with effect on 1 July 2011), on 7 May 2012, by section 7(4)(a) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CQ 2 list of defined terms net attributable CFC income: inserted (with effect on 30 June 2009), on 6 October 2009, by section 29(5)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CQ 2 list of defined terms non-attributing active CFC: inserted (with effect on 30 June 2009), on 6 October 2009, by section 29(5)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CQ 2 list of defined terms non-attributing Australian CFC: inserted (with effect on 30 June 2009), on 6 October 2009, by section 29(5)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CQ 2 list of defined terms portfolio investment entity: inserted (with effect on 1 July 2011), on 7 May 2012, by section 7(4)(b) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
CQ 3 Calculation of attributed CFC income
The amount of attributed CFC income is calculated under the rules in sections EX 18 to EX 20 (which relate to the calculation of attributed CFC income or loss).
Defined in this Act: amount, attributed CFC income
Compare: 2004 No 35 s CQ 3
Foreign investment fund income
CQ 4 Foreign investment fund income
FIF income of a person is income.
Defined in this Act: FIF income, income
Compare: 2004 No 35 s CQ 4
CQ 5 When FIF income arises
General rule
(1)
A person has FIF income in an income year if—
(a)
at any time in the year, the person has—
(i)
rights in a foreign company, or a foreign superannuation scheme, or an entity listed in schedule 25, part A (Foreign investment funds); or
(ii)
rights under a life insurance policy issued by a non-resident; and
(b)
at that time, the rights are an attributing interest in a FIF under section EX 29 (Attributing interests in FIFs); and
(c)
at that time, the rights are not exempt from being an attributing interest in a FIF under any of—
(i)
the exemption for ASX-listed Australian companies in section EX 31 (Exemption for ASX-listed Australian companies):
(ii)
the exemption for Australian unit trusts with 25% turnover in section EX 32 (Exemption for Australian unit trusts with 25% turnover):
(iii)
the exemption for Australian regulated superannuation savings in section EX 33 (Exemption for Australian regulated superannuation savings):
(iv)
the CFC rules exemption in section EX 34 (CFC rules exemption):
(v)
the exemption in section EX 35 (Exemption for interest in FIF resident in Australia):
(vi)
the 10-year exemption for a venture capital company emigrating to a grey list country in section EX 36 (Venture capital company emigrating to grey list country: 10-year exemption):
(vii)
the 10-year exemption for a grey list company owning a New Zealand venture capital company in section EX 37 (Grey list company owning New Zealand venture capital company: 10-year exemption):
(viii)
the exemption for an employee share scheme of a grey list company in section EX 38 (Exemptions for employee share schemes):
(ix)
the terminating exemption for a grey list company with numerous New Zealand shareholders in section EX 39 (Terminating exemption for grey list company with numerous New Zealand shareholders):
(x)
the terminating exemption for a grey list company investing in Australasian equities in section EZ 32 (Terminating exemption for grey list FIF investing in Australasian listed equities):
(xi)
the foreign exchange control exemption in section EX 40 (Foreign exchange control exemption):
(xii)
the exemption for a non-resident or transitional resident in section EX 41 (Income interest of non-resident or transitional resident):
(xiii)
[Repealed](xiv)
the annuity or pension exemption in section EX 43 (Non-resident’s pension or annuity exception):
(xv)
an exemption for a non-attributing active FIF given by sections EX 50, EX 18A(2)(b)(i), and EX 21B (which relate to the attributable FIF income method and FIFs corresponding to non-attributing active CFCs); and
(d)
if the person is a natural person,—
(i)
the total cost, calculated under section EX 68 (Measurement of cost), of attributing interests in FIFs that the person holds at any time in the year when the person is a New Zealand resident is more than $50,000:
(ii)
the person includes, in a return for the year, FIF income or loss from an attributing interest in a FIF:
(iii)
the person has, in the return for 1 of the preceding 4 income years (the earlier year), included FIF income or loss from attributing interests in FIFs with a total cost of $50,000 or less, calculated under section EX 68, at all times in the earlier year when the person is a New Zealand resident; and
(e)
if the person is acting as trustee of a trust that meets the requirements of subsection (5),—
(i)
the total cost, calculated under section EX 68, of attributing interests in FIFs that the person holds at any time in the year is more than $50,000:
(ii)
the person includes, in a return for the year, FIF income or loss from an attributing interest in a FIF:
(iii)
the person has, in the return for 1 of the preceding 4 income years (the earlier year), included FIF income or loss from attributing interests in FIFs with a total cost of $50,000 or less, calculated under section EX 68, at all times in the earlier year; and
(f)
at any time in the year, the person is a New Zealand resident who is not a transitional resident and holds the attributing interest; and
(g)
under the relevant calculation method chosen by the person, an income amount is calculated for the year under sections EX 44 to EX 56 (which relate to the calculation of FIF income or loss), EX 60 or EX 61 (which relate to top-up FIF income).
Treatment of transaction under section EX 63, EX 65, or EX 67
(1B)
If a person is treated under section EX 63(5), EX 65, or EX 67 (which relate to changes in method or application of FIF rules) as disposing of or acquiring rights in an income year, the disposal or acquisition is ignored for the purposes of subsection (1)(d) and (e).
Look-through calculation methods
(2)
Despite subsection (1), if the calculation method is the attributable FIF income method,—
(a)
FIF income arises in the income year only if the relevant accounting period of the FIF ends during the year; and
(b)
the tests in subsection (1)(a), (b), (c), and (f) are applied on the basis that references in subsection (1)(a), (b), (c), and (f) to any time in the year are read as references to any time in the relevant accounting period.
FIF income from CFC with FIF interest
(3)
FIF income also includes an additional amount that a person with an income interest of 10% or more in a CFC has in an income year under section EX 58 (Additional FIF income or loss if CFC owns FIF), regardless of whether the CFC is a non-attributing active CFC under section EX 21B (Non-attributing active CFCs) or a non-attributing Australian CFC under section EX 22 (Non-attributing Australian CFCs).
Treated as derived while person New Zealand resident
(4)
FIF income of a person who has stopped being a New Zealand resident is treated as being derived while the person was a New Zealand resident.
Requirements for trustees
(5)
Subsection (1)(e) applies to the trustee of a trust for an income year if—
(a)
the trust is of the estate of a deceased person and the income year begins on or before the day that is 5 years after the person’s death:
(b)
the settlor of the trust—
(i)
is a relative or legal guardian of a beneficiary of the trust, or a person associated with a relative or legal guardian of a beneficiary of the trust; and
(ii)
is required by a court order to pay damages or compensation to the beneficiary:
(c)
the settlor of the trust—
(i)
is the estate of a deceased person; and
(ii)
is required by a court order to settle on the trust the proceeds of damages or compensation for the beneficiaries of the trust:
(d)
the settlor of the trust is the Accident Compensation Corporation.
Defined in this Act: accounting period, amount, associated person, attributable FIF income method, attributing interest, calculation method, CFC, employee share scheme, FIF, FIF income, foreign company, foreign superannuation scheme, grey list, grey list company, income, income interest, income year, life insurance policy, loss, New Zealand resident, non-attributing Australian CFC, non-resident, relative, settlor, shareholder, transitional resident, trustee, unit trust
Compare: 2004 No 35 s CQ 5
Section CQ 5(1)(c)(iii): replaced (with effect on 1 April 2014), on 24 February 2016, by section 82(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CQ 5(1)(c)(v): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 8(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CQ 5(1)(c)(viii): amended (with effect on 29 September 2018), on 31 March 2023, by section 19(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CQ 5(1)(c)(viii): amended, on 29 September 2018, by section 24(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CQ 5(1)(c)(xiii): repealed, on 1 April 2014, by section 9 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CQ 5(1)(c)(xiv): amended, on 24 February 2016, by section 82(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CQ 5(1)(c)(xiv): amended (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 8(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CQ 5(1)(c)(xv): inserted (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 8(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CQ 5(1)(c)(xv): amended (with effect on 1 July 2011), on 30 March 2017, by section 29(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CQ 5(1)(d): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 8(3) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CQ 5(1)(d): amended, on 29 March 2018, by section 258 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CQ 5(1)(e): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 8(3) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CQ 5(1B) heading: inserted, on 1 April 2008, by section 322(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CQ 5(1B): inserted, on 1 April 2008, by section 322(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CQ 5(2): amended (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 8(4) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CQ 5(3) heading: substituted (with effect on 30 June 2009), on 6 October 2009, by section 30(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CQ 5(3): substituted (with effect on 30 June 2009), on 6 October 2009, by section 30(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CQ 5(3): amended, on 24 February 2016, by section 82(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CQ 5 list of defined terms accounting profits method: repealed (with effect on 1 July 2011), on 7 May 2012, by section 8(5)(a) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CQ 5 list of defined terms attributable FIF income method: inserted (with effect on 1 July 2011), on 7 May 2012, by section 8(5)(b) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CQ 5 list of defined terms branch equivalent method: repealed (with effect on 1 July 2011), on 7 May 2012, by section 8(5)(a) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CQ 5 list of defined terms employee share scheme: inserted (with effect on 29 September 2018), on 31 March 2023, by section 19(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CQ 5 list of defined terms loss: inserted (with effect on 1 July 2011), on 7 May 2012, by section 8(5)(b) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CQ 5 list of defined terms non-attributing active FIF: repealed, on 29 September 2018, by section 24(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CQ 5 list of defined terms non-attributing Australian CFC: inserted (with effect on 30 June 2009), on 6 October 2009, by section 30(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CQ 5 list of defined terms settlor: inserted, on 24 February 2016, by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CQ 6 Calculation of FIF income
The amount of any FIF income is calculated, using the relevant calculation method, under sections EX 44 to EX 61 (which relate to the calculation of FIF income or loss).
Defined in this Act: amount, calculation method, FIF income
Compare: 2004 No 35 s CQ 6
CQ 7 Treatment of attributing interests subject to returning share transfer
[Repealed]Section CQ 7: repealed on 6 October 2009, by section 31 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Subpart CR—Income from insurance
Subpart CR heading: substituted (with effect on 1 April 2008), on 6 October 2009, by section 32 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Contents
CR 1 Policyholder base income of life insurer
If, but for this section, a life insurer has an amount of policyholder base income for an income year, and that amount is not income under this Part, the amount is income of the life insurer for the income year.
Defined in this Act: amount, income, income year, life insurer, policyholder base income
Section CR 1: substituted, on 1 July 2010, by section 33(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CR 2 Shareholder base income of life insurer
If, but for this section, a life insurer has an amount of shareholder base income for an income year, and that amount is not income under this Part, the amount is income of the life insurer for the income year.
Defined in this Act: amount, income, income year, life insurer, shareholder base income
Section CR 2: substituted, on 1 July 2010, by section 33(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CR 3 Income of non-resident general insurer
What this section applies to
(1)
This section applies to a premium that is treated as having a source in New Zealand under section YD 8 (Apportionment of premiums derived by non-resident general insurers) if—
(a)
an insured person pays the premium to an insurer for insurance of any of the kinds described in subsection (3); and
(b)
the premium meets all 3 conditions in subsection (4); and
(c)
the premium is not excluded from the application of this section by section YD 8(6).
Amount of income
(2)
Ten percent of the gross premium derived by the insurer is income of the insurer.
Kinds of insurance
(3)
The kinds of insurance referred to in subsection (1)(a) are—
(a)
general insurance:
(b)
a guarantee against risk given by an insurer to an insured person if—
(i)
the insured person is liable to pay a premium to the insurer for the guarantee; and
(ii)
the insured person is associated with the insurer:
(c)
a guarantee against risk given by an insurer to an insured person if—
(i)
the insured person is liable to pay a premium to the insurer for the guarantee; and
(ii)
the risk arises from money lent to the insured person; and
(iii)
the amounts the insured person is liable to pay for the money are significantly less than they would otherwise have been because of the guarantee; and
(iv)
the effect of the guarantee on the amounts payable is more than an incidental effect, or comes about as more than an incidental purpose, of the insurer’s giving the guarantee.
Conditions for premium
(4)
The premium referred to in subsection (1)(b) is—
(a)
a premium derived by an insurer who is not resident in New Zealand when they derive it:
(b)
a premium that is not attributable to a fixed establishment of the insurer in New Zealand through which they carry on business in New Zealand:
(c)
a premium to which at least 1 of the following applies:
(i)
the insured person from whom the premium is derived is resident in New Zealand; or
(ii)
the insurance contract from which the premium is derived is offered or entered into in New Zealand; or
(iii)
the insurance contract from which the premium is derived is entered into for the purposes of a business carried on by the insured person in New Zealand through a fixed establishment in New Zealand.
Defined in this Act: amount, business, fixed establishment, general insurance, gross, income, insurance, insurance contract, insured person, insurer, money lent, New Zealand, non-resident, offered or entered into in New Zealand, pay, premium, resident in New Zealand, source in New Zealand
Compare: 2004 No 35 ss FC 13, FC 14(2)
Section CR 3(1): amended, on 21 December 2010, by section 32(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CR 3 list of defined terms derived from New Zealand: repealed, on 21 December 2010, by section 32(2)(a) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CR 3 list of defined terms source in New Zealand: inserted, on 21 December 2010, by section 32(2)(b) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
CR 3B Lloyd’s of London: income from life insurance premiums
What this section applies to
(1)
This section applies to a premium a portion of which is treated as having a source in New Zealand under section YD 8B (Apportionment of life insurance premiums derived by Lloyd’s of London) if—
(a)
the policyholder pays the premium for a life insurance policy to Lloyd’s of London or an agent of Lloyd’s of London; and
(b)
the life insurance policy is described in subsection (3); and
(c)
the life insurance policy is offered or was offered or entered into within New Zealand.
Amount of income
(2)
Ten percent of the gross premium derived by Lloyd’s of London is income of Lloyd’s of London.
Types of life insurance policies
(3)
The life insurance policy referred to in subsection (1) is a life insurance policy that—
(a)
is made available to the general public; and
(b)
is not a profit participation policy or a savings product policy or both; and
(c)
does not provide for a benefit that is an annuity.
Defined in this Act: income, life insurance policy, Lloyd’s of London, offered or was offered or entered into, pay, premium, profit participation policy, savings product policy, source in New Zealand
Section CR 3B: inserted, on 29 March 2018 (with effect on 1 April 2017 and applying in relation to a life insurance premium that is derived on or after that date by Lloyd’s of London), by section 25(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CR 4 Income for general insurance outstanding claims reserve
What this section applies to
(1)
This section applies for—
(a)
an insurer who—
(i)
uses IFRS 4, Appendix D or IFRS 17 for general insurance contracts:
(ii)
is a life insurer who has general insurance contracts; and
(b)
general insurance contracts, excluding contracts having premiums to which section CR 3 (Income of non-resident general insurer) applies.
When this section does not apply
(1B)
This section does not apply for contracts that section DZ 10 (General insurance with risk period straddling 1 July 1993) applies to.
Formula for insurer’s OCR income
(2)
For an income year (the current year), an insurer has income of the amount by which zero is less than the amount calculated using the formula—
opening outstanding claims reserve − closing outstanding claims reserve.
Definition of items in formula
(3)
In the formula,—
(a)
opening outstanding claims reserve is the total for the general insurance contracts of—
(i)
the amount of the insurer’s closing outstanding claims reserve for the income year before the current year (the prior year), for general insurance contracts to which neither of subparagraphs (ii) and (iii) apply:
(ii)
the amount of the insurer’s closing outstanding claims reserve, for general insurance contracts not referred to in subparagraph (iii), used by the insurer for tax purposes for the prior year, if the current year is the first year for which this section applies to the insurer, or for which the insurer adopts IFRS 17, or for which the insurer applies for the first time in a tax calculation the definition of present value (gross) in section EY 24(5) (Outstanding claims reserving amount: non-participation policies not annuities):
(iii)
the amount calculated using the formula in section DW 4(4B) (Deductions for general insurance outstanding claims reserve), for general insurance contracts transferred to the insurer in the current year by a transfer to which section ED 3(1B) (Part-year tax calculations for transfers: general insurance OCR) applies:
(b)
closing outstanding claims reserve is the amount of the insurer’s outstanding claims reserve, calculated at the end of the current year.
Defined in this Act: amount, IFRS 4, IFRS 17, income, income year, insurer, life insurer, outstanding claims reserve, premium, present value (gross)
Section CR 4: added (with effect on 1 April 2008), on 6 October 2009, by section 34(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CR 4(1)(a)(i): amended (with effect on 1 January 2023), on 31 March 2023, by section 20(1) (and see section 20(4) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CR 4(3)(a)(ii): replaced (with effect on 1 January 2023), on 31 March 2023, by section 20(2) (and see section 20(4) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CR 4(1B) heading: inserted (with effect on 1 April 2008 and applying for the 2008–09 income year and later income years), on 17 July 2013, by section 11(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CR 4(1B): inserted (with effect on 1 April 2008 and applying for the 2008–09 income year and later income years), on 17 July 2013, by section 11(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CR 4(3)(a): replaced, on 1 April 2014, by section 10 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CR 4 list of defined terms general insurance contract: repealed (with effect on 1 April 2008), on 7 September 2010, by section 11(b) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section CR 4 list of defined terms IFRS 17: inserted (with effect on 1 January 2023), on 31 March 2023, by section 20(3) (and see section 20(4) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CR 4 list of defined terms premium: added (with effect on 1 April 2008), on 7 September 2010, by section 11(a) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section CR 4 list of defined terms present value (gross): inserted (with effect on 1 January 2023), on 31 March 2023, by section 20(3) (and see section 20(4) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Subpart CS—Superannuation funds
[Repealed]Subpart CS: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Contents
Withdrawals[Repealed]
Heading: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 1 Withdrawals
[Repealed]Section CS 1: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Exclusions[Repealed]
Heading: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 2 Exclusions of withdrawals of various kinds
[Repealed]Section CS 2: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 3 Exclusion of withdrawal on grounds of hardship
[Repealed]Section CS 3: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 4 Exclusion of withdrawal to settle division of relationship property
[Repealed]Section CS 4: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 5 Exclusion of withdrawal paid as annuity or pension
[Repealed]Section CS 5: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 6 Exclusion of withdrawal on partial retirement
[Repealed]Section CS 6: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 7 Exclusion of withdrawal when member ends employment
[Repealed]Section CS 7: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 8 Exclusion of withdrawal when member ends employment: lock-in rule
[Repealed]Section CS 8: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 9 Exclusion of withdrawal from defined benefit fund when member ends employment
[Repealed]Section CS 9: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 10 When member treated as not ending employment
[Repealed]Section CS 10: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 10B Exclusion of permitted withdrawals from KiwiSaver schemes and complying superannuation funds
[Repealed]Section CS 10B: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Transfers to or from superannuation funds and superannuation schemes[Repealed]
Heading: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 11 Transfer by superannuation fund to another superannuation fund
[Repealed]Section CS 11: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 12 Transfer from superannuation scheme to superannuation fund
[Repealed]Section CS 12: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 13 Investment by superannuation fund in another superannuation fund
[Repealed]Section CS 13: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Treatment of amounts when superannuation fund becomes superannuation scheme or vice versa[Repealed]
Heading: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 14 Superannuation fund becomes superannuation scheme
[Repealed]Section CS 14: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 15 Superannuation fund becomes foreign superannuation scheme
[Repealed]Section CS 15: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 16 Superannuation scheme becomes superannuation fund
[Repealed]Section CS 16: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Treatment of distributions when superannuation fund wound up[Repealed]
Heading: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 17 Superannuation fund wound up
[Repealed]Section CS 17: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Treatment of loans to members[Repealed]
Heading: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CS 18 Value of loan treated as fund income
[Repealed]Section CS 18: repealed, on 1 April 2011, by section 12 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Subpart CT—Income from petroleum mining
Contents
CT 1 Disposal of exploratory material or petroleum mining asset
Income: disposal of exploratory material
(1)
The consideration that a petroleum miner derives from disposing of exploratory material is income of the petroleum miner.
Income: disposal of petroleum mining asset
(2)
The consideration that a petroleum miner derives from disposing of a petroleum mining asset is income of the petroleum miner.
Relationship with section CX 43
(3)
This section is overridden by section CX 43 (Farm-out arrangements for mining operations).
Relationship with section CZ 32
(4)
Section CZ 32 (Treatment of certain petroleum storage facilities) overrides subsection (2).
Defined in this Act: consideration, dispose, exploratory material, income, petroleum miner, petroleum mining asset
Compare: 2004 No 35 s CT 1
Section CT 1(3): amended, on 1 April 2014, by section 11 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CT 1(4) heading: inserted, on 30 June 2014, by section 20 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CT 1(4): inserted, on 30 June 2014, by section 20 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CT 2 Damage to assets
The consideration that a petroleum miner derives for damage to an asset of the kind described in section CT 7(1)(b) or (c) is income of the petroleum miner.
Defined in this Act: consideration, income, petroleum miner
Compare: 2004 No 35 s CT 2
CT 3 Exploratory well used for commercial production
When this section applies
(1)
This section applies when a petroleum miner uses an exploratory well for commercial production of petroleum, whether or not the well has been sealed and abandoned previously.
Income
(2)
An amount equal to the amount of expenditure described in subsection (3) is treated as income of the petroleum miner.
Exploratory well expenditure
(3)
The expenditure is exploratory well expenditure to which all the following apply:
(a)
it is directly attributable to drilling or acquiring the exploratory well; and
(b)
the petroleum miner or a holder of a previous interest in the well is or has been allowed a deduction for it as petroleum exploration expenditure; and
(c)
it is incurred in relation to the permit held currently by the petroleum miner, or a previous permit surrendered in exchange for the permit currently held under section 32(3) of the Crown Minerals Act 1991.
Timing of income
(4)
The amount is allocated to the income year in which commercial production from the well starts.
Part interest
(5)
If the petroleum miner has a part interest in the exploratory well when that well is first used for commercial production, the amount of expenditure treated as income under this section must bear the same proportion to the exploratory well expenditure specified in subsection (3) as that part interest bears to all interests in the well.
Defined in this Act: amount, commercial production, deduction, exploratory well, exploratory well expenditure, income, income year, permit, petroleum, petroleum exploration expenditure, petroleum miner, seal and abandonment
Compare: 2004 No 35 s CT 3
CT 4 Partnership interests and disposal of part of asset
In this subpart, and in sections CX 42 (Disposal of ownership interests in controlled petroleum mining entities) and CX 43 (Farm-out arrangements for mining operations), unless the context requires otherwise,—
(a)
a partner is treated as having a share or interest in a petroleum permit or other property of a partnership to the extent of their interest in the income of the partnership:
(b)
references to the disposal of an asset apply equally to the disposal of part of an asset.
Defined in this Act: income, petroleum permit
Compare: 2004 No 35 s CT 4
Section CT 4: amended, on 1 April 2014, by section 12 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CT 5 Petroleum mining operations outside New Zealand
This subpart, and sections CX 42 (Disposal of ownership interests in controlled petroleum mining entities) and CX 43 (Farm-out arrangements for mining operations), apply, with any necessary modifications, to a petroleum miner who undertakes petroleum mining operations that are, or decommissioning that is—
(a)
outside New Zealand and undertaken through a branch or a controlled foreign company; and
Defined in this Act: controlled foreign company, decommissioning, New Zealand, petroleum miner, petroleum mining operations
Compare: 2004 No 35 s CT 5
Section CT 5: amended, on 1 April 2018, by section 26(1) (and see section 26(3) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CT 5: amended, on 1 April 2014, by section 13 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CT 5 list of defined terms decommissioning: inserted, on 1 April 2018, by section 26(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CT 5B Resuming commercial production
When this section applies
(1)
This section applies when a petroleum miner or a farm-in party undertakes commercial production in a permit area when a petroleum miner, or a farm-in party, has received a deduction under section EJ 13 (Permanently ceasing petroleum mining operations) for permanently ceasing petroleum mining operations in the permit area.
Income
(2)
An amount described in subsection (3) is treated as income of the petroleum miner who, at any time after the petroleum mining operations have ceased under section EJ 13,—
(a)
undertakes commercial production (the resumed commercial production) in the permit area:
(b)
arranges for a farm-in party to undertake the resumed commercial production in the permit area.
Amount treated as income
(3)
The amount referred to in subsection (2) that is treated as income is an amount that is equal to the amount of the deduction allowed under section EJ 13 to the extent to which it relates to a petroleum mining asset that is used or is to be used in the resumed commercial production.
Allocation of income
(4)
The amount is allocated to the income year in which the resumed commercial production in the permit area begins.
Defined in this Act: amount, commercial production, deduction, farm-in party, farm-out arrangement, income, income year, permit area, petroleum development expenditure, petroleum miner, petroleum mining asset, petroleum mining operations, petroleum permit
Section CT 5B: inserted, on 1 April 2018, by section 27(1) (and see section 27(2) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Definitions
CT 6 Meaning of petroleum miner
Meaning
(1)
Petroleum miner, for a permit area, means a person who undertakes petroleum mining operations or decommissioning in the permit area.
Exclusion
(2)
Petroleum miner does not include a person who undertakes petroleum mining operations or decommissioning for consideration that is not in the form of, or contingent on,—
(a)
the production of petroleum from the permit area; or
(b)
profits from the production of petroleum from the permit area; or
(c)
an interest or a right to an interest in the petroleum permit.
Activities: inclusions[Repealed]
(3)
[Repealed]Activities: exclusions[Repealed]
(4)
[Repealed]Defined in this Act: consideration, decommissioning, permit area, petroleum, petroleum miner, petroleum mining operations, petroleum permit
Compare: 2004 No 35 s CT 6
Section CT 6(1): substituted, on 1 April 2008, by section 326(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CT 6(1): amended, on 1 April 2018, by section 28(1) (and see section 28(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CT 6(2): amended, on 1 April 2018, by section 28(2) (and see section 28(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CT 6(3) heading: repealed, on 1 April 2008, by section 326(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CT 6(3): repealed, on 1 April 2008, by section 326(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CT 6(4) heading: repealed, on 1 April 2008, by section 326(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CT 6(4): repealed, on 1 April 2008, by section 326(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CT 6 list of defined terms decommissioning: inserted, on 1 April 2018, by section 28(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CT 6 list of defined terms petroleum mining operations: inserted, on 1 April 2008, by section 326(4)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CT 6 list of defined terms removal or restoration operations: repealed, on 1 April 2008, by section 326(4)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
CT 6B Meaning of petroleum mining operations
Meaning
(1)
Petroleum mining operations means an activity included in those described in subsection (2) and not excluded by subsection (3).
Activities: inclusions
(2)
The activities are those carried out in connection with—
(a)
prospecting or exploring for petroleum:
(b)
developing a permit area for producing petroleum:
(c)
producing petroleum:
(d)
processing, storing, or transmitting petroleum before its dispatch to a buyer, consumer, processor, refinery, or user.
(e)
[Repealed]Activities: exclusions
(3)
The activities do not include further treatment to which all the following apply:
(a)
it occurs after the well stream has been separated and stabilised into crude oil, condensate, or natural gas; and
(b)
it is done—
(i)
by liquefaction or compression; or
(ii)
for the extraction of constituent products; or
(iii)
for the production of derivative products; and
(c)
it is not treatment at the production facilities.
Defined in this Act: permit area, petroleum
Compare: 2004 No 35 s CT 6B.
Section CT 6B: inserted, on 1 April 2008, by section 327 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CT 6B(2)(e): repealed, on 1 April 2018, by section 29(1) (and see section 29(3) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CT 6B list of defined terms removal or restoration operations: repealed, on 1 April 2018, by section 29(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CT 7 Meaning of petroleum mining asset
Meaning
(1)
Petroleum mining asset means—
(a)
a petroleum permit:
(b)
an asset that—
(i)
is acquired by a petroleum miner for the purpose of carrying on an activity described in subsection (3) in a permit area or areas; and
(ii)
has an estimated useful life that depends on, and is no longer than, the remaining life of the petroleum permit for the area or areas:
(c)
a share or partial interest in an asset described in paragraph (a) or (b).
Exclusion
(2)
Petroleum mining asset does not include—
(a)
land:
(b)
an underground gas storage facility as that term is defined in section 2 of the Crown Minerals Act 1991.
Activities: inclusions
(3)
The activities are those carried out in connection with—
(a)
developing a permit area for producing petroleum:
(b)
producing petroleum:
(c)
processing, storing, or transmitting petroleum before its dispatch to a buyer, consumer, processor, refinery, or user:
(d)
decommissioning.
Activities: exclusions
(4)
The activities do not include further treatment to which all the following apply:
(a)
it occurs after the well stream has been separated and stabilised into crude oil, condensate, or natural gas; and
(b)
it is done—
(i)
by liquefaction or compression; or
(ii)
for the extraction of constituent products; or
(iii)
for the production of derivative products; and
(c)
it is not treatment at the production facilities.
Defined in this Act: decommissioning, land, permit area, petroleum, petroleum miner, petroleum mining asset, petroleum permit
Compare: 2004 No 35 s CT 7
Section CT 7(2): replaced, on 30 June 2014, by section 21 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CT 7(3)(d): amended, on 1 April 2018, by section 30(1) (and see section 30(3) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CT 7 list of defined terms decommissioning: inserted, on 1 April 2018, by section 30(2)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CT 7 list of defined terms removal or restoration operations: repealed, on 1 April 2018, by section 30(2)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Subpart CU—Income from mineral mining
Subpart CU: replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Contents
CU 1 Mineral miner’s income
An amount that a mineral miner derives from their mining operations or associated mining operations is income of the mineral miner.
Defined in this Act: amount, associated mining operations, income, mineral miner, mining operations
Section CU 1: replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 2 Treatment of mining land
When this section applies
(1)
This section applies when—
(a)
a mineral miner acquires land or an interest in land for the purposes of current or intended mining operations or associated mining operations; and
(b)
the land—
(i)
constitutes a mining permit area or is land adjacent to it:
(ii)
forms, or is intended to form, part of a mining permit area or land adjacent to it.
Income
(2)
An amount that the mineral miner derives from disposing of the land or interest in land is income of the mineral miner for the income year of disposal.
Defined in this Act: amount, associated mining operations, income, income year, interest, land, mineral miner, mining operations, permit area
Section CU 2: replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 3 Disposal of mineral mining assets
Income
(1)
The consideration that a mineral miner derives from disposing of a mineral mining asset is income of the mineral miner.
Relationship with section CX 43
(2)
This section is overridden by section CX 43 (Farm-out arrangements for mining operations).
Defined in this Act: income, mineral miner, mineral mining asset
Section CU 3: replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 4 Recovery of certain expenditure
When this section applies
(1)
This section applies when—
(a)
a mineral miner incurs an amount of mining exploration expenditure in relation to their mining operations or associated mining operations; and
(b)
the mineral miner is allowed a deduction for the expenditure for an income year under section DU 1(1)(b) (Mining expenditure: prospecting and exploration expenditure); and
(c)
the income year is later than the 2013–14 income year; and
(d)
the expenditure is incurred in an income year for which the mineral miner is required under section 22 of the Tax Administration Act 1994 to keep records; and
(e)
the expenditure results in, produces, or generates an asset for the mineral miner; and
(f)
the mineral miner uses the asset for, or in relation to, the commercial production of a listed industrial mineral.
Income
(2)
The mineral miner is treated as deriving income to the extent of the amount of expenditure that resulted in, produced, or generated the asset. However, the amount must not be more than the amount of the deduction referred to in subsection (1)(b).
Timing
(3)
The income is allocated to the income year in which the mineral miner uses the asset for, or in relation to, the commercial production of the mineral.
Defined in this Act: amount, associated mining operations, commercial production, deduction, income, income year, interest, land, listed industrial mineral, mineral, mineral miner, mining exploration expenditure, mining operations
Section CU 4: replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 5 Partnership interests and disposal of part of asset
In this subpart and subpart DU (Mineral mining expenditure), and in sections CX 43 (Farm-out arrangements for mining operations), and GB 20 (Arrangements involving petroleum and mineral mining) unless the context otherwise requires,—
(a)
a partner is treated as having a share or interest in a mineral mining asset or other property of a partnership to the extent of their interest in the income of the partnership:
(b)
references to the disposal of an asset apply equally to the disposal of part of an asset.
Defined in this Act: income, mineral mining asset, partner, partnership
Section CU 5: replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Definitions
Heading: inserted, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 6 Meaning of mineral miner
Meaning
(1)
Mineral miner means a person to which 1 of the following applies:
(a)
the person’s only source of income is the business described in subsection (2); or
(b)
the person’s main source of income is the business described in subsection (2); or
(c)
the person’s only activity is 1 of the activities described in subsection (3); or
(d)
the person’s main activity is 1 of the activities described in subsection (3); or
(e)
the person proposes that their only activity or their main activity be 1 of the activities described in subsection (3).
Business
(2)
The business referred to in subsection (1)(a) and (b) is the business of mining a listed industrial mineral in New Zealand.
Activities
(3)
The activities referred to in subsection (1)(c), (d), and (e) are—
(a)
exploring, searching, or mining for a listed industrial mineral in New Zealand; or
(b)
performing development work for exploring, searching, or mining for a listed industrial mineral in New Zealand.
Service for reward
(4)
An activity described in subsection (3) does not include an activity done or to be done as a service to another person for reward unless the reward—
(a)
is wholly or mainly related to and dependent on the production of the listed industrial mineral; or
(b)
arises wholly or mainly through participation in profits from the production of the listed industrial mineral.
Defined in this Act: business, income, listed industrial mineral, New Zealand
Section CU 6: replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 7 Some definitions
Meaning of mining operations
(1)
Mining operations means operations that—
(a)
are carried on by a mineral miner in a permit area in New Zealand for the purpose of deriving income; and
(b)
consist of—
(i)
exploring, or searching for 1 or more listed industrial minerals; or
(ii)
performing development work for exploring, searching, or mining for 1 or more listed industrial minerals; or
(iii)
extracting 1 or more listed industrial minerals; or
(iv)
mining or performing work directly related to mining for 1 or more listed industrial minerals.
Meaning of associated mining operations
(2)
Associated mining operations means operations that—
(a)
are carried on in New Zealand in association with mining operations; and
(b)
consist of the accumulation, initial treatment, and transport of listed industrial minerals up to the stage at which the minerals—
(i)
are in a saleable form and in a location suitable for a person to acquire them; or
(ii)
are ready to be processed beyond the initial treatment or to be used in a manufacturing operation.
Meaning of initial treatment
(3)
For the purposes of subsection (2)(b)(ii), initial treatment—
(a)
means—
(i)
breaking, cleaning, crushing, grading, grinding, leaching, screening, or sizing; or
(ii)
a treatment that is applied before concentration or, for a listed industrial mineral not requiring concentration, a treatment that would have been applied before concentration if the mineral had required concentration; or
(iii)
concentration; and
(b)
does not include—
(i)
calcining or sintering; or
(ii)
the production of, or processes carried on in connection with the production of, alumina, or pellets, or other agglomerated forms of iron.
Defined in this Act: associated mining operations, income, initial treatment, listed industrial mineral, mineral, mineral miner, mining operations, New Zealand, permit area
Section CU 7: replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 8 Meaning of listed industrial mineral
Meaning
(1)
Listed industrial mineral—
(a)
means alumina minerals (for example, bauxite, corundum, diaspore, and gibbsite), aluminous refractory clays containing over 30% alumina in the fired state, aluminous refractory fireclays containing over 30% alumina in the fired state, andalusite, antimony, asbestos, barite, bentonite (except bentonite mined in the area formerly known as Malvern County), bituminous shale, chromite, copper, diatomite, dolomite, feldspar, fluorite, gold, halloysite, kaolin, kyanite, lead, magnesite, manganese, mercury, mica, molybdenite, nickel, perlite, phosphate, platinum group, pyrite, silica in lump form used only in producing silicon carbide or silicon metal or ferro silicon, silica in sand form used only in producing silicon carbide, sillimanite, silver, sodium chloride, sulphur, talc, tin, titanium, titanomagnetite, tungsten, uranium, wollastonite, zeolite, zinc, and zircon:
(b)
includes a mineral that is declared to be an industrial mineral in a notice given by the Minister.
Minister to consider
(2)
Before giving a notice about a particular mineral, the Minister must consider whether the mineral is or is likely to be of importance—
(a)
in the industrial development of New Zealand:
(b)
as a means of reducing the quantity of industrial minerals or industrial rock required to be imported into New Zealand:
(c)
as an item of export from New Zealand.
Secondary legislation
(3)
A notice under subsection (1)(b) is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
Defined in this Act: listed industrial mineral, mineral, Minister, New Zealand
| Legislation Act 2019 requirements for secondary legislation made under this section | ||||
| Publication | PCO must publish it on the legislation website and notify it in the Gazette | LA19 s 69(1)(c) | ||
| Presentation | The Minister must present it to the House of Representatives | LA19 s 114, Sch 1 cl 32(1)(a) | ||
| Disallowance | It may be disallowed by the House of Representatives | LA19 ss 115, 116 | ||
| This note is not part of the Act. | ||||
Section CU 8: replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CU 8(1)(b): amended, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section CU 8(2): amended, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section CU 8(3) heading: inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section CU 8(3): inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
CU 9 Some definitions
Meaning of mineral mining asset
(1)
Mineral mining asset means—
(a)
a mining or prospecting right:
(b)
an exploration permit, a prospecting permit, or a mining permit:
(c)
a share or partial interest in an asset described in paragraph (a) or (b).
Inclusion for particular purpose
(2)
For the purposes of section GB 20 (Arrangements involving petroleum and mineral mining), a mineral mining asset also includes an asset that is acquired by a mineral miner for the purposes of their mining operations or associated mining operations.
Exclusion
(3)
A mineral mining asset does not include land.
Meaning of mining or prospecting right
(4)
For the purposes of this section, mining or prospecting right—
(a)
means an authority, concession, easement, lease, licence, option, permit, privilege, right, or title relating to exploring, searching, or mining for, or carrying on an operation to recover, a listed industrial mineral; and
(b)
includes a share or interest in any such authority, concession, easement, lease, licence, option, permit, privilege, right, or title.
Defined in this Act: associated mining operations, exploration permit, land, lease, listed industrial mineral, mineral miner, mineral mining asset, mining operations, mining or prospecting right, mining permit, permit, prospecting permit
Section CU 9: replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 10 Mining asset used to derive income other than income from mining
[Repealed]Section CU 10: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 11 Meaning of asset for sections CU 3 to CU 10
[Repealed]Section CU 11: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 12 Application of sections to resident mining operators
[Repealed]Section CU 12: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 13 Application of sections to non-resident mining operators
[Repealed]Section CU 13: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 14 Recovery of reinvestment profit on disposal of mining shares
[Repealed]Section CU 14: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 15 Recovery of reinvestment profit not used for mining purposes
[Repealed]Section CU 15: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 16 Recovery of reinvestment profit on repayment of loans
[Repealed]Section CU 16: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 17 Repayment by mining company of amount written off
[Repealed]Section CU 17: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 18 Amount treated as repayment for purposes of section CU 17: excess
[Repealed]Section CU 18: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 19 Amount treated as repayment for purposes of section CU 17: net income
[Repealed]Section CU 19: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 20 Mining company or mining holding company liquidated
[Repealed]Section CU 20: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Definitions[Repealed]
Heading: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 21 Meaning of income from mining
[Repealed]Section CU 21: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 22 Meaning of mining company
[Repealed]Section CU 22: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 23 Meaning of mining development expenditure
[Repealed]Section CU 23: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 24 Meaning of mining exploration expenditure
[Repealed]Section CU 24: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 25 Meaning of mining operations
[Repealed]Section CU 25: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 26 Meaning of mining venture
[Repealed]Section CU 26: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 27 Meaning of resident mining operator
[Repealed]Section CU 27: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 28 Meaning of specified mineral
[Repealed]Section CU 28: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CU 29 Other definitions
[Repealed]Section CU 29: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Subpart CV—Income specific to certain entities
Contents
CV 1 Group companies
Income
(1)
An amount that a company derives in an income year and that would not otherwise be income of the company is treated as its income if—
(a)
the company is for that income year part of a wholly-owned group of companies; and
(b)
had the group of companies been a single company, the amount would have been income of that single company.
Relationship with section CB 15D
(2)
Subsection (1) is overridden by section CB 15D (Kāinga Ora–Homes and Communities and wholly-owned group).
Defined in this Act: amount, company, income, income year, wholly-owned group of companies
Compare: 2004 No 35 s CV 1
Section CV 1(1) heading: inserted (with effect on 1 July 2017), on 18 March 2019, by section 134(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CV 1(2): inserted (with effect on 1 July 2017), on 18 March 2019, by section 134(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CV 1(2): amended (with effect on 1 October 2019), on 23 March 2020, by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CV 2 Consolidated groups: income of company in group
When this section applies
(1)
This section applies for the purposes of section FM 9 (Amounts that are company’s income) to an amount derived by a company that is part of a consolidated group, when the amount would be income of the group if the group were 1 company.
Income
(2)
The amount is treated as income of the company.
Relationship with sections CB 15C and CB 15D
(3)
Subsection (2) is overridden by sections CB 15C and CB 15D (which apply to bodies linked or associated with a local authority or companies in the same wholly-owned group as Kāinga Ora–Homes and Communities).
Defined in this Act: amount, company, consolidated group, income
Compare: 2004 No 35 s HB 2(1)(e)
Section CV 2(1): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 27 February 2014, by section 15(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CV 2(3) heading: replaced (with effect on 1 July 2017), on 18 March 2019, by section 135 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CV 2(3): replaced (with effect on 1 July 2017), on 18 March 2019, by section 135 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CV 2(3): amended (with effect on 1 October 2019), on 23 March 2020, by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CV 3 Consolidated groups: arrangement for disposal of shares
When this section applies
(1)
This section applies for the purposes of section FM 23 (Arrangements for disposal of shares) when shares in company A that is part of a consolidated group are disposed of by another company for consideration that is less than would have been received in an arm’s length transaction because of a reduction in the value of company A’s assets.
Income
(2)
The amount that would have been received in an arm’s length transaction is treated as income derived by the other company at the time of disposal.
Defined in this Act: amount, company, consolidated group, income
Compare: 2004 No 35 s FD 10(8)
CV 4 Amalgamated companies: amount derived after amalgamation
When this section applies
(1)
This section applies for the purposes of section FO 7 (Income derived after amalgamation) when an amount is derived by the amalgamated company after an amalgamation as a result of something that an amalgamating company did or did not do.
Income
(2)
The amount is income of the amalgamated company in the income year in which it is derived if it would have been income of an amalgamating company but for the amalgamation.
Defined in this Act: amalgamated company, amalgamating company, amount, income, income year
Compare: 2004 No 35 s FE 4(b)
CV 5 Statutory producer boards
A levy received by a statutory producer board, other than a levy charged specifically for capital development, is income.
Defined in this Act: income, levy, statutory producer board
Compare: 2004 No 35 s OC 3(c)
CV 6 Crown Research Institutes
Income
(1)
An amount that a Crown Research Institute derives is income of the institute if the amount is provided to the institute for the purposes of—
(a)
any 1 or more of the activities listed in section 7 of the Research, Science, and Technology Act 2010; or
(b)
producing outputs relating to public good science and technology.
Meaning
(2)
In this section, public good science and technology means science or technology—
(a)
that is likely to increase knowledge or understanding of the physical, biological, or social environment; or
(b)
that is likely to develop, maintain, or increase skills or scientific or technological expertise that is of particular importance to New Zealand; or
(c)
that may be of benefit to New Zealand, but is unlikely to be funded, or adequately funded, from non-governmental sources.
Defined in this Act: amount, Crown Research Institute, income
Compare: 2004 No 35 s CV 2
Section CV 6: substituted, on 1 February 2011, by section 18 of the Research, Science, and Technology Act 2010 (2010 No 131).
CV 7 Australian wine producer rebate
An amount of Australian wine producer rebate derived by a New Zealand resident wine producer is income of the wine producer.
Defined in this Act: amount, Australian wine producer rebate, income, New Zealand resident
Compare: 2004 No 35 s CV 3
CV 8 Regulations: Australian wine producer rebate
Order in Council
(1)
For the purpose of enabling the Commissioner to administer the entitlement of New Zealand resident wine producers to Australian wine producer rebates for wine produced in New Zealand, the Governor-General may by Order in Council make regulations relating to—
(a)
the claim by a New Zealand resident wine producer for payment of an Australian wine producer rebate for wine produced in New Zealand that is sold in Australia:
(b)
the approval or verification of the entitlement of a New Zealand resident wine producer to a payment of an Australian wine producer rebate:
(c)
any matter necessary to give effect to a provision relating to Australian wine producer rebates in the agreement for the time being in force between the Government of New Zealand and the Government of Australia for the avoidance of double taxation and the prevention of fiscal evasion in relation to taxes on income.
Force and effect
(2)
An Order in Council under subsection (1)—
(a)
has force and effect despite any provision in this Act or any other Inland Revenue Act:
(b)
may come into force on or after 1 July 2005:
(c)
may apply for Australian financial years commencing on or after 1 July 2005.
Definitions
(3)
In this section,—
Australian financial year means a year starting on and including 1 July
wine has the meaning given in section 31-1 of A New Tax System (Wine Equalisation Tax) Act 1999 (Aust) and regulations made under that Act.
Secondary legislation
(4)
An Order in Council under subsection (1)—
(a)
is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements); but
(b)
commences in accordance with subsection (2), even if it is not yet published.
Defined in this Act: Australian financial year, Australian wine producer rebate, Inland Revenue Acts, New Zealand resident, pay, wine
Compare: 2004 No 35 s CV 4
| Legislation Act 2019 requirements for secondary legislation made under this section | ||||
| Publication | PCO must publish it on the legislation website and notify it in the Gazette | LA19 s 69(1)(c) | ||
| Presentation | The Minister must present it to the House of Representatives | LA19 s 114, Sch 1 cl 32(1)(a) | ||
| Disallowance | It may be disallowed by the House of Representatives | LA19 ss 115, 116 | ||
| This note is not part of the Act. | ||||
CV 9 Supplementary dividend holding companies
[Repealed]Section CV 9: repealed, on 26 June 2019, by section 46 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
CV 10 Foreign dividend payment account companies or conduit tax relief companies
[Repealed]Section CV 10: repealed (with effect on 30 June 2009), on 6 October 2009, by section 39(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CV 11 Maori authorities
Income
(1)
An amount that a member of a Maori authority derives as a distribution from the Maori authority is income of the member if the amount is—
(a)
a notional distribution under section HF 5 (Notional distributions of co-operative companies); or
(b)
a taxable Maori authority distribution under section HF 7 (Taxable Maori authority distributions).
When credits attached
(2)
The amount of a taxable Maori authority distribution or notional distribution is increased by a credit that is attached or is treated as attached under section RE 24 (When amount of tax treated as Maori authority credit).
Defined in this Act: amount, co-operative company, Maori authority, Maori authority credit, member, taxable Maori authority distribution
Compare: 2004 No 35 ss HI 4(3), HI 5(2), (3), HI 7
CV 12 Trustees: amounts received after person’s death
To the extent to which section HC 8(2) (Amounts received after person’s death) applies to an amount that a trustee of an estate of a deceased person receives in an income year, the amount is income of the trustee.
Defined in this Act: amount, income, income year, trustee
Compare: 2004 No 35 s HH 8
Section CV 12: amended (with effect on 1 April 2022), on 31 March 2023, by section 21(1) (and see section 21(2) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
CV 13 Amounts derived from trusts
An amount derived by a person is income of the person if it is—
(a)
beneficiary income to which sections HC 6 (Beneficiary income) and HC 17 (Amounts derived as beneficiary income) apply; or
(b)
a settlement on trust of property of the kind described in section HC 7(3) (Trustee income); or
(c)
a taxable distribution from a foreign trust to which section HC 18 (Taxable distributions from foreign trusts) applies.
Defined in this Act: amount, beneficiary income, foreign trust, income, settlement, settlor, taxable distribution, trustee income
CV 14 Distributions from community trusts
To the extent to which section HC 21 (Distributions from community trusts) applies to treat an amount that a community trust distributes to a person as income, the amount is income of the person.
Defined in this Act: amount, community trust, distribution, income
Compare: 2004 No 35 s HH 3(5A)
CV 15 Amounts derived from trusts while person absent from New Zealand
To the extent to which section HC 23 (Temporary absences of beneficiaries) applies to an amount of beneficiary income or taxable distribution, the amount is income of the person derived on the day on which the person becomes resident in New Zealand again.
Defined in this Act: amount, beneficiary income, income, resident in New Zealand, taxable distribution
Compare: 2004 No 35 s HH 3(3)
CV 16 Non-resident shippers
When this section applies
(1)
This section applies when a ship that belongs to, or is chartered by, a non-resident person carries outside New Zealand cargo, mail, or passengers shipped or embarked in New Zealand.
Amount of income
(2)
Five percent of the amount payable to the person for the carriage, whether payable inside or outside New Zealand, is treated as income of the person.
Exemption
(3)
Despite subsection (2), the Commissioner may determine that some or all of an amount that would otherwise be income of a person under this section is a foreign-sourced amount.
Place of shipping
(4)
In this section, cargo, mail, or passengers shipped or embarked at a port in New Zealand for carriage outside New Zealand are treated as carried outside New Zealand from that port, even though the ship may call at another port in New Zealand before finally leaving New Zealand.
Defined in this Act: amount, Commissioner, exempt income, foreign-sourced amount, income, income tax, New Zealand, non-resident, pay, resident in New Zealand
CV 17 Non-exempt charities: taxation of tax-exempt accumulation
An amount of income of a person under section HR 12 (Non-exempt charities: treatment of tax-exempt accumulation) is income of the person for the income year that contains the day 1 year after the day of final decision.
Defined in this Act: day of final decision, person, income, income year, year
Section CV 17: replaced (with effect on 14 April 2014), on 30 June 2014, by section 22 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CV 17: amended (with effect on 14 April 2014), on 29 March 2018, by section 31 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CV 18 Hedging of currency movements in Australian non-attributing shares and attributing FDR method interests
The amount of income that a person has under section EM 6 (Income and expenditure for fair dividend rate hedge portions) is income of the person.
Defined in this Act: amount, income
Section CV 18: inserted, on 17 July 2013, by section 12 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
CV 19 Additional income for certain imputation credits
When this section applies
(1)
This section applies when a person has assessable income for the purposes of section LE 1 (Tax credits for imputation credits) because section LE 1(4B) applies (the LE 1(4B) income), and the LE 1(4B) income includes an imputation credit.
Income
(2)
For the income year to which the LE 1(4B) income relates, the person derives an amount of income equal to the amount of the tax credit for the imputation credit under section LE 8B (Dividend from certain FIF interests) except if the LE 1(4B) income relates to FIF income or loss calculated under—
(a)
the comparative value method; or
(b)
the deemed rate of return method.
Defined in this Act: assessable income, comparative value method, deemed rate of return method, FIF income, FIF loss, imputation credit, income, income year, tax credit
Section CV 19: inserted, on 1 April 2014, by section 16 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CV 19(2): replaced (with effect on 1 April 2014), on 30 June 2014, by section 23(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CV 19 list of defined terms comparative value method: inserted (with effect on 1 April 2014), on 30 June 2014, by section 23(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CV 19 list of defined terms deemed rate of return method: inserted (with effect on 1 April 2014), on 30 June 2014, by section 23(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CV 19 list of defined terms FIF income: inserted (with effect on 1 April 2014), on 30 June 2014, by section 23(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CV 19 list of defined terms FIF loss: inserted (with effect on 1 April 2014), on 30 June 2014, by section 23(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CV 20 Employee share schemes
An amount of income that a person has under section DV 27(9) (Employee share schemes) is income of the person.
Defined in this Act: amount, employee share scheme, income
Section CV 20: inserted, on 29 September 2018, by section 32 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Subpart CW—Exempt income
Contents
Income from business or trade-like activities
CW 1 Forestry companies established by the Crown, Maori owners, and holding companies acquiring land with standing timber from founders
When this section applies
(1)
This section applies when a forestry company acquires land with standing timber on it from a seller who is the Crown, the Maori owners, or a holding company of the forestry company.
Land disposed of by Maori Trustee, trustee for Maori owners, or Maori incorporation
(2)
For the purposes of subsection (1),—
(a)
land disposed of to the forestry company by the Maori Trustee or by a trustee for a Maori owner is treated as if it had been disposed of by the beneficial owners:
(b)
land disposed of to the forestry company by a Maori incorporation is treated as if it had been disposed of by the members of the incorporation.
Exempt income
(3)
The amount described in section CB 25(3) (Disposal of land with standing timber) is exempt income of the seller.
Relationship with section DP 9
(4)
Section DP 9 (Cost of acquiring timber: forestry business on land acquired from the Crown, Maori owners, or holding company) deals with the cost to the forestry company of acquiring the timber.
Defined in this Act: amount, exempt income, forestry company, holding company, Maori incorporation, Maori owners, standing timber, trustee
Compare: 2004 No 35 s CW 1
Section CW 1 heading: amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CW 1(1): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CW 1(2) heading: amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CW 1(2)(a): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CW 1(2)(b): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CW 1(4): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CW 1B Treaty of Waitangi claim settlements: rights to take timber
When this section applies
(1)
This section applies when a person’s right to take timber (the old right) is extinguished, and new rights (the new rights) to take timber are granted to the person in place of the old right, if—
(a)
the sole reason for the new rights replacing the old right is to facilitate a Treaty of Waitangi claim settlement process; and
(b)
the rights and obligations of the new rights are equivalent to the old right, ignoring differences that are solely for the reason in paragraph (a).
Exempt income
(2)
An amount under section CB 24(1)(b) (Disposal of timber or right to take timber) for the extinguishing of the old right, or for the granting of the new rights, is exempt income of the relevant person. The amount is not income under that section.
Exception
(3)
Subsection (2) does not apply to an amount to the extent it is compensation paid, for the new rights replacing the old right, to the person who is granted the new rights.
Relationship with section DP 9B
(4)
Section DP 9B (Treaty of Waitangi claim settlements: rights to take timber) deals with the cost of the new rights for the person who is granted them.
Defined in this Act: amount, exempt income, income, pay, person, right to take timber
Section CW 1B: inserted (with effect on 1 April 2008), on 29 August 2011, by section 7 of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
CW 2 Forestry encouragement agreements
When this section applies
(1)
This section applies when a person makes a forestry encouragement agreement under the Forestry Encouragement Act 1962.
Exempt income: advance
(2)
An amount of income advanced to the person under the agreement is exempt income, even if the person is later relieved from some or all of their liability to repay the principal.
Exempt income: interest
(3)
The amount from which the person is relieved in the circumstances described in subsection (4) is exempt income.
Circumstances for purposes of subsection (3)
(4)
The circumstances are that—
(a)
the person is liable to pay interest on an advance made under the agreement; and
(b)
the interest has not been paid; and
(c)
the person has been denied a deduction for the interest; and
(d)
the person is relieved from some or all of their liability to pay the interest.
Defined in this Act: amount, deduction, exempt income, income, interest, pay
Compare: 2004 No 35 s CW 2
CW 3 Forestry companies and Maori investment companies
When this section applies
(1)
This section applies when a forestry company or a Maori investment company issues a qualifying debenture.
Exempt income
(2)
Interest derived from the qualifying debenture is exempt income to the extent to which it is paid by the issue of a further qualifying debenture.
Defined in this Act: exempt income, forestry company, interest, Maori investment company, pay, qualifying debenture
Compare: 2004 No 35 s CW 3
CW 3B Pre-1990 forest land units: emissions trading scheme
[Repealed]Section CW 3B: repealed (with effect on 26 September 2008), on 6 October 2009, by section 40 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CW 3C Certain subdivisions of land
Exempt income
(1)
An amount that a person derives from disposing of land is exempt income if they are a co-owner of the land and—
(a)
the land is disposed of by the person to themselves and other co-owners, but to no third parties by any co-owner; and
(b)
as between the co-owners, the value of the land disposed of by them to each of themselves is proportionate to the value contributed by each co-owner for their acquisition of the land. For example: A contributes $10 for the acquisition of land worth $25, and B contributes $15. When A and B dispose of the land to themselves at a later date for a total of $50, A provides $20 and B provides $30. Because, as between themselves as co-owners, the disposal to each of themselves is proportionate in value to their acquisition contribution, amounts derived by A and B in relation to the disposal are exempt income.
Exception: 5% safe harbour
(2)
Despite subsection (1), if the person has the smallest proportion of the land as between co-owners and the land’s value at the time of disposal is not exactly proportionate to the acquisition value as between co-owners, income derived by the person from disposing of the land is nevertheless exempt income if the difference between the actual disposal proportion and the proportion required by subsection (1) for an exemption is less than 5%.
Defined in this Act: amount, dispose, exempt income, land, person
Section CW 3C: inserted (with effect on 27 March 2021), on 31 March 2023, by section 22 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Income from holding property (excluding equity)
CW 4 Annuities under life insurance policies
When this section applies
(1)
This section applies when—
(a)
a person is paid an annuity under a life insurance policy offered or entered into in New Zealand by a life insurer; or
(b)
a person is paid an annuity under a life insurance policy offered or entered into outside New Zealand by a life insurer resident in New Zealand.
Exempt income
(2)
The annuity is exempt income.
Excluded annuities
(3)
An annuity that is excluded income of a superannuation fund under section CX 40 (Superannuation fund deriving amount from life insurance policy) is not also exempt income of the fund under this section.
Defined in this Act: excluded income, exempt income, life insurance policy, life insurer, New Zealand, offered or entered into in New Zealand, pay, resident in New Zealand, superannuation fund
Compare: 2004 No 35 s CW 4
CW 5 Payments of interest: post-war credits
Interest derived by a person under section 2 of the Income Tax (Repayment of Post-War Credits) Act 1959 of the United Kingdom Parliament is exempt income.
Defined in this Act: exempt income, interest
Compare: 2004 No 35 s CW 5
CW 6 Payments of interest: farm mortgages
Exempt income
(1)
Fifty percent of the interest that a person derives from a mortgage securing a loan made by a seller of a farm is exempt income, if—
(a)
the Rural Banking and Finance Corporation of New Zealand approves the mortgage; and
(b)
the Corporation gives the Commissioner notice of the approval and each variation.
Exclusions
(2)
This section does not apply if the person is—
(a)
an absentee; or
(b)
a company; or
(c)
a Maori authority; or
(d)
a public authority; or
(e)
a trustee liable for income tax under subpart HC (Trusts) and section HZ 2 (Trusts that may become complying trusts); or
(f)
an unincorporated body.
Relationship with sections LZ 6 to LZ 8
(3)
A person who derives interest that is exempt income under this section is not entitled to a tax credit for the interest under sections LZ 6 to LZ 8 (which relate to interest on home vendor mortgages).
Defined in this Act: absentee, Commissioner, company, exempt income, income tax, interest, Maori authority, mortgage, notice, public authority, trustee
Compare: 2004 No 35 s CW 6
CW 7 Foreign-sourced interest
Interest that a person derives from a country or territory outside New Zealand is exempt income if—
(a)
the person was not resident in New Zealand during the period for which the interest was payable; and
(b)
the interest was exempt under the laws of the overseas country or territory from a tax that is substantially the same as income tax imposed under this Act.
Defined in this Act: exempt income, income tax, interest, New Zealand, pay, resident in New Zealand
Compare: 2004 No 35 s CW 7
CW 8 Money lent to government of New Zealand
What this section applies to
(1)
This section applies to—
(a)
interest derived from money lent under a binding contract entered into on or after 29 July 1983; and
(b)
a redemption payment made on a commercial bill to which both the following apply; issue is defined in section 2 of the Bills of Exchange Act 1908:
(i)
it was issued on or after 29 July 1983; and
(ii)
it was not issued under a binding contract entered into before that date.
Exempt income
(2)
Interest or a redemption payment that is payable outside New Zealand is exempt income if—
(a)
it is derived by a person who is a non-resident; and
(b)
it is derived from or in relation to money lent to—
(i)
the government of New Zealand; or
(ii)
a local authority or a public authority; and
(c)
in the case of money lent to a local or public authority,—
(i)
it is lent for the purposes of a non-commercial activity carried on in New Zealand by the local or public authority; and
(ii)
the government of New Zealand has approved the exempt status of the interest or redemption payment.
Defined in this Act: commercial bill, exempt income, interest, local authority, money lent, New Zealand, non-resident, pay, public authority, redemption payment
Compare: 2004 No 35 s CW 8
CW 8B Certain amounts derived from use of assets
When this section applies
(1)
This section applies when a person derives income from the use of an asset described in section DG 3 (Meaning of asset for this subpart).
When person opts out of assets expenditure rules
(2)
Income that the person derives from the use of the asset is exempt income if—
(a)
they meet the requirements of section DG 21 (Opting out of treatment under this subpart); and
(b)
they choose under that section to treat the income as exempt income.
Below-market use and use by associates
(3)
An amount of income that the person derives in relation to the private use of an asset as described in section DG 4(1) (Meaning of private use for this subpart) is exempt income.
Defined in this Act: amount, asset, exempt income, income
Section CW 8B: inserted (with effect on 1 April 2013 and applying for the 2013–14 and later income years for an item of property referred to in section DG 3(2)(a)(i), and for the 2014–15 and later income years for an item of property referred to in section DG 3(2)(a)(ii) and (iii)), on 17 July 2013, by section 13(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Income from equity
CW 9 Dividend derived from foreign company
Exempt income
(1)
A dividend from a foreign company is exempt income if derived by a company that is resident in New Zealand.
Exclusions
(2)
Subsection (1) does not apply to a dividend if the dividend is paid in relation to rights that are—
(a)
a direct income interest that meets the requirements of neither section EX 34 (CFC rules exemption) nor section EX 35 (Exemption for interest in FIF resident in Australia) and is excluded from being an attributing interest by—
(i)
section EX 31 (Exemption for ASX-listed Australian companies):
(ii)
section EX 32 (Exemption for Australian unit trusts with adequate turnover or distributions):
(iii)
section EX 36 (Venture capital company emigrating to grey list country: 10-year exemption):
(iv)
section EX 37 (Grey list company owning New Zealand venture capital company: 10-year exemption):
(v)
section EX 37B (Share in grey list company acquired under venture investment agreement):
(vi)
[Repealed](b)
a fixed-rate foreign equity:
(c)
rights to a deductible foreign equity distribution.
Non-application to certain dividends
(3)
This section does not apply to a dividend—
(a)
derived by a portfolio investment entity:
(b)
excluded by section CD 36(2) (Foreign investment fund income) from the effect of section CD 36(1).
Defined in this Act: company, dividend, deductible foreign equity distribution, exempt income, fixed-rate foreign equity, portfolio investment entity, resident in New Zealand
Section CW 9: substituted (with effect on 30 June 2009), on 6 October 2009, by section 41(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CW 9(2)(a): amended (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 9(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CW 9(2)(a)(vi): repealed, on 18 March 2019, by section 136 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CW 9(3) heading: replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 9(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CW 9(3): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 9(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CW 9 list of defined terms multi-rate PIE: repealed (with effect on 1 July 2011), on 7 May 2012, by section 9(3)(a) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CW 9 list of defined terms portfolio investment entity: inserted (with effect on 1 July 2011), on 7 May 2012, by section 9(3)(b) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section CW 9 list of defined terms portfolio tax rate entity: repealed (with effect on 1 July 2011), on 7 May 2012, by section 9(3)(a) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
CW 10 Dividend within New Zealand wholly-owned group
Exempt income: dividends within wholly-owned groups
(1)
A dividend is exempt income if—
(a)
it is derived by a company (the recipient) that is—
(i)
not a foreign company; or
(ii)
a New Zealand resident company that is treated under a double tax agreement as not being resident in New Zealand; and
(b)
it is derived from a company (the payer) that is part of the same wholly-owned group of companies as the recipient at the time the dividend is derived; and
(c)
the payer is not a foreign company; and
(d)
the payer is not a company that can derive only exempt income; and
(e)
the requirements of subsections (5) and (6) are met; and
(f)
for a dividend derived by a company described in paragraph (a)(ii), 1 or more of the following apply:
(i)
the recipient is treated as not being resident in New Zealand under a double tax agreement between New Zealand and Australia:
(ii)
immediately after the dividend is derived by the recipient, the recipient has only shareholders that would have full relief from New Zealand tax under a double tax agreement on a dividend paid to them at that time by the recipient if the recipient were treated as being a company that is not a foreign company:
(iii)
the total amount of dividends derived by the recipient from the payer is less than $1 million in each 12-month period that includes the date on which the dividend is derived by the recipient:
(iv)
the recipient becomes a company that is not a foreign company within 2 years of the date on which it derived the dividend and does not itself pay a dividend in the period that starts on the date on which it derived the dividend and ends on the date on which it becomes a company that is not a foreign company.
Exempt income: fully imputed dividends within wholly-owned groups
(1B)
A dividend is exempt income to the extent to which it is fully imputed if—
(a)
it is derived by a company described in subsection (1)(a)(ii); and
(b)
the requirements of subsection (1)(b) to (e) are met; and
(c)
the requirement of subsection (1)(f) is not met.
Aligned balance dates[Repealed]
(2)
[Repealed]Exclusion: dividends from council-controlled organisations[Repealed]
(3)
[Repealed]Exclusion: debt release dividends[Repealed]
(4)
[Repealed]Exclusion: certain friendly society dividends
(5)
The dividend must not be derived by a friendly society from a company registered as an insurer under the Accident Insurance Act 1998 that is under the control of the society.
Exclusion: certain sickness, accident, or death benefit fund dividends
(6)
The dividend must not be derived by a trustee in trust for a sickness, accident, or death benefit fund from a company registered as an insurer under the Accident Insurance Act 1998 that is under the control of the trustee.
Defined in this Act: amount, company, council-controlled organisation, dividend, double tax agreement, exempt income, foreign company, friendly society, fully imputed, local authority, New Zealand, New Zealand resident, New Zealand tax, resident in New Zealand, shareholder, sickness, accident, or death benefit fund, trustee, wholly-owned group of companies
Compare: 2004 No 35 s CW 10
Section CW 10(1) heading: replaced (with effect on 30 August 2022), on 31 March 2023, by section 23(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CW 10(1)(a): replaced (with effect on 30 August 2022), on 31 March 2023, by section 23(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CW 10(1)(e): amended (with effect on 30 August 2022), on 31 March 2023, by section 23(3) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CW 10(1)(e): amended, on 1 April 2022, by section 55(1) (and see section 55(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CW 10(1)(f): inserted (with effect on 30 August 2022), on 31 March 2023, by section 23(4) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CW 10(1B) heading: inserted (with effect on 30 August 2022), on 31 March 2023, by section 23(5) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CW 10(1B): inserted (with effect on 30 August 2022), on 31 March 2023, by section 23(5) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CW 10(2) heading: repealed, on 29 August 2011, pursuant to section 8(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CW 10(2): repealed, on 29 August 2011, by section 8(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CW 10(3) heading: repealed, on 1 April 2022, pursuant to section 55(2) (and see section 55(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CW 10(3): repealed, on 1 April 2022, by section 55(2) (and see section 55(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CW 10(4) heading: repealed (with effect on 1 April 2015), on 30 March 2017, pursuant to section 31 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CW 10(4): repealed (with effect on 1 April 2015), on 30 March 2017, by section 31 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CW 10 list of defined terms amount: inserted (with effect on 30 August 2022), on 31 March 2023, by section 23(6) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CW 10 list of defined terms deduction: repealed, on 29 March 2018, by section 33 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CW 10 list of defined terms double tax agreement: inserted (with effect on 30 August 2022), on 31 March 2023, by section 23(6) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CW 10 list of defined terms fully imputed: inserted (with effect on 30 August 2022), on 31 March 2023, by section 23(6) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CW 10 list of defined terms income year: repealed, on 29 March 2018, by section 33 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CW 10 list of defined terms net income: repealed, on 29 March 2018, by section 33 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CW 10 list of defined terms New Zealand resident: inserted (with effect on 30 August 2022), on 31 March 2023, by section 23(6) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CW 10 list of defined terms New Zealand tax: inserted (with effect on 30 August 2022), on 31 March 2023, by section 23(6) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CW 10 list of defined terms shareholder: inserted (with effect on 30 August 2022), on 31 March 2023, by section 23(6) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CW 10 list of defined terms tax avoidance arrangement: repealed, on 29 March 2018, by section 33 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CW 10B Dividends derived by council-controlled organisation holding companies
A dividend derived by a council-controlled organisation (the recipient) from another person (the payer) is exempt income of the recipient if—
(a)
the payer is—
(i)
a council-controlled organisation; or
(ii)
a port company, a subsidiary of a port company, or an energy company that would be a council-controlled organisation in the absence of section 6(4) of the Local Government Act 2002; and
(b)
at the time the dividend is derived, 100% of the voting interests in the payer are held by—
(i)
2 or more local authorities; or
(ii)
a combination of 1 or more Ministers of the Crown, on behalf of the Crown, and 1 or more local authorities; and
(c)
at the time the dividend is derived, a local authority holds 100% of the voting interests in the recipient.
Defined in this Act: council-controlled organisation, dividend, exempt income, local authority, voting interest
Section CW 10B: inserted, on 1 April 2022, by section 56(1) (and see section 56(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
CW 11 Dividend of conduit tax relief holding company
[Repealed]Section CW 11: repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 10(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
CW 12 Proceeds of share disposal by qualifying foreign equity investor
Exempt income: proceeds from disposal of share in resident company
(1)
An amount that a person derives from the sale or other disposal by a qualifying foreign equity investor of a share, or option to buy a share, in a company (the resident company) is exempt income if—
(a)
the resident company is resident in New Zealand; and
(b)
the share or option, or an option or convertible note relating to the share, is bought on a day that is 12 months or more before the day of the sale or other disposal; and
(c)
the person who buys the share or option, or the option or convertible note relating to the share, and disposes of the share or option is a qualifying foreign equity investor from the time of the purchase to the time of the disposal; and
(d)
at some time in the 12-month period that starts from the time of the purchase referred to in paragraph (b), the shares of the resident company are quoted on no official list of a recognised exchange; and
(e)
the resident company meets the requirements of either or both of subsections (2) and (3).
Requirements relating to main activity of resident company
(2)
A resident company meets the requirements of this subsection if, throughout the period referred to in subsection (1)(c), the resident company does not have as a main activity 1 or more of—
(a)
land development:
(b)
land ownership:
(c)
mining:
(d)
provision of financial services:
(e)
insurance:
(f)
construction of public infrastructure assets:
(g)
acquisition of public infrastructure assets:
(h)
investing with a main aim of deriving, from the investment, income in the form of interest, dividends, rent, or personal property lease payments that are not royalties.
Requirements relating to resident company that provides capital to others
(3)
A resident company that has a main activity of providing capital in the form of debt or equity funding to other companies meets the requirements of this subsection if,—
(a)
throughout the period referred to in subsection (1)(c), each other company that is resident in New Zealand—
(i)
does not have, as a main activity, an activity that is referred to in subsection (2)(a) to (c) and (e) to (g); and
(ii)
does not have, as a main activity, an activity that is referred to in subsection (2)(d) and (h) and is not the provision of capital to other companies; and
(iii)
does not provide capital, directly or indirectly, to a company that is resident in New Zealand and has, as a main activity, an activity that is referred to in subsection (2)(a) to (c) and (e) to (g); and
(iv)
does not provide capital, directly or indirectly, to a company that is resident in New Zealand and has, as a main activity, an activity that is referred to in subsection (2)(d) and (h) and is not the provision of capital to other companies; and
(b)
throughout the period referred to in subsection (1)(c), each other company that is not resident in New Zealand does not provide capital, directly or indirectly, to a company that is resident in New Zealand and has, as a main activity, an activity that is referred to in subsection (2)(a) to (h); and
(c)
for each other company there is a time in the period referred to in subsection (1)(c) at which—
(i)
the shares of the other company are quoted on no official list of a recognised exchange; and
(ii)
the shares of the resident company are quoted on no official list of a recognised exchange.
Some definitions
(4)
In this section,—
foreign exempt entity means a person who—
(a)
is established as a legal entity under the laws of a territory that is approved for the purposes of this section by the Governor-General by an Order in Council or under the laws of a part of such a territory; and
(b)
has persons (the members) who hold interests in the capital of the legal entity and who are entitled to shares of the income of the legal entity; and
(c)
under the laws of the territory or part of the territory is not subject to a tax on income other than as a body that handles income of the members; and
(d)
is resident in no territory that has laws that treat the legal entity as being subject to a tax on income other than as a body that handles income of the members; and
(e)
does not have a member who—
(i)
has, when treated as holding the interests of any person who is associated with the member, an interest of 10% or more in the capital of the legal entity; and
(ii)
is resident in no territory that is approved for the purpose of this section by the Governor-General by an Order in Council; and
(f)
does not have a member who, when treated as holding the interests of any person who is associated with the member, has an interest of 10% or more in the capital of the legal entity and who would—
(i)
be entitled to receive an amount derived from a disposal to which this section would apply; and
(ii)
receive an amount referred to in subparagraph (i) that, in the absence of this section, would have been reduced by a tax imposed by the Act on the amount or on the proceeds of the disposal in the hands of the legal entity; and
(iii)
in any circumstances under the laws of the territory in which the member is resident or under the laws of part of the territory be entitled to receive from the government of the territory or part of the territory a financial benefit in the form of a payment, credit, rebate, forgiveness, or other compensation for the reduction referred to in subparagraph (ii); and
(g)
does not have a holder of a direct or indirect interest in the capital of the legal entity who,—
(i)
is resident in New Zealand:
(ii)
when treated as holding the interests of a person associated with the resident, holds a total direct or indirect interest of 10% or more
foreign exempt partnership means an unincorporated body that—
(a)
is established under the laws of a territory that is approved for the purposes of this section by the Governor-General by an Order in Council or under the laws of a part of such a territory; and
(b)
consists of persons (the partners); and
(c)
under the laws of the territory or part of the territory is not subject to a tax on income other than as a body that handles income of the partners; and
(d)
has at least 1 partner (the general partner) who is liable for all debts of the unincorporated body and who has significant involvement in, and control of, the business activities of the unincorporated body; and
(e)
has at least 1 partner (the special partner) whose liability for debts of the unincorporated body is limited and who has limited involvement in, and control of, the business activities of the unincorporated body; and
(f)
does not have a general partner who is resident in no territory that is approved for the purposes of this section by the Governor-General by an Order in Council; and
(g)
does not have a partner who—
(i)
has, when treated as holding the interests of any person who is associated with the partner, an interest of 10% or more in the capital of the unincorporated body; and
(ii)
is resident in no territory that is approved for the purpose of this section by the Governor-General by an Order in Council; and
(h)
does not have a partner who, when treated as holding the interests of any person who is associated with the partner, has an interest of 10% or more in the capital of the unincorporated body and who—
(i)
would under the Act in the absence of this section, be subject to tax on an amount derived from a disposal to which this section would apply; and
(ii)
would in any circumstances under the laws of the territory in which the partner is resident or under the laws of part of the territory be entitled to receive from the government of the territory or part of the territory a financial benefit in the form of a payment, credit, rebate, forgiveness, or other compensation for a payment of the tax referred to in subparagraph (i); and
(i)
does not have a holder of a direct or indirect interest in the capital of the unincorporated body who,—
(i)
is resident in New Zealand:
(ii)
when treated as holding the interests of a person associated with the resident, holds a total direct or indirect interest of 10% or more
foreign exempt person means a person who—
(a)
is resident in a territory that is approved for the purposes of this section by the Governor-General by an Order in Council; and
(b)
is not a legal entity that meets the requirements of paragraphs (a) to (c) of the definition of foreign exempt entity; and
(c)
is not part of an unincorporated body that meets the requirements of paragraphs (a) to (c) of the definition of foreign exempt partnership; and
(d)
under the laws of the territory or part of the territory derives the proceeds from a disposal of shares or options that are held by the person; and
(e)
is not a person who—
(i)
would under the Act in the absence of this section, be subject to tax on an amount derived from a disposal to which this section would apply; and
(ii)
would in any circumstances under the laws of the territory in which the person is resident or under the laws of part of the territory be entitled to receive from the government of the territory or part of the territory a financial benefit in the form of a payment, credit, rebate, forgiveness, or other compensation for a payment of the tax referred to in subparagraph (i); and
(f)
does not have a holder of a direct or indirect interest in the capital of the legal entity who,—
(i)
is resident in New Zealand:
(ii)
when treated as holding the interests of a person associated with the resident, holds a total direct or indirect interest of 10% or more
qualifying foreign equity investor means a person who is not resident in New Zealand and who is 1 or more of—
(a)
a foreign exempt entity:
(b)
a person who is part of a foreign exempt partnership:
(c)
a foreign exempt person.
Residency of territory
(5)
For the purpose of this section, whether a person is resident in a territory other than New Zealand is determined—
(a)
under a double tax agreement that is in force between New Zealand and the territory, if there is an agreement and it provides for the residency of the person; or
(b)
otherwise, under the laws of the territory.
Approval and withdrawal of approval for territory
(6)
The Governor-General may by Order in Council—
(a)
approve a territory for the purpose of this section:
(b)
withdraw the approval of a territory for the purpose of this section.
Secondary legislation
(7)
An Order in Council under subsection (6) is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
Defined in this Act: amount, associated, business, company, dividend, double tax agreement, exempt income, foreign exempt entity, foreign exempt partnership, foreign exempt person, income, insurance, interest, land, pay, personal property lease payment, qualifying foreign equity investor, recognised exchange, resident in New Zealand, royalty, share, tax
Compare: 2004 No 35 s CW 11B
| Legislation Act 2019 requirements for secondary legislation made under this section | ||||
| Publication | PCO must publish it on the legislation website and notify it in the Gazette | LA19 s 69(1)(c) | ||
| Presentation | The Minister must present it to the House of Representatives | LA19 s 114, Sch 1 cl 32(1)(a) | ||
| Disallowance | It may be disallowed by the House of Representatives | LA19 ss 115, 116 | ||
| This note is not part of the Act. | ||||
Section CW 12(4): substituted (with effect on 1 April 2008), on 6 October 2009, by section 42 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CW 12(4) qualifying foreign equity investor: inserted (with effect on 1 April 2008), on 27 February 2014, by section 17 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CW 12(5)(a): substituted, on 1 April 2008, by section 328(4) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CW 12(5)(b): substituted, on 1 April 2008, by section 328(4) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CW 12(7) heading: inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section CW 12(7): inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section CW 12 list of defined terms 1990 version provisions: repealed, on 1 April 2010, by section 594 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CW 13 Proceeds from share or option acquired under venture investment agreement
Exempt income: proceeds from share or option
(1)
An amount of income that a non-resident derives from the sale or other disposal of a share, or option to buy a share, in a company is exempt income if the requirements of subsections (2) to (5) are met.
Requirement relating to company at time of acquisition
(2)
The first requirement is that, when the non-resident first acquires a share, or option to buy a share, in the company in a way that meets the requirements of subsection (3), the company must have in New Zealand—
(a)
more than 50% in value of the company’s assets; and
(b)
more than 50% in number of the company’s employees.
Requirement relating to acquisition of first share or option
(3)
The second requirement is that, when the non-resident first acquires a share or option to buy a share (the first interest) in the company, a person (the venture capital manager) must acquire, at the same time and on the same terms,—
(a)
the first interest, on behalf of the non-resident; and
(b)
another share or option that confers the same rights and imposes the same obligations as the first interest—
(i)
on behalf of the Venture Investment Fund or a company owned by the Venture Investment Fund; and
(ii)
under a venture investment agreement.
Continuing requirement relating to company
(4)
The third requirement is that, while the non-resident holds the share or option, the company must not have 1 or more of the following as a main activity:
(a)
land development:
(b)
land ownership:
(c)
mining:
(d)
provision of financial services:
(e)
insurance:
(f)
construction of public infrastructure assets:
(g)
acquisition of public infrastructure assets:
(h)
investing with a main aim of deriving, from the investment, income in the form of interest, dividends, rent, or personal property lease payments that are not royalties.
Requirement relating to situation at disposition of share or option
(5)
The fourth requirement is that, when the non-resident disposes of the share or option,—
(a)
the venture capital manager must have complied with the venture capital manager’s obligations under the venture investment agreement; and
(b)
the non-resident must have complied with the non-resident’s obligations under any agreement between the non-resident and the Venture Investment Fund or a company owned by the Venture Investment Fund; and
(c)
no person who is resident in New Zealand and no group of associated persons who are resident in New Zealand has a direct or indirect interest of more than 10% in the share or option.
Venture investment agreement
(6)
In this section, venture investment agreement means an agreement that—
(a)
is an agreement, relating to investment in companies, between parties that include—
(i)
a venture capital manager; and
(ii)
the Venture Investment Fund or a company owned by the Venture Investment Fund; and
(b)
provides for investments under the agreement to be managed by the venture capital manager; and
(c)
provides that an investment under the agreement must be in a company that, when the first investment in the company under the agreement is made, has in New Zealand—
(i)
more than 50% in value of the company’s assets; and
(ii)
more than 50% in number of the company’s employees.
Defined in this Act: employee, income, interest, non-resident, pay, resident in New Zealand, share, venture investment agreement, Venture Investment Fund
Compare: 2004 No 35 s CW 11C
CW 14 Dividends derived by qualifying companies
When this section applies
(1)
This section applies when a company derives a dividend (the derived dividend) after it becomes a qualifying company, if—
(a)
the derived dividend is derived less than 7 years after the company ceases to be a qualifying company; and
(b)
section CW 10 applies to the derived dividend; and
(c)
the company paid a dividend that section CW 15 applied to, when the company was a qualifying company.
Dividend not exempt income
(2)
The derived dividend is not exempt income under section CW 10, except to the extent to which section CW 9 applies.
Defined in this Act: company, dividend, exempt income, qualifying company
Section CW 14: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 March 2017, by section 32(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CW 14(1)(b): amended (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 30 March 2017, by section 33(1)(a) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CW 14(2): amended (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 30 March 2017, by section 33(1)(b) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CW 15 Dividends paid by qualifying companies
Exempt income of shareholder
(1)
To the extent to which the amount of a dividend that a qualifying company pays to a person resident in New Zealand is more than a fully imputed distribution, the amount is exempt income of the person.
Exempt income of beneficiary
(2)
If a dividend paid by a qualifying company to a trustee shareholder is, or becomes, beneficiary income of a beneficiary resident in New Zealand, the dividend is exempt income of the beneficiary.
Defined in this Act: beneficiary income, dividend, exempt income, fully imputed, pay, qualifying company, resident in New Zealand, shareholder, trustee
Compare: 2004 No 35 s HG 13(1)(a), (1A)
Section CW 15(1): substituted (with effect on 1 April 2008), on 6 October 2009, by section 43(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CW 15 list of defined terms bonus issue: repealed, on 2 November 2012, by section 15 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CW 15 list of defined terms fully imputed: inserted (with effect on 1 April 2008), on 6 October 2009, by section 43(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Employee or contractor income
CW 16 Allowance of Governor-General and other benefits and privileges
The following are exempt income:
(a)
the allowance of the Governor-General, paid under section 6 of the Governor-General Act 2010:
(b)
any benefit or privilege provided under an agreement made under section 11(1) of the Governor-General Act 2010 or an agreement referred to in section 28(1)(d) of that Act.
Defined in this Act: exempt income
Section CW 16: substituted, on 23 November 2010, by section 23 of the Governor-General Act 2010 (2010 No 122).
Section CW 16 list of defined terms exempt income: inserted (with effect on 1 April 2008), on 17 July 2013, by section 14 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
CW 16B Accommodation expenditure: out-of-town secondments and projects
When this section applies
(1)
This section applies when—
(a)
the employment duties of an employee require them to work at a distant workplace on an out-of town secondment or a project of limited duration; and
(b)
the period of the employee’s employment or service at the distant workplace is a period of continuous work; and
(c)
the employer—
(i)
provides accommodation for the employee for a period that falls within a time limit described in section CW 16C:
(ii)
incurs expenditure on the employee’s accommodation at the distant workplace for a period that falls within a time limit described in section CW 16C:
(iii)
incurs expenditure on the employee’s accommodation for necessary travel to and from the distant workplace in connection with the performance of their duties.
Exclusions
(2)
This section does not apply—
(a)
to an amount that is the value provided or expenditure incurred by the employer when, under the terms of the their employment, the employee would be entitled to a greater amount of employment income, should the employee choose, or have chosen, not to receive the benefit of the amount:
(b)
in relation to an out-of-town secondment, to a new employee of the employer.
Exempt income
(3)
The amount that is the value provided or expenditure incurred by the employer is exempt income of the employee.
Estimated expenditure
(4)
For the purposes of subsection (1)(c)(ii),—
(a)
an employer may make, for a relevant period, a reasonable estimate of the amount of expenditure likely to be incurred on an employee’s accommodation; and
(b)
the amount estimated is treated as if it were the amount incurred during the period to which the estimate relates.
Definitions for this section
(5)
In this section and sections CW 16C to CW 16F, CW 17CB, CZ 29, and CZ 30 (which relate to accommodation expenditure), as applicable,—
distant workplace, for an employee, means a workplace that—
(a)
is another workplace of the employee; and
(b)
is not within reasonable daily travelling distance of their residence
out-of-town secondment means the placement of an employee at a distant workplace—
(a)
because the employment duties of the employee require them to work at the distant workplace for the performance of those duties; and
(b)
for a period that, in their employer’s expectation at the start of the period of secondment, will last for no more than 2 years
period of continuous work—
(a)
means a period when an employee has ongoing duties of employment that must be performed to a significant extent at a distant workplace, requiring the employee to stay at the distant location for 1 or more nights; and
(b)
includes the employee’s time away on leave or other breaks for personal reasons, weekend breaks, required rest periods, and other similar periods
project of limited duration means a particular work project—
(a)
whose principal purpose is to create, build, develop, restore, replace, or demolish a capital asset; and
(b)
which is carried out under a contract between an employer (the contractor) and 1 or more persons who are not associated with the contractor; and
(c)
in relation to which the engagement of an employee of the contractor at the distant workplace—
(i)
has, at the outset, clear start and end dates; and
(ii)
involves work that, apart from incidental activities, is undertaken solely for the purposes of the project; and
(iii)
in the contractor’s expectation at the start of the project, will last for a period of no more than 3 years
workplace means a particular place or base—
(a)
at which an employee performs their employment duties; or
(b)
from which an employee’s duties are allocated.
Defined in this Act: accommodation, amount, associated person, company, distant workplace, employee, employer, employment, employment income, exempt income, group of companies, out-of-town secondment, pay, period of continuous work, project of limited duration, workplace
Section CW 16B: inserted, on 1 April 2015 (applying for the 2015–16 and later income years), by section 24(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 16B(5) project of limited duration paragraph (b): replaced (with effect on 1 April 2015), on 24 February 2016, by section 83 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CW 16B(5) project of limited duration paragraph (c): replaced (with effect on 1 April 2015), on 24 February 2016, by section 83 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CW 16C Time periods for certain accommodation expenditure
Time limits: out-of-town secondments
(1)
Section CW 16B applies for an employee on an out-of-town secondment to the value provided or expenditure incurred for a period that starts on the date on which the employee begins to work at a distant workplace, and ends at the earliest of the following dates:
(a)
the date that is 2 years from the date on which they began work at the distant workplace:
(b)
the date on which the out-of-town secondment ends:
(c)
the date on which the employee receives a relocation payment under section CW 17B in relation to the costs associated with settling the purchase of a new home:
(d)
the date on which the employer’s expectation regarding the length of the period changes, and the total period is expected to be more than 2 years.
Time limits: projects of limited duration
(2)
Section CW 16B applies for an employee on a project of limited duration to the value provided or expenditure incurred for a period that starts on the date on which the employee starts work at a distant workplace, and ends at the earliest of the following dates:
(a)
the date that is 3 years from the date on which the employee began work on the project at the distant workplace:
(b)
the date on which the employee’s participation in the project at the distant workplace ends:
(c)
the date on which the employee receives a relocation payment under section CW 17B in relation to the costs associated with settling the purchase of a new home:
(d)
the date on which the employer’s expectation regarding the employee’s involvement in the project changes, and the total period of their involvement in the project is expected to be more than 3 years.
When subsection (4) applies: time limits when expectations change
(3)
Subsection (4) applies for a placement of an employee at a distant workplace when—
(a)
the employment duties of the employee require them to work for a period of time at the distant workplace for the performance of those duties; and
(b)
the terms of the placement of the employee meet the requirements of an out-of-town secondment or project of limited duration, as applicable, other than the requirement related to the limitation on the length of the period for which the employee is to remain at the distant workplace; and
(c)
the expectation of their employer at the start of the period is that the duration of the secondment or project will exceed the applicable time limit; and
(d)
during the period, the employer revises their expectation of the period for the secondment or project, reducing its expected duration, and as a consequence, the requirements of an out-of-town secondment or project of limited duration, as applicable, are fully met.
Period of exemption
(4)
Section CW 16B applies to the amount that is the value provided or expenditure incurred by the employer for the remainder of the period for which the employee is required to remain at the distant workplace under the out-of-town secondment or project of limited duration. For these purposes, the period starts on the date on which the employer revises their expectation, and ends at the earliest of the dates referred to in subsection (1)(a) to (d) or (2)(a) to (d), as applicable.
Time limits in exceptional circumstances
(5)
A time limit does not apply if exceptional circumstances arise beyond the control of the employer and employee that require the employee to remain at the distant workplace after the period expires. Examples are a natural disaster or medical emergency. However, an extension of time must be limited to the period for which the employee is unable, because of the exceptional circumstances, to leave the distant workplace.
Avoidance provision
(6)
For the purposes of determining whether a time limit under this section applies, a break in a period of continuous work at a distant workplace is ignored if a reason, that is more than incidental, for the cessation of the employment or service is to allow a further period of exemption under section CW 16B or CZ 29 (Accommodation expenditure: Canterbury earthquake relief).
Defined in this Act: accommodation, amount, distant workplace, employee, employer, employment, out-of-town secondment, pay, period of continuous work, project of limited duration, workplace
Section CW 16C: inserted, on 1 April 2015 (applying for the 2015–16 and later income years), by section 24(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CW 16D Accommodation expenditure: conferences and overnight stays
When this section applies
(1)
This section applies when—
(a)
the employment duties of an employee require them to attend a work-related meeting, conference, or training course that entails an overnight stay; and
(b)
the period for which the employee’s attendance is required is a period of continuous work; and
(c)
their employer—
(i)
provides accommodation for the employee for the period of their attendance:
(ii)
incurs expenditure on the employee’s accommodation for the period of their attendance:
(iii)
incurs expenditure on the employee’s accommodation for necessary travel in connection with the performance of their duties for the period of their attendance.
Exclusions
(2)
This section does not apply to an amount that is the value provided or expenditure incurred by the employer when, under the terms of their employment, the employee would be entitled to a greater amount of employment income, should the employee choose, or have chosen, not to receive the benefit of the amount.
Exempt income
(3)
The amount that is the value provided or expenditure incurred by the employer is exempt income of the employee.
Extended meaning of period of continuous work
(4)
For the purposes of this section, a period of continuous work may include a period in which an employee’s duties of employment require them to stay for 1 or more nights at a location that is not distant from their regular workplace.
Defined in this Act: accommodation, amount, employee, employer, employment, employment income, exempt income, period of continuous work
Section CW 16D: inserted, on 1 April 2015 (applying for the 2015–16 and later income years), by section 24(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CW 16E Accommodation expenditure: new employees
Despite section CW 16B(2)(b), section CW 16B applies to a new employee in the following circumstances:
(a)
when the employer intends, at the time of employing the new employee, that the new employee would work permanently at a workplace of the employer that is not a distant workplace, but instead requires the employee to work temporarily at another of their workplaces that is a distant workplace:
(b)
the new employee is on an out-of-town secondment to work—
(i)
for a person with whom the employer has a continuing commercial affiliation or working relationship, and for the purposes of section CW 16B, the person is treated as the employer; and
(ii)
for a period that is expected to be no more than 2 years; and
(iii)
at a distant workplace that is the person’s workplace.
Defined in this Act: distant workplace, employee, employer, out-of-town secondment, workplace
Section CW 16E: inserted, on 1 April 2015 (applying for the 2015–16 and later income years), by section 24(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CW 16F Accommodation expenditure: multiple workplaces
When this section applies
(1)
This section applies when—
(a)
the employment duties of an employee require them to work on an ongoing basis at more than 1 workplace; and
(b)
1 or more of those workplaces is a distant workplace; and
(c)
in connection with the employee’s employment or service, their employer provides accommodation or pays an amount for the employee’s accommodation at the distant workplace.
Exclusions
(2)
This section does not apply—
(a)
to an amount that is the value provided or the payment by the employer when, under the terms of their employment, the employee would be entitled to a greater amount of employment income, should the employee choose, or have chosen, not to receive the benefit of the amount:
(b)
when the employee has 2 workplaces and 1 of those workplaces is a home office.
Exempt income
(3)
The amount that is the value provided or the payment by the employer is exempt income of the employee.
Defined in this Act: accommodation, amount, distant workplace, employee, employer, employment, employment income, exempt income, pay, workplace
Section CW 16F: inserted, on 1 April 2015 (applying for the 2015–16 and later income years), by section 24(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CW 17 Expenditure on account, and reimbursement, of employees
Exempt income: expenditure on account
(1)
Expenditure on account of an employee, being a payment to which section CE 5 (Meaning of expenditure on account of an employee) applies, that is incurred by an employer in connection with the employee’s employment or service is exempt income of the employee to the extent to which the expenditure is expenditure for which the employee would be allowed a deduction if they incurred the expenditure and if the employment limitation did not exist.
Exempt income: reimbursement
(2)
An amount that an employer pays to an employee in connection with the employee’s employment or service is exempt income of the employee to the extent to which it reimburses the employee for expenditure for which the employee would be allowed a deduction if the employment limitation did not exist.
Requirements for expenditure connected to employment or service
(2B)
For the purposes of subsections (1) and (2), expenditure is treated as incurred, or an amount paid, in connection with an employee’s employment or service only if—
(a)
the expenditure is incurred or the amount is paid because the employee is performing an obligation required by their employment or service; and
(b)
the employee derives employment income through the performance of the obligation; and
(c)
the expenditure is necessary in the performance of the obligation.
When subsection (2D) applies
(2C)
Subsection (2D) applies for the purposes of subsections (2) and (3) to an amount that an employer pays to or on behalf of an employee in connection with their employment or service when—
(a)
the payment—
(i)
is made to, or on behalf of, a wide group or class of employees; and
(ii)
is provided mainly to reimburse an expense incurred by an employee in deriving their employment income; and
(b)
the amount paid is not an amount incurred by the employer when, under the terms of their employment, the employee would be entitled to a greater amount of employment income, should the employee choose, or have chosen, not to receive the benefit of the amount; and
(c)
the Commissioner considers that the average private or capital benefit that the employee as a member of the group or class is likely to receive from the payment is hard to measure.
Determinations
(2D)
The Commissioner may make a determination under section 91AAT of the Tax Administration Act 1994 as to whether, or the extent to which, tax must be paid on some or all of the amount.
Estimated expenditure of employees
(3)
For the purposes of subsection (2),—
(a)
the employer may make, for a relevant period, a reasonable estimate of the amount of expenditure likely to be incurred by the employee or a group of employees for which reimbursement is payable; and
(b)
the amount estimated is treated as if it were the amount incurred during the period to which the estimate relates.
Depreciation loss included
(4)
In this section, expenditure includes an amount of depreciation loss.
Relationship with certain employment expenses provisions
Defined in this Act: amount, Commissioner, deduction, depreciation loss, employee, employer, employment, employment income, employment limitation, exempt income, expenditure on account of an employee, pay, tax
Compare: 2004 No 35 s CW 13
Section CW 17(1): amended (with effect on 1 April 2008), on 2 November 2012 (applying for the 2008–09 and later income years), by section 16(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CW 17(2B) heading: inserted, on 1 April 2015, by section 25(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 17(2B): inserted, on 1 April 2015, by section 25(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 17(2C) heading: inserted, on 1 April 2015, by section 25(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 17(2C): inserted, on 1 April 2015, by section 25(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 17(2D) heading: inserted, on 1 April 2015, by section 25(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 17(2D): inserted, on 1 April 2015, by section 25(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 17(4) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 44(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CW 17(4): added (with effect on 1 April 2008), on 6 October 2009, by section 44(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CW 17(5) heading: replaced, on 1 April 2015, by section 25(2)(a) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 17(5): added (with effect on 1 April 2008), on 6 October 2009, by section 44(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CW 17(5): amended, on 1 April 2015, by section 25(2)(b) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 17 list of defined terms Commissioner: inserted, on 1 April 2015, by section 25(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 17 list of defined terms depreciation loss: inserted (with effect on 1 April 2008), on 6 October 2009, by section 44(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CW 17 list of defined terms employment: inserted, on 1 April 2015, by section 25(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 17 list of defined terms employment income: inserted, on 1 April 2015, by section 25(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 17 list of defined terms tax: inserted, on 1 April 2015, by section 25(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CW 17B Relocation payments
Exempt income
(1)
An amount that an employer pays to or on behalf of an employee in connection with the expenses of the employee in a work-related relocation is exempt income of the employee.
Actual expenditure
(2)
The amount paid must be no more than the actual cost incurred by or on behalf of the employee on an expense that the Commissioner lists as an eligible relocation expense in a determination made under subsection (6).
Time limit
(3)
Subsection (1) applies only to expenditure incurred to the end of the tax year following that in which the relocation occurs. For the purposes of this subsection, a temporary move that has not been treated as a work-related relocation under this section is ignored.
Meaning of work-related relocation
(4)
Work-related relocation means a relocation of the place where an employee lives that is required—
(a)
because the employee’s workplace is not within reasonable daily travelling distance of their residence; and
(b)
as a result of the employee—
(i)
taking up new employment with a new employer; or
(ii)
taking up new duties at a new location with their existing employer; or
(iii)
continuing in their current position but at a new location.
Exemption from distance test
(5)
The requirement in subsection (4)(a) for a person’s workplace to be beyond reasonable travelling distance of their residence does not apply to a person whose accommodation forms an integral part of their work.
Determinations
(6)
The Commissioner may issue a determination for the purposes of this section under section 91AAR of the Tax Administration Act 1994 to provide a list of eligible relocation expenses, and may extend or modify the list from time to time as required. The Commissioner must give at least 30 days’ notice of the implementation date of any alteration.
Defined in this Act: amount, Commissioner, employee, employer, exempt income, tax year, work-related relocation
Section CW 17B: inserted (with effect on 1 April 2008), on 6 October 2009, by section 45 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CW 17C Payments for overtime meals and certain other allowances
Exempt income: overtime meals
(1)
An amount that an employer pays to or on behalf of an employee for a meal for the employee when the employee is working overtime is exempt income of the employee.
Exempt income: certain sustenance allowances
(2)
An amount that an employer pays to an employee as a sustenance allowance for the employee for a day is exempt income of the employee if—
(a)
the employee works a minimum of 7 hours on the day; and
(b)
their employment requires them—
(i)
to work outdoors and away from their employment base for most of the day; and
(ii)
to undertake a long period of physical activity in travelling through a neighbourhood or district on foot or by bicycle; and
(c)
it is not practicable for the employer to provide sufficient sustenance on the day for the period when the employee is working outdoors; and
(d)
the allowance recognises—
(i)
the arduous physical nature of the employee’s work as described in paragraph (b); and
(ii)
that the employer would normally provide tea, coffee, water, or similar refreshments at the employment base in the course of their business.
Eligibility requirements: overtime meals
(3)
Subsection (1) applies only if—
(a)
the employee has worked at least 2 hours’ overtime on the day of the meal; and
(b)
either—
(i)
the employee’s employment agreement provides for pay for overtime hours worked; or
(ii)
the employer has an established policy or practice of paying for overtime meals.
Eligibility requirements: sustenance allowances
(4)
Subsection (2) applies only if the employer has an established policy or practice of paying a sustenance allowance.
Actual cost or reasonable estimate
(5)
The amount paid must be—
(a)
the actual cost to the employee, and for an overtime meal referred to in subsection (1), with documentation required for amounts over $20 per meal; or
(b)
a reasonable estimate of the expenditure likely to be incurred by the employee or a group of employees for whom an amount is payable.
Meaning of overtime
(6)
For the purposes of this section, overtime, for a person and a day, means time worked for an employer on the day beyond the person’s ordinary hours of work as set out in their employment agreement.
Defined in this Act: amount, employee, employer, exempt income, overtime, pay
Section CW 17C: inserted (with effect on 1 April 2008), on 6 October 2009, by section 45 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CW 17CB Payments for certain work-related meals
Exempt income
(1)
When the employment duties of an employee require them to work away from their employer’s workplace, expenditure that the employer incurs for or on behalf of the employee for a meal for the employee is exempt income of the employee. For these purposes, expenditure includes a reimbursement payment or a meal allowance.
Inclusions: work-related events
(2)
For the purposes of subsection (1), a meal includes—
(a)
food and drink that the employee consumes as part of a working meal arranged as part of or as an alternative to a formal meeting for business discussions:
(b)
food and drink that the employee consumes at a conference or training course:
(c)
light refreshments in the form of snack foods such as biscuits and fruit, or liquid refreshments such as tea, coffee, water, or similar refreshments, provided for the employee, but only if—
(i)
their employment duties require them to be away from their employment base for most of the day; and
(ii)
the employer would normally provide the refreshments to the employee on the day; and
(iii)
it is not practicable for the employer to provide the refreshments on the day.
Inclusions: meals when travelling on business
(3)
For the purposes of subsection (1), a meal also includes food and drink that the employee consumes when their employment duties require them to travel in the performance of those duties.
Exclusion: salary sacrifice
(4)
Subsection (1) does not apply if expenditure is incurred by the employer when, under the terms of their employment, the employee would be entitled to a greater amount of employment income, should the employee choose, or have chosen, not to receive the benefit of the expenditure.
Time limit
(5)
The maximum period applying to expenditure incurred under subsection (1) other than expenditure on a meal described in subsection (2), is 3 months—
(a)
commencing—
(i)
on the date on which the employee starts to work away from their employer’s workplace; or
(ii)
for an employee who does not have a fixed workplace, on the date on which they arrive at their accommodation base:
(b)
ending on the earlier of—
(i)
the date on which the 3-month period expires; or
(ii)
the date on which the employee returns to their employer’s workplace to undertake their employment duties for their employer, or the date on which the employee moves to a new accommodation base, as applicable.
Measuring period
(6)
In the measurement of the maximum period in subsection (5), the period includes the employee’s time away on leave or other breaks for personal reasons, weekend breaks, required rest periods, and other similar periods.
Time limits in exceptional circumstances
(7)
The time limit referred to in subsection (5) does not apply if exceptional circumstances arise beyond the control of the employer and employee that require the employee to continue to work away from their employer’s workplace after the period expires. However, an extension of time must be limited to the period for which the employee is unable, because of the exceptional circumstances, to return to their employer’s workplace.
Meaning of employer’s workplace
(7B)
In this section, employer’s workplace means the workplace of the employer at which the employee normally works.
Relationship with FBT rules
(8)
To the extent to which the expenditure of an employer described in subsection (1) gives rise to a fringe benefit, the fringe benefit tax rules override this section.
Defined in this Act: accommodation, amount, business, employee, employer, employer’s workplace, employment, employment income, exempt income, fringe benefit, fringe benefit tax rules, pay, workplace
Section CW 17CB: inserted, on 1 April 2015, by section 26 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 17CB(7B) heading: inserted, on 29 March 2018 (with effect on 1 April 2015), by section 34(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CW 17CB(7B): inserted, on 29 March 2018 (with effect on 1 April 2015), by section 34(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CW 17CB list of defined terms employer’s workplace: inserted, on 29 March 2018 (with effect on 1 April 2015), by section 34(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CW 17CC Payments for distinctive work clothing
Exempt income
(1)
An amount that an employer pays to or on behalf of an employee for distinctive work clothing for the employee is exempt income of the employee.
Distinctive work clothing
(2)
For the purposes of this section, distinctive work clothing has the meaning set out in section CX 30 (Distinctive work clothing).
Certain plain clothes included
(3)
Despite subsection (2), for the purposes of subsection (4), the wearing of distinctive work clothing by an employee includes the wearing of plain clothes that would normally be worn for private purposes if—
(a)
their employer provides a uniform to employees; and
(b)
despite the provision of a uniform, the employer requires the employee to wear plain clothes in the performance of their employment duties; and
(c)
as at 1 July 2013, the employer’s general terms and conditions of employment or service provided for allowances for plain clothes to be paid to employees; and
(d)
historically, the plain clothes allowance was part of a larger amount paid at the time by the employer to employees in relation to the provision of plain clothes, the balance being a taxable amount that was at a later period classified as remuneration for employees then receiving the plain clothes allowance under the employer’s general terms and conditions; and
(e)
the terms and conditions referred to in paragraph (c) continue to provide for the payment of the plain clothes allowance.
Exempt amount
(4)
The amount that the employer pays to or on behalf of the employee as an allowance for the plain clothes is exempt income of the employee.
Defined in this Act: amount, distinctive work clothing, employee, employer, employment, exempt income, pay
Section CW 17CC: inserted (with effect on 1 July 2013), on 30 June 2014, by section 27 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CW 18 Allowance for additional transport costs
Exempt income
(1)
An allowance that an employee receives from an employer to reimburse the employee’s additional transport costs is exempt income to the extent to which the employee incurs the costs in connection with their employment and for the employer’s benefit or convenience.
Estimated expenditure of employees
(2)
For the purposes of subsection (1),—
(a)
the employer may make, for a relevant period, a reasonable estimate of the amount of expenditure likely to be incurred by the employee or a group of employees for which reimbursement is payable; and
(b)
the amount estimated is treated as if it were the amount incurred during the period to which the estimate relates.
Meaning of additional transport costs
(3)
In this section, additional transport costs means the costs to an employee of travelling between their home and place of work that are more than would ordinarily be expected. The costs must be attributable to 1 or more of the following factors:
(a)
the day or time of day when the work duties are performed:
(b)
the need to transport any goods or material for use or disposal in the course of the employee’s work:
(c)
the requirement to fulfil a statutory obligation:
(d)
a temporary change in the employee’s place of work while in the same employment:
(e)
any other condition of the employee’s work:
(f)
the absence of an adequate public passenger transport service that operates fixed routes and a regular timetable for the employee’s place of work.
Quantifying additional transport costs
(4)
Additional transport costs are quantified as follows:
(a)
when the additional transport costs are attributed to a factor described in any of subsection (3)(a) to (e), the amount by which the costs are more than the employee’s ordinarily expected travel costs without reference to that factor:
(b)
when the additional transport costs are attributed to the factor described in subsection (3)(f), the amount by which the costs are more than $5 for each day on which the employee attends work:
(c)
except in special circumstances, the costs of travelling any distance over 70 kilometres in 1 day are not taken into account in calculating additional transport costs.
Defined in this Act: additional transport costs, amount, employee, employer, exempt income, pay
Compare: 2004 No 35 s CW 14
CW 19 Amounts derived during short-term visits
Exempt income
(1)
Income that a non-resident person derives from performing personal or professional services in New Zealand during a visit is exempt income if—
(a)
the visit is for 92 or fewer days, counting the days of arrival and departure as a whole day each; and
(b)
the person is present in New Zealand for 92 days or fewer in total in each 12-month period that includes the period of the visit; and
(c)
the services are performed for or on behalf of a person who is not resident in New Zealand; and
(d)
the amount derived from the personal or professional services is chargeable in the country or territory in which the person is resident with a tax that is substantially the same as income tax imposed under this Act.
Exclusion
(2)
This section does not apply to the income of a public entertainer.
Meaning of public entertainer
(3)
In this section, public entertainer includes—
(a)
circus performers, dancers, lecturers, motion picture artists, musicians, radio artists, singers, television artists, and theatre artists; and
(b)
athletes, boxers, wrestlers, and other professional sportspersons.
Defined in this Act: amount, exempt income, income, income tax, New Zealand, non-resident, public entertainer, resident in New Zealand, tax year
Compare: 2004 No 35 s CW 15
Section CW 19(1): amended (with effect on 30 March 2017), on 18 March 2019, by section 137 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CW 19(1)(b): replaced, on 30 March 2017 (applying for a person for a visit beginning on or after 1 April 2017), by section 34(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CW 20 Amounts derived by visiting entertainers including sportspersons
Exempt income: cultural activities
(1)
Income that a non-resident entertainer derives from carrying out their activity or performance in New Zealand during a visit is exempt income if—
(a)
the activity or performance occurs under a cultural programme of the New Zealand government or an overseas government; or
(b)
the activity or performance occurs under a cultural programme wholly or partly sponsored by the New Zealand government or an overseas government; or
(c)
the activity or performance occurs as part of a programme of an overseas foundation, trust, or other organisation that—
(i)
exists wholly or partly to promote cultural activity; and
(ii)
is not carried on for the private pecuniary profit of any member, proprietor, or shareholder.
Exempt income: sporting activities
(2)
Income that a non-resident entertainer derives from carrying out an activity or performance that relates to a game or sport in New Zealand during a visit is exempt income if the participants are the official representatives of a body that administers the game or sport in an overseas country.
Exempt income: employer of non-resident entertainer
(3)
If income derived from an activity or performance of a non-resident entertainer would be exempt income under this section if derived by the non-resident entertainer, that amount is exempt income if derived by a person who—
(a)
provides the services of the non-resident entertainer during the visit to New Zealand; and
(b)
is 1 of the following:
(i)
the entertainer’s employer; or
(ii)
a company of which the entertainer is an officer; or
(iii)
a firm of which the entertainer is a principal.
Meaning of non-resident entertainer
(4)
In this section, non-resident entertainer means a non-resident person, as defined in subpart YD (Residence and source in New Zealand), who carries out an activity or performance in connection with—
(a)
a solo or group performance by actors, comperes, dancers, entertainers, musicians, singers, or other artists, whether for cultural, educational, entertainment, religious, or other purposes; or
(b)
lectures, speeches, or talks for any purpose; or
(c)
a sporting event or sporting competition of any nature.
Defined in this Act: amount, company, employer, exempt income, income, New Zealand, non-resident, non-resident entertainer
Compare: 2004 No 35 s CW 16
CW 21 Amounts derived by visiting crew of pleasure craft
Exempt income
(1)
Income that a non-resident crew member derives from performing services in New Zealand relating to a pleasure craft while it is in New Zealand is exempt income if—
(a)
the services are performed for a person who is not resident in New Zealand; and
(b)
the pleasure craft is the subject of a security given under section 136 of the Customs and Excise Act 2018; and
(c)
the pleasure craft is not owned, wholly or partly or directly or indirectly, by—
(i)
a resident of New Zealand; or
(ii)
a controlled foreign company.
Some definitions
(2)
In this section,—
non-resident crew member means a person who—
(a)
is a crew member of a pleasure craft; and
(b)
is a non-resident, a matter determined without applying section YD 1(3) (Residence of natural persons); and
(c)
is not present in New Zealand on more than 365 days in any 2-year period that starts on or after 28 May 2002; and
(d)
is not in New Zealand unlawfully under the Immigration Act 2009
pleasure craft is defined in section 2 of the Maritime Transport Act 1994.
Defined in this Act: amount, controlled foreign company, exempt income, income, New Zealand, non-resident, non-resident crew member, pleasure craft, resident in New Zealand, year
Compare: 2004 No 35 s CW 17
Section CW 21(1)(b): amended, on 1 October 2018, by section 443(3) of the Customs and Excise Act 2018 (2018 No 4).
Section CW 21(2) non-resident crew member: amended, on 29 November 2010, by section 406(1) of the Immigration Act 2009 (2009 No 51).
CW 22 Amounts derived by overseas experts and trainees in New Zealand by government arrangement
Exempt income: personal services
(1)
Income that a non-resident person derives from performing personal services, including professional services, in New Zealand during a visit is exempt income if—
(a)
the services are performed for or on behalf of a non-resident employer; and
(b)
the purpose of the visit is all or any of the following:
(i)
providing professional or expert advice or assistance:
(ii)
teaching or lecturing:
(iii)
making investigations:
(iv)
receiving education, training, or experience; and
(c)
the visit occurs under an arrangement for assistance entered into by the government of New Zealand.
Exempt income: maintenance or bursaries
(2)
An amount of income that a non-resident person derives from a payment of maintenance or of an allowance, or from a bursary or scholarship, provided for or paid to the person during or in relation to their presence in New Zealand during a visit, is exempt income if—
(a)
the purpose of the visit is all or any of the following:
(i)
providing professional or expert advice or assistance:
(ii)
teaching or lecturing:
(iii)
making investigations:
(iv)
receiving education, training, or experience; and
(b)
the visit occurs under an arrangement for assistance entered into by the government of New Zealand.
Some definitions
(3)
In this section,—
arrangement for assistance entered into by the government of New Zealand means an arrangement entered into by the government of New Zealand—
(a)
in relation to or under—
(i)
the Commonwealth Education Scheme; or
(ii)
a programme of the United Nations, or any specialised agency of the United Nations, for cultural, economic, educational, expert, professional, or technical assistance; or
(b)
for the purpose of providing education, training, or experience for officers of the Samoan, Cook Islands, Niuean, or Tokelauan public services, or for persons resident in Samoa, the Cook Islands, Niue, or Tokelau; or
(c)
with the government of any other country or with any international organisation, if it is an arrangement that—
(i)
is for the purpose of providing cultural, economic, educational, expert, professional, or technical assistance, or administrative or other training, or the means or facilities for making investigations, whether upon a bilateral, co-operative, multilateral, mutual, or unilateral basis; and
(ii)
is in principle similar to any arrangement to which paragraph (a) or (b) applies
international organisation means an organisation whose members are sovereign powers, whether countries of the Commonwealth or foreign sovereign powers, or the governments of those countries or powers
non-resident person means a person who would not be resident in New Zealand if they were not present in New Zealand under an arrangement for assistance entered into by the government of New Zealand. The residence of the person is determined without applying section YD 1(3) (Residence of natural persons).
Defined in this Act: amount, arrangement, arrangement for assistance entered into by the government of New Zealand, Commonwealth, employer, exempt income, income, international organisation, New Zealand, non-resident person, pay, resident in New Zealand
Compare: 2004 No 35 s CW 18
CW 23 Income for military or police service in operational area
When this section applies
(1)
This section applies when a member of the New Zealand Defence Force or the police (the member) derives income for serving in an operational area.
Exempt income
(2)
The following are exempt income of the member:
(a)
an operational allowance:
(b)
an amount that the ministerial committee decides under subsection (3) is exempt income.
Ministerial committee
(3)
A ministerial committee that includes the Prime Minister, the Minister of Defence, the Minister of Police, the Minister of Finance, and the Minister of Foreign Affairs may, for the purposes of subsection (2)(b), decide that an amount of income derived by a member for being in an operational area is exempt income.
Some definitions
(4)
In this section,—
operational allowance, for a member, means the amount of an allowance payable by the Government of New Zealand that—
(a)
is paid directly and solely to the member for being in an operational area; and
(b)
is not—
(i)
a regular force gratuity:
(ii)
a bonus or bounty for re-engagement in a regular force
operational area means an area—
(a)
to which the Minister of Defence has ordered the deployment of New Zealand Defence Force members for a specific mission authorised by the Government; and
(b)
that the Chief of Defence Force delineates for that mission.
Defined in this Act: amount, exempt income, income, New Zealand, operational allowance, operational area
Compare: 2004 No 35 s CW 19
CW 24 Deferred military pay for active service
Exempt income
(1)
Deferred military pay that is granted or paid under the Defence Act 1990 to a person for service in the New Zealand armed forces in an active service area is exempt income.
Some definitions
(2)
In this section,—
active service area means an area outside New Zealand that is designated as an active service area by the Minister of Defence, with the agreement of the Minister of Finance
deferred military pay means pay declared to be deferred by the Minister of Defence, with the agreement of the Minister of Finance.
Defined in this Act: active service area, deferred military pay, exempt income, New Zealand, pay
Compare: 2004 No 35 s CW 20
CW 25 Value of board for religious society members
The value of personal board and lodging and other basic personal necessities received by a member of a religious society or order is exempt income if—
(a)
the member’s sole occupation is service in a religious society or order; and
(b)
it is in the nature of the service that members are not paid for their work and do not receive a reward for it, other than those necessities.
Defined in this Act: exempt income, pay
Compare: 2004 No 35 s CW 21
CW 26 Jurors’ and witnesses’ fees
Fees paid by the Crown to jurors and to witnesses, other than expert witnesses, are exempt income.
Defined in this Act: exempt income, pay
Compare: 2004 No 35 s CW 22
CW 26B Exempt ESS
An amount derived from an exempt ESS is exempt income.
Defined in this Act: amount, exempt ESS, exempt income
Section CW 26B: inserted, on 29 March 2018, by section 35 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CW 26C Meaning of exempt ESS
Exempt ESS
(1)
Exempt ESS means—
(a)
a scheme that had the Commissioner’s approval under section DC 12 (Loans to employees under share purchase schemes) before that section’s repeal by the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018:
(b)
an arrangement of which the Commissioner has been notified under section 63B(1) of the Tax Administration Act 1994, if—
(i)
the arrangement meets the criteria in subsections (2) to (9) of this section; and
(ii)
the Commissioner has received all forms due under section 63B(2) and (3) of the Tax Administration Act 1994.
Purchase of shares
(2)
The arrangement must provide that—
(a)
the shares are available for no more than their market value at the date of purchase or subscription; and
(b)
the market value of the shares purchased or subscribed for by an employee, or a trustee for an employee, under the arrangement is less than or equal to $5,000 in a year; and
(c)
the difference between the market value of the shares purchased or subscribed for by an employee or a trustee and the amount that an employee spends on buying shares under the arrangement is less than or equal to $2,000 in a year.
Eligibility
(3)
The arrangement must provide that—
(a)
a full-time permanent employee to whom an offer under the arrangement is made is eligible to participate in the arrangement, on an equal basis with 90% or more of other full-time permanent employees to whom an offer under the arrangement is not subject to foreign security disclosure rules; and
(b)
if it applies to part-time employees, those employees to whom an offer under the arrangement is made are eligible to participate in the arrangement, on an equal basis with 90% or more of other part-time employees to whom an offer under the arrangement is not subject to foreign security disclosure rules; and
(c)
if it applies to seasonal workers, those employees to whom an offer under the arrangement is made are eligible to participate in the arrangement, on an equal basis with 90% or more of other seasonal workers to whom an offer under the arrangement is not subject to foreign security disclosure rules; and
(d)
if it requires that an employee spend a minimum amount on buying shares, it requires no more than $1,000 to be spent in a year; and
(e)
if it requires that an employee must have a minimum period of employment or service before the employee is eligible to participate, it requires—
(i)
no more than 3 years full-time work, for full-time employees; and
(ii)
no more than an accumulated period that is the equivalent of 3 years full-time work, for other employees.
Trusts
(3B)
If a trust holds the shares in trust for the employee, the arrangement must provide that—
(a)
the trustee pays dividends directly to the employee; and
(b)
the dividends are treated as being derived by the employee.
Payments
(4)
The arrangement must provide that—
(a)
if it requires that an employee must buy the shares for more than nominal consideration,—
(i)
a loan for the cost of the shares is available to the employee; or
(ii)
the employee may pay for or buy the shares in regular instalments of a month or less, and any regular instalments are subject to paragraph (d)(ii); and
(b)
any loan to an employee to buy shares is free of interest and other charges; and
(c)
any loan or regular instalments have a maximum term of 60 months and a minimum term of 36 months; and
(d)
any loan to an employee to buy shares is repayable by regular instalments of a month or less, but—
(i)
the loan is repayable early in full or in part at the employee’s discretion; and
(ii)
in the case of an employee who is on unpaid or parental leave for more than a month, the regular instalments are suspended while on leave and the term of the loan is extended as appropriate.
Serious hardship
(5)
The arrangement must provide, in the case of serious hardship that results or may result from an employee’s continued participation in the exempt ESS, that, with the employee’s agreement,—
(a)
any regular instalments and any other terms related to payment by the employee may be varied; or
(b)
the employee may withdraw from the arrangement, and any shares are bought from the employee for their market value on the day of withdrawal, subject to the repayment of any outstanding loan.
Withdrawal
(6)
The arrangement must provide that the employee may withdraw from the arrangement on giving 1 month’s notice to the relevant party. Any shares must be bought from the employee for the lesser of their market value on the day of withdrawal and their cost to the employee, subject to the repayment of any outstanding loan.
Period of restriction
(7)
The arrangement must provide that,—
(a)
if the employee has not acquired the shares for market value, there is a period of restriction during which the shares must not be disposed of other than as part of a takeover or similar share reorganisation, and that period of restriction is the shorter of—
(i)
a period of 3 years starting on the date the employee acquired the shares, or the period of repayment of a loan made to them under the scheme for this purpose, whichever is longer; and
(ii)
a period starting on the date the employee acquired the shares and ending on the date the employee ends their employment with the company that employs them, or a company in the same group of companies if the employee is transferred; or
(b)
if the employee has acquired the shares for market value, there is a period of restriction during which the shares must not be disposed of other than as part of a takeover or similar share reorganisation, and that period of restriction is no longer than the shorter of—
(i)
the shortest period in paragraph (a)(i) and (ii); and
(ii)
any period of restriction provided by the arrangement, if that period finishes on or after the date on which the employee has no further repayment obligations for a loan made to them under the scheme.
End of period of restriction: first option
(8)
The arrangement may provide, when the period of restriction provided by subsection (7) ends, that the shares are transferred to the employee if they have not already been transferred or, if the employee chooses, that the shares are acquired from the employee or trustee for the lesser of—
(a)
the cost of the shares to the employee:
(b)
the market value of the shares on the date the period of restriction ends.
End of period of restriction: second option
(8B)
If the arrangement does not provide as described in subsection (8), the arrangement must provide, when the period of restriction provided by subsection (7) ends,—
(a)
in the case that the employee is currently employed, that the shares are transferred to the employee if they have not already been transferred or, if the employee chooses, that the shares are acquired from the employee or trustee for the lesser of—
(i)
the cost of the shares to the employee:
(ii)
the market value of the shares on the date the period of restriction ends:
(b)
in the case that the employee is not currently employed, that the shares are acquired from the employee or trustee for the lesser of—
(i)
the cost of the shares to the employee:
(ii)
the market value of the shares on the date the period of restriction ends.
End of period of restriction: certain cases
(9)
Despite subsections (8) and (8B), when a period of restriction ends because the employee’s employment ends through their death, accident, sickness, redundancy, or retirement at normal retiring age, the arrangement must provide that—
(a)
the shares are transferred to the former employee if they have not already been transferred, or transferred to the legal representative of the employee’s estate, as appropriate; or
(b)
if the employee chooses, the shares are purchased for the lesser of—
(i)
the cost of the shares to the employee:
(ii)
the market value of the shares on the date the period of restriction ends.
Defined in this Act: amount, arrangement, Commissioner, company, employee, employer, employment, exempt ESS, group of companies, interest, loan, market value, normal retiring age, notice, pay, share, trustee, year
Section CW 26C: inserted, on 29 March 2018, by section 35 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CW 26C(3B) heading: inserted (with effect on 29 March 2018), on 23 March 2020, by section 95(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 26C(3B): inserted (with effect on 29 March 2018), on 23 March 2020, by section 95(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 26C(7)(a): amended (with effect on 29 March 2018), on 23 March 2020, by section 95(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 26C(7)(a)(ii): amended (with effect on 29 March 2018), on 30 March 2021, by section 19 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CW 26C(7)(b): amended (with effect on 29 March 2018), on 23 March 2020, by section 95(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 26C(8) heading: replaced (with effect on 29 March 2018), on 23 March 2020, by section 95(4) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 26C(8): replaced (with effect on 29 March 2018), on 23 March 2020, by section 95(4) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 26C(8B) heading: inserted (with effect on 29 March 2018), on 23 March 2020, by section 95(4) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 26C(8B): inserted (with effect on 29 March 2018), on 23 March 2020, by section 95(4) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 26C(9): amended (with effect on 29 March 2018), on 23 March 2020, by section 95(5) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CW 26D Meaning of employee
For the purposes of section CW 26C, employee—
(a)
means a person that is employed by a company; but
(b)
does not include a person who,—
(i)
is a director of the company, unless they are employed by the company:
(ii)
is a corporation sole, a body corporate, or an unincorporated body:
(iii)
with any associated person, holds 10% or more of the issued capital of the company.
Defined in this Act: associated person, company, director, employment
Section CW 26D: inserted, on 29 March 2018, by section 35 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CW 26DB Meaning of market value
For the purposes of section CW 26C, market value—
(a)
has the same meaning as in section YA 1 (Definitions), definition of market value, paragraphs (a) and (b); and
(b)
includes, for a share or option quoted on the official list of a recognised exchange, at the time, an amount equal to the 5-day volume weighted average price or any other method that is accepted by the Commissioner or is comparable to the 5-day volume weighted average price, for such shares or options.
Section CW 26DB: inserted (with effect on 29 March 2018), on 23 March 2020, by section 96 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CW 26E Meaning of normal retiring age
For the purposes of section CW 26C, normal retiring age means,—
(a)
for an employee other than 1 to whom paragraph (b) applies, no less than 60 years of age:
(b)
for a female employee who is entitled under a contract of employment entered into before 1 April 1978 with the company that employs her to retire before 60 years of age, no less than 55 years of age:
(c)
for any employee, an age that is earlier than the age referred to in paragraph (a) or (b) and that the Commissioner considers reasonable given the nature of the employment or the general terms of employment in the business or occupation of the employee.
Defined in this Act: business, Commissioner, company, employee, employment, normal retiring age
Section CW 26E: inserted, on 29 March 2018, by section 35 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CW 26F Meaning of share
For the purposes of section CW 26C, share means, for a company whose shares are made available under an exempt ESS, a fully paid ordinary share that ranks equally with, and has the same designation as, an existing ordinary voting share in the company.
Defined in this Act: company, exempt ESS, share
Section CW 26F: inserted, on 29 March 2018, by section 35 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CW 26G Meaning of trustee
For the purposes of section CW 26C, trustee means a group of persons appointed to administer an exempt ESS of a company that employs an employee, and to hold shares under that scheme on trust for the employee during any period of restriction described in section CW 26C(7).
Defined in this Act: company, employee, exempt ESS, group of persons, share, trustee
Section CW 26G: inserted, on 29 March 2018, by section 35 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Certain income of transitional resident
CW 27 Certain income derived by transitional resident
Income derived by a person who is a transitional resident is exempt income if the income is a foreign-sourced amount that is none of the following:
(a)
employment income of a type described in section CE 1 (Amounts derived in connection with employment) in connection with employment or service performed while the person is a transitional resident:
(b)
income from a supply of services.
Defined in this Act: employment income, exempt income, foreign-sourced amount, income, transitional resident
Compare: 2004 No 35 s CW 22B
Income from living allowances, foreign superannuation, compensation, and government grants
Heading: amended, on 1 April 2014, by section 18 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CW 28 Pensions
Exempt income
(1)
The following are exempt income:
(a)
a pension or allowance under the Veterans’ Support Act 2014, including a lump sum paid pursuant to an election under section 53(1)(b) of that Act, but excluding—
(i)
a veteran’s pension:
(ii)
a retirement lump sum paid under Part 5, subpart 7 of that Act:
(iii)
weekly income compensation paid under Part 3, subpart 4 of that Act:
(iv)
weekly compensation paid under Part 4, subpart 5 of that Act:
(b)
a pension or allowance of any other kind granted in New Zealand or overseas by any government relating to any war or to disability attributable to or aggravated by service in the armed forces or the police:
(c)
a payment of portable New Zealand superannuation:
(d)
a payment of portable veteran’s pension:
(e)
an overseas pension.
Meaning of overseas pension
(2)
In this section, overseas pension means—
(a)
an overseas pension, to the extent of amounts deducted under section 189 of the Social Security Act 2018, by the department currently responsible for administering that Act, from—
(i)
a monetary benefit paid under that Act (other than section 380, which relates to reciprocity agreements with other countries); or
(ii)
a monetary benefit, other than New Zealand superannuation or a veteran’s pension, paid under section 380 of that Act:
(b)
an overseas pension to the extent to which it is subject to an arrangement under section 190 of the Social Security Act 2018.
Defined in this Act: amount, exempt income, New Zealand superannuation, overseas pension, pay, portable New Zealand superannuation, portable veteran’s pension, veteran’s pension
Compare: 2004 No 35 s CW 23
Section CW 28(1)(a): replaced (with effect on 7 December 2014), on 31 March 2015, by section 12(1) of the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 (2015 No 40).
Section CW 28(1)(a)(iii): inserted, on 31 March 2015, by section 12(2) of the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 (2015 No 40).
Section CW 28(1)(a)(iv): inserted, on 31 March 2015, by section 12(2) of the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 (2015 No 40).
Section CW 28(1)(a)(v): inserted, on 31 March 2015, by section 12(2) of the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 (2015 No 40).
Section CW 28(2): replaced, on 26 November 2018, by section 459 of the Social Security Act 2018 (2018 No 32).
Section CW 28 list of defined terms income-tested benefit: repealed, on 17 July 2013, by section 15(3) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
CW 28B Foreign superannuation withdrawal in initial period of residency
A foreign superannuation withdrawal is exempt income of a person if the person—
(a)
meets the requirements of section CF 3(4)(a) (Withdrawals from foreign superannuation scheme); and
(b)
derives the foreign superannuation withdrawal in the exemption period referred to in section CF 3(6) for the person.
Defined in this Act: exempt income, foreign superannuation withdrawal, transitional resident
Section CW 28B: inserted, on 1 April 2014, by section 19 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CW 28C Foreign superannuation withdrawal exceeding given amount
A foreign superannuation withdrawal derived by a person in the assessable period referred to in section CF 3(8) (Withdrawals from foreign superannuation scheme) for the person is exempt income of the person to the extent to which the foreign superannuation withdrawal exceeds the amount—
(a)
calculated using the formula in section CF 3(10) as the assessable withdrawal amount, if the person uses the schedule method under that section; or
(b)
calculated using the formula in section CF 3(16) as the assessable withdrawal amount, if the person uses the formula method under that section.
Defined in this Act: exempt income, foreign superannuation withdrawal
Section CW 28C: inserted, on 1 April 2014, by section 19 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CW 29 Reinvested amounts from foreign superannuation schemes in Australia
An amount of income derived in an income year by a natural person as a withdrawal from a foreign superannuation scheme is exempt income if,—
(a)
in the income year, the person invests the amount in another foreign superannuation scheme; and
(b)
each foreign superannuation scheme is constituted in Australia and is—
(i)
an Australian approved deposit fund:
(ii)
an Australian exempt public sector superannuation scheme:
(iii)
an Australian regulated superannuation fund:
(iv)
an Australian retirement savings account.
Defined in this Act: amount, Australian approved deposit fund, Australian exempt public sector superannuation scheme, Australian regulated superannuation fund, Australian retirement savings account, exempt income, foreign superannuation scheme, income, income year
Compare: 2004 No 35 s CW 23B
CW 29B Amounts from Australian complying superannuation schemes reinvested in KiwiSaver schemes
An amount of income derived in an income year by a natural person from an Australian complying superannuation scheme is exempt income if, in the income year, it is contributed to a KiwiSaver scheme.
Defined in this Act: amount, Australian complying superannuation scheme, exempt income, income, income year, KiwiSaver scheme
Section CW 29B: inserted, on 1 July 2013, by section 13 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CW 30 Annuities from Crown Bank Accounts
An annuity is exempt income if—
(a)
it is granted by the Executive Council of New Zealand; and
(b)
it is paid from the Crown Bank Account; and
(c)
it is not designated as being subject to tax.
Defined in this Act: exempt income, New Zealand, pay, tax
Compare: 2004 No 35 s CW 24
CW 31 Services for members and former members of Parliament
An amount is exempt income of a person to the extent that it is income of the person and is not exempt income of the person under another provision of subpart CW, if the amount is—
(a)
travel, accommodation, or communication services, and is—
(i)
(ii)
provided to a member of Parliament (including in his or her capacity as a member of the Executive), a qualifying electoral candidate, or a family member of one of those persons:
(b)
the travel entitlements of a former member of Parliament (including the travel entitlements that apply in respect of a former member’s spouse or partner) and is paid under section 39 of the Members of Parliament (Remuneration and Services) Act 2013 after 30 June 2014:
(c)
the travel entitlements of a former Prime Minister (including the travel entitlements that apply in respect of a former Prime Minister’s spouse or partner) and is paid under section 44 of the Members of Parliament (Remuneration and Services) Act 2013:
(d)
international travel, international accommodation, or communications services provided to a member of the Executive.
Defined in this Act: exempt income, family member, pay, qualifying electoral candidate
CW 31: replaced, on 16 December 2013, by section 66 of the Members of Parliament (Remuneration and Services) Act 2013 (2013 No 93).
CW 32 Maintenance payments
The following are exempt income:
(a)
child support or spousal maintenance under the Child Support Act 1991:
(b)
a payment in the nature of maintenance out of money belonging to a person’s spouse, civil union partner or de facto partner, or former spouse, former civil union partner, or former de facto partner.
Defined in this Act: exempt income, pay
Compare: 2004 No 35 s CW 26
CW 33 Allowances and benefits
Exempt income
(1)
The following are exempt income:
(a)
a monetary benefit under the Social Security Act 2018, except any of the following kinds:
(i)
a payment of a main benefit:
(ii)
a payment of New Zealand superannuation equivalent assistance:
(iii)
a payment of veteran’s pension equivalent assistance:
(b)
a payment under Part 5 or 13 of the Accident Insurance Act 1998, or under Part 11 of the Accident Compensation Act 2001, of any of the following kinds:
(i)
a payment to an insured person for treatment or rehabilitation:
(ii)
an independence allowance:
(iii)
a funeral grant:
(iv)
a survivor’s grant:
(v)
a childcare payment:
(ba)
a payment under section 363, 386AAG, or 386B of the Oranga Tamariki Act 1989:
(c)
a participation allowance under regulations made under section 429 of the Social Security Act 2018:
(cb)
a payment under the cost of living payments scheme, as defined in section 3(1) of the Tax Administration Act 1994:
(d)
a disabled workshop payment:
(e)
an amount derived by a trustee of a trust created for the benefit of persons harmed by thalidomide, or a distribution to a beneficiary from the trust:
(f)
an amount derived by a trustee of the New Zealand Agent Orange Trust that represents the settlement fund and income attributable to the fund, or a distribution to a beneficiary from the trust.
Meaning of disabled workshop payment
(2)
In this section, disabled workshop payment means a payment to a disabled person for undertaking therapeutic activities in a sheltered workshop, as defined in the Disabled Persons Employment Promotion Act 1960, or in a similar workshop, if the average amount paid in a tax year is $50 or less per week.
Defined in this Act: amount, disabled workshop payment, exempt income, income, main benefit, New Zealand superannuation equivalent assistance, pay, tax year, trustee, veteran’s pension equivalent assistance
Compare: 2004 No 35 s CW 27
Section CW 33(1)(a): replaced (with effect on 20 April 2020), on 30 April 2020, by section 4(1) of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).
Section CW 33(1)(a)(i): replaced, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CW 33(1)(b): amended, on 21 December 2010, by section 189 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CW 33(1)(ba): replaced, on 1 July 2019, by section 47 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section CW 33(1)(c): replaced, on 26 November 2018, by section 459 of the Social Security Act 2018 (2018 No 32).
Section CW 33(1)(cb): inserted, on 25 May 2022, by section 8 of the Taxation (Cost of Living Payments) Act 2022 (2022 No 25).
Section CW 33 list of defined terms income-tested benefit: repealed, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CW 33 list of defined terms main benefit: inserted, on 30 March 2021, by section 141 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CW 33 list of defined terms New Zealand superannuation equivalent assistance: inserted (with effect on 20 April 2020), on 30 April 2020, by section 4(2) of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).
Section CW 33 list of defined terms veteran’s pension equivalent assistance: inserted (with effect on 20 April 2020), on 30 April 2020, by section 4(2) of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).
CW 34 Compensation payments
Exempt income
(1)
An amount of income from the following payments is exempt income:
(a)
a payment relating to incapacity for work:
(b)
a payment under the Workers Compensation Act 1956:
(c)
a payment under the Criminal Injuries Compensation Act 1963:
(d)
a distribution from funds approved by the Minister in charge of War Pensions to ex-prisoners of war held in German concentration camps in World War 2:
(e)
a payment under the laws of a State of the Federal Republic of Germany or the Republic of Austria to the victims of National Socialist persecution:
(f)
payments under schedule 1 of the Crown Forest Assets Act 1989 (except clause 3(b)):
(g)
payments of compensation, solatium payments, or payments to lessors for the purchase of leases under the Maori Reserved Land Amendment Act 1997 (but not interest paid under section 23 of the Act).
Some definitions
(2)
In this section,—
accident insurance contract is defined in section 13 of the Accident Insurance Act 1998
payment relating to incapacity for work means a payment of 1 of the following kinds made to a person because they are, or another person is, incapacitated for work:
(a)
a payment by a friendly society, but not a payment referred to in paragraph (d) or (e) of the definition of accident compensation payment in section CF 1(2) (Benefits, pensions, compensation, and government grants):
(b)
a payment from a sickness, accident, or death benefit fund to which the person was a contributor when the period of incapacity began, but not a payment referred to in paragraph (d) or (e) of the definition of accident compensation payment in section CF 1(2):
(c)
a payment under a policy of personal sickness or accident insurance, or an accident insurance contract, but neither a payment referred to in paragraph (d) or (e) or (f) of the definition of accident compensation payment in section CF 1(2) nor a payment calculated according to loss of earnings or profits:
(d)
an impairment payment made under subpart 4 of Part 4 of the Veterans’ Support Act 2014.
Defined in this Act: accident insurance contract, exempt income, friendly society, interest, lease, pay, payment relating to incapacity for work, sickness, accident, or death benefit fund
Compare: 2004 No 35 s CW 28
Section CW 34(2) payment relating to incapacity for work paragraph (d): inserted, on 7 December 2014, by section 278 of the Veterans’ Support Act 2014 (2014 No 56).
CW 35 Personal service rehabilitation payments
Exempt income
(1)
An amount paid to a person for an income year as a personal service rehabilitation payment is exempt income of the person if—
(a)
they are paid the amount under the Accident Compensation Act 2001 either—
(i)
in the income year; or
(ii)
as a reimbursement payment in a later income year; and
(b)
they pay an amount to another person for providing them in the income year or in an earlier income year a key aspect of social rehabilitation referred to in the definition of personal service rehabilitation payment; and
(c)
the amount paid is equal to or more than the amount of personal service rehabilitation payment for the income year or an earlier income year after taking into account any amount of tax withheld.
Meaning of reimbursement payment
(2)
For the purposes of this section, sections CZ 36, DF 4, and LB 7, reimbursement payment means a personal service rehabilitation payment that—
(a)
relates to a key aspect of social rehabilitation that is provided to a person in an income year; and
(b)
is paid to them in an income year that is later than the income year in which they were provided the rehabilitation.
Defined in this Act: amount, amount of tax, exempt income, income year, pay, personal service rehabilitation payment, reimbursement payment
Compare: 2004 No 35 s CW 28B
Section CW 35: substituted, on 1 July 2008, by section 329 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CW 35(1) heading: inserted (with effect on 1 April 2018), on 18 March 2019, by section 138(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CW 35(1)(a): replaced (with effect on 1 April 2018), on 18 March 2019, by section 138(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CW 35(1)(b): amended (with effect on 1 April 2018), on 18 March 2019, by section 138(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CW 35(1)(c): amended (with effect on 1 April 2018), on 18 March 2019, by section 138(4) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CW 35(2) heading: inserted (with effect on 1 April 2018), on 18 March 2019, by section 138(5) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CW 35(2): inserted (with effect on 1 April 2018), on 18 March 2019, by section 138(5) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CW 35(2): amended (with effect on 1 July 2008), on 26 June 2019, by section 48 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section CW 35 list of defined terms reimbursement payment: inserted (with effect on 1 April 2018), on 18 March 2019, by section 138(6) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
CW 36 Scholarships and bursaries
A basic grant or an independent circumstances grant under regulations made under section 645 of the Education and Training Act 2020 is not exempt income, but any other scholarship or bursary for attendance at an educational institution is exempt income.
Defined in this Act: exempt income
Compare: 2004 No 35 s CW 29
Section CW 36: amended, on 1 August 2020, by section 668 of the Education and Training Act 2020 (2020 No 38).
CW 37 Film production grants
[Repealed]Section CW 37: repealed (with effect on 1 October 2009), on 6 October 2009, by section 46(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Income of certain entities
CW 38 Public authorities
Exempt income: sinking funds
(1)
An amount of income derived from sinking funds relating to the debt of a public authority is exempt income.
Exempt income: other income
(2)
Any other amount of income derived by a public authority is exempt income.
Exclusion: amounts received in trust
(3)
Subsection (2) does not apply to an amount of income that a public authority derives as a trustee, other than an amount distributed as beneficiary income to a beneficiary who derives the amount as exempt income.
Exclusion: superannuation schemes
(4)
Subsection (2) does not apply to a public authority to the extent to which it is a superannuation scheme.
Exclusion: certain public authorities
(5)
Subsection (2) does not apply to an amount of income derived by the following public authorities:
(a)
Public Trust:
(b)
State enterprises:
(c)
Crown Research Institutes:
(d)
a Fund investment vehicle as referred to in section 59A of the New Zealand Superannuation and Retirement Income Act 2001:
(db)
a VCF investment vehicle as referred to in section 25 of the Venture Capital Fund Act 2019:
(e)
a company that is treated as being wholly owned by the Crown under section HR 4B (Activities relating to New Zealand Superannuation Fund and VCF).
Exclusion: mixed-ownership enterprises
(5B)
Subsection (2) does not apply to an amount of income derived by a mixed-ownership enterprise.
Meaning of public authority
(6)
In this section, public authority includes the Reserve Bank of New Zealand.
Defined in this Act: amount, Crown Research Institute, exempt income, income, mixed-ownership enterprise, public authority, State enterprise, superannuation scheme, trustee, VCF
Compare: 2004 No 35 s CW 31
Section CW 38(1) heading: replaced (with effect on 1 April 2008), on 23 March 2020, by section 97(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 38(2) heading: replaced (with effect on 1 April 2008), on 23 March 2020, by section 97(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 38(3): amended, on 30 June 2014, by section 28 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 38(5)(d): inserted, on 23 October 2015, by section 4 of the Taxation (New Zealand Superannuation and Retirement Income) Act 2015 (2015 No 94).
Section CW 38(5)(db): inserted, on 14 December 2019, by section 17 of the New Zealand Superannuation and Retirement Income Amendment Act 2019 (2019 No 77).
Section CW 38(5)(e): inserted, on 23 October 2015, by section 4 of the Taxation (New Zealand Superannuation and Retirement Income) Act 2015 (2015 No 94).
Section CW 38(5)(e): amended, on 14 December 2019, by section 17 of the New Zealand Superannuation and Retirement Income Amendment Act 2019 (2019 No 77).
Section CW 38(5B) heading: inserted, on 30 June 2012, by section 11 of the Public Finance (Mixed Ownership Model) Amendment Act 2012 (2012 No 45).
Section CW 38(5B): inserted, on 30 June 2012, by section 11 of the Public Finance (Mixed Ownership Model) Amendment Act 2012 (2012 No 45).
Section CW 38 list of defined terms mixed-ownership enterprise: inserted, on 30 June 2012, by section 11 of the Public Finance (Mixed Ownership Model) Amendment Act 2012 (2012 No 45).
Section CW 38 list of defined terms VCF: inserted, on 14 December 2019, by section 17 of the New Zealand Superannuation and Retirement Income Amendment Act 2019 (2019 No 77).
CW 38B Public purpose Crown-controlled companies
Exempt income: sinking funds
(1)
An amount of income derived from sinking funds relating to the debt of a public purpose Crown-controlled company is exempt income.
Exempt income: other income
(2)
Any other amount of income derived by a public purpose Crown-controlled company is exempt income.
Exclusion: amounts received in trust
(3)
Subsection (2) does not apply to an amount of income that a public purpose Crown-controlled company derives as a trustee, other than an amount distributed as beneficiary income to a beneficiary who derives the amount as exempt income.
Orders in Council
(4)
The Governor-General may, by Order in Council made on the recommendation of the Minister of Revenue, amend schedule 35—
(a)
to add the name of a company that meets the following criteria:
(i)
the company is listed in schedule 4A of the Public Finance Act 1989 or 100% of the voting interests in the company are held by the group of persons that holds 100% of the voting interests in a company listed in schedule 4A of that Act; and
(ii)
Ministers of the Crown hold, on behalf of the Crown, more than 50% of the voting interests in the company; and
(iii)
all other voting interests, if any, in the company are held by local authorities; and
(iv)
the company’s primary purpose is the carrying out of a public policy objective of the Government of New Zealand:
(b)
to substitute the name of a company in recognition of a change in its name:
(c)
to remove the name of a company.
When Minister of Revenue must recommend Order in Council under subsection (4)(c)
(5)
The Minister of Revenue must recommend that an Order in Council be made to remove the name of a company from schedule 35 if the Minister is satisfied that—
(a)
the company has been removed from the register of companies kept under the Companies Act 1993; or
(b)
the company no longer meets the criteria set out in subsection (4)(a).
Secondary legislation
(6)
An Order in Council under subsection (4) is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
Defined in this Act: amount, company, exempt income, group of persons, income, income tax, local authority, public purpose Crown-controlled company, trustee, voting interest
| Legislation Act 2019 requirements for secondary legislation made under this section | ||||
| Publication | PCO must publish it on the legislation website and notify it in the Gazette | LA19 s 69(1)(c) | ||
| Presentation | The Minister must present it to the House of Representatives | LA19 s 114, Sch 1 cl 32(1)(a) | ||
| Disallowance | It may be disallowed by the House of Representatives | LA19 ss 115, 116 | ||
| This note is not part of the Act. | ||||
Section CW 38B: inserted, on 18 March 2019, by section 139 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CW 38B(1) heading: replaced (with effect on 18 March 2019), on 23 March 2020, by section 98(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 38B(2) heading: replaced (with effect on 18 March 2019), on 23 March 2020, by section 98(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 38B(6) heading: inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section CW 38B(6): inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
CW 39 Local authorities
Exempt income: sinking funds
(1)
An amount of income derived from sinking funds relating to the debt of a local authority is exempt income.
Exempt income: other income
(2)
Any other amount of income derived by a local authority is exempt income.
Exclusion: amounts received in trust
(3)
Subsection (2) does not apply to an amount of income that a local authority derives as a trustee, other than an amount distributed as beneficiary income to a beneficiary who derives the amount as exempt income.
Exclusion: certain amounts from commercial undertakings
(4)
Subsection (2) does not apply to an amount of income that—
(a)
is derived by a local authority from—
(i)
a council-controlled organisation linked by ownership or control to the local authority, other than a council-controlled organisation operating a hospital as a charitable activity on behalf of the local authority; or
(ii)
an organisation linked by ownership or control to the local authority that is a port company, a subsidiary of a port company, or an energy company and that would be a council-controlled organisation in the absence of section 6(4) of the Local Government Act 2002; and
(b)
is neither rates nor a dividend.
Exclusion: local authority as port operator
(5)
Subsection (2) does not apply to an amount of income derived by a local authority in its capacity as a port operator from a port-related commercial undertaking. Port operator and port-related commercial undertaking are defined in section 38(4) of the Port Companies Act 1988.
Defined in this Act: amount, council-controlled organisation, exempt income, income, local authority, trustee
Compare: 2004 No 35 s CW 32
Section CW 39(1) heading: replaced (with effect on 1 April 2008), on 23 March 2020, by section 99(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 39(2) heading: replaced (with effect on 1 April 2008), on 23 March 2020, by section 99(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 39(3): amended, on 30 June 2014, by section 29 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 39(4): replaced, on 1 April 2022, by section 57(1) (and see section 57(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
CW 40 Local and regional promotion bodies
Exempt income: beautification societies
(1)
An amount of income derived by an association or society is exempt income if—
(a)
the association or society is established mainly to—
(i)
advertise, beautify, or develop a city or other district so as to attract population, tourists, trade, or visitors:
(ii)
create, develop, or increase amenities for the general public in a city or other district; and
(b)
none of the funds of the association or society is used, or is or may become available to be used, for any other purpose that is not a charitable purpose.
Exclusion: council-controlled organisation
(2)
Subsection (1) does not apply to an amount of income derived—
(a)
by a council-controlled organisation:
(b)
by a local authority from a council-controlled organisation.
Exempt income: trustees of Cornwall Park
(3)
An amount of income that the trustees of Cornwall Park, Auckland, derive from the property of the trust is exempt income.
Defined in this Act: amount, charitable purpose, council-controlled organisation, exempt income, income, local authority, trustee
Compare: 2004 No 35 s CW 33
Section CW 40 list of defined terms associated person: repealed (with effect on 1 April 2008), on 6 October 2009, by section 47 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CW 40B Te Urewera Board
Exempt income
(1)
To the extent to which it is applied for the purposes set out in the Te Urewera Act 2014, income derived by Te Urewera Board is exempt income.
Definition
(2)
In this section, Te Urewera Board has the meaning given in section 7 of that Act.
Section CW 40B: inserted, on 28 July 2014, by section 40(6) of the Te Urewera Act 2014 (2014 No 51).
CW 40C Te Pou Tupua
Exempt income
(1)
An amount of income derived by Te Pou Tupua (as defined in the Te Awa Tupua (Whanganui River Claims Settlement) Act 2017) is exempt income.
Exclusion
(2)
However, subsection (1) does not apply for an amount of income under section CH 11 (Te Awa Tupua and Te Pou Tupua).
Defined in this Act: amount, exempt income, income
Section CW 40C: inserted, on 21 March 2017, by section 26(3) of the Te Awa Tupua (Whanganui River Claims Settlement) Act 2017 (2017 No 7).
Section CW 40C(1) heading: inserted, on 29 March 2018 (with effect on 21 March 2017), by section 36(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CW 40C(2) heading: inserted, on 29 March 2018 (with effect on 21 March 2017), by section 36(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CW 40C list of defined terms amount: inserted, on 29 March 2018 (with effect on 21 March 2017), by section 36(c) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CW 40C list of defined terms exempt income: inserted, on 29 March 2018 (with effect on 21 March 2017), by section 36(c) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CW 40C list of defined terms income: inserted, on 29 March 2018 (with effect on 21 March 2017), by section 36(c) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CW 41 Charities: non-business income
Exempt income
(1)
The following are exempt income:
(aa)
an amount of income derived by a person who is removed from the register of charitable entities (the register) under the Charities Act 2005, if it is derived in the period starting with the day they are registered on the register and ending with the earlier of the following days:
(i)
the day on which the person does not comply with the person’s rules contained in the register:
(ii)
the day of final decision:
(a)
an amount of income derived by a trustee in trust for charitable purposes:
(b)
an amount of income derived by a society or institution established and maintained exclusively for charitable purposes and not carried on for the private pecuniary profit of any individual.
Exclusion: trustees, society, or institution not registered
(2)
This section does not apply to an amount of income if, at the time that the amount of income is derived, the trustee or trustees of the trust, the society, or the institution is not, or are not, a tax charity.
Exclusion: business income
(3)
This section does not apply to an amount of income derived from a business carried on by, or for, or for the benefit of a trust, society, or institution of a kind referred to in subsection (1).
Exclusion: council-controlled organisation income
(4)
This section does not apply to an amount of income derived by—
(a)
a council-controlled organisation, other than a council-controlled organisation operating a hospital as a charitable activity:
(b)
a local authority from a council-controlled organisation, other than from a council-controlled organisation operating a hospital as a charitable activity on behalf of the local authority.
Definition
(5)
Tax charity means,—
(a)
a trustee, a society, or an institution, registered as a charitable entity under the Charities Act 2005:
(b)
a trustee, a society, or an institution (the entity), that—
(i)
has started, before 1 July 2008, to take reasonable steps in the process of preparing an application for registering the entity as a charitable entity under the Charities Act 2005; and
(ii)
intends to complete the process of preparing an application described in subparagraph (i); and
(iii)
has not been notified by the Commissioner that the entity is not a tax charity:
(c)
a trustee, a society, or an institution, that is or are non-resident and carrying out its or their charitable purposes outside New Zealand, and which is approved as a tax charity by the Commissioner in circumstances where registration as a charitable entity under the Charities Act 2005 is unavailable:
(d)
a person who is removed from the register, in the period starting with the day they are registered on the register and ending with the earlier of the following days:
(i)
the day on which the person does not comply with the person’s rules contained in the register:
(ii)
the day of final decision.
Defined in this Act: amount, business, charitable purpose, council-controlled organisation, day of final decision, exempt income, income, local authority, notify, tax charity, trustee
Compare: 2004 No 35 s CW 34
Section CW 41(1)(aa): inserted (with effect on 14 April 2014 and applying for a person for the 2014–15 and subsequent income years; and for an income year before the 2014–15 income year, but only for the first income year and subsequent income years for which the person files a return of income on the basis that subsections (1), (2), and (3) of section 30 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 apply for the relevant income year), on 30 June 2014, by section 30(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 41(2): amended, on 1 July 2008, by section 20(1) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section CW 41(4): substituted, on 1 April 2008, by section 331 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CW 41(5) heading: added, on 1 July 2008, by section 20(2) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section CW 41(5): added, on 1 July 2008, by section 20(2) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section CW 41(5): amended, on 1 April 2019, by section 140 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CW 41(5)(a): amended, on 29 March 2018 (with effect on 1 July 2008), by section 37(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CW 41(5)(b): amended, on 29 March 2018 (with effect on 1 July 2008), by section 37(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CW 41(5)(c): amended, on 29 March 2018 (with effect on 1 July 2008), by section 37(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CW 41(5)(c): amended (with effect on 14 April 2014), on 30 June 2014, by section 30(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 41(5)(d): inserted (with effect on 14 April 2014 and applying for a person for the 2014–15 and subsequent income years; and for an income year before the 2014–15 income year, but only for the first income year and subsequent income years for which the person files a return of income on the basis that subsections (1), (2), and (3) of section 30 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 apply for the relevant income year), on 30 June 2014, by section 30(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 41 list of defined terms day of final decision: inserted (with effect on 14 April 2014 and applying for a person for the 2014–15 and subsequent income years; and for an income year before the 2014–15 income year, but only for the first income year and subsequent income years for which the person files a return of income on the basis that subsections (1), (2), and (3) of section 30 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 apply for the relevant income year), on 30 June 2014, by section 30(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 41 list of defined terms notify: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section CW 41 list of defined terms registered as a charitable entity: repealed, on 1 July 2008, by section 20(3) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section CW 41 list of defined terms tax charity: inserted, on 1 July 2008, by section 20(3) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
CW 42 Charities: business income
Exempt income
(1)
Income derived directly or indirectly from a business carried on by, or for, or for the benefit of a trust, society, or institution of a kind referred to in section CW 41(1) is exempt income if—
(aa)
the entity carrying on the business is, at the time that the income is derived, registered as a charitable entity under the Charities Act 2005; and
(a)
the trust, society, or institution carries out its charitable purposes in New Zealand; and
(b)
the trustee or trustees of the trust, the society, or the institution is or are, at the time that the income is derived, a tax charity; and
(c)
no person with some control over the business is able to direct or divert an amount derived from the business to the benefit or advantage of,—
(i)
if subparagraph (ii) does not apply, a person other than the trust, society, or institution except for a purpose of the trust, society, or institution:
(ii)
if a trust, society, or institution (the operating entity) is carrying on the business for or for the benefit of another trust, society, or institution (the controlling entity), a person other than the operating entity or the controlling entity except for a purpose of the operating entity or the controlling entity.
Subsections (3) to (8) expand on this subsection.
Exclusion
(2)
This section does not apply to an amount of income derived by—
(a)
a council-controlled organisation, other than a council-controlled organisation operating a hospital as a charitable activity:
(b)
a local authority from a council-controlled organisation, other than from a council-controlled organisation operating a hospital as a charitable activity on behalf of the local authority.
Carrying on a business: trustee
(3)
For the purposes of subsection (1), a trustee is treated as carrying on a business if—
(a)
the trustee derives rents, fines, premiums, or other revenues from an asset of the trust; and
(b)
the asset was disposed of to the trust by a person of a kind described in subsection (5)(b); and
(c)
either—
(i)
the person retains or reserves an interest in the asset; or
(ii)
the asset will revert to the person.
Charitable purposes in New Zealand and overseas
(4)
For the purposes of subsection (1)(a), if the charitable purposes of the trust, society, or institution are not limited to New Zealand, income derived from the business in a tax year is apportioned reasonably between those purposes in New Zealand and those outside New Zealand. Only the part apportioned to the New Zealand purposes is exempt income.
Control over business
(5)
For the purposes of subsection (1)(c) and section CW 42B(2)(c) and (4) for an income year, a person is treated as having some control over the business, and as being able to direct or divert amounts from the business if, in the tax year,—
(a)
they are, in any way, whether directly or indirectly, able to determine, or materially influence the determination of,—
(i)
the nature or extent of a relevant benefit or advantage; or
(ii)
the circumstances in which a relevant benefit or advantage is, or is to be, given or received; and
(b)
their ability to determine or influence the benefit or advantage arises because they are—
(i)
a settlor or trustee of the trust by which the business is carried on; or
(ii)
a shareholder or director of the company by which the business is carried on; or
(iii)
a settlor or trustee of a trust that is a shareholder of the company by which the business is carried on; or
(iv)
a person associated with a settlor, trustee, shareholder, or director referred to in any of subparagraphs (i) to (iii).
Control: settlor asset disposed of to trust
(6)
For the purposes of subsection (5) and section CW 42B(2)(c) and (4), a person is treated as a settlor of a trust, and as gaining a benefit or advantage in the carrying on of a business of the trust, if—
(a)
they have disposed of an asset to the trust, and the asset is used by the trust in the carrying on of the business; and
(b)
they retain or reserve an interest in the asset, or the asset will revert to them.
No control
(7)
For the purposes of subsection (1)(c) and section CW 42B(2)(c) and (5), a person is not treated as having some control over the business merely because—
(a)
they provide professional services to the trust or company by which the business is carried on; and
(b)
their ability to determine, or materially influence the determination of, the nature or extent of a relevent benefit or advantage arises because they—
(i)
provide the services in the course of and as part of carrying on, as a business, a professional public practice; or
(ii)
are a statutory trustee company; or
(iii)
are Public Trust; or
(iv)
are the Maori Trustee.
Benefit or advantage
(8)
For the purposes of subsection (1)(c) and section CW 42B(2)(c) and (6), a benefit or advantage to a person—
(a)
may or may not be something that is convertible into money:
(b)
unless excluded under paragraph (d), includes deriving an amount that would be income of the person under 1 or more of the following provisions:
(i)
section CA 1(2) (Amounts that are income):
(ii)
sections CB 1 to CB 23 (which relate to income from business or trade-like activities):
(iii)
section CB 32 (Property obtained by theft):
(iv)
sections CC 1 (Land), CC 3 to CC 8 (which relate to income from financial instruments), and CC 9 (Royalties):
(v)
section CD 1 (Dividend):
(vi)
sections CE 1 (Amounts derived in connection with employment) and CE 8 (Attributed income from personal services):
(vii)
section CF 1 (Benefits, pensions, compensation, and government grants):
(viii)
section CG 3 (Bad debt repayment):
(ix)
sections CQ 1 (Attributed controlled foreign company income) and CQ 4 (Foreign investment fund income):
(c)
includes retaining or reserving an interest in an asset in the case described in subsection (3), if the person has disposed of the asset to the trust or the asset will revert to them:
(d)
does not include earning interest on money lent, if the interest is payable at no more than the current commercial rate, given the nature and term of the loan.
Non-exempt business income
(9)
If an amount derived from the carrying on of a business by or for a trust is not exempt income because of a failure to comply with subsection (1)(c), the amount is trustee income.
Defined in this Act: amount, associated person, business, charitable purpose, company, council-controlled organisation, director, exempt income, income, income year, interest, local authority, money lent, New Zealand, pay, shareholder, statutory trustee company, tax charity, trustee, trustee income
Compare: 2004 No 35 s CW 35
Section CW 42(1)(aa): inserted, on 1 April 2020, by section 141(1) (and see section 141(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CW 42(1)(b): amended, on 1 July 2008, by section 21(1) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section CW 42(1)(c): replaced (with effect on 1 July 2008), on 24 February 2016, by section 84(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CW 42(2): substituted, on 1 April 2008, by section 332 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section CW 42(5): amended (with effect on 1 July 2008), on 24 February 2016, by section 84(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CW 42(5): amended (with effect on 14 April 2014), on 30 June 2014, by section 31(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 42(6): amended (with effect on 14 April 2014), on 30 June 2014, by section 31(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 42(7): amended (with effect on 14 April 2014), on 30 June 2014, by section 31(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 42(8): amended (with effect on 14 April 2014), on 30 June 2014, by section 31(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 42(9): amended (with effect on 1 April 2008), on 6 October 2009, by section 48 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CW 42 list of defined terms tax charity: inserted, on 1 July 2008, by section 21(2) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
CW 42B Community housing trusts and companies
Exempt income
(1)
An amount of income derived by a community housing entity is exempt income.
Definition
(2)
In this section and section LD 3 (Meaning of charitable or other public benefit gift), community housing entity means a trustee or company (the entity) whose activities involve the provision of housing or housing assistance (the activities), and—
(aa)
the entity is a registered community housing provider under the Public and Community Housing Management Act 1992; and
(a)
the activities are not carried on for the private pecuniary profit of any individual; and
(b)
all profit is retained by the entity, or distributed or applied to—
(i)
community housing entities that meet the requirements to derive exempt income under this section:
(ii)
beneficiaries or clients of the entity:
(iii)
tax charities:
(iv)
persons to whom distributions would be in accordance with charitable purposes; and
(c)
no person with some control over the activities is able to direct or divert an amount derived from the activities to the benefit or advantage of,—
(i)
if subparagraph (ii) does not apply, a person other than the entity except for a purpose of the entity or a charitable purpose:
(ii)
if the entity (the operating entity) is carrying on the activities for or for the benefit of a community housing entity or charity (the controlling entity), a person other than the operating entity or the controlling entity except for a purpose of the operating entity or the controlling entity or for a charitable purpose.
Definition: exception
(3)
Despite subsection (2), community housing entity does not include a trustee or company (the entity) if—
(a)
more than 15% of the people who become beneficiaries or clients of the entity on a date that is or is after 14 April 2014 have, on that date, income or assets exceeding a value (the entry threshold) set out in schedule 34 (Community housing trusts and companies: income and assets of beneficiaries and clients) that is relevant to the beneficiary or client:
(b)
the provision of housing or housing assistance to a beneficiary or client who has income and assets not exceeding the entry thresholds is substantially different from the provision of housing or housing assistance to a beneficiary or client who has income or assets exceeding an entry threshold.
Control over activities
(4)
For the purposes of subsection (2)(c), for an income year, a person is treated as having some control over the activities, and as being able to direct or divert amounts from the activities if, in the tax year, they are described in section CW 42(5)(a) and (b) and (6) (Charities: business income).
No control
(5)
For the purposes of subsection (2)(c), a person described in section CW 42(7)(a) and (b) is not treated as having some control merely because of the factors in section CW 42(7)(a) and (b).
Benefit or advantage
(6)
For the purposes of subsection (2)(c), a benefit or advantage to a person includes a benefit or advantage included under section CW 42(8).
Defined in this Act: amount, charitable purpose, community housing entity, exempt income, income, income year, tax charity
Section CW 42B: inserted (with effect on 14 April 2014), on 30 June 2014, by section 32(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 42B(2): amended (with effect on 14 April 2014), on 24 February 2016, by section 85(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CW 42B(2)(aa): inserted (with effect on 14 April 2014), on 30 June 2014, by section 32(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39) (as amended by the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016).
Section CW 42B(2)(aa): amended, on 1 October 2019, by section 33 of the Kāinga Ora–Homes and Communities Act 2019 (2019 No 50).
Section CW 42B(2)(c): replaced (with effect on 14 April 2014), on 24 February 2016, by section 85(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CW 42B(3): amended (with effect on 14 April 2014), on 24 February 2016, by section 85(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CW 42B(3)(a): replaced (with effect on 14 April 2014), on 24 February 2016, by section 85(4) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CW 42B(3)(b): replaced (with effect on 14 April 2014), on 24 February 2016, by section 85(4) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CW 42B(4): amended (with effect on 14 April 2014), on 24 February 2016, by section 85(5) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CW 43 Charitable bequests
Exempt income
(1)
An amount of income derived by a deceased’s executor or administrator is exempt income to the extent to which the requirements of subsections (2) and (3) are met, having regard to all relevant matters including—
(a)
the terms of the deceased’s will, including the rights of annuitants, legatees, and other beneficiaries; and
(b)
the nature and extent of the debts and liabilities of, and other charges against, the estate and their likely effect on the income and assets available for distribution to the beneficiaries; and
(c)
the shares and prospective shares of the beneficiaries in the income and assets of the estate.
Gift to charity
(2)
The first requirement is that the amount arises from or is attributable to assets of the estate that have been left to a trust, society, or institution of a kind referred to in section CW 41(1).
Exempt in hands of charity
(3)
The second requirement is that the amount, if derived by the trust, society, or institution or by a business carried on by, or for, or for the benefit of it, would be exempt income under section CW 41 or CW 42.
Timing of registration as charitable entity
(4)
An amount of income derived by a deceased’s executor or administrator that is derived during the period beginning on the deceased’s date of death and ending at the end of the income year that follows the income year in which the deceased died is not prevented from being exempt income under this section merely because the trustee or trustees of the trust, the society, or the institution is not, or are not, a tax charity.
Requirements of sections CW 41 and CW 42 disregarded
(5)
For the purposes of subsection (4), until the end of the income year that follows the income year in which the deceased died, the requirements of sections CW 41 and CW 42 for the trustee or trustees of the trust, the society, or the institution to be a tax charity must be disregarded when applying those sections for the purposes of this section.
Amounts derived after end of certain period
(6)
This section does not apply to an amount of income derived after the end of the income year that follows the income year in which the deceased died if, at the time that the amount of income is derived, the trustee or trustees of the trust, the society, or the institution is not, or are not, a tax charity.
Defined in this Act: amount, business, distribution, exempt income, income, New Zealand, tax charity
Compare: 2004 No 35 s CW 36
Section CW 43(4): amended, on 1 July 2008, by section 22(1) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section CW 43(5): amended, on 1 July 2008, by section 22(2) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section CW 43(6): amended, on 1 July 2008, by section 22(3) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section CW 43 list of defined terms registered as a charitable entity: repealed, on 1 July 2008, by section 22(4) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section CW 43 list of defined terms tax charity: inserted, on 1 July 2008, by section 22(4) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
CW 44 Friendly societies
An amount of income derived by a friendly society is exempt income, except to the extent to which the amount is derived from—
(a)
a business carried on beyond the membership of the friendly society; or
(b)
a company registered as an insurer under the Accident Insurance Act 1998.
Defined in this Act: amount, business, company, exempt income, friendly society, income
Compare: 2004 No 35 s CW 37
CW 45 Funeral trusts
Interest or a dividend derived by a trustee in trust for a fund is exempt income if, when the interest or dividend is derived by the trustee,—
(a)
the sole purpose of the fund is the payment of the expenses associated with the funerals of—
(i)
employees of an employer:
(ii)
spouses, civil union partners, de facto partners, and dependants of employees of the employer:
(iii)
surviving spouses, civil union partners, de facto partners, and surviving dependants of deceased employees of the employer; and
(b)
the employer has at least 10 employees; and
(c)
all persons eligible for benefits from the fund are eligible equally for benefits from the fund; and
(d)
no contributions to the fund are made by a person who is not the employer or an employee of the employer; and
(e)
the fund is approved by the Commissioner.
Defined in this Act: Commissioner, dividend, employee, employer, exempt income, interest, pay, trustee
Compare: 2004 No 35 s CW 38
CW 46 Bodies promoting amateur games and sports
An amount of income derived by a club, society, association, or trustee or trustees of a trust (the promoter) is exempt income if—
(a)
the promoter is established mainly to promote an amateur game or sport; and
(b)
the game or sport is conducted for the recreation or entertainment of the general public; and
(c)
no part of the funds of the promoter is used or is available to be used for the private pecuniary profit of a member, proprietor, shareholder, beneficiary, or associate of any of them.
Defined in this Act: amount, associated person, beneficiary, exempt income, income, trustee
Compare: 2004 No 35 s CW 39
Section CW 46: amended (with effect on 1 April 2010 and applying for the 2010–11 and later income years), on 30 June 2014, by section 33(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 46(a): amended (with effect on 1 April 2010 and applying for the 2010–11 and later income years), on 30 June 2014, by section 33(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 46(c): amended (with effect on 1 April 2010 and applying for the 2010–11 and later income years), on 30 June 2014, by section 33(3)(a) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 46(c): amended (with effect on 1 April 2010 and applying for the 2010–11 and later income years), on 30 June 2014, by section 33(3)(b) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 46 list of defined terms beneficiary: inserted (with effect on 1 April 2010 and applying for the 2010–11 and later income years), on 30 June 2014, by section 33(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CW 46 list of defined terms trustee: inserted (with effect on 1 April 2010 and applying for the 2010–11 and later income years), on 30 June 2014, by section 33(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CW 47 TAB NZ and racing clubs
Exempt income: racing organisations
(1)
An amount of income derived by any of the following bodies is exempt income:
(a)
TAB NZ:
(b)
New Zealand Thoroughbred Racing:
(c)
Harness Racing New Zealand:
(d)
the New Zealand Greyhound Racing Association (Incorporated):
(e)
the Racing Integrity Board:
(f)
Racing New Zealand.
Exempt income: racing clubs
(2)
An amount of income derived by a racing club, as defined in section 5(1) of the Racing Industry Act 2020, is exempt income, if none of the club’s funds is used or is available to be used for the private pecuniary profit of a member of the club or an associate of a member.
Defined in this Act: amount, associated person, exempt income, income
Compare: 2004 No 35 s CW 40
Section CW 47 heading: amended, on 1 August 2020, by section 129 of the Racing Industry Act 2020 (2020 No 28).
Section CW 47(1)(a): amended, on 1 August 2020, by section 129 of the Racing Industry Act 2020 (2020 No 28).
Section CW 47(1)(e): inserted (with effect on 1 August 2020) on 30 March 2022, by section 58 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CW 47(1)(f): inserted (with effect on 1 August 2020) on 30 March 2022, by section 58 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CW 47(2): amended, on 1 August 2020, by section 129 of the Racing Industry Act 2020 (2020 No 28).
CW 48 Income from conducting gaming-machine gambling
An amount of income derived by a person that is gross gambling proceeds from gaming-machine gambling is exempt income if—
(a)
the person is authorised to conduct the gaming-machine gambling under the Gambling Act 2003 by a gaming-machine operator’s licence and a gaming-machine venue licence; and
(b)
the person complies with the Gambling Act 2003 in applying and distributing the net gambling proceeds from the gaming-machine gambling.
Defined in this Act: exempt income, gaming-machine gambling, gaming-machine operator’s licence, gaming-machine venue licence, gross gambling proceeds, net gambling proceeds
Compare: 2004 No 35 s CW 40B
CW 49 Bodies promoting scientific or industrial research
Exempt income
(1)
An amount of income derived by a society or association established mainly to promote or encourage scientific or industrial research is exempt income if—
(a)
the society or association is approved by the Royal Society of New Zealand; and
(b)
none of its funds is used or available to be used for the private pecuniary profit of a member, proprietor, shareholder, or associate of any of them.
Exclusion
(2)
This section does not apply to a Crown Research Institute.
Defined in this Act: amount, associated person, Crown Research Institute, exempt income, income
Compare: 2004 No 35 s CW 41
CW 50 Veterinary services bodies
Exempt income: veterinary clubs
(1)
An amount of income derived by a veterinary association, club, or society is exempt income if—
(a)
the association, club, or society was established mainly to promote efficient veterinary services in New Zealand; and
(b)
none of its funds is used or available to be used for the private pecuniary profit of a member, proprietor, shareholder, or associate of any of them.
Exempt income: Veterinary Council
(2)
An amount of income derived by the Veterinary Council of New Zealand is exempt income.
Defined in this Act: amount, associated person, exempt income, income, New Zealand
Compare: 2004 No 35 s CW 42
CW 51 Herd improvement bodies
An amount of income derived by a herd improvement association or society is exempt income if—
(a)
the association or society was established mainly to promote the improvement of the standard of dairy cattle in New Zealand; and
(b)
none of its funds is used or available to be used for the private pecuniary profit of a member, proprietor, shareholder, or associate of any of them.
Defined in this Act: amount, associated person, exempt income, income, New Zealand
Compare: 2004 No 35 s CW 43
CW 52 Community trusts
An amount of income derived by the trustee of a community trust is exempt income.
Defined in this Act: amount, community trust, exempt income, income, trustee
Compare: 2004 No 35 s CW 44
CW 52B Disability support services
Exempt income
(1)
An amount of income derived by or on behalf of a person or their carer is exempt income of the relevant person if the amount is paid by Health New Zealand or the Māori Health Authority for the purpose of the purchase of disability support services in relation to the person.
Meaning
(2)
In this section, disability support services has the meaning given in section 4 of the Pae Ora (Healthy Futures) Act 2022.
Defined in this Act: exempt income, income, pay, person
Section CW 52B: inserted (with effect on 1 April 2015), on 18 March 2019, by section 142(1) (and see section 142(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CW 52B(1): amended, on 1 July 2022, by section 104 of the Pae Ora (Healthy Futures) Act 2022 (2022 No 30).
Section CW 52B(2) disability support services: amended, on 1 July 2022, by section 104 of the Pae Ora (Healthy Futures) Act 2022 (2022 No 30).
CW 53 Distributions from complying trusts
To the extent to which section HC 20 (Distributions from complying trusts) applies to an amount that a person derives as a beneficiary of a trust, the amount is exempt income.
Defined in this Act: amount, complying trust, distribution, exempt income
Compare: 2004 No 35 s HH 3(5)
CW 54 Foreign-sourced amounts derived by trustees
To the extent to which section HC 26 (Foreign-sourced amounts: resident trustees) applies to a foreign-sourced amount that a trustee who is resident in New Zealand derives in an income year, the amount is exempt income.
Defined in this Act: exempt income, foreign-sourced amount, income year, non-resident, resident in New Zealand, trustee
Compare: 2004 No 35 s HH 4(3B)
CW 55 Maori authority distributions
A distribution from a Maori authority to a member, to the extent to which it is not income under section CV 11 (Maori authorities) is exempt income.
Defined in this Act: exempt income, income, Maori authority, member
Compare: 2004 No 35 s HI 5(1)
CW 55BA Tertiary education institutions and subsidiaries
Exempt income
(1)
An amount of income derived by a tertiary education institution or a tertiary education subsidiary is exempt income.
Tertiary education subsidiary
(2)
In this section, a tertiary education subsidiary, for a tertiary education institution, means a company—
(a)
in which the tertiary education institution, alone or together with other tertiary education institutions, holds—
(i)
voting interests in the company adding up to 100%; or
(ii)
market value interests in the company adding up to 100%, when a market value circumstance exists; and
(b)
where no person, other than a tertiary education institution, with some control over the company is able to direct or divert, to their own benefit or advantage, an amount derived from the company.
Control over company
(3)
For the purposes of subsection (2)(b), for an income year, a person is treated as having some control over the company and as being able to direct or divert amounts from the company if, in the corresponding tax year, they are described in section CW 42(5)(a) and (b).
No control over company
(4)
For the purposes of subsection (2)(b), a person described in section CW 42(7)(a) and (b) is not treated as having some control over the company merely because of the factors in section CW 42(7)(a) and (b).
Benefit or advantage
(5)
For the purposes of subsection (2)(b), a benefit or advantage is one that would be a benefit or advantage under section CW 42(1)(c) and (8).
Defined in this Act: amount, company, exempt income, income, market value circumstance, market value interest, tertiary education institution, tertiary education subsidiary, voting interest
Section CW 55BA: replaced (with effect on 1 July 2008 and applying for the 2008–09 and later income years), on 24 February 2016, by section 86(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CW 55BAB Rebate of fees paid by FIF
When this section applies
(1)
This section applies to a person having an attributing interest in a foreign investment fund when—
(a)
the FIF pays fees to another person; and
(b)
the person derives, from the other person, a rebate of the fees; and
(c)
the person is not allowed a deduction for the fees; and
(d)
the person’s FIF income or loss from the interest is not calculated using the comparative value method.
(2)
The amount of the rebate is exempt income.
Defined in this Act: attributing interest, comparative value method, deduction, exempt income, FIF, foreign investment fund, loss, pay
Section CW 55BAB: inserted (with effect on 1 April 2009), on 27 February 2014, by section 20(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CW 55BB Minors’ income, to limited extent
When this section applies
(1)
This section applies for a tax year to a person, other than an absentee, when the person is—
(a)
younger than 15:
(b)
younger than 18, and attends a registered school as defined in section 10(1) of the Education and Training Act 2020:
(c)
younger than 19, and—
(i)
was a person to whom paragraph (b) applied during the previous tax year; and
(ii)
turned 18 on or after 1 January in that previous tax year; and
(iii)
continues to attend a school of a kind referred to in paragraph (b).
Exempt income—if less than limit
(2)
An amount of income derived by the person in the tax year is exempt income if—
(a)
the income is none of—
(i)
a PAYE income payment from which the person’s employer is required to withhold tax under the PAYE rules:
(ii)
resident passive income:
(iii)
non-resident passive income:
(iiib)
beneficiary income:
(iv)
excluded income:
(v)
exempt income under another provision; and
(b)
the person derives in the tax year a total amount of income meeting the requirements of paragraph (a) that is less than $2,340.
Defined in this Act: absentee, beneficiary income, employer, excluded income, exempt income, income, non-resident passive income, PAYE income payment, PAYE rules, resident passive income, tax, tax year
Section CW 55BB: inserted, on 29 May 2012 (applying for the 2012–13 and later tax years), by section 4(1) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
Section CW 55BB(1)(b): replaced, on 1 August 2020, by section 668 of the Education and Training Act 2020 (2020 No 38).
Section CW 55BB(2)(a)(i): replaced (with effect on 29 May 2012 and applying for the 2012–13 and later tax years), on 17 July 2013, by section 17(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CW 55BB(2)(a)(iiib): inserted (with effect on 29 May 2012), on 30 March 2021, by section 20(1) (and see section 20(3) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CW 55BB list of defined terms beneficiary income: inserted (with effect on 29 May 2012), on 30 March 2021, by section 20(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CW 55BB list of defined terms employer: inserted (with effect on 29 May 2012), on 17 July 2013, by section 17(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CW 55BB list of defined terms PAYE rules: inserted (with effect on 29 May 2012), on 17 July 2013, by section 17(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CW 55BB list of defined terms tax: inserted (with effect on 29 May 2012), on 17 July 2013, by section 17(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Partners and partnerships
Heading: inserted, on 1 April 2008, by section 8(1) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).
CW 55B Amounts of exempt income for partners
A person who is a partner has an amount of exempt income to the extent to which an amount of exempt income results from the application of subpart HG (Joint venturers, partners, and partnerships) to them and their partnership.
Defined in this Act: amount, exempt income, partner, partnership
Section CW 55B: inserted, on 1 April 2008, by section 8(1) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).
Income from certain activities
CW 56 Non-resident aircraft operators
Exempt income
(1)
An amount of income derived by a non-resident aircraft operator from air transport from New Zealand, or from air transport to New Zealand, is exempt income to the extent to which the Commissioner determines that an aircraft operator resident in New Zealand is, in circumstances corresponding to the circumstances of the non-resident aircraft operator, exempt from, or not liable to, income tax imposed by the laws of the country or territory in which the non-resident aircraft operator is resident.
Determination
(2)
A determination by the Commissioner for the purposes of subsection (1) may relate to a class of non-resident aircraft operators or a class of resident aircraft operators.
Some definitions
(3)
In this section,—
air transport from New Zealand—
(a)
means the carriage outside New Zealand by an aircraft of cargo, mail, or passengers emplaned or embarked on the aircraft at an airport in New Zealand; and
(b)
includes a flight by the aircraft between the airport in New Zealand where the emplaning or embarking occurred and another airport in New Zealand at which the aircraft calls before leaving New Zealand on the international flight for which the emplaning or embarking occurred
air transport to New Zealand—
(a)
means the carriage to an airport in New Zealand by an aircraft of cargo, mail, or passengers emplaned or embarked on the aircraft at an airport in a country or territory outside New Zealand; and
(b)
includes a flight by the aircraft to the airport in New Zealand for carriage to which the emplaning or embarking occurred from another airport in New Zealand at which the aircraft calls en route
non-resident aircraft operator means a person who—
(a)
is engaged in the business of operating an aircraft for air transport from an airport; and
(b)
is resident in a country or territory outside New Zealand and is not resident in New Zealand.
Defined in this Act: air transport from New Zealand, air transport to New Zealand, amount, business, Commissioner, exempt income, income, income tax, New Zealand, non-resident aircraft operator, resident in New Zealand
Compare: 2004 No 35 s CW 45
Section CW 56(1): amended (with effect on 1 April 2008), on 23 March 2020, by section 100(1) (and see section 100(5) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 56(3) air transport from New Zealand paragraph (b): replaced (with effect on 1 April 2008), on 23 March 2020, by section 100(2) (and see section 100(5) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 56(3) air transport to New Zealand: inserted (with effect on 1 April 2008), on 23 March 2020, by section 100(3) (and see section 100(5) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CW 56 list of defined terms air transport to New Zealand: inserted (with effect on 1 April 2008), on 23 March 2020, by section 100(4) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CW 57 Non-resident company involved in exploration and development activities
Exempt income
(1)
An amount of income derived by a non-resident company from exploration and development activities in an offshore permit area is exempt income if it is derived in the period that—
(a)
starts on 1 January 2020; and
(b)
ends on 31 December 2024.
Some definitions
(2)
In this section,—
exploration and development activities—
(a)
means the following activities undertaken for the purposes of identifying and developing exploitable petroleum deposits or occurrences in an offshore permit area:
(i)
operating a ship to provide seismic or electromagnetic survey readings:
(ii)
drilling an exploratory well or other well; but
(b)
does not include using a drilling rig of modular construction that is installed on an existing offshore platform
offshore permit area means an area of land that is—
(a)
in New Zealand; and
(b)
on the seaward side of the mean high-water mark; and
(c)
a permit area or part of a permit area.
Defined in this Act: amount, exempt income, exploration and development activities, exploratory well, New Zealand, non-resident company, offshore permit area, permit area
Compare: 2004 No 35 s CW 45B
Section CW 57(1)(a): replaced, on 1 January 2020, by section 51 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section CW 57(1)(b): replaced, on 1 January 2020, by section 51 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section CW 57(2) exploration and development activities: replaced, on 1 January 2015, by section 34(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CW 58 Disposal of companies’ own shares
An amount of income derived by a company from disposing of shares in the company, including if the company disposes of the shares as the result of the application of section CE 6 (Trusts are nominees), is exempt income if—
(a)
the company acquired the shares, including if the company acquired the shares as the result of the application of section CE 6; and
(b)
the acquisition was treated under section 67A(1) of the Companies Act 1993 as not resulting in the cancellation of the shares.
Defined in this Act: amount, cancellation, company, exempt income, income, share
Compare: 2004 No 35 s CW 46
Section CW 58: amended, on 30 March 2021, by section 21(1) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CW 58(a): amended, on 30 March 2021, by section 21(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
CW 59 New Zealand companies operating in Niue
Exempt income: income wholly or mainly from Niue
(1)
An amount of income derived by a company incorporated in New Zealand that derives its income wholly or mainly from Niue is exempt income.
Exclusion
(2)
Subsection (1) does not apply if the company, if it were a foreign company, would at any time during the income year in which the amount is derived be a controlled foreign company.
Exempt income: dividends
(3)
A dividend derived from a company incorporated in New Zealand that derives its income wholly or mainly from Niue is exempt income, unless the dividend is derived by—
(a)
a person who is resident in New Zealand; or
(b)
a company that is a controlled foreign company at any time during the income year in which the amount is derived; or
(c)
a trustee of a trust of which a settlor or beneficiary is resident in New Zealand during the income year in which the amount is derived.
Exempt income: Niue development projects
(4)
An amount of income derived by a company incorporated in New Zealand from a business or enterprise that the company carries on in Niue is exempt income if—
(a)
the business or enterprise is declared by an Order in Council made under subsection (7) to be a development project for the purposes of this section; and
(b)
the company’s income is derived wholly or mainly from that business or enterprise; and
(c)
the amount is derived from sources in Niue; and
(d)
the amount is derived while the Order in Council is in force.
Exclusions
(5)
Subsections (1), (3), and (4) do not apply to—
(a)
an amount of income derived from sources in New Zealand; or
(b)
a dividend, to the extent to which it constitutes distribution of an amount derived by the company from sources in New Zealand.
Attributed CFC income and FIF income
(6)
This section does not restrict the application of section CQ 1 (Attributed controlled foreign company income), or CQ 4 (Foreign investment fund income), or the FIF rules. For the purposes of the FIF rules, a company that derives its income wholly or mainly from Niue and has exempt income under subsection (1) is treated as a foreign company.
Order in Council declaring Niue development project
(7)
The Governor-General may make an Order in Council declaring a business or enterprise to be a development project for the purposes of this section if satisfied that the business or enterprise—
(a)
has been or will be entered upon wholly or mainly for the purpose of developing Niue; or
(b)
is or will be important in the development of Niue.
Secondary legislation
(8)
An Order in Council under this section is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
Defined in this Act: amount, attributed CFC income, business, company, controlled foreign company, dividend, exempt income, FIF, FIF rules, foreign company, income, income year, resident in New Zealand, settlor, source in New Zealand, trustee
Compare: 2004 No 35 s CW 47
| Legislation Act 2019 requirements for secondary legislation made under this section | ||||
| Publication | PCO must publish it on the legislation website and notify it in the Gazette | LA19 s 69(1)(c) | ||
| Presentation | The Minister must present it to the House of Representatives | LA19 s 114, Sch 1 cl 32(1)(a) | ||
| Disallowance | It may be disallowed by the House of Representatives | LA19 ss 115, 116 | ||
| This note is not part of the Act. | ||||
CW 59B Income of and distributions by certain international funds
Trustees
(1)
An amount derived by a person is exempt income of the person if they are—
(a)
the trustee of the Niue International Trust Fund:
(b)
the trustee of the Tokelau International Trust Fund.
Distributions
(2)
An amount derived by a person is exempt income of the person if the income is a distribution by—
(a)
the trustee of the Niue International Trust Fund:
(b)
the trustee of the Tokelau International Trust Fund.
Defined in this Act: amount, distribution, exempt income, income, Niue International Trust Fund, Tokelau International Trust Fund, trustee
Compare: 2004 No 35 ss CW 49C, CW 49D
Section CW 59B: inserted, on 1 April 2008, by section 333 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
CW 59C Life reinsurance claims from reinsurer outside New Zealand
An amount of life reinsurance claim derived by a life insurer is exempt income to the extent to which, for the relevant life reinsurance policy, deductions for premiums are denied under section DR 3 (Life reinsurance premiums to reinsurer outside New Zealand).
Defined in this Act: amount, claim, deduction, exempt income, income, life insurer, life reinsurance, life reinsurance policy, New Zealand, premium
Section CW 59C: inserted, on 1 July 2010, by section 49(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CW 59C heading: replaced, on 1 July 2018, by section 7(1) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
Section CW 59C: amended, on 1 July 2018, by section 7(2) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
CW 60 Stake money
Stake or prize money for a dog race, horse race, or trotting race is exempt income if—
(a)
it is paid by a club that is licensed to use the totalisator under the Racing Industry Act 2020; or
(b)
the race is held outside New Zealand.
Defined in this Act: exempt income, New Zealand, pay
Compare: 2004 No 35 s CW 48
Section CW 60(a): amended, on 1 August 2020, by section 129 of the Racing Industry Act 2020 (2020 No 28).
CW 61 Providing standard-cost household service
Exempt income under determination
(1)
An amount of income derived in an income year by a natural person from providing a standard-cost household service is exempt income if the amount is exempt income under a determination made under section 91AA(2)(a) of the Tax Administration Act 1994.
When amount treated as expenditure
(2)
If subsection (1) does not apply, and the amount of standard-cost household service is less than the amount of income of the person, the person is treated, under a determination made under section 91AA of that Act, as incurring an amount of expenditure in providing the services.
Allocation
(3)
For the purposes of subsection (2), the allocation of the amount of the expenditure occurs under section BD 4 (Allocation of deductions to particular income years).
Defined in this Act: amount, deduction, exempt income, income, income tax liability, income year, standard-cost household service
Compare: 2004 No 35 s CW 49
CW 62 Interest paid under the KiwiSaver Act 2006
Interest paid by the Commissioner under section 84 of the KiwiSaver Act 2006 is exempt income.
Defined in this Act: Commissioner, exempt income, interest
Compare: 2004 No 35 s CW 49B
CW 62B Voluntary activities
Exempt income
(1)
When a volunteer, in undertaking a voluntary activity, derives an amount that is a reimbursement payment to cover actual expenses incurred by them, the amount is exempt income of the volunteer.
Estimated expenditure
(2)
For the purposes of subsection (1)—
(a)
a person may make a reasonable estimate of the amount of expenditure likely to be incurred by the volunteer for which reimbursement is payable; and
(b)
the amount estimated is treated as if it were the amount incurred.
Payments partly reimbursement and partly honorarium
(3)
If the person paying the amount to the volunteer makes a payment to them that is only partly a reimbursement of expenses, the person must identify the portion of the amount that is the reimbursement, and treat the remainder as an honorarium, being a schedular payment to which the PAYE rules apply.
Who is a volunteer?
(4)
For the purposes of this section, a volunteer means a person who freely undertakes an activity in New Zealand—
(a)
chosen either by themselves or by a group of which they are a member; and
(b)
that provides a benefit to a community or another person; and
(c)
for which there is no purpose or intention of private pecuniary profit for the person.
Honoraria
(5)
For the purposes of this section, an honorarium means an amount that a person receives for providing services that—
(a)
is paid at a rate that is less than the market rate for providing the services; and
(b)
is an amount for which, in the normal course, no payment is fixed for the services provided.
Nature of reimbursement payment
(6)
For the purposes of this section, it does not matter whether—
(a)
an amount of a reimbursement payment is paid in 1 sum or not:
(b)
the amount is paid during an income year or at the end of an income year.
Relationship with section RD 8(3)
(7)
A determination made by the Commissioner under section RD 8(3) (Schedular payments) may apply to modify an amount of expenditure under this section.
Defined in this Act: amount, exempt income, honorarium, income year, New Zealand, pay, PAYE rules, schedular payment, volunteer
Section CW 62B: inserted (with effect on 1 April 2009), on 6 October 2009, by section 50(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CW 62B(5): amended, on 7 September 2010 (applying for the 2009–10 and later income years), by section 15(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CW 62C Income from foreign-currency loans used for disallowed residential property
An amount of income of a person under section CC 3(1) (Financial arrangements) is exempt income if the person—
(a)
derives the income from a financial arrangement that is a loan of foreign currency to the person; and
(b)
uses the loan proceeds for disallowed residential property; and
(c)
is denied by section DH 8(1) (Deduction not allowed) a deduction for interest incurred by the person under the financial arrangement.
Defined in this Act: disallowed residential property, exempt income, financial arrangement, interest, income
Section CW 62C: inserted (with effect on 27 March 2021), on 30 March 2022, by section 59 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
CW 63 Avoidance arrangements
An amount is exempt income if it is treated as exempt income under—
(a)
section GA 1 (Commissioner’s power to adjust):
(b)
section GB 23 (Excessive remuneration to relatives).
Defined in this Act: amount, exempt income
Compare: 2004 No 35 ss GB 1(1)–(2C), GD 3(1), (2)
CW 64 Exemption under other Acts
An amount of income expressly exempted from income tax by any other Act is exempt income.
Defined in this Act: amount, exempt income, income, income tax
Compare: 2004 No 35 s CW 50
Restructuring under New Zealand Railways Corporation Restructuring Act 1990
Heading: inserted (with effect on 31 December 2012), on 17 July 2013, by section 18 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
CW 65 New Zealand Railways Corporation restructure: exempt income
Railways vesting and land-related payments
(1)
The following are exempt income of KiwiRail Holdings Limited and any company in which it directly or indirectly owns 100% of the shares (wholly-owned subsidiary):
(a)
an amount derived from the Railways vesting:
(b)
an amount derived by KiwiRail Holdings Limited or a wholly-owned subsidiary in relation to—
(i)
a disposal or grant of land, if that land is owned on 31 December 2012 by the Crown or New Zealand Railways Corporation:
(ii)
the termination or variation of a lease granted by the Crown or New Zealand Railways Corporation over land, if that land is owned on 31 December 2012 by the Crown or New Zealand Railways Corporation.
Meaning of Railways vesting
(2)
In this section, Railways vesting has the same meaning as in section EZ 68 (Definitions).
Defined in this Act: amount, company, dispose, exempt income, land, lease, Railways vesting, share
Section CW 65: inserted (with effect on 31 December 2012), on 17 July 2013, by section 18 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Subpart CX—Excluded income
Contents
Goods and services tax
CX 1 Goods and services tax
The following are excluded income of a registered person:
(a)
output tax on goods and services they supply:
(b)
goods and services tax (GST) payable to them by the Commissioner.
Defined in this Act: Commissioner, excluded income, goods, GST, GST payable, output tax, pay, registered person, services
Compare: 2004 No 35 s CX 1
Fringe benefits
Introductory provisions
CX 2 Meaning of fringe benefit
Meaning
(1)
A fringe benefit is a benefit that—
(a)
is provided by an employer to an employee in connection with their employment; and
(b)
either—
(i)
arises in a way described in any of sections CX 6, CX 9, CX 10, or CX 12 to CX 16; or
(ii)
is an unclassified benefit; and
(c)
is not a benefit excluded from being a fringe benefit by any provision of this subpart.
Arrangement to provide benefit
(2)
A benefit that is provided to an employee through an arrangement made between their employer and another person for the benefit to be provided is treated as having been provided by the employer.
Past, present, or future employment
(3)
It is not necessary to the existence of a fringe benefit that an employment relationship exists when the employee receives the benefit.
Relationship with subpart RD
(4)
Sections RD 25 to RD 63 (which relate to fringe benefit tax) deal with the calculation of the taxable value of fringe benefits.
Arrangements
(5)
A benefit may be treated for the purposes of the FBT rules as being provided by an employer to an employee under—
(a)
section GB 31 (FBT arrangements: general):
(b)
section GB 32 (Benefits provided to employee’s associates).
Defined in this Act: arrangement, associated person, employee, employer, employment, FBT rules, fringe benefit, unclassified benefit
Compare: 2004 No 35 s CX 2
Section CX 2(5): amended, on 1 April 2010 (applying for the 2010–11 and later income years), by section 51(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CX 2 list of defined terms FBT rules: inserted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 51(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CX 3 Excluded income
A fringe benefit is excluded income of the employee.
Defined in this Act: employee, excluded income, fringe benefit
Compare: 2004 No 35 s CX 3
CX 4 Relationship with assessable income
To the extent to which a benefit that an employer provides to an employee in connection with their employment is assessable income, the benefit is not a fringe benefit.
Defined in this Act: assessable income, employee, employer, employment, fringe benefit
Compare: 2004 No 35 s CX 4
CX 5 Relationship with exempt income
Exempt income not fringe benefit
(1)
To the extent to which a benefit that an employer provides to an employee in connection with their employment is exempt income, the benefit is not a fringe benefit.
Exclusions
(2)
Subsection (1) does not apply to—
(a)
[Repealed](b)
an allowance that is exempt income under section CW 17 (Expenditure on account, and reimbursement, of employees) to the extent to which it is made to enable the employee to provide a benefit to another person.
Exempt cash payment not fringe benefit
(3)
To the extent to which a benefit that an employer provides to an employee in connection with their employment would have been exempt income if it had been paid in cash, the benefit is not a fringe benefit.
Exclusion
(4)
Subsection (3) does not apply to interest, dividends, or an allowance under subsection (2)(b).
Defined in this Act: dividend, employee, employer, employment, exempt income, fringe benefit, interest, pay
Compare: 2004 No 35 s CX 5
Section CX 5(2)(a): repealed, on 30 March 2017, by section 36 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CX 5 list of defined terms expenditure on account of an employee: repealed, on 29 March 2018, by section 38 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CX 5 list of defined terms life insurance policy: repealed, on 29 March 2018, by section 38 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CX 5 list of defined terms premium: repealed, on 29 March 2018, by section 38 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Fringe benefits
CX 6 Private use of motor vehicle
When fringe benefit arises
(1)
A fringe benefit arises when—
(a)
a motor vehicle is made available to an employee for their private use; and
(b)
the person who makes the vehicle available to the employee—
(i)
owns the vehicle:
(ii)
leases or rents the vehicle:
(iii)
has a right to use the vehicle under an agreement or arrangement with the employee or a person associated with the employee.
Exclusion: work-related vehicles
(2)
Subsection (1) does not apply when the vehicle is a work-related vehicle.
Exclusion: election by close company
(2B)
Subsection (1) does not apply if the employee is a shareholder-employee of a close company and the close company made an election under section CX 17(4B) to apply subpart DE (Motor vehicle expenditure) instead of the FBT rules.
Exclusion: emergency calls
(3)
Subsection (1) does not apply when the vehicle is used for an emergency call.
Exclusion: absences from home
(4)
Subsection (1) does not apply when the employee is absent from home, with the vehicle, for a period of at least 24 hours continuously, if the employee is required, in the performance of their duties, to use a vehicle and regularly to be absent from home.
Use on part of day
(5)
For the purposes of subsections (3) and (4), the whole of the day on which a motor vehicle is used as described in the applicable subsection is treated as a day on which the vehicle is not available for private use.
Defined in this Act: close company, emergency call, employee, FBT rules, fringe benefit, lease, motor vehicle, private use, shareholder-employee, work-related vehicle
Compare: 2004 No 35 s CX 6
Section CX 6(2B) heading: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 67(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 6(2B): inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 67(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 6 list of defined terms close company: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 67(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 6 list of defined terms FBT rules: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 67(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 6 list of defined terms shareholder-employee: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 67(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
CX 7 Employer or associated person treated as having right to use vehicle under arrangement
When this section applies
(1)
This section applies for the application of the fringe benefit tax (FBT) rules to an agreement or arrangement—
(a)
between an employer, or a person associated with the employer, and an employee, or a person associated with the employee; and
(b)
transferring to the employer or person associated with the employer a right to use a motor vehicle under terms agreed between the parties.
Person treated as having right to use vehicle
(2)
The employer or associated person is treated as having a right to use the motor vehicle for a period during which the employee—
(a)
uses the vehicle privately:
(b)
has a right to use the vehicle privately.
Defined in this Act: employee, employer, FBT rules, fringe benefit tax, lease, motor vehicle
Compare: 2004 No 35 s CX 6B
CX 8 Private use of motor vehicle: use by more than 1 employee
If, on any day, a motor vehicle is made available by an employer for the private use of more than 1 employee, this availability is treated as a single instance. The taxable value of the fringe benefit is reduced by the total amount of any contributions paid by an employee or employees.
Defined in this Act: amount, contribution, employee, employer, fringe benefit, motor vehicle, pay, private use
Compare: 2004 No 35 s CX 7
CX 9 Subsidised transport
A fringe benefit arises when an employer provides subsidised transport to an employee, unless section CX 19C or CX 19D applies.
Defined in this Act: employee, employer, fringe benefit, subsidised transport
Compare: 2004 No 35 s CX 8
Section CX 9: amended, on 1 April 2023, by section 25(1) (and see section 25(2) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
CX 10 Employment-related loans
When fringe benefit arises
(1)
A fringe benefit arises when an employer provides a loan to an employee.
Exclusions
(2)
Subsection (1) does not apply to a loan made—
(a)
as an employee share loan:
(b)
under an exempt ESS:
(bb)
as an amount that is a PAYE-related overpayment:
(c)
[Repealed](d)
as an advance of salary and wages, if,—
(i)
in the period for which the employer is required to forward a return to the Commissioner under sections RD 25 to RD 63 (which relate to fringe benefit tax), the total outstanding of such advances to the employee is no more than $2,000; and
(ii)
the contract of employment does not require the employer to make the advance.
Loan owing
(3)
The employer provides a fringe benefit in a tax year in which the loan is owing. The circumstances in which a loan is owing include a case in which, under the arrangement for the loan, an amount is payable in the future, or would be payable in the future if a particular event happened, and the employee or an associated person is or would be liable to pay the amount.
Defined in this Act: amount, arrangement, associated person, employee, employee share loan, employer, employment-related loan, exempt ESS, fringe benefit, income, pay, PAYE-related overpayment, tax year
Compare: 2004 No 35 s CX 9
Section CX 10(2)(b): amended (with effect on 29 March 2018), on 31 March 2023, by section 26(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CX 10(2)(bb): inserted, on 1 April 2019, by section 143(1) (and see section 143(3) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CX 10(2)(c): repealed, on 1 April 2011, by section 16(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section CX 10 list of defined terms exempt ESS: inserted (with effect on 29 March 2018), on 31 March 2023, by section 26(2)(a) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CX 10 list of defined terms PAYE-related overpayment: inserted, on 1 April 2019, by section 143(2) (and see section 143(3) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CX 10 list of defined terms share purchase scheme: repealed (with effect on 29 March 2018), on 31 March 2023, by section 26(2)(b) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CX 10 list of defined terms superannuation fund: repealed, on 1 April 2011, by section 16(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
CX 11 Employment-related loans: loans by life insurers
When fringe benefit treated as arising
(1)
A life insurer provides a benefit that is treated as an employment-related loan if—
(a)
the life insurer makes a loan to a person who holds a life insurance policy (person A) or to a person associated with person A; and
(b)
the life insurance policy is offered or entered into in New Zealand; and
(c)
either—
(i)
the loan is made because of the capacity or status of person A as a policyholder; or
(ii)
the interest charged on the loan depends on the capacity or status of person A as a policyholder.
Life insurer as employer
(2)
For the purposes of the FBT rules, the life insurer is treated as an employer and person A or the person associated with them is treated as an employee.
Meaning of life insurer
(3)
In this section, life insurer—
(a)
means a person who is the insurer under the life insurance policy:
(b)
includes—
(i)
a person associated with the life insurer:
(ii)
a person with whom the life insurer has entered into an arrangement relating to the making of the loan.
Defined in this Act: arrangement, associated person, employee, employer, employment-related loan, FBT rules, fringe benefit, interest, life insurance policy, life insurer, offered or entered into in New Zealand
Compare: 2004 No 35 s CX 10
CX 12 Services for members and former members of Parliament
When fringe benefit arises
(1)
A fringe benefit arises when travel, accommodation, and communications services are exempt income under section CW 31 (services for members and former members of Parliament).
Relationship with sections CX 5 and CX 28
(2)
This section overrides sections CX 5 (relationship with exempt income) and CX 28 (accommodation).
Defined in this Act: exempt income, fringe benefit
Section CX 12: replaced, on 16 December 2013, by section 66 of the Members of Parliament (Remuneration and Services) Act 2013 (2013 No 93).
CX 13 Contributions to superannuation schemes
When fringe benefit arises
(1)
A fringe benefit arises when an employer contributes to a superannuation scheme for the benefit of an employee.
Exclusion
(2)
This section does not apply if the contribution is an employer’s superannuation cash contribution.
Defined in this Act: contribution, employee, employer, employer’s superannuation cash contribution, fringe benefit, superannuation scheme
Compare: 2004 No 35 s CX 12
Section CX 13(2): substituted (with effect on 1 April 2008), on 6 October 2009, by section 52(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CX 13 list of defined terms employer’s superannuation cash contribution: inserted (with effect on 1 April 2008), on 6 October 2009, by section 52(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CX 13 list of defined terms employer’s superannuation contribution: repealed (with effect on 1 April 2008), on 6 October 2009, by section 52(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CX 14 Contributions to sickness, accident, or death benefit funds
A fringe benefit arises when an employer makes a contribution for the benefit of an employee to a sickness, accident, or death benefit fund.
Defined in this Act: contribution, employee, employer, fringe benefit, sickness, accident, or death benefit fund
Compare: 2004 No 35 s CX 13
CX 15 Contributions to funeral trusts
A fringe benefit arises when an employer makes a contribution to a fund in the circumstances described in section CW 45 (Funeral trusts).
Defined in this Act: contribution, employer, fringe benefit
Compare: 2004 No 35 s CX 14
CX 16 Contributions to life or health insurance
When fringe benefit arises
(1)
A fringe benefit arises when an employer pays a specified insurance premium or makes a contribution to the insurance fund of a friendly society for the benefit of an employee.
Exclusion
(2)
This section does not apply to a premium or contribution described in section CZ 15 (Accident insurance contracts before 1 July 2000).
Meaning of specified insurance premium
(3)
In this section, specified insurance premium means a premium paid for the benefit of an employee on an insurance policy to the extent to which the insurance policy is for—
(a)
life insurance under section EY 8 (Meaning of life insurance) on the life of the employee or their spouse, civil union partner, or de facto partner, or on their joint lives, or on the life of their child:
(b)
accident or medical insurance referred to in section EY 8(3) on the life of the employee or their spouse, civil union partner, or de facto partner, or on their joint lives, or on the life of their child:
(c)
insurance against accident, disease, or sickness, whether fatal or not, suffered by the employee, their spouse, civil union partner, or de facto partner, or their child.
Life insurance[Repealed]
(4)
[Repealed]Life insurance: pension benefit[Repealed]
(5)
[Repealed]Health insurance[Repealed]
(6)
[Repealed]Defined in this Act: contribution, de facto partner, employee, employer, friendly society, fringe benefit, life insurance, pay, premium, specified insurance premium, year
Compare: 2004 No 35 s CX 15
Section CX 16(3) heading: replaced, on 30 March 2017, by section 37(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CX 16(3): replaced, on 30 March 2017, by section 37(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CX 16(4) heading: repealed, on 30 March 2017, pursuant to section 37(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CX 16(4): repealed, on 30 March 2017, by section 37(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CX 16(5) heading: repealed, on 30 March 2017, pursuant to section 37(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CX 16(5): repealed, on 30 March 2017, by section 37(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CX 16(6) heading: repealed, on 30 March 2017, pursuant to section 37(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CX 16(6): repealed, on 30 March 2017, by section 37(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CX 16 list of defined terms de facto partner: inserted, on 30 March 2017, by section 37(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CX 16 list of defined terms premium: inserted, on 30 March 2017, by section 37(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CX 17 Benefits provided to employees who are shareholders or investors
Benefit provided in connection with employment
(1)
If a company or a trustee of a group investment fund provides a non-cash benefit to an employee who holds shares in the company or who is an investor in the fund, the benefit is treated as having been provided in connection with the employment. The shares or investment may be held in the employee’s own right or beneficially.
Whether fringe benefit or dividend
(2)
A company or a trustee of a group investment fund that has provided a non-cash benefit to an employee who holds shares in the company or who is an investor in the fund may choose to treat the benefit as a fringe benefit or a dividend. If the company or trustee does not make an election, the benefit is treated as a fringe benefit. If the company or trustee chooses to treat the benefit as a dividend, the FBT rules do not apply.
Exclusion: benefit provided to non-executive director
(3)
Neither subsection (1) nor subsection (2) applies to a non-cash benefit provided by a company to a non-executive director of the company.
Non-cash benefits
(4)
Subsection (2) applies to non-cash benefits that would,—
(a)
in the absence of section CD 32 (Employee benefits), be dividends under section CD 4 (Transfers of company value generally) if provided to a person in their capacity as a shareholder; and
(b)
in the absence of section CX 4, be unclassified benefits if provided to a person in their capacity as an employee.
Exclusion: election by close company
(4B)
Despite subsection (4), subsection (2) does not apply and the benefit is neither a fringe benefit nor a dividend in an income year if—
(a)
the benefit—
(i)
arises when a close company makes a motor vehicle available to a shareholder-employee for their private use; and
(ii)
would, in the absence of this subsection, be a fringe benefit arising under section CX 6; and
(b)
the total benefits the close company provides to all employees in the income year are 1 or 2 of the benefits described in paragraph (a); and
(c)
the close company chooses to apply subpart DE (Motor vehicle expenditure) for the motor vehicle and the shareholder-employee instead of the FBT rules.
When election may be made
(4C)
An election by a close company under subsection (4B) may be made for the income year which includes the day on which the close company—
(a)
acquires the motor vehicle; or
(b)
first starts using the motor vehicle for business use.
Election continues to apply
(4D)
An election under subsection (4B) applies for the income year described in subsection (4C), and continues to apply until the end of the income year that includes the earlier of—
(a)
the day on which the close company stops using the motor vehicle for business use; or
(b)
the day on which the close company disposes of the motor vehicle.
Notice of election under subsection (2)
(5)
The company or trustee must give notice to the Commissioner of the election referred to in subsection (2) in the time allowed for filing a fringe benefit tax return for the period in which the benefit was provided.
Notice of election under subsection (4B)
(5B)
The close company must give notice to the Commissioner of an election referred to in subsection (4B) in the time allowed for filing a return of income for the income year in which the election was made.
Relationship with subpart DG
(6)
Section DG 2(4) (Application of this subpart) may apply to require a company to treat a benefit under this section as a dividend.
Defined in this Act: business use, close company, Commissioner, company, dividend, employee, employment, FBT rules, fringe benefit, fringe benefit tax, group investment fund, income year, investor, motor vehicle, non-executive director, notice, return, return of income, share, shareholder, shareholder-employee, trustee, unclassified benefit
Compare: 2004 No 35 s CX 16
Section CX 17(3) heading: replaced, on 1 April 2017 (applying for the 2017–18 and later income years), by section 68(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 17(4)(a): amended, on 23 March 2020, by section 101 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CX 17(4)(a): amended (with effect on 1 April 2008), on 7 September 2010, by section 17(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section CX 17(4B) heading: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 68(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 17(4B): inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 68(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 17(4C) heading: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 68(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 17(4C): inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 68(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 17(4D) heading: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 68(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 17(4D): inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 68(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 17(5) heading: amended, on 1 April 2017 (applying for the 2017–18 and later income years), by section 68(3) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 17(5B) heading: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 68(4) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 17(5B): inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 68(4) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 17(6) heading: inserted (with effect on 1 April 2013 and applying for the 2013–14 and later income years for an item of property referred to in section DG 3(2)(a)(i), and for the 2014–15 and later income years for an item of property referred to in section DG 3(2)(a)(ii) and (iii)), on 17 July 2013, by section 20(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CX 17(6): inserted (with effect on 1 April 2013 and applying for the 2013–14 and later income years for an item of property referred to in section DG 3(2)(a)(i), and for the 2014–15 and later income years for an item of property referred to in section DG 3(2)(a)(ii) and (iii)), on 17 July 2013, by section 20(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CX 17 list of defined terms business use: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 68(5) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 17 list of defined terms close company: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 68(5) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 17 list of defined terms income year: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 68(5) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 17 list of defined terms motor vehicle: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 68(5) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 17 list of defined terms return of income: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 68(5) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section CX 17 list of defined terms shareholder-employee: inserted, on 1 April 2017 (applying for the 2017–18 and later income years), by section 68(5) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
CX 18 Benefits provided to associates of both employees and shareholders
When this section applies
(1)
This section applies when—
(a)
a benefit provided to an associated person of an employee would be treated as a fringe benefit under section GB 32 (Benefits provided to employee’s associates) in the absence of section CX 4; and
(b)
the employer is a company; and
(c)
the associated person is also associated with a shareholder in the company; and
(d)
the associated person is not a company; and
(e)
the associated person is not a shareholder in the company; and
(f)
the benefit would be a dividend if provided to the shareholder.
FBT rules apply, not dividend rules
(2)
The benefit is subject to the FBT rules and is treated as not being a dividend.
Defined in this Act: associated person, company, dividend, employee, employer, FBT rules, fringe benefit, shareholder
Compare: 2004 No 35 s GC 15(3), (4)
Exclusions and limitations
CX 19 Benefits provided instead of allowances
When not fringe benefit
(1)
A benefit that an employer provides to an employee in connection with their employment is not a fringe benefit to the extent to which it removes the need that would otherwise exist for the employer to pay the employee an allowance of 1 of the following kinds:
(a)
an allowance that, if it had been paid,—
(i)
would have been exempt income under section CW 17 (Expenditure on account, and reimbursement, of employees); and
(ii)
would have been paid for reasons other than to enable the employee to provide a benefit to another person; or
(b)
an allowance that reimburses the employee for transport costs that—
(i)
would have been incurred both in connection with their employment and for the benefit of the employer in travelling between home and work; and
(ii)
would have been attributable to any 1 or more of the factors set out in section CW 18(3) (Allowance for additional transport costs); or
(c)
an amount that, if it had been paid, would have been exempt income under sections CW 16B to CW 16F, CW 17B, CW 17CB, and CW 17CC (which relate to certain expenditure of an employer on an employee’s accommodation, work-related meals, relocation, and clothing).
Temporary change in workplace
(2)
A benefit that an employer provides to an employee is not a fringe benefit if it—
(a)
is in substitution for an allowance described in subsection (1)(b); and
(b)
is brought about because the employee has a temporary change in their place of work while in the same employment; and
(c)
reimburses the employee for transport costs that would have been incurred relating to travel by 1 or more of the employee’s spouse, civil union partner, or de facto partner, and relatives for the purpose of visiting the employee in the temporary place of work; and
(d)
has a value that is no more than the amount that would be provided under the allowance described in subsection (1)(b).
Defined in this Act: employee, employer, employment, exempt income, fringe benefit, pay, relative
Compare: 2004 No 35 s CX 17
Section CX 19(1)(b)(ii): amended (with effect on 1 April 2008), on 6 October 2009, by section 53 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CX 19(1)(c): added (with effect on 1 April 2008), on 6 October 2009, by section 53 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CX 19(1)(c): amended, on 1 April 2015, by section 35 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CX 19B Transport in vehicle other than motor vehicle
A benefit that an employer provides to an employee in the form of transport of the employee in a vehicle is not a fringe benefit if the vehicle—
(a)
is not a motor vehicle; and
(b)
is not designed principally for the carriage of passengers.
Defined in this Act: employee, employer, fringe benefit, motor vehicle
Section CX 19B: inserted (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 March 2017, by section 38(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CX 19C Certain public transport
Travel between home and work
(1)
A fare that an employer subsidises mainly for the purposes of an employee travelling between their home and place of work is not a fringe benefit if the fare—
(a)
is a public transport fare for 1 or more of the following:
(i)
bus service:
(ii)
rail vehicle:
(iii)
ferry:
(iv)
cable car:
(b)
is partly funded by the Total Mobility Scheme administered by Waka Kotahi.
Meaning of bus service
(2)
Bus service means a service for the carriage of passengers for hire or reward by means of a motor vehicle, but does not include—
(a)
a service that can be reserved for use by a single person or a self-selected group of people:
(b)
a shuttle service as defined in section 5 of the Land Transport Management Act 2003.
Meaning of public transport fare
(3)
Public transport fare means the money paid for a journey on a means of transport that is available to the public and for which set fares are charged.
Meaning of rail vehicle
(4)
Rail vehicle has the same meaning as in section 4(1) of the Railways Act 2005.
Defined in this Act: bus service, employee, fringe benefit, public transport fare, rail vehicle
Section CX 19C: inserted, on 1 April 2023, by section 27(1) (and see section 27(2) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
CX 19D Certain self-powered and low-powered vehicles and vehicle-share services
Self-powered or low-powered vehicles
(1)
A vehicle that an employer provides to an employee for the main purpose of the employee travelling between their home and place of work is not a fringe benefit if the vehicle is—
(a)
a bicycle:
(b)
an electric bicycle:
(c)
a scooter:
(d)
an electric scooter:
(e)
any other vehicle declared under section 168A of the Land Transport Act 1998 to be—
(i)
a mobility device; or
(ii)
not a motor vehicle.
Payment of vehicle-share service costs
(2)
A benefit that an employer provides to an employee in the form of assistance with the payment of the employee’s costs of using a vehicle-share service for the main purpose of an employee travelling between their home and place of work is not a fringe benefit if the vehicle-share service provides use of 1 or more of the following vehicles to the employee:
(a)
a bicycle:
(b)
an electric bicycle:
(c)
a scooter:
(d)
an electric scooter:
(e)
any other vehicle declared under section 168A of the Land Transport Act 1998 to be—
(i)
a mobility device; or
(ii)
not a motor vehicle.
Regulations
(3)
For the purposes of subsections (1) and (2), the Governor-General may, by Order in Council made on the recommendation of the Minister of Revenue, make regulations specifying—
(a)
the maximum allowable cost of the vehicle referred to in subsection (1); and
(b)
requirements for any vehicle referred to in subsections (1) and (2).
Meaning of vehicle-share service
(4)
In this section, vehicle-share service means a transport service that allows users to hire a vehicle for a point-to-point trip through a mobile communication device.
Defined in this Act: employee, employer, fringe benefit
Section CX 19D: inserted, on 1 April 2023, by section 27(1) (and see section 27(2) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
CX 20 Benefits to enable performance of duties
The taxable value of a benefit that an employer provides to an employee by way of subsidised transport, or in the form of expenditure that an employer incurs on accommodation or transport provided to an employee, is zero if the expenditure—
(a)
relates to travel by the employee in order for them to perform their employment duties; and
(b)
does not relate to the providing or taking of leave or a vacation; and
(c)
is not increased as a result of the benefit.
Defined in this Act: employee, employer, subsidised transport
Compare: 2004 No 35 s CX 18
CX 21 Business tools
When use of business tool not fringe benefit
(1)
The private use of a business tool that an employer provides to an employee, and the availability for private use of such a business tool, is not a fringe benefit if—
(a)
the business tool is provided mainly for business use; and
(b)
the cost of the business tool to the employer, including the amount of any deduction for the cost of the business tool that the employer may make under section 20(3) of the Goods and Services Tax Act 1985, is no more than $5,000.
Use away from employer’s premises
(2)
For the purposes of subsection (1), a business tool that is not taken to and used on the employer’s premises may nevertheless be provided mainly for business use if the employee performs a significant part of the employee’s employment duties away from the premises.
Defined in this Act: business tool, business use, employee, employer, fringe benefit
Compare: 2004 No 35 s CX 18B
CX 22 Benefits to non-executive directors
A transfer of company value to a non-executive director that is a dividend under section CD 20(2) (Benefits of shareholder-employees or directors) is not a fringe benefit if it is made solely because of their capacity as a non-executive director.
Defined in this Act: dividend, fringe benefit, non-executive director, transfer of company value
Compare: 2004 No 35 s CX 19
Section CX 22: amended, on 23 March 2020, by section 102(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CX 22 list of defined terms transfer of company value: inserted, on 23 March 2020, by section 102(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CX 22 list of defined terms transfer of value: repealed, on 23 March 2020, by section 102(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CX 23 Benefits provided on premises
When not fringe benefit
(1)
A benefit, other than free, discounted, or subsidised travel, accommodation, or clothing, is not a fringe benefit if the benefit is—
(a)
provided to the employee by the employer of the employee and used or consumed by the employee on the premises of—
(i)
the employer:
(ii)
a company that is part of the same group of companies as the employer:
(b)
provided to the employee by a company that is part of the same group of companies as the employer of the employee and used or consumed by the employee on the premises of—
(i)
the employer:
(ii)
the company that provides the benefit.
Premises of person
(2)
In this section, the premises of a person—
(a)
include premises that the person owns or leases:
(b)
include premises, other than those referred to in paragraph (a), on which an employee of the person is required to perform duties for the person:
(c)
do not include premises occupied by an employee of the person for residential purposes.
Defined in this Act: company, employee, employer, fringe benefit, group of companies, lease
Compare: 2004 No 35 s CX 20
Section CX 23(1)(a): amended (with effect on 5 August 2010), on 21 December 2010, by section 34 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CX 23(1)(b): amended (with effect on 5 August 2010), on 21 December 2010, by section 34 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
CX 24 Benefits related to health or safety
A benefit that an employer provides to an employee is not a fringe benefit to the extent to which it—
(a)
is related to the employee’s health or safety; and
(b)
is aimed at managing risks to health and safety in the workplace as provided under the Health and Safety at Work Act 2015; and
(c)
would be excluded by section CX 23 from being a fringe benefit if provided on the employer’s premises.
Defined in this Act: employee, employer, employment, fringe benefit
Compare: 2004 No 35 s CX 20B
Section CX 24(b): replaced, on 4 April 2016, by section 232 of the Health and Safety at Work Act 2015 (2015 No 70).
CX 25 Benefits provided by charitable organisations
When not fringe benefit
(1)
A charitable organisation that provides a benefit to an employee does not provide a fringe benefit except to the extent to which—
(a)
the employee receives the benefit mainly in connection with their employment; and
(b)
the employment consists of the carrying on by the organisation of a business whose activity is outside its benevolent, charitable, cultural, or philanthropic purposes.
When employer provides charge facilities
(2)
Subsection (1) does not apply, and the benefit provided is a fringe benefit, if a charitable organisation provides a benefit to an employee by way of short-term charge facilities and the value of the benefit from the short-term charge facilities for the employee in a tax year is more than the lesser for the tax year of—
(a)
5% of the employee’s salary or wages:
(b)
$1,200.
Meaning of short-term charge facilities
(3)
For the purposes of the FBT rules, a short-term charge facility means an arrangement that—
(a)
enables an employee to obtain goods or services that have no connection with the employer or its operations by—
(i)
buying or hiring the goods or services:
(ii)
charging the cost of the goods or services to an account:
(iii)
providing consideration other than money for the goods or services; and
(b)
requires the employer to provide some or all of the payment or other consideration for the goods or services; and
(c)
is not a fringe benefit under section CX 10.
Defined in this Act: business, charitable organisation, employee, employer, employment, fringe benefit, pay, salary or wages, short-term charge facility, tax year
Compare: 2004 No 35 s CX 21
Section CX 25(2): replaced, on 1 April 2014, by section 21(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CX 25(3)(a): replaced, on 1 April 2014, by section 21(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CX 25(3)(b): replaced, on 1 April 2014, by section 21(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CX 25 list of defined terms employer: inserted, on 1 April 2014, by section 21(3) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CX 25 list of defined terms salary or wages: inserted, on 1 April 2014, by section 21(3) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CX 25 list of defined terms tax year: inserted, on 1 April 2014, by section 21(3) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
CX 26 Non-liable payments
A benefit received by an employee is not a fringe benefit to the extent to which it is received in a quarter or in an income year in which they derive 1 or more pay-as-you-earn (PAYE) income payments, all of which are not liable for income tax.
Defined in this Act: employee, fringe benefit, income tax, income year, PAYE income payment, quarter
Compare: 2004 No 35 s CX 22
CX 27 Assistance with tax returns
Not fringe benefit
(1)
An employer’s assistance with the preparation of an employee’s return of income is not a fringe benefit when the expenditure incurred in providing the assistance is expenditure for which the employee would have been allowed a deduction, if it had been incurred by the employee, under section DB 3 (Determining tax liabilities).
Employees’ returns of income
(2)
For the purposes of this section, an employee’s return of income includes the income information held by the Commissioner and set out in the employee’s pre-populated account referred to in section 22D(5) of the Tax Administration Act 1994.
Defined in this Act: deduction, employee, employer, fringe benefit, return of income
Compare: 2004 No 35 s CX 23
Section CX 27(1) heading: inserted, on 1 April 2019, by section 144(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CX 27(1): amended, on 1 April 2019, by section 144(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CX 27(2) heading: inserted, on 1 April 2019, by section 144(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CX 27(2): inserted, on 1 April 2019, by section 144(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CX 27 list of defined terms income statement: repealed, on 1 April 2019, by section 144(4) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
CX 28 Accommodation
The value of accommodation that an employer provides to an employee in connection with the employment or services is not a fringe benefit.
Defined in this Act: accommodation, employee, employer, employment, fringe benefit
Section CX 28: substituted (with effect on 1 April 2008), on 6 October 2009, by section 54(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CX 29 Entertainment
When not fringe benefit
(1)
A benefit in a form of entertainment described in section DD 2 (Limitation rule) that an employer provides to an employee is not a fringe benefit. This subsection is overridden by subsection (2).
When is fringe benefit
(2)
A benefit in a form of entertainment described in section DD 2 that an employer provides to an employee is a fringe benefit if—
(a)
the employee does not receive or use it in the course of employment; and
(b)
the employee does not receive or use it as a necessary consequence of their employment duties; and
(c)
either—
(i)
the employee may choose when to receive or use the benefit; or
(ii)
the entertainment is of a kind described in section DD 7 (Entertainment outside New Zealand).
Defined in this Act: employee, employer, employment, fringe benefit
Compare: 2004 No 35 s CX 25
CX 30 Distinctive work clothing
When not fringe benefit
(1)
Distinctive work clothing that an employer provides to an employee is not a fringe benefit, whether provided by sale or otherwise.
Meaning of distinctive work clothing
(2)
In this section, distinctive work clothing means clothing, including a single item of clothing, that—
(a)
is worn by an employee as, or as part of, a uniform that can be identified with the employer—
(i)
through the permanent and prominent display of a name, logo, or other identification that the employer regularly uses in carrying on their activity or undertaking; or
(ii)
because the colour scheme, pattern, or style is readily associated with the employer; and
(b)
is worn in the course, or as an incident, of employment; and
(c)
is not clothing that employees would normally wear for private purposes.
Defined in this Act: distinctive work clothing, employee, employer, employment, fringe benefit
Compare: 2004 No 35 s CX 26
CX 31 Contributions to income protection insurance
An employer who satisfies a liability to pay, or contribute to the payment of, a premium for income protection insurance for the benefit of an employee does not provide a fringe benefit to the employee if a payment of the insurance to the employee would be assessable income of the employee.
Defined in this Act: contribution, employee, employer, fringe benefit, pay
Compare: 2004 No 35 s CX 26B
CX 32 Services provided to superannuation fund
A fringe benefit does not arise if services are provided to a superannuation fund to the extent to which the superannuation fund would have been allowed a deduction for the expenditure incurred in providing the services if the expenditure had been incurred by the superannuation fund.
Defined in this Act: deduction, fringe benefit, superannuation fund
Compare: 2004 No 35 s CX 27
CX 33 Goods provided at discount by third parties
When this section applies
(1)
This section applies when an employer and a person who is not associated with the employer have an arrangement through which goods are provided by the person at a discount.
When not fringe benefit
(2)
A discount provided by the person to an employee in a group of employees is not a fringe benefit if—
(a)
the person offers a discount to a group of persons that—
(i)
negotiates the discount on an arm’s-length basis; and
(ii)
does not include the group of employees; and
(iii)
is comparable in number to the group of employees; and
(b)
the discount offered to the group of employees is the same or less than the discount offered to the group described in paragraph (a).
Defined in this Act: arrangement, associated person, employee, employer, fringe benefit
Compare: 2004 No 35 s CX 27B
CX 33B Benefits for members of Parliament
Reasonable estimates may be used to determine, for the purposes of the FBT rules, what benefit provided under the Members of Parliament (Remuneration and Services) Act 2013 to a member of Parliament is a fringe benefit, or excluded from being a fringe benefit, or valued at zero.
Defined in this Act: FBT rules, fringe benefit
Section CX 33B: inserted (with effect on 1 July 2013), on 17 July 2013, by section 22 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section CX 33B: amended, on 16 December 2013, by section 66 of the Members of Parliament (Remuneration and Services) Act 2013 (2013 No 93).
Definitions
CX 34 Meaning of emergency call
Emergency call means a visit that an employee is required to make, to which all the following apply:
(a)
the employee makes the visit from their home in the course of their employment; and
(b)
the purpose of the visit is to provide—
(i)
essential services relating to the operation of the plant or machinery of the employer, or of their client or customer; or
(ii)
essential services relating to the maintenance of services provided by a local authority or a public authority; or
(iii)
essential services relating to the carrying on of a business for the supply of energy or fuel to the public; or
(iv)
emergency services relating to the health or safety of any person; and
(c)
the employer, their client or customer, or a member of the public requests the services; and
(d)
except when paragraph (b)(iv) applies, the services are required to be performed between the hours of 6.00 pm and 6.00 am on days other than a Saturday, Sunday, or statutory public holiday, and at any time on other days.
Defined in this Act: business, emergency call, employee, employer, employment, local authority, public authority, request
Compare: 2004 No 35 s CX 28
Section CX 34 list of defined terms request: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
CX 35 Meaning of employee share loan
Meaning
(1)
Employee share loan means a loan made to an employee if—
(a)
the loan is made for the sole purpose of enabling the employee to acquire, under a scheme of acquisition,—
(i)
shares, rights, or options in the company that is their employer:
(ii)
shares, rights, or options in a company that is associated with their employer; and
(b)
the employee uses the loan only for the purpose of the acquisition; and
(c)
the employee beneficially owns the shares, rights, or options throughout the term of the loan; and
(d)
the employee must immediately repay the loan in full if they stop being the beneficial owner of any of the shares, rights, or options; and
(e)
the company issuing the shares, rights, or options must maintain a dividend-paying policy throughout the term of the loan.
Exclusions
(2)
This section does not apply—
(a)
to shares, rights, or options in a qualifying company:
(b)
to a loan made under an exempt ESS:
(c)
to an employer and an employee who are associated persons.
Defined in this Act: associated person, company, dividend, employee, employee share loan, employer, exempt ESS, pay, qualifying company, share
Compare: 2004 No 35 s CX 29
Section CX 35(2)(b): amended (with effect on 29 March 2018), on 31 March 2023, by section 29(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CX 35 list of defined terms exempt ESS: inserted (with effect on 29 March 2018), on 31 March 2023, by section 29(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
CX 36 Meaning of private use
Private use, for a motor vehicle, includes—
(a)
the employee’s use of the vehicle for travel between home and work; and
(b)
any other travel that confers a private benefit on the employee.
Defined in this Act: employee, motor vehicle, private use
Compare: 2004 No 35 s CX 30
CX 37 Meaning of unclassified benefit
Unclassified benefit means a fringe benefit that arises if an employer provides an employee with a benefit in connection with their employment that is—
(a)
not a benefit referred to in any of sections CX 6 to CX 16; and
(b)
not a benefit excluded under this subpart.
Defined in this Act: employee, employer, employment, fringe benefit, unclassified benefit
Compare: 2004 No 35 s CX 31
CX 38 Meaning of work-related vehicle
Meaning
(1)
Work-related vehicle, for an employer, means a motor vehicle that prominently and permanently displays on its exterior,—
(a)
if the employer owns the vehicle, the form of identification that the employer regularly uses in carrying on their undertaking or activity; or
(b)
if the employer rents the vehicle, the form of identification—
(i)
that the employer regularly uses in carrying on their undertaking or activity; or
(ii)
that the person from whom it is rented regularly uses in carrying on their undertaking or activity.
Exclusion: car
(2)
Subsection (1) does not apply to a car.
Exclusion: private use
(3)
A motor vehicle is not a work-related vehicle on any day on which the vehicle is available for the employee’s private use, except for private use that is—
(a)
travel to and from their home that is necessary in, and a condition of, their employment; or
(b)
other travel in the course of their employment during which the travel arises incidentally to the business use.
Defined in this Act: business use, car, employee, employer, employment, motor vehicle, work-related vehicle
Compare: 2004 No 35 s CX 32
Insurance
CX 39 Life insurers and fully reinsured persons
[Repealed]Section CX 39: repealed, on 1 July 2010, by section 55(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CX 40 Superannuation fund deriving amount from life insurance policy
When this section applies
(1)
This section applies when a superannuation fund invests funds in a life insurance policy offered or entered into in New Zealand.
Excluded income
(2)
An amount that the superannuation fund derives from the policy is excluded income.
Defined in this Act: amount, excluded income, life insurance policy, offered or entered into in New Zealand, superannuation fund
Compare: 2004 No 35 s CX 34
CX 41 Resident insurance underwriters
When this section applies
(1)
This section applies when a natural person or an unincorporated body of natural persons—
(a)
is resident in New Zealand; and
(b)
carries on a business of providing general insurance or guarantees against loss, damage, or risk; and
(c)
as part of the business, is liable under an insurance contract, whether or not named in it, to pay, or to contribute towards the payment of, some or all of an amount claimable by the person insured under the contract.
Excluded income
(2)
Income that the natural person or persons derive from carrying on the business outside New Zealand is excluded income to the extent to which it is income not referred to in any of section YD 4(7) or (10) to (12) (Classes of income treated as having New Zealand source).
Defined in this Act: amount, business, excluded income, general insurance, income, insurance contract, New Zealand, pay, resident in New Zealand
Compare: 2004 No 35 s CX 35
Petroleum mining
CX 42 Disposal of ownership interests in controlled petroleum mining entities
Excluded income
(1)
The consideration that a person derives from disposing of shares or trust interests in a controlled petroleum mining entity is excluded income of the person.
Application of Tax Administration Act 1994
(2)
Section 65 of the Tax Administration Act 1994 applies when this section applies.
Defined in this Act: consideration, controlled petroleum mining entity, dispose, excluded income, share
Compare: 2004 No 35 s CX 36
CX 43 Farm-out arrangements for mining operations
Farm-in expenditure under a farm-out arrangement is excluded income of a petroleum miner or a mineral miner, as applicable, who is the farm-out party in the farm-out arrangement.
Defined in this Act: excluded income, farm-in expenditure, farm-out arrangement, mineral miner, petroleum miner
Section CX 43: replaced, on 1 April 2014 (applying for the 2014–15 and later income years), by section 21(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Mineral mining[Repealed]
Heading: repealed, on 1 April 2014, by section 22 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CX 44 Disposal of mining shares
[Repealed]Section CX 44: repealed, on 1 April 2014, by section 22 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CX 45 Disposal of mining shares acquired with reinvestment profit
[Repealed]Section CX 45: repealed, on 1 April 2014, by section 23 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CX 46 Repayment of loans made from reinvestment profit
[Repealed]Section CX 46: repealed, on 1 April 2014, by section 24 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Government grants
CX 47 Government grants to businesses
When this section applies
(1)
This section applies when—
(a)
a local authority, a public authority, or a public purpose Crown-controlled company makes a payment to a person for a business that the person carries on; and
(b)
the payment—
(i)
is in the nature of a grant or subsidy to the person; or
(ii)
is a grant-related suspensory loan to the person; and
(c)
the payment is not in the nature of an advance or loan other than a grant-related suspensory loan; and
(d)
the payment corresponds to—
(i)
expenditure that they incur and for which they would be allowed a deduction in the absence of section DF 1 (Government grants to businesses):
(ii)
expenditure that they incur in acquiring, constructing, installing, or extending an asset for which they would have an amount of depreciation loss in the absence of section DF 1.
Excluded income
(2)
The payment is excluded income of the person.
Exclusions
(3)
This section does not apply to a grant made under the Agriculture Recovery Programme for the Lower North Island and Eastern Bay of Plenty, to the extent to which the grant relates to expenditure—
(a)
incurred by the recipient before the grant; and
(b)
for which the recipient would be allowed a deduction in the absence of section DF 1.
Further exclusion
(4)
A person may choose that this section not apply to a payment under a grant to the extent to which—
(a)
the grant is made to the person for the person’s business as a research and development growth grant; and
(b)
the payment is withheld until the conditions of the grant are satisfied; and
(c)
in the absence of section DF 1, the person would be allowed for an income year before the income year of the payment,—
(i)
a deduction for expenditure to which the payment corresponds:
(ii)
depreciation loss resulting from expenditure to which the payment corresponds.
Another exclusion
(5)
This section does not apply to an RDTI transition support payment.
Defined in this Act: amount, business, deduction, depreciation loss, excluded income, grant-related suspensory loan, local authority, pay, public authority, public purpose Crown-controlled company
Compare: 2004 No 35 s CX 41
Section CX 47(1)(a): substituted (with effect on 1 October 2010), on 21 December 2010, by section 35(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CX 47(1)(a): amended (with effect on 18 March 2019), on 31 March 2023, by section 30(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CX 47(1)(b): substituted (with effect on 1 October 2010), on 21 December 2010, by section 35(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CX 47(1)(c): substituted (with effect on 1 October 2010), on 21 December 2010, by section 35(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CX 47(1)(d): substituted (with effect on 1 October 2010), on 21 December 2010, by section 35(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CX 47(3) heading: substituted (with effect on 1 October 2009), on 6 October 2009, by section 56(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CX 47(3): substituted (with effect on 1 October 2009), on 6 October 2009, by section 56(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CX 47(4) heading: added (with effect on 1 October 2010), on 21 December 2010, by section 35(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CX 47(4): added (with effect on 1 October 2010), on 21 December 2010, by section 35(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CX 47(4)(a): amended, on 30 March 2017, by section 39 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CX 47(5) heading: inserted (with effect on 1 April 2019), on 30 March 2022, by section 60(1) (and see section 60(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CX 47(5): inserted (with effect on 1 April 2019), on 30 March 2022, by section 60(1) (and see section 60(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CX 47 list of defined terms large budget screen production grant: repealed (with effect on 1 October 2009), on 6 October 2009, by section 52(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CX 47 list of defined terms public purpose Crown-controlled company: inserted (with effect on 18 March 2019), on 31 March 2023, by section 30(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
CX 48 Amounts remitted as condition of new start grant
[Repealed]Section CX 48: repealed, on 24 February 2016, by section 87 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CX 48B Issue of post-1989 forest land units
[Repealed]Section CX 48B: repealed (with effect on 26 September 2008), on 6 October 2009, by section 58 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Government funding of film and television
Heading: inserted (with effect on 1 October 2009), on 6 October 2009, by section 59 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CX 48C Government funding additional to government screen production payments
When this section applies
(1)
This section applies when a public authority makes a payment to a person for a project if—
(a)
the payment is not in the nature of a grant or subsidy; and
(b)
the payment is not a grant-related suspensory loan; and
(c)
the person receives a government screen production payment for the project in addition to the payment.
Excluded income
(2)
The payment is excluded income of the person.
Defined in this Act: excluded income, government screen production payment, grant-related suspensory loan, pay, public authority
Section CX 48C: inserted (with effect on 1 October 2009), on 6 October 2009, by section 59 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Research and development[Repealed]
Heading: repealed (with effect on 1 April 2009), on 30 March 2017, by section 40(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CX 48D Tax credits for expenditure on research and development
[Repealed]
Section CX 48D: repealed (with effect on 1 April 2009), on 30 March 2017, by section 40(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Superannuation and savings
CX 49 Employer’s superannuation contributions
An employer’s superannuation contribution is excluded income of—
(a)
the employee for whose benefit the contribution is provided; and
(b)
the trustees of the superannuation scheme to whom the contribution is made.
Defined in this Act: employee, employer’s superannuation contribution, excluded income, superannuation scheme, trustee
Compare: 2004 No 35 s CX 42
CX 50 Tax credits for KiwiSaver and complying superannuation funds
An amount paid as a tax credit under subpart MK (Tax credits for KiwiSaver schemes and complying superannuation funds) is excluded income of the person deriving the amount.
Defined in this Act: amount, Commissioner, excluded income, pay, tax credit
Compare: 2004 No 35 s CP 1
CX 50B Contributions to retirement savings schemes
Excluded income
(1)
A retirement scheme contribution is excluded income of a person if they are—
(a)
the person for whose benefit the contribution is made to the extent to which the contribution is an amount of—
(i)
money:
(ii)
an imputation credit or a Maori authority credit that is used to meet the liability of the retirement scheme contributor for RSCT on the contribution:
(b)
the retirement savings scheme.
Exclusions
(2)
Subsection (1)(a) does not apply if the person for whose benefit the contribution is made—
(a)
is non-resident, and the contribution is non-resident passive income:
(b)
supplies to the retirement scheme contributor or the retirement savings scheme, a tax rate applying to the amount of tax withheld that is less than the retirement scheme prescribed rate for the person:
(c)
includes the amount of the contribution in a return of income for the income year in which the contribution is made.
Defined in this Act: excluded income, income year, non-resident, non-resident passive income, retirement savings scheme, retirement scheme contribution, retirement scheme contributor, retirement scheme prescribed rate, return of income
Compare: 2004 No 35 s CX 42B
Section CX 50B: inserted, on 1 April 2008, by section 334 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Farming, forestry, or fishing
CX 51 Income equalisation schemes
A refund under section EH 8 (Refund of excess deposit) or EH 68 (Refund of excess deposit) is excluded income.
Defined in this Act: excluded income
Compare: 2004 No 35 s CX 43
Section CX 51: amended, on 18 March 2019, by section 145(1) (and see section 145(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Emissions units under Climate Change Response Act 2002
Heading: inserted (with effect on 26 September 2008), on 6 October 2009, by section 61 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CX 51B Disposal of pre-1990 forest land emissions units
Who this section applies to
(1)
This section applies to a person who disposes of a pre-1990 forest land emissions unit other than by surrender.
Excluded income: disposal
(2)
An amount of income that the person derives from the disposal is excluded income if, at the time of the disposal, the person would not derive income, other than exempt income or excluded income, from a disposal without timber of the pre-1990 forest land to which the emissions unit relates.
Defined in this Act: amount, emissions unit, excluded income, income, pre-1990 forest land, pre-1990 forest land emissions unit, surrender
Section CX 51B: inserted (with effect on 26 September 2008), on 6 October 2009, by section 61 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
CX 51C Disposal of fishing quota emissions units
Who this section applies to
(1)
This section applies to a person who disposes of a fishing quota emissions unit other than by surrender.
Excluded income: disposal
(2)
An amount of income that the person derives from the disposal is excluded income if, at the time of the disposal, the person would not derive income, other than exempt income or excluded income, from a disposal of the individual transferable quota to which the emissions unit relates.
Defined in this Act: amount, emissions unit, excluded income, exempt income, fishing quota emissions unit
Section CX 51C: inserted (with effect on 1 July 2010), on 7 September 2010, by section 18 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Environmental restoration
CX 52 Refund from environmental restoration account
A refund to a person under section EK 9 (Refund of payment if excess, lacking details) is excluded income of the person.
Defined in this Act: excluded income
Compare: 2004 No 35 s CX 43B
Inflation-indexed instruments
CX 53 Credits for inflation-indexed instruments
When this section applies
(1)
This section applies when—
(a)
an amount payable to a person who is a lender for money lent is determined by a fixed relationship to 1 or more indices of general price inflation in New Zealand; and
(b)
an amount on account of an increase in the amount payable is credited to the lender’s account by the borrower; and
(c)
the credit represents a recovery of a decrease, previously debited in account, in the amount payable over a previous period.
Excluded income
(2)
The credit is excluded income of the lender.
Defined in this Act: amount, excluded income, money lent, New Zealand, pay
Compare: 2004 No 35 s CX 44
Share-lending arrangements and excepted financial arrangements
Heading: amended (with effect on 1 April 2018), on 26 June 2019, by section 49 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
CX 54 Share-lending collateral under share-lending arrangements
An amount of share-lending collateral derived by a person under a share-lending arrangement is excluded income of the person.
Defined in this Act: amount, excluded income, share-lending arrangement, share-lending collateral
Compare: 2004 No 35 s CX 44B
CX 54B Transfers of emissions units under certain excepted financial arrangements
An amount that relates to the market value of an emissions unit and is derived by a person in a transfer of the emissions unit under an arrangement that is an excepted financial arrangement under section EW 5(11C) (What is an excepted financial arrangement?) is excluded income of the person.
Defined in this Act: amount, arrangement, emissions unit, excepted financial arrangement, excluded income
Section CX 54B: inserted (with effect on 1 April 2018), on 26 June 2019, by section 50 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Portfolio investment income
CX 55 Proceeds from disposal of investment shares
What this section applies to
(1)
This section applies in an income year to the following entities unless the entity is assured, under an arrangement with another person, of having a gain on the disposal:
(a)
a portfolio investment entity other than a life fund PIE:
(b)
the Crown as owner of the New Zealand Superannuation Fund:
(bb)
a Fund investment vehicle, as referred to in section 59A of the New Zealand Superannuation and Retirement Income Act 2001, that is treated as being wholly owned by the Crown under section HR 4B (Activities relating to New Zealand Superannuation Fund):
(bc)
a company that is treated as being wholly owned by the Crown under section HR 4B:
(bd)
the Crown as owner of the VCF:
(be)
a VCF investment vehicle, as referred to in section 25 of the Venture Capital Fund Act 2019, that is treated as being wholly owned by the Crown under section HR 4B:
(c)
a life insurer.
Excluded income
(2)
An amount that the entity derives from the disposal in the income year of a share issued by a company referred to in subsection (3) is—
(a)
excluded income of the entity for the income year, if the entity is described in subsection (1)(a), (b), (bb), or (bc); or
(b)
excluded income of the entity for the income year to the extent to which the amount is actuarially determined to be policyholder base income, if the entity is a life insurer.
Particular company
(3)
The company referred to in subsection (2) is,—
(a)
at all times in the income year, a company resident in New Zealand and not treated under and for the purposes of a double tax agreement as not resident in New Zealand; or
(b)
a company that meets the following requirements:
(i)
a company that, at all times in the income year, is resident in Australia and not treated as resident in a country other than Australia under an agreement between Australia and the other country, that would be a double tax agreement if negotiated between New Zealand and the other country; and
(ii)
a company that, at the start of the income year or at the time the shares are first acquired in the income year, is included on the official list of ASX Limited, a market licensee under Chapter 7 of the Corporations Act 2001 (Aust); and
(iii)
a company that, at all times in the income year, is required under the Income Tax Assessment Act 1997 (Aust) and the Income Tax Assessment Act 1936 (Aust) to maintain a franking account.
Non-participating redeemable shares
(4)
This section does not apply to—
(a)
a fixed-rate share, within the meaning of paragraphs (a) to (d) of the definition of that term; or
(b)
a share for which the amount payable on cancellation is no more than the available subscribed capital per share calculated under the slice rule.
Defined in this Act: actuarially determined, amount, arrangement, available subscribed capital, company, double tax agreement, excluded income, fixed-rate share, income, income year, life fund PIE, life insurer, pay, policyholder base income, portfolio investment entity, resident in Australia, resident in New Zealand, share, slice rule, VCF
Section CX 55: substituted, on 1 April 2010, by section 63(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CX 55(1)(b): replaced, on 23 October 2015, by section 5(1) of the Taxation (New Zealand Superannuation and Retirement Income) Act 2015 (2015 No 94).
Section CX 55(1)(bb): inserted, on 23 October 2015, by section 5(1) of the Taxation (New Zealand Superannuation and Retirement Income) Act 2015 (2015 No 94).
Section CX 55(1)(bc): inserted, on 23 October 2015, by section 5(1) of the Taxation (New Zealand Superannuation and Retirement Income) Act 2015 (2015 No 94).
Section CX 55(1)(bd): inserted, on 14 December 2019, by section 17 of the New Zealand Superannuation and Retirement Income Amendment Act 2019 (2019 No 77).
Section CX 55(1)(be): inserted, on 14 December 2019, by section 17 of the New Zealand Superannuation and Retirement Income Amendment Act 2019 (2019 No 77).
Section CX 55(2)(a): amended, on 23 October 2015, by section 5(2) of the Taxation (New Zealand Superannuation and Retirement Income) Act 2015 (2015 No 94).
Section CX 55(3)(b)(ii): amended, on 1 April 2017 (applying for the 2017–18 and later income years), by section 9(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section CX 55(4): replaced, on 2 November 2012, by section 17(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CX 55 list of defined terms available subscribed capital: inserted, on 2 November 2012, by section 17(2)(b) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CX 55 list of defined terms fixed-rate share: inserted, on 2 November 2012, by section 17(2)(b) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CX 55 list of defined terms non-participating redeemable share: repealed, on 2 November 2012, by section 17(2)(a) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CX 55 list of defined terms pay: inserted, on 2 November 2012, by section 17(2)(b) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CX 55 list of defined terms slice rule: inserted, on 2 November 2012, by section 17(2)(b) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CX 55 list of defined terms VCF: inserted, on 14 December 2019, by section 17 of the New Zealand Superannuation and Retirement Income Amendment Act 2019 (2019 No 77).
CX 55B Proceeds from disposal of certain shares and financial arrangements
Disposal of shares
(1)
An amount that a foreign PIE equivalent derives for an income year from the disposal of a share is excluded income of the foreign PIE equivalent for the income year.
Disposal of financial arrangements
(2)
An amount that a foreign PIE equivalent derives for an income year from the disposal of a financial arrangement is excluded income of the foreign PIE equivalent for the income year.
Exclusion
(3)
Subsection (2) does not apply to an amount of interest referred to in schedule 6, table 1B, row 6 (Prescribed rates: PIE investments and retirement scheme contributions).
Defined in this Act: amount, excluded income, financial arrangement, foreign PIE equivalent, income year, interest, share
Section CX 55B: inserted, on 29 March 2018 (with effect on 1 April 2012 and applying for the 2012–13 and later income years), by section 39(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CX 56 Attributed income of certain investors in multi-rate PIEs
When this section applies
(1)
This section applies when an investor in a multi-rate PIE derives income attributed under section CP 1 (Attributed income of investors in multi-rate PIEs) in an income year, and—
(a)
the prescribed investor rate for the investor in the relevant calculation period is more than zero; and
(b)
that rate is not more than the notified investor rate in relation to the investor when the PIE calculates—
(i)
its income tax liability under section HM 47 (Calculation of tax liability or tax credit of multi-rate PIEs) in relation to the income; or
(ii)
a voluntary payment under section HM 45 (Voluntary payments) that is intended to be a final payment of its income tax liability in relation to the income.
When this section also applies
(1B)
This section also applies when a foreign investment PIE attributes income to an investor who is, for the calculation period in which the amount is attributed,—
(a)
a notified foreign investor other than a person referred to in section HM 55D(6):
(b)
a transitional resident who has chosen a prescribed investor rate referred to in schedule 6, table 1, row 10 (Prescribed rates: PIE investments and retirement scheme contributions):
(c)
a transitional resident when the calculation period falls in the tax year in which the person becomes or ceases to be a transitional resident:
(d)
an investor in the PIE when the calculation period falls in the tax year in which the person either becomes or ceases to be resident in New Zealand.
When this section also applies
(1C)
When a trustee of a trust is an investor in a multi-rate PIE and an election is made in an income year (the election year) for the trust under section HC 33 (Choosing to satisfy income tax liability of trustee), this section also applies to the trustee for the income years that end before the election year and for which the election applies.
When this section does not apply
(2)
This section does not apply when—
(a)
the PIE calculates its income tax liability using the quarterly calculation option under section HM 43 (Quarterly calculation option) and the amount is attributed to an investor who is treated under section HM 61 (Certain exiting investors zero-rated) as zero-rated:
(b)
an amount of attributed PIE income is derived by a trustee who has chosen a prescribed investor rate referred to in schedule 6, table 1, row 5 or 7, as applicable:
(c)
a person to whom section HM 57B (Prescribed investor rates for new residents) applies chooses not to apply the section to determine their prescribed investor rate for a resident year.
(d)
[Repealed]When this section also does not apply
(2B)
This section also does not apply for the purposes of an adjustment under section HM 36B (Calculating PIE schedular adjustments for natural person investors) when a natural person who is resident in New Zealand—
(a)
is an investor in a multi-rate PIE; and
(b)
derives attributed PIE income from the PIE for an income year; and
(c)
has a rate of tax applied to their attributed PIE income that is not equal to their prescribed investor rate for the income year; and
(d)
has an amount of PIE schedular income for the income year.
Excluded income
(3)
The amount is excluded income of the investor.
Defined in this Act: amount, attribution period, calculation period, excluded income, foreign investment PIE, income, income tax liability, income year, investor, multi-rate PIE, natural person, notified foreign investor, notified investor rate, pay, PIE, PIE schedular income, prescribed investor rate, quarter, resident in New Zealand, tax year, transitional resident
Section CX 56: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 65(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CX 56(1): amended (with effect on 1 April 2020), on 30 March 2021, by section 22(1) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CX 56(1): amended, on 1 April 2020, by section 103(1) (and see section 103(5) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CX 56(1)(b): amended, on 1 October 2010, by section 5(1) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
Section CX 56(1B) heading: inserted, on 29 August 2011 (applying for the 2012–13 and later income years for a foreign investment variable-rate PIE and a notified foreign investor in the PIE), by section 9(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CX 56(1B): inserted, on 29 August 2011 (applying for the 2012–13 and later income years for a foreign investment variable-rate PIE and a notified foreign investor in the PIE), by section 9(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CX 56(1C) heading: inserted, on 1 April 2020, by section 103(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CX 56(1C): inserted, on 1 April 2020, by section 103(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CX 56(2)(b): amended, on 1 April 2012 (applying for the 2012–13 and later income years), by section 9(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CX 56(2)(b): amended, on 29 August 2011, by section 9(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CX 56(2)(b): amended, on 1 April 2010 (applying for income years beginning on or after 1 April 2010), by section 8(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section CX 56(2)(c): inserted, on 1 April 2012 (applying for the 2012–13 and later income years), by section 9(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CX 56(2)(d): repealed (with effect on 1 April 2020), on 30 March 2021, by section 22(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CX 56(2B) heading: inserted (with effect on 1 April 2020), on 30 March 2021, by section 22(3) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CX 56(2B): inserted (with effect on 1 April 2020), on 30 March 2021, by section 22(3) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CX 56 list of defined terms foreign investment PIE: inserted, on 29 August 2011, by section 9(4) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CX 56 list of defined terms natural person: inserted, on 1 April 2020, by section 103(4) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CX 56 list of defined terms notified foreign investor: inserted, on 29 August 2011, by section 9(4) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CX 56 list of defined terms notified investor rate: inserted, on 1 October 2010, by section 5(2) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
Section CX 56 list of defined terms PIE schedular income: inserted, on 1 April 2020, by section 103(4) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CX 56 list of defined terms resident in New Zealand: inserted, on 29 August 2011, by section 9(4) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CX 56 list of defined terms tax year: inserted, on 29 August 2011, by section 9(4) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CX 56 list of defined terms transitional resident: inserted, on 29 August 2011, by section 9(4) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
CX 56B Distributions to investors in multi-rate PIEs
Excluded income
(1)
An amount of income derived by an investor in a multi-rate PIE as a distribution of or dividend of the PIE is excluded income of the investor.
Treatment as non-resident passive income
(2)
Despite subsection (1), an amount paid by a foreign investment PIE to a notified foreign investor in the PIE is not excluded income under this section to the extent to which it is treated under section HM 44B (NRWT calculation option) as non-resident passive income.
Defined in this Act: amount, dividend, excluded income, foreign investment PIE, income, investor, multi-rate PIE, non-resident passive income, notified foreign investor
Section CX 56B: inserted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 65(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CX 56B(1) heading: inserted, on 29 August 2011, by section 10(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CX 56B(2) heading: inserted, on 29 August 2011 (applying for the 2012–13 and later income years for a foreign investment variable-rate PIE and a notified foreign investor in the PIE), by section 10(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CX 56B(2): inserted, on 29 August 2011 (applying for the 2012–13 and later income years for a foreign investment variable-rate PIE and a notified foreign investor in the PIE), by section 10(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CX 56B list of defined terms foreign investment PIE: inserted, on 29 August 2011, by section 10(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CX 56B list of defined terms non-resident passive income: inserted, on 29 August 2011, by section 10(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section CX 56B list of defined terms notified foreign investor: inserted, on 29 August 2011, by section 10(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
CX 56C Distributions to investors by listed PIEs
Resident investors
(1)
If an investor in a listed PIE derives an amount in an income year as a distribution by or dividend of the PIE, the amount is excluded income of the investor if they—
(a)
are resident in New Zealand; and
(b)
are a natural person or a trustee; and
(c)
do not include the amount as income in a return of income for the income year.
Imputed dividends
(2)
If subsection (1)(a) to (c) does not apply to the investor, the amount is excluded income to the extent to which the amount of the distribution or dividend is more than the amount that is fully credited as described in section CD 43(26) (Available subscribed capital amount).
Defined in this Act: amount, dividend, excluded income, income year, investor, listed PIE, PIE, resident in New Zealand, return of income, trustee
Section CX 56C: inserted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 65(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section CX 56C(1)(a): amended (with effect on 1 April 2010), on 24 February 2016, by section 88(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CX 56C list of defined terms resident: repealed (with effect on 1 April 2010), on 24 February 2016, by section 88(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section CX 56C list of defined terms resident in New Zealand: inserted (with effect on 1 April 2010), on 24 February 2016, by section 88(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CX 57 Credits for investment fees
When this section applies
(1)
This section applies when—
(a)
a multi-rate PIE includes a credit for fees in the calculation of its tax liability under section HM 47 (Calculation of tax liability or tax credit of multi-rate PIEs) in relation to an investor in an investor class of the PIE; and
(b)
an amount of the credit is attributed to the investor as a member of the class.
Excluded income
(2)
The amount allocated is excluded income of the investor.
Defined in this Act: amount, excluded income, investor, investor class, multi-rate PIE, PIE
Section CX 57: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 66(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Foreign investment income
Heading: inserted, on 29 March 2018, by section 40 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CX 57B Amounts derived during periods covered by calculation methods
When this section applies
(1)
This section applies when a person derives an amount, that is not FIF income from an attributing interest in a FIF or a dividend to which section CD 36(4) (Foreign investment fund income) applies, in a period for which they have used a calculation method referred to in section EX 59(1) (Codes: comparative value method, deemed rate of return method, fair dividend rate method, and cost method) to calculate their FIF income or loss.
Excluded income
(2)
The amount derived is excluded income of the person.
Defined in this Act: amount, attributing interest, calculation method, excluded income, FIF, FIF income, FIF loss
Section CX 57B: inserted, on 29 March 2018, by section 40 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CX 57B(1): amended, on 1 April 2023, by section 31(a) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CX 57B(1): amended, on 1 April 2023, by section 31(b) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Minors’ beneficiary income
CX 58 Amounts derived by minors from trusts
To the extent to which section HC 35 (Beneficiary income of minors) applies to an amount of beneficiary income, the amount is excluded income of the minor.
Defined in this Act: amount, beneficiary income, excluded income, minor
Compare: 2004 No 35 ss HH 3A–3F
CX 59 Taxable distributions from non-complying trusts
An amount that a person derives in an income year as a taxable distribution from a non-complying trust under section HC 19 (Taxable distributions from non-complying trusts) is excluded income of the person.
Defined in this Act: amount, exempt income, income year, non-complying trust, taxable distribution
Compare: 2004 No 35 s HH 3(4)
Transactions between companies in consolidated groups
CX 60 Intra-group transactions
When this section applies
(1)
This section applies when a company that is part of a consolidated group derives an amount referred to in section FM 8 (Transactions between group companies: income) from a transaction or arrangement with another company that is part of the same group and the amount would not be income if the group were 1 company.
Excluded income[Repealed]
(1B)
[Repealed]Excluded income
(2)
The amount, except to the extent to which it is described in section FM 8(3), is excluded income of the company.
Defined in this Act: amount, company, consolidated group, excluded income, income
Compare: 2004 No 35 s HB 2(1)(a)
Section CX 60(1): replaced, on 1 April 2019, by section 41(1) (and see section 41(3) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CX 60(1): amended (with effect on 1 April 2019), on 30 March 2021, by section 23(1) (and see section 23(4) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CX 60(1B) heading: repealed (with effect on 1 April 2019), on 30 March 2021, pursuant to section 23(2) (and see section 23(4) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CX 60(1B): repealed (with effect on 1 April 2019), on 30 March 2021, by section 23(2) (and see section 23(4) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CX 60(2): replaced (with effect on 1 April 2019), on 26 June 2019, by section 52(1) (and see section 52(2) for application) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section CX 60(2): amended (with effect on 1 April 2019), on 30 March 2021, by section 23(3) (and see section 23(4) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Avoidance arrangements
CX 61 Avoidance arrangements
An amount is excluded income if it is treated as excluded income under—
(a)
section GA 1 (Commissioner’s power to adjust):
(b)
section GB 23 (Excessive remuneration to relatives).
Defined in this Act: amount, excluded income
Compare: 2004 No 35 ss GB 1(1)–(2C), GD 3(1), (2)
Partners and partnerships
Heading: added, on 1 April 2008, by section 9(1) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).
CX 62 Amounts of excluded income for partners
A person who is a partner has an amount of excluded income to the extent to which an amount of excluded income results from the application of subpart HG (Joint venturers, partners, and partnerships) to them and their partnership.
Defined in this Act: amount, excluded income, partner, partnership
Section CX 62: added, on 1 April 2008, by section 9(1) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).
Look-through companies
Heading: added, on 1 April 2011 (applying for income years beginning on or after 1 April 2011), by section 36 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
CX 63 Dividends derived after company ceased to be look-through company
Dividends
(1)
A dividend derived by a person from a company after it has ceased to be a look-through company is excluded income of the person to the extent to which it is equal to or less than the amount given by subsection (2).
Excluded income formula
(2)
For the purposes of subsection (1), the amount is calculated using the following formula:
exit dividends − dividends after look-through.
Definition of items in formula
(3)
The items in the formula are defined in subsections (4) and (5).
Exit dividends
(4)
Exit dividends is the sum of the amounts that would be dividends if the company, immediately after it ceased to be a look-through company,—
(a)
disposed of all of its property, other than cash, to an unrelated person at market value for cash; and
(b)
met all its liabilities at market value, excluding income tax payable through disposing of the property or meeting the liabilities; and
(c)
were liquidated, with the amount of cash remaining being distributed to its shareholders without imputation credits attached.
Dividends after look-through
(5)
Dividends after look-through is the total dividends paid by the company after it ceases to be a look-through company and before it pays the dividend described in subsection (1) to the person.
Defined in this Act: amount, company, dispose, dividend, excluded income, imputation credit, income tax, liquidation, look-through company, shareholder
Section CX 63: added, on 1 April 2011 (applying for income years beginning on or after 1 April 2011), by section 36 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section CX 63(4)(c): amended, on 1 April 2017, by section 41(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section CX 63 list of defined terms FDP credit: repealed, on 1 April 2017, by section 41(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Financial instruments and hybrid mismatches
Heading: inserted, on 1 July 2018, by section 8(1) (and see section 8(2) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
CX 64 Income from financial instrument
An amount is excluded income if it is treated as excluded income under subpart FH (Hybrid and branch mismatches of deductions and income from multi-jurisdictional arrangements).
Defined in this Act: amount, excluded income
Section CX 64: inserted, on 1 July 2018, by section 8(1) (and see section 8(2) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
Subpart CZ—Terminating provisions
Contents
CZ 1 Grandparented shares under employee share schemes
When this section applies
(1)
This section applies when, for shares under an employee share scheme,—
(a)
the shares were granted or acquired under the employee share scheme before the date that is 6 months after the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 receives the Royal assent, and—
(i)
the shares were granted or acquired for purposes not including the purpose of avoiding the future application of the employee share scheme provisions in that Act (the new ESS provisions); and
(ii)
the share scheme taxing date for the shares is before 1 April 2022:
(b)
the shares were granted or acquired under the employee share scheme before 12 May 2016.
Grandparenting
(2)
The new ESS provisions do not apply for the shares. Instead, the provisions of this Act that would apply ignoring the enactment of the new ESS provisions apply for the shares.
Defined in this Act: employee share scheme, income, share, share scheme taxing date
Section CZ 1: replaced, on 29 September 2018, by section 42 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
CZ 2 Mining company’s 1970–71 tax year
[Repealed]Section CZ 2: repealed, on 1 April 2014, by section 25 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CZ 3 Exchange variations on 8 August 1975
When this section applies
(1)
This section applies when—
(a)
a person carrying on a business in New Zealand—
(i)
receives a loan in 2 or more instalments for the purposes of the business; or
(ii)
makes a loan in 2 or more instalments in the course of carrying on the business; and
(b)
an exchange variation arises in relation to the whole or partial repayment of the loan; and
(c)
the person derives an amount or incurs a loss through the exchange variation.
Income or deduction
(2)
The amount derived is income of the person and the loss incurred is a deduction that they are allowed.
Instalments and repayments
(3)
For the purposes of this section, unless the terms of the loan expressly provide otherwise,—
(a)
each instalment is treated as a separate loan; and
(b)
repayments are applied so that the separate loans are repaid in the order in which they were received.
Exclusion
(4)
This section does not apply to a financial arrangement to which the financial arrangements rules apply.
Some definitions
(5)
In this section,—
exchange variation, for the repayment of some or all of the loan, excluding interest, means a variation by virtue of a fluctuation in the value of the currency or currencies of 1 or more countries other than New Zealand in relation to New Zealand currency, that occurs between—
(a)
the amount of the repayment expressed in New Zealand currency at the time at which the repayment was made; and
(b)
the amount expressed in New Zealand currency that would have been required to make that repayment on or at the later of 8 August 1975 and the time at which the loan was first made
loan means,—
(a)
for money lent, to a person, on or after 1 January 1974 and on or before 22 January 1985, money that—
(i)
was lent with the consent of the Minister under the Capital Issues (Overseas) Regulations 1965 or the Overseas Investment Regulations 1974 or with the consent of the Reserve Bank under the Exchange Control Regulations 1978, as applicable; and
(ii)
was lent in a currency other than New Zealand currency; and
(iii)
was expressed to be repayable in a currency other than New Zealand currency:
(b)
for money lent, by a person, on or after 1 January 1974 and on or before 22 January 1985, money that—
(i)
was lent with the consent of the Reserve Bank under the Exchange Control Regulations 1978 if required; and
(ii)
was expressed to be repayable in a currency other than New Zealand currency:
(c)
for money lent, to a person, on or after 23 January 1985, money that—
(i)
is lent in a currency other than New Zealand currency; and
(ii)
is expressed to be repayable in a currency other than New Zealand currency:
(d)
in relation to money lent, by a person, on or after 23 January 1985, money that is expressed to be repayable in a currency other than New Zealand currency.
Defined in this Act: amount, business, deduction, exchange variation, financial arrangement, financial arrangements rules, income, loan, money lent, New Zealand, pay
Compare: 2004 No 35 s CZ 3
CZ 4 Mineral mining: company making loan before 1 April 1979
[Repealed]Section CZ 4: repealed, on 1 April 2014, by section 26 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CZ 5 Exempt interest: overseas money lent to government or local or public authority before 29 July 1983
Exempt income
(1)
Amounts that a non-resident derives are exempt income if they are derived from—
(a)
stock or debentures issued before 29 July 1983 by the government of New Zealand or by a local authority or a public authority, the interest on which is payable out of New Zealand; or
(b)
loans entered into before 29 July 1983, the interest on which was to be exempt from income tax in New Zealand under an agreement or arrangement made with the government of New Zealand.
Application posted or received before 29 July 1983
(2)
For the purposes of subsection (1)(b), a loan entered into on or after 29 July 1983 is treated as having been entered into before that date if an exemption of a kind referred to in that provision was authorised as a result of an application received by or posted to the government of New Zealand before 29 July 1983.
Defined in this Act: amount, apply, arrangement, debenture, exempt income, income tax, interest, local authority, money lent, New Zealand, non-resident, pay, public authority
Compare: 2004 No 35 s CZ 5
Section CZ 5 list of defined terms apply: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
CZ 6 Commercial bills before 31 July 1986
Income: redemption
(1)
The amount that a person receives on the redemption of a commercial bill owned by the person is income of the person.
Income: disposal
(2)
The value of a commercial bill on the day its owner disposes of it is income of the owner. This subsection does not apply if the disposal is a transfer under a relationship agreement.
Defined in this Act: amount, commercial bill, income, relationship agreement
Compare: 2004 No 35 s CZ 6
CZ 7 Primary producer co-operative companies: 1987–88 income year
Income: disposal of asset
(1)
If a primary producer co-operative company disposes of an asset for which the company was allowed a deduction under section 200 of the Income Tax Act 1976 for the 1987–88 income year or an earlier income year, the company is treated as deriving income in the income year of disposal of an amount equal to the lesser of—
(a)
the total of all deductions relating to the asset that were allowed under section 200; and
(b)
the amount that the company derived from the disposal of the asset.
Income: payments to shareholders
(2)
If a primary producer co-operative company has been allowed a deduction under section 200 for the 1987–88 income year or an earlier income year, and a payment has been made to a shareholder of the company either on the surrender of any of their shares or on the liquidation of the company, part of the payment is treated as income of the shareholder. The part that is income is determined under subsection (3).
Amounts attributable to deductions
(3)
The part of the payment that is treated as income is only such part as—
(a)
is more than the available subscribed capital per share calculated under the slice rule of the shares surrendered or held on liquidation by the shareholder; and
(b)
is attributable to an increase in the value of the company’s assets that was caused by the company applying or appropriating a deduction allowed under section 200.
Some definitions
(4)
In this section,—
primary producer co-operative company means a company that, at the end of the 1987–88 income year,—
(a)
was a primary producer co-operative company, as defined in section 200(1) and (9); and
(b)
could qualify for a deduction under section 200(4)
section 200 means section 200 of the Income Tax Act 1976 as it was in force before it was repealed by section 41(1) of the Income Tax Amendment Act (No 5) 1988 (which, in general, allowed primary producer co-operative companies to claim a deduction for profits that were reinvested in certain defined primary produce activities and assets).
Defined in this Act: amount, available subscribed capital, income, income year, liquidation, pay, primary producer co-operative company, section 200, share, shareholder, slice rule
Compare: 2004 No 35 s CZ 7
Section CZ 7(1) heading: amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CZ 8 Farm-out arrangements for petroleum mining before 16 December 1991
Excluded income
(1)
Excess expenditure under a farm-out arrangement entered into before 16 December 1991 is excluded income of the transferor.
Some definitions
(2)
In subsection (1), excess expenditure, farm-out arrangement, and transferor have the same meanings as in section 214D of the Income Tax Act 1976 immediately before its repeal by section 15 of the Income Tax Amendment Act (No 5) 1992.
Defined in this Act: excess expenditure, excluded income, farm-out arrangement, transferor
Compare: 2004 No 35 s CZ 8
CZ 9 Available capital distribution amount: 1965 and 1985–1992
Section CD 44(7)(e)
(1)
For the purposes of section CD 44(7)(e) (Available capital distribution amount), a company derives a capital gain amount if—
(a)
before 1 April 1988, a net profit or gain was derived by the company to which section 4(5) of the Income Tax Act 1976 applied immediately before that provision was repealed by section 31(1) of the Income Tax Amendment Act (No 5) 1988; or
(b)
an amount is derived by the company that is attributable to—
(i)
a deduction allowed in the 1985–86 or 1986–87 tax year for livestock under section 86E of the Income Tax Act 1976; or
(ii)
a revaluation of livestock in any of the 1986–87 to 1991–92 tax years under section 86A of the Income Tax Act 1976; or
(iii)
a deduction allowed in the 1988–89 tax year for the revaluation of trading stock of wine, brandy, and whisky under section 87A of the Income Tax Act 1976.
Section CD 44(14)(b)
(2)
For the purposes of section CD 44(14)(b),—
(a)
the amount has been excluded by section 4(3) of the Land and Income Tax Act 1954 from treatment as a dividend; or
(b)
the issue has been excluded by section 3(3) of the Income Tax Act 1976 from treatment as a bonus issue.
Defined in this Act: amount, bonus issue, company, dividend, trading stock
Compare: 2004 No 35 s CZ 9
Section CZ 9(1)(a): amended, on 29 March 2018 (with effect on 30 March 2017), by section 43 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section CZ 9(1)(a): amended, on 30 March 2017, by section 42 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CZ 9B Available capital distribution amount: 1988 to 2010
[Repealed]Section CZ 9B: repealed, on 30 March 2017, by section 43 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CZ 10 Transitional relief for calculation of attributed repatriation dividends: 2 July 1992
[Repealed]Section CZ 10: repealed, on 24 February 2016, by section 89 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CZ 11 Recovery of deductions for software acquired before 1 April 1993
What this section applies to
(1)
This section applies to any of the following items for the acquisition of which a person was allowed a deduction before 1 April 1993:
(a)
the copyright in software:
(b)
the right to use the copyright in software:
(c)
the right to use software.
Income
(2)
An amount derived from the disposal of the item is income.
Relationship with sections EE 44 to EE 52 and EZ 20
(3)
Sections EE 44 to EE 52 (which relate to disposals and similar events) apply to the item. Section EZ 20 (Adjusted tax value for software acquired before 1 April 1993) deals with the adjusted tax value of the item.
Defined in this Act: adjusted tax value, amount, income
Compare: 2004 No 35 s CZ 11
CZ 12 General insurance with risk period straddling 1 July 1993
When this section applies
(1)
This section applies when—
(a)
a company carries on a business of providing general insurance or guarantees against loss, damage, or risk, immediately before and on 1 July 1993; and
(b)
the company holds a reinsurance contract for the general insurance that covers a period of risk starting before 1 July 1993 and ending after 1 July 1993; and
(c)
the company pays the premiums under the contract outside New Zealand.
Income
(2)
An amount derived by the company from a claim under the reinsurance contract is income of the company if the event giving rise to the claim occurs on or after 1 July 1993.
Timing
(3)
The income is allocated to the income year in which the event giving rise to the claim occurs.
Defined in this Act: amount, business, company, general insurance, income, income year, New Zealand, pay, reinsurance contract
Compare: 2004 No 35 s CZ 12
CZ 13 Treatment of units and interests in unit trusts and group investment funds on issue as at 1 April 1996
Units and interests in unit trusts and group investment funds
(1)
All units in a unit trust and interests in a group investment fund on issue on 1 April 1996 are treated, on and from that date, as not having been issued on terms that their redemption would be subject to the slice rule.
Election made for units or interests
(2)
All units or interests to which subsection (1) applies and for which an election has been made relying on paragraph (c) of the definition of the term shares of the same class in section YA 1 (Definitions) are treated on and from 1 April 1996 as if the election made in reliance upon paragraph (c) had never been made.
Exclusion
(3)
This section does not apply to a unit or interest if the manager or trustee of the unit trust or group investment fund so chooses, by giving notice to the Commissioner before 1 April 1996, in which case the relevant unit or interest is treated, on and from 1 April 1996, as having been issued on terms that its redemption would be subject to the slice rule.
Defined in this Act: Commissioner, group investment fund, notice, shares of the same class, slice rule, trustee, unit trust
Compare: 2004 No 35 s CZ 13
CZ 14 Treatment of superannuation fund interests in group investment funds on 1 April 1999
When this section applies
(1)
This section applies when a superannuation fund has an interest in a group investment fund on 1 April 1999.
Exclusions from dividends
(2)
Section CD 22(4) (Returns of capital: off-market share cancellations) does not apply to the interest.
Trustee’s election
(3)
If a trustee of a group investment fund chose on or before 31 March 1999 to treat a superannuation fund interest in a group investment fund as subject to section CD 22(4),—
(a)
subsection (2) does not apply to the interest:
(b)
section CD 22(2) applies to the interest on and after 1 April 1999.
Defined in this Act: dividend, group investment fund, interest, superannuation fund, trustee
Compare: 2004 No 35 s CZ 14
CZ 15 Accident insurance contracts before 1 July 2000
A premium or contribution referred to in section CX 16(2) (Contributions to life or health insurance) is—
(a)
a premium or contribution paid for an accident insurance contract, as defined in section 13 of the Accident Insurance Act 1998, that was in force before 1 July 2000; or
(b)
a premium or contribution paid for a contract to which section 188(1)(a) of that Act applied, to the extent to which it related to cover and entitlements for work-related personal injury, that was in force before 1 July 2000.
Defined in this Act: contribution, pay
Compare: 2004 No 35 s CZ 15
CZ 16 Interest payable to exiting company: 2001
Interest payable under schedule 4, clause 12 of the Dairy Industry Restructuring Act 2001 to an exiting company, as defined in section 5 of the Act, as a result of a buy-out of the company’s interests in the New Zealand Dairy Board is exempt income.
Defined in this Act: exempt income, interest, pay
Compare: 2004 No 35 s CZ 16
CZ 17 Dividend of exiting company: 2001
If an exiting company, as defined in section 5 of the Dairy Industry Restructuring Act 2001, derives a dividend as a result of a buy-out of the company’s interests in the New Zealand Dairy Board under schedule 4 of the Act, the dividend is exempt income.
Defined in this Act: dividend, exempt income
Compare: 2004 No 35 s CZ 17
CZ 18 Benefit provider approved within 6 months of 25 November 2003
When this section applies
(1)
This section applies when a person (the provider)—
(a)
is—
(i)
an incorporated body; or
(ii)
a trustee; and
(b)
provides accident insurance, health insurance, life insurance, or other health and welfare benefits to natural persons (the recipients); and
(c)
either—
(i)
was approved as a sickness, accident, or death benefit fund by the Commissioner on or before 24 November 2003; or
(ii)
administers a fund that was approved as a sickness, accident, or death benefit fund by the Commissioner on or before 24 November 2003; and
(d)
has been approved by the Commissioner as an organisation that the Commissioner considers operates on the principles of mutuality for recipients—
(i)
within the 6 months starting on 25 November 2003; or
(ii)
in a further period allowed by the Commissioner, if the provider satisfies the Commissioner that the provider was not aware of the requirement for the Commissioner’s approval in sufficient time to obtain the approval under subparagraph (i).
Exempt income
(2)
An amount derived by a provider is exempt income if—
(a)
the amount is not derived from a business carried on by the provider beyond the circle of the recipients; and
(b)
each of the recipients is—
(i)
a beneficiary of the trust for which the provider is the trustee:
(ii)
a member of the provider:
(iii)
a member of an organisation that directly or indirectly controls the provider:
(iv)
a relative of a person described in any of subparagraphs (i) to (iii).
Defined in this Act: amount, business, Commissioner, exempt income, life insurance, relative, sickness, accident, or death benefit fund, trustee
Compare: 2004 No 35 s CZ 18
CZ 19 Community trust receipts in 2004–05 or 2005–06 tax year
An amount of income derived by a trustee or company is exempt income if—
(a)
the amount would be exempt income under section CW 41 (Charities: non-business income) or CW 42 (Charities: business income) but for the trustee or company making a dividend, distribution, or settlement to a community trust in the 2004–05 or 2005–06 tax year on the winding up of the trust or company; and
(b)
either—
(i)
the corpus of the trust was provided by the community trust; or
(ii)
the company is wholly owned by the community trust.
Defined in this Act: amount, community trust, company, corpus, dividend, exempt income, income, tax year, trustee
Compare: 2004 No 35 s CZ 19
CZ 20 Disposal of personal property lease asset under specified lease
When this section applies
(1)
This section applies for the purposes of section FZ 2 (Effect of specified lease on lessor and lessee) when a personal property lease asset that is leased under a specified lease is sold, assigned or leased on or after the term of the lease.
Income of lessor: when lease ends before term
(2)
The amount of the excess described in section FZ 2(5)(c) is treated as income derived by the lessor in the income year in which the lease is terminated.
Income of lessor: when lease ends
(3)
The amount of the excess described in section FZ 2(7) is treated as income derived by the lessor in the income year in which the term of the lease ends.
Income of lessee
(4)
The amount of the excess described in section FZ 2(8) is income of the lessee in the income year in which the asset is disposed of.
Defined in this Act: amount, income year, lessee, lessor, personal property lease asset, specified lease, term of the lease
Compare: 2004 No 35 s FC 6(7), (8)
CZ 21 Superannuation fund loans made to members before 1 April 1989
When this section applies
(1)
This section applies for the purposes of section CS 18 (Value of loan treated as fund income) in the case of a loan made by a superannuation fund to a member if—
(a)
it was made before 1 April 1989; and
(b)
the rate of interest payable on the loan cannot be reviewed.
Prescribed rate of interest varied
(2)
The prescribed rate of interest is treated as being—
(a)
the non-concessionary rate of interest for the tax year in which the loan agreement was signed or, if not in writing, agreed to by all parties, in the case of a loan made before 1 April 1985:
(b)
the prescribed rate of interest for the quarter in which the loan agreement was signed or, if not in writing, agreed to by all parties, in any other case.
Defined in this Act: interest, member, non-concessionary rate of interest, pay, prescribed rate of interest, quarter, superannuation fund, tax year
Compare: 2004 No 35 s GD 6(3)
CZ 21B Optional treatment of withdrawals from foreign superannuation schemes not included in return or assessed before 1 April 2014
When this section applies
(1)
This section applies when a person—
(a)
derives an amount from a foreign superannuation scheme as a withdrawal other than a pension or annuity, or applies for the withdrawal of such an amount, in the period beginning on 1 January 2000 and ending with 31 March 2014; and
(b)
does not include the withdrawal (the omitted withdrawal) in a return of income for the income year in which the amount was derived; and
(c)
is not assessed before 1 April 2014 for income included in the omitted withdrawal; and
(d)
chooses to include in a return of income for an income year (the return year) that is the 2013–14 or 2014–15 income year an amount of assessable income as relating to all omitted withdrawals from the foreign superannuation scheme.
Amount of income
(2)
The person is treated as deriving, in the return year, from the omitted withdrawals an amount of assessable income (the withdrawal income) equal to 15% of the total amount of the omitted withdrawals.
Tax on omitted withdrawal
(3)
The amount of the liability of the person for income tax (the withdrawal tax liability) arising from the omitted withdrawals is the difference between the person’s income tax liability for the return year, with the withdrawal income included in the person’s assessable income for that year, and the income tax liability that the person would have for the return year if the withdrawal income were not included in the person’s assessable income for that year.
Relationship with law otherwise applicable to withdrawal and interest in scheme
(4)
This section overrides—
(a)
section CF 3 (Withdrawals from foreign superannuation scheme):
(b)
for omitted withdrawals derived on or before 31 March 2014, the law that would apply in the absence of this section to the withdrawal at the time of the derivation of the withdrawal:
(c)
the law that would apply in the absence of this section to the person’s interest in the foreign superannuation scheme for the period ending by 31 March 2014.
Defined in this Act: assessable income, foreign superannuation scheme, income tax, income tax liability, income year, return of income, terminal tax
Section CZ 21B: inserted, on 1 April 2014, by section 27 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CZ 22 Geothermal wells between 31 March 2003 and 17 May 2006
When this section applies
(1)
This section applies to a person’s geothermal well when—
(a)
the well is—
(i)
both started and completed between 31 March 2003 and 17 May 2006:
(ii)
acquired between 31 March 2003 and 17 May 2006; and
(b)
the person—
(i)
uses the well, or has the well available for use, after the end of the well’s geothermal energy proving period in deriving income or carrying on a business for the purpose of deriving income:
(ii)
disposes of the well.
Income: using well
(2)
For a person to whom subsection (1)(b)(i) applies, the person has, for the first income year in which this section applies, an amount of income equal to the total amount of deductions that the person is allowed for the well under section DZ 7 of the Income Tax Act 1994, section DZ 15 of the Income Tax Act 2004, and section DZ 16 (Geothermal wells between 31 March 2003 and 17 May 2006) for all income years.
Income: disposing of well
(3)
For a person to whom subsection (1)(b)(ii) applies, the person has, for the first income year in which this section applies, an amount of income equal to the lesser of—
(a)
the amount derived from disposing of the well; and
(b)
the total amount of deductions that the person is allowed for the well under section DZ 7 of the Income Tax Act 1994, section DZ 15 of the Income Tax Act 2004, and section DZ 16 for all income years.
Defined in this Act: amount, business, deduction, dispose, geothermal energy proving period, geothermal well, income, income year
Compare: 2004 No 35 s CZ 20
CZ 23 Insurance or compensation for buildings replaced as revenue account property affected by Canterbury earthquakes
[Repealed]Section CZ 23: repealed (with effect on 4 September 2010), on 2 November 2012, by section 18 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
CZ 23 Employee benefits for Canterbury earthquake relief: exempt income
Exempt income
(1)
Income derived by an employee from an employer is exempt income to the extent given by subsection (2) if the income—
(a)
would be assessable income in the absence of this section; and
(b)
is provided by the employer for the purpose of relief of employees from the adverse effects of a Canterbury earthquake, as defined in section 4 of the Canterbury Earthquake Recovery Act 2011, of 4 September 2010 or 22 February 2011; and
(c)
is derived in the period of 8 weeks beginning on the day of that Canterbury earthquake; and
(d)
does not replace a PAYE income payment; and
(e)
does not depend on the seniority of the employee; and
(f)
is available to another employee, who is not an associated person of the employer and is or was immediately before a Canterbury earthquake in full-time employment with the employer, if the employee is an associated person of the employer; and
(g)
is treated by the employer as being exempt income for the employee.
Extent of exemption
(2)
Income satisfying subsection (1) is exempt income to the extent that the income is—
(a)
accommodation:
(b)
less than or equal to $3,200 in total, if the income is in a form other than accommodation.
Defined in this Act: accommodation, assessable income, employee, employer, exempt income, fringe benefit, income
Section CZ 23: inserted (with effect on 4 September 2010), on 24 May 2011, by section 4 of the Taxation (Canterbury Earthquake Measures) Act 2011 (2011 No 24).
Section CZ 23(2)(a): amended (with effect on 4 September 2010), on 30 June 2014, by section 36(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CZ 23 list of defined terms accommodation: inserted (with effect on 4 September 2010), on 30 June 2014, by section 36(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CZ 23B Employee benefits for North Island flooding events: exempt income
Exempt income
(1)
Income derived by an employee from an employer is exempt income to the extent given by subsection (2) if the income—
(a)
would be assessable income in the absence of this section; and
(b)
is provided by the employer for the purpose of relief of employees from the adverse effects of a North Island flooding event; and
(c)
is derived in the period of 8 weeks beginning on the first day of the relevant North Island flooding event; and
(d)
does not replace a PAYE income payment; and
(e)
does not depend on the seniority of the employee; and
(f)
is available to another employee, who is not an associated person of the employer and is or was immediately before a North Island flooding event in full-time employment with the employer, if the employee is an associated person of the employer; and
(g)
is treated by the employer as being exempt income for the employee.
Extent of exemption
(2)
Income satisfying subsection (1) is exempt income to the extent to which the income is—
(a)
accommodation:
(b)
less than or equal to $5,000 in total, if the income is in a form other than accommodation.
Defined in this Act: accommodation, assessable income, employee, employer, exempt income, fringe benefit, income, North Island flooding event
Section CZ 23B: inserted (with effect on 8 January 2023), on 31 March 2023, by section 32(1) (and see section 32(2) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
CZ 24 Employee benefits for Canterbury earthquake relief: not fringe benefits
When this section applies
(1)
This section applies when an employee receives from an employer a benefit that—
(a)
would be a fringe benefit in the absence of this section; and
(b)
is for the purpose of the relief of employees from the adverse effects of a Canterbury earthquake, as defined in section 4 of the Canterbury Earthquake Recovery Act 2011, of 4 September 2010 or 22 February 2011; and
(c)
is received in the period of 8 weeks beginning on the day of that Canterbury earthquake; and
(d)
does not replace a PAYE income payment; and
(e)
does not depend on the seniority of the employee; and
(f)
is available to another employee, who is not an associated person of the employer and is or was immediately before a Canterbury earthquake in full-time employment with the employer, if the employee is an associated person of the employer; and
(g)
is treated by the employer as not being a fringe benefit.
Benefits with known value for employee
(2)
Benefits satisfying subsection (1) that would, in the absence of this section, be fringe benefits having a value for the employee that the employer could estimate, are not fringe benefits to the extent that their total value as fringe benefits for the period would be less than or equal to the amount by which $3,200 exceeds the income that is—
(a)
exempt income under section CZ 23(2)(b); and
(b)
derived by the employee from the employer in the same period.
Benefits with unknown value for employee
(3)
Benefits satisfying subsection (1) that would, in the absence of this section, be fringe benefits having a value for the employee that the employer could not estimate, are not fringe benefits.
Defined in this Act: associated person, employee, employer, exempt income, fringe benefit, income, PAYE income payment
Section CZ 24: added (with effect on 4 September 2010), on 24 May 2011, by section 4 of the Taxation (Canterbury Earthquake Measures) Act 2011 (2011 No 24).
CZ 24B Employee benefits for North Island flooding events relief: not fringe benefits
When this section applies
(1)
This section applies when an employee receives from an employer a benefit that—
(a)
would be a fringe benefit in the absence of this section; and
(b)
is for the purpose of the relief of employees from the adverse effects of a North Island flooding event; and
(c)
is received in the period of 8 weeks beginning on the first day of the relevant North Island flooding event; and
(d)
does not replace a PAYE income payment; and
(e)
does not depend on the seniority of the employee; and
(f)
is available to another employee, who is not an associated person of the employer and is or was immediately before the relevant North Island flooding event in full-time employment with the employer, if the employee is an associated person of the employer; and
(g)
is treated by the employer as not being a fringe benefit.
Benefits with known value for employee
(2)
Benefits satisfying subsection (1) that would, in the absence of this section, be fringe benefits having a value for the employee that the employer could estimate, are not fringe benefits to the extent to which their total value as fringe benefits for the period would be less than or equal to the amount by which $5,000 exceeds the income that is—
(a)
exempt under section CZ 23B(2)(b); and
(b)
derived by the employee from the employer in the same period.
Benefits without known value for employee
(3)
Benefits satisfying subsection (1) that would, in the absence of this section, be fringe benefits having a value for the employee that the employer could not estimate, are not fringe benefits.
Defined in this Act: associated person, employee, employer, exempt income, fringe benefit, income, PAYE income payment, North Island flooding event
Section CZ 24B: inserted (with effect on 8 January 2023), on 31 March 2023, by section 33(1) (and see section 33(2) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
CZ 25 Land and buildings as revenue account property affected by Canterbury earthquakes and replaced—insurance or compensation, Government purchase
When this section applies
(1)
This section applies for a person and an income year (the current year) before the 2024–25 income year when the person,—
(a)
in or before the current year, derives for buildings or land (the affected property), all of which is revenue account property,—
(i)
insurance or compensation, if a Canterbury earthquake as that term is defined in section 4 of the Canterbury Earthquake Recovery Act 2011 damages the land and damages each building, or the neighbourhood of the building, causing the building to be useless for the purpose of deriving income and consequently to be demolished or abandoned for later demolition:
(ii)
an amount from a purchase by the Crown from the person under section 91, 103, or 104 of the Greater Christchurch Regeneration Act 2016; and
(b)
in the absence of this section, would have in or before the current year a total amount of income (the insurance income) under sections CB 6, CB 7, CB 12, CB 13, and CG 6 (which relate to income from certain disposals of land and from compensation for trading stock) from the consideration, compensation, or insurance for the affected property that exceeds the total amount of deductions under sections DB 23 and DB 27 (which relate to deductions for the cost or value of land) for the affected property; and
(c)
plans, in the current year, to acquire property (the replacement property)—
(i)
replacing affected property; and
(ii)
meeting the requirements of subsection (4); and
(iii)
having a cost exceeding the total amount of deductions under sections DB 23 and DB 27 for the affected property; and
(d)
notifies the Commissioner under subsection (6) in relation to the affected property.
Suspended recovery income
(2)
The amount (the excess recovery) by which the insurance income referred to in subsection (1)(b) exceeds the deductions referred to in subsection (1)(b) is not income of the person except to the extent of the amount (the suspended recovery income) remaining after adjustment under subsection (3) that is attributed to an income year by subsection (5).
Effect of purchase of replacement property
(3)
If the person incurs expenditure (the replacement cost) to acquire replacement property,—
(a)
for the purposes of determining the value of the replacement property for section EA 2 (Other revenue account property), the amount of the person’s expenditure on the replacement property is reduced by—
(i)
the amount calculated by dividing the replacement cost by the total amount of deductions under sections DB 23 and DB 27 for the affected property and multiplying the result by the excess of the insurance income over the replacement cost, if the insurance income exceeds the replacement cost and the calculated amount is less than or equal to the amount of insurance income; or
(ii)
the amount of the excess recovery, if the insurance income does not exceed the replacement cost or is less than the amount calculated in subparagraph (i); and
(b)
the amount of the suspended recovery income immediately before the expenditure is reduced by an amount equal to the reduction of expenditure under paragraph (a) for the purposes of section EA 2.
Requirements for replacement property
(4)
For an item of affected property, replacement property must be a building or land that is revenue account property—
(a)
acquired in or before the person’s 2023–24 income year; and
(b)
located in greater Christchurch as that term is defined in section 4 of the Canterbury Earthquake Recovery Act 2011.
Amount remaining at end of 2023–24 income year or when person changes intentions, is liquidated, or becomes bankrupt
(5)
The person has an amount of income for the affected property in the current year equal to the amount of suspended recovery income when—
(a)
the current year ends, if the current year is the 2023–24 income year:
(b)
in the current year, the person decides not to replace the affected property:
(c)
in the current year, the person goes into liquidation or becomes bankrupt.
Notice of election for affected property
(6)
A person choosing to rely on this section to suspend in a current year the recognition of suspended recovery income from the insurance for affected property must notify the Commissioner—
(a)
by the later of 31 January 2012 and the date on which the return of income is filed for the earliest income year (the estimate year) in which the amount of the insurance for the affected property can be reasonably estimated; and
(b)
if the current year is after the estimate year,—
(i)
for each income year between the estimate year and the current year, by the date on which the return of income is filed for that income year; and
(ii)
for the current year, by the date on which the return of income is filed for the current year.
Contents of notice of election
(7)
A notice under subsection (6) must—
(a)
describe the affected property; and
(b)
give details of replacement property acquired in the current year to replace, in full or in part, the affected property; and
(c)
give the cost of the replacement property and the reduction under subsection (3) of that cost for the purposes of section EA 2; and
(d)
give the amount, for the affected property, of the income from insurance or compensation remaining suspended under this section at the end of the current year.
Relationship to section CG 6
(8)
This section overrides section CG 6.
Defined in this Act: amount, deduction, income, income year, notice, notify, return of income
Section CZ 25: inserted (with effect on 4 September 2010), on 2 November 2012, by section 19 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section CZ 25(1): amended (with effect on 4 September 2010), on 18 March 2019, by section 147(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CZ 25(1): amended (with effect on 4 September 2010), on 27 February 2014, by section 28(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CZ 25(1)(a)(i): amended (with effect on 4 September 2010), on 27 February 2014, by section 28(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CZ 25(1)(a)(ii): amended (with effect on 19 April 2016), on 2 June 2016, by section 10(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section CZ 25(1)(a)(ii): amended (with effect on 4 September 2010), on 27 February 2014, by section 28(3) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CZ 25(1)(b): replaced (with effect on 4 September 2010), on 27 February 2014, by section 28(5) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CZ 25(1)(c): replaced (with effect on 4 September 2010), on 27 February 2014, by section 28(6) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CZ 25(1)(d): amended, on 2 June 2016, by section 10(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section CZ 25(2): amended (with effect on 4 September 2010), on 27 February 2014, by section 28(7) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CZ 25(3)(a): replaced (with effect on 4 September 2010), on 27 February 2014, by section 28(8) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CZ 25(4)(a): amended (with effect on 4 September 2010), on 18 March 2019, by section 147(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CZ 25(4)(a): amended (with effect on 4 September 2010), on 27 February 2014, by section 28(9) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CZ 25(5) heading: amended (with effect on 4 September 2010), on 18 March 2019, by section 147(3)(a) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CZ 25(5) heading: amended (with effect on 4 September 2010), on 27 February 2014, by section 28(10) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CZ 25(5)(a): amended (with effect on 4 September 2010), on 18 March 2019, by section 147(3)(b) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section CZ 25(5)(a): amended (with effect on 4 September 2010), on 27 February 2014, by section 28(11) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CZ 25(6): amended, on 2 June 2016, by section 10(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section CZ 25 list of defined terms notify: inserted, on 2 June 2016, by section 10(4) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
CZ 25B Land and buildings as revenue account property affected by Hurunui/Kaikōura earthquakes and replaced—insurance or compensation
When this section applies
(1)
This section applies for a person and an income year (the current year) before the 2024–25 income year when the person,—
(a)
in or before the current year, derives for buildings or land (the affected property), all of which is revenue account property, insurance or compensation, if a Hurunui/Kaikōura earthquake as that term is defined in section 4 of the Hurunui/Kaikōura Earthquakes Recovery Act 2016 damages the land and damages each building, or the neighbourhood of the building, causing the building to be useless for the purpose of deriving income and consequently to be demolished or abandoned for later demolition; and
(b)
in the absence of this section, would have in or before the current year a total amount of income (the insurance income) under sections CB 6, CB 7, CB 12, CB 13, and CG 6 (which relate to income from certain disposals of land and from compensation for trading stock) from the compensation or insurance for the affected property that exceeds the total amount of deductions under sections DB 23 and DB 27 (which relate to deductions for the cost or value of land) for the affected property; and
(c)
plans, in the current year, to acquire property (the replacement property)—
(i)
replacing affected property; and
(ii)
meeting the requirements of subsection (4); and
(iii)
having a cost exceeding the total amount of deductions under sections DB 23 and DB 27 for the affected property; and
(d)
notifies the Commissioner under subsection (6) in relation to the affected property.
Suspended recovery income
(2)
The amount (the excess recovery) by which the insurance income referred to in subsection (1)(b) exceeds the deductions referred to in subsection (1)(b) is not income of the person except to the extent of the amount (the suspended recovery income) remaining after adjustment under subsection (3) that is attributed to an income year by subsection (5).
Effect of purchase of replacement property
(3)
If the person incurs expenditure (the replacement cost) to acquire replacement property,—
(a)
for the purposes of determining the value of the replacement property for section EA 2 (Other revenue account property), the amount of the person’s expenditure on the replacement property is reduced by—
(i)
the amount calculated by dividing the replacement cost by the total amount of deductions under sections DB 23 and DB 27 for the affected property and multiplying the result by the excess of the insurance income over the replacement cost, if the insurance income exceeds the replacement cost and the calculated amount is less than or equal to the amount of insurance income; or
(ii)
the amount of the excess recovery, if the insurance income does not exceed the replacement cost or is less than the amount calculated in subparagraph (i); and
(b)
the amount of the suspended recovery income immediately before the expenditure is reduced by an amount equal to the reduction of expenditure under paragraph (a) for the purposes of section EA 2.
Requirements for replacement property
(4)
For an item of affected property, replacement property must be a building or land that is revenue account property—
(a)
acquired in or before the person’s 2023–24 income year; and
(b)
located in the earthquake-affected area as that term is defined in section 4 of the Hurunui/Kaikōura Earthquakes Recovery Act 2016, relating to—
(i)
the Canterbury Regional Council (Environment Canterbury), the Hurunui District Council, the Kaikoura District Council, or the Marlborough District Council, if the affected property is located in an earthquake-affected area relating to 1 of those councils; or
(ii)
the Wellington City Council, the Hutt City Council, or the Wellington Regional Council (Greater Wellington), if the affected property is located in an earthquake-affected area relating to 1 of those councils.
Amount remaining at end of 2023–24 income year or when person changes intentions, is liquidated, or becomes bankrupt
(5)
The person has an amount of income for the affected property in the current year equal to the amount of suspended recovery income when—
(a)
the current year ends, if the current year is the 2023–24 income year:
(b)
in the current year, the person decides not to replace the affected property:
(c)
in the current year, the person goes into liquidation or becomes bankrupt.
Notice of election for affected property
(6)
A person choosing to rely on this section to suspend in a current year the recognition of suspended recovery income from the insurance for affected property must notify the Commissioner.
Contents of notice of election
(7)
A notice under subsection (6) must—
(a)
describe the affected property; and
(b)
give details of replacement property acquired in the current year to replace, in full or in part, the affected property; and
(c)
give the cost of the replacement property and the reduction under subsection (3) of that cost for the purposes of section EA 2; and
(d)
give the amount, for the affected property, of the income from insurance or compensation remaining suspended under this section at the end of the current year.
Relationship to section CG 6
(8)
This section overrides section CG 6.
Defined in this Act: amount, deduction, income, income year, notice, notify
Section CZ 25B: inserted (with effect on 30 March 2017), on 18 March 2019, by section 148(1) (and see section 148(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
CZ 26 Land and buildings affected by Canterbury earthquakes—sections CB 9 to CB 11 and CB 14 overridden for Crown purchases
Sections CB 9 to CB 11 and CB 14 (which relate to disposals within 10 years of acquisition) do not apply to a person and land or buildings purchased by the Crown from the person under section 91, 103, or 104 of the Greater Christchurch Regeneration Act 2016.
Defined in this Act: land
Section CZ 26: replaced (with effect on 4 September 2010), on 27 February 2014, by section 29(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CZ 26 heading: amended, on 27 February 2014, by section 29(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CZ 26: amended (with effect on 19 April 2016), on 2 June 2016, by section 11 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section CZ 26: amended, on 27 February 2014, by section 29(3) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CZ 27 Prior bad debt deductions clawback
When this section applies
(1)
This section applies when—
(a)
a person acquires a debt before the introduction of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Bill (the introduction day); and
(b)
the debt exists on the first day of the 2014–15 income year and a base price adjustment under section EW 31 (Base price adjustment formula) is not calculated for the debt in the 2014–15 income year or an earlier income year; and
(c)
the person has taken, in a return of income, a deduction for the debt under section DB 31 (Bad debts) for an income year that starts before the introduction day (a prior bad debt deduction); and
(d)
the prior bad debt deduction arose before the introduction day; and
(e)
the person does not have a dispute with the Commissioner on the introduction day in relation to any prior bad debt deduction for the debt.
Income: prior bad debt deductions clawback
(2)
The person has an amount of income equal to the difference between their total prior bad debt deductions for the debt, and the amount of deductions that they would have had for the debt under section DB 31 for the same period of the prior bad debt deductions if section DB 31(3B), (4B), (4C), and (5B) were treated as applying on and after the first day that the person acquires the debt.
Defined in this Act: Commissioner, deduction, income, income year, return of income
Section CZ 27: inserted (with effect on 20 May 2013), on 27 February 2014, by section 30 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section CZ 27(2): amended (with effect on 20 May 2013), on 24 February 2016, by section 90 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CZ 28 Transitional provision for mineral mining: previously appropriated mining expenditure
When this section applies
(1)
This section applies when—
(a)
a mineral miner appropriates an amount of income for an income year to mining exploration expenditure or mining development expenditure; and
(b)
the income year precedes the 2014–15 income year; and
(c)
the mineral miner has a deduction under section DU 4 (Income appropriated to expenditure) and a corresponding amount of income under section CU 9 (Previous deduction for income appropriated) as those sections were immediately before the enactment of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014; and
(d)
as a result of the application of those sections, the mineral miner has an income tax liability for the 2014–15 income year.
Timing
(2)
The mineral miner may allocate the corresponding amount of income equally to the 2014–15 and 2015–16 income years.
Defined in this Act: amount, deduction, income, income tax liability, income year, mineral miner, mining development expenditure, mining exploration expenditure
Section CZ 28: inserted, on 1 April 2014 (applying for the 2014–15 and later income years), by section 31(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
CZ 29 Accommodation expenditure: Canterbury earthquake relief
When this section applies
(1)
This section applies for the purposes of section CW 16B (Accommodation expenditure: out-of-town secondments and projects) when—
(a)
the employment duties of an employee require them to work on a project of limited duration for rebuilding or recovery, including the repair and reconstruction of land, infrastructure, and other property in greater Christchurch as a result of the Canterbury earthquakes; and
(b)
the distant workplace is a workplace in greater Christchurch.
Exempt income
(2)
The value provided or expenditure incurred by the employer of the employee for or in relation to the accommodation is exempt income of the employee.
Modified definition of project of limited duration
(3)
Despite paragraph (c)(iii) of the definition of project of limited duration and section CW 16C(2)(d) (Time periods for certain accommodation expenditure), for the purposes of this section, the 3-year limit is ignored and is replaced by the following:
(a)
5 years, if the employee starts work at the distant workplace in the period commencing on 4 September 2010 and ending on 31 March 2015:
(b)
4 years, if the employee starts work at the distant workplace in the period commencing on 1 April 2015 and ending on 31 March 2016:
(c)
3 years, if the employee starts work at the distant workplace in the period commencing on 1 April 2016 and ending on 31 March 2017:
(d)
3 years, if the employee starts work at the distant workplace in the period commencing on 1 April 2017 and ending on 31 March 2018:
(e)
3 years, if the employee starts work at the distant workplace in the period commencing on 1 April 2018 and ending on 31 March 2019.
Project periods: basis of time limits
(4)
For the purposes of this section and section CW 16C,—
(a)
in subsection (3)(a), the time limit is determined by whether the actual period of continuous work of the employee at the distant workplace is for a period of no more than 5 years:
(b)
in subsection (3)(b) to (e), the time limits apply based on the employer’s expectation of the employee’s involvement in the project.
Definitions for this section
(5)
In this section, Canterbury earthquakes, greater Christchurch, rebuilding, and recovery have the meanings given in section 4 of the Canterbury Earthquake Recovery Act 2011.
Relationship with section CZ 30
(6)
Section CZ 30 does not apply to modify the application of this section.
Related provisions
(7)
For the purposes of this section, the commencement and application provisions in sections 2 and 24 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 are treated as—
(a)
commencing on 4 September 2010:
(b)
applying for the person’s income year that includes 4 September 2010 and for all later income years.
Defined in this Act: accommodation, amount, Canterbury earthquakes, distant workplace, employee, employer, exempt income, greater Christchurch, land, pay, period of continuous work, project of limited duration, rebuilding, recovery
Section CZ 29: inserted (with effect on 4 September 2010 and applying for a person’s income year that includes that date and for all later income years), on 30 June 2014, by section 37(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CZ 29(3) heading: inserted (with effect on 4 September 2010), on 24 February 2016, by section 91 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CZ 29B Accommodation expenditure: North Island flooding events
When this section applies
(1)
This section applies for the purposes of section CW 16B (Accommodation expenditure: out-of-town secondments and projects) when—
(a)
the employment duties of an employee require them to work on a project of limited duration for rebuilding or recovery, including the repair and reconstruction of land, infrastructure, and other property in the areas affected by the North Island flooding events; and
(b)
the distant workplace is a workplace in the areas affected by the North Island flooding events.
Exempt income
(2)
The value provided or expenditure incurred by the employer of the employee for or in relation to the accommodation is exempt income of the employee.
Modified definition of project of limited duration
(3)
Despite paragraph (c)(iii) of the definition of project of limited duration and section CW 16C(2)(d) (Time periods for certain accommodation expenditure), for the purposes of this section, the 3-year limit is ignored and is replaced by 5 years, if the employee starts work at the distant workplace in the period commencing on the date of the first relevant North Island flooding event, being 8 January 2023, 26 January 2023, or 12 February 2023, as the case may be, and ending 6 months after that date.
Time limit extension
(4)
The time limit imposed by subsection (3) may be extended or modified by Order in Council made—
(a)
on the recommendation of the Minister of Revenue; and
(b)
before the time limit in subsection (3) that applies immediately before the Order in Council comes into force.
Definitions for this section
(5)
In this section,—
(a)
rebuilding includes—
(i)
extending, repairing, improving, subdividing, or converting any land, infrastructure, or other property; and
(ii)
rebuilding communities:
(b)
recovery includes restoration and enhancement.
Relationship with section CZ 30
(6)
Section CZ 30 does not apply to modify the application of this section.
Defined in this Act: accommodation, distant workplace, employee, employer, exempt income, land, North Island flooding event
Section CZ 29B: inserted (with effect on 8 January 2023), on 31 March 2023, by section 34 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
CZ 30 Transitional provision: application of certain accommodation provisions
When this section applies
(1)
This section applies for the purposes of sections CE 1B, CW 16B to CW 16F, and CW 17CB (which relate to expenditure on accommodation and work-related meals) when an employer provides accommodation or incurs expenditure that meets the requirements of those provisions in the period that starts on 1 January 2011 or 1 April 2011, as applicable, and ends on 31 March 2015.
Transitional period: accommodation
(2)
Despite the commencement and application provisions in the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 relating to the accommodation provisions, the employer may choose to apply those provisions to the expenditure incurred in the period, but only if they have not, before 6 December 2012, taken a tax position that the accommodation expenditure is taxable.
Transitional period: work-related meals
(3)
Despite the commencement and application provisions in the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 relating to the work-related meal provisions, the employer may choose to apply those provisions to expenditure incurred in the period on work-related meals, but only if they have not already taken a tax position that the expenditure is taxable.
Basis of time limits for and after transitional period
(4)
For the purposes of this section and section CW 16C, and for the period referred to in subsection (1), a time limit may be either—
(a)
the actual period of continuous work of the employee at the distant workplace; or
(b)
a time limit based on the employer’s expectation of the employee’s involvement in an out-of-town secondment or project of limited duration.
Related provisions
(5)
For the purposes of this section, the commencement and application provisions in sections 2, 15, 24, and 26 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 are treated as—
(a)
commencing on 1 January 2011 for the accommodation provisions, and 1 April 2011 for the work-related meal provisions:
(b)
applying for the person’s income year that includes 1 January 2011 or 1 April 2011, as applicable, and for all later income years.
Defined in this Act: accommodation, distant workplace, employee, employer, out-of-town secondment, period of continuous work, project of limited duration, tax, tax position
Section CZ 30: inserted (with effect on 1 January 2011 and applying for a person’s income year that includes that date and for later income years), on 30 June 2014, by section 38(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section CZ 30 list of defined terms tax position: inserted, on 24 February 2016, by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CZ 31 Accommodation expenditure: New Zealand Defence Force
When this section applies
(1)
This section applies for the period that starts on 6 December 2012 and ends on 31 March 2015 for the purposes of section CE 1(1B) (Amounts derived in connection with employment) when—
(a)
accommodation is provided to a person who is a member of the Defence Force by the Navy, Army, or Air Force, as those terms are defined in the Defence Act 1990; and
(b)
the accommodation is provided in relation to the employment or service of the person.
Market value
(2)
The value is an amount equal to the rent paid by the person for the accommodation.
Defined in this Act: accommodation, amount, employment
Section CZ 31: inserted (with effect on 6 December 2012), on 30 June 2014, by section 39 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CZ 32 Treatment of certain petroleum storage facilities
When this section applies
(1)
This section applies for an income year when a petroleum miner disposes of an underground gas storage facility in relation to which they have been allowed a deduction under section DT 5 (Petroleum development expenditure) for expenditure incurred before the date of enactment of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014.
Income
(2)
Despite section CT 1(2) (Disposal of exploratory material or petroleum mining asset), the miner has an amount of income from the disposal of the storage facility for the income year calculated using the formula—
(past expenditure ÷ total expenditure) × amount on disposal.
Definition of items in formula
(3)
In the formula,—
(a)
past expenditure is the total amount of expenditure that the miner incurs in relation to the storage facility for which they have been allowed a deduction under section DT 5:
(b)
total expenditure is the sum of—
(i)
the amount of expenditure that the miner incurs in relation to the storage facility after the date of enactment of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 for which a deduction is allowed; and
(ii)
the amount of past expenditure referred to in paragraph (a):
(c)
amount on disposal is the total amount that the miner derives on the disposal of the storage facility.
Transitional provision for certain facilities
(4)
Despite section CT 7(2) (Meaning of petroleum mining asset), an underground gas storage facility covered by petroleum mining permit number 52278 is a petroleum mining asset to the extent to which the expenditure incurred by the permit holder relates to activities specified in the work programme set out in schedule 3 of the permit. Permit number 52278 includes a replacement or supplementary permit to the extent to which it covers activities specified in the work programme in schedule 3 of permit 52278.
Defined in this Act: amount, deduction, income year, petroleum miner, petroleum mining asset, petroleum mining permit
Section CZ 32: inserted, on 30 June 2014, by section 40 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
CZ 33 Transitional exception for accommodation provided to ministers of religion
When this section applies
(1)
This section applies for the period that starts on 1 July 2013 and ends on 31 March 2015 when accommodation is provided to a person who is a minister of religion and the property in which the accommodation is provided is supplied by the religious society or organisation of which they are a minister.
Income
(2)
Despite section CE 1 (Amounts derived in connection with employment), the value of the accommodation is income of the person but is limited to the extent described in subsection (3).
Limited amount
(3)
The amount of income for an income year is calculated using the formula—
remuneration × (1 − adjustment).
Definition of items in formula
(4)
In the formula,—
(a)
remuneration is the amount that equals 10% of the remuneration that the person receives for the income year for the performance of their duties as a minister from the religious society or organisation of which they are a minister:
(b)
adjustment is the adjustment referred to in subsection (6), and is the part of the amount that is the value of the accommodation for the income year apportioned to work-related use, expressed as a decimal fraction of the total value of the accommodation.
Calculation of remuneration for purposes of section
(5)
For the purposes of subsection (4)(a), the calculation of the amount of the item remuneration excludes the value of the accommodation described in subsection (1) that is provided to the person.
Adjustments
(6)
An adjustment referred to in subsection (4)(b) is as follows:
(a)
if the person to whom the accommodation is provided uses part of the accommodation wholly or mainly for work purposes related to their duties as a minister, the amount is apportioned between that business use and private use:
(b)
if more than 1 person referred to in subsection (1) shares in the accommodation provided, the amount is apportioned equally between them.
Part years
(7)
For the purposes of this section, if accommodation is provided for part of an income year, the references to income year are read as references to the relevant parts of the income year.
Meaning of minister of religion
(8)
For the purposes of this section, minister of religion—
(a)
means a person—
(i)
who is ordained, commissioned, appointed, or otherwise holds an office or position, regardless of their title or designation, as a minister of a religious denomination or community that meets the charitable purpose of the advancement of religion; and
(ii)
whose duties are related mainly to the practice, study, teaching, or advancement of religious beliefs; and
(iii)
whose accommodation is used as an integral part of performing their duties; and
(b)
does not include a member of a religious society or order referred to in section CW 25 (Value of board for religious society members).
Defined in this Act: accommodation, amount, business, income, income year, minister of religion
Section CZ 33: inserted (with effect on 1 July 2013), on 24 February 2016, by section 92 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
CZ 34 Income arising from tax accounting provision for aircraft engine overhauls
Income arising for a person under section DZ 23(2)(b) (Aircraft maintenance: tax accounting provisions for expenditure incurred after 2016–17 income year) is income of the person.
Section CZ 34: inserted, on 1 April 2017, by section 44 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
CZ 35 Treatment of backdated payments for social rehabilitation: 2008–09 to 2017–18 income years
[Repealed]Section CZ 35: repealed (with effect on 1 April 2008), on 26 June 2019, by section 53 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
CZ 35 Amounts derived by Te Kōwhatu Tū Moana
Exempt income
(1)
Income derived by Te Kōwhatu Tū Moana (the trust) is exempt income of the trustees and beneficiaries of the trust if it is derived by the trust in the 6-month period starting on 17 March 2019.
Meaning
(2)
In this section, Te Kōwhatu Tū Moana has the meaning given in section 4 of the New Plymouth District Council (Waitara Lands) Act 2018.
Defined in this Act: beneficiary, exempt income, income, Te Kōwhatu Tū Moana, trustee
Section CZ 35: inserted, on 17 March 2019, by section 65(2) of the New Plymouth District Council (Waitara Lands) Act 2018 (2018 No 2 (L)).
Section CZ 35 list of defined terms Te Kōwhatu Tū Moana: inserted (with effect on 17 March 2019), on 23 March 2020, by section 104(a) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section CZ 35 list of defined terms month: repealed (with effect on 17 March 2019), on 23 March 2020, by section 104(b) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
CZ 36 Treatment of backdated payments for social rehabilitation: 2008–09 to 2017–18 income years
When this section applies
(1)
This section applies for income years from the 2008–09 income year to the 2017–18 income year when—
(a)
a person is paid an amount as a personal service rehabilitation payment; and
(b)
the person pays an amount to another person for providing them with a key aspect of social rehabilitation, referred to in the definition of personal service rehabilitation payment, in an income year; and
(c)
the payment referred to in paragraph (a) that is paid in relation to the service referred to in paragraph (b) is made in an income year that is later than the income year in which the service is provided to the person.
Treatment of payment
(2)
If the Commissioner is satisfied that the tax obligations relating to the personal service rehabilitation payment have been met, the payment is treated as exempt income for the income year in which the person derives the payment.
Defined in this Act: amount, Commissioner, exempt income, income year, pay, personal service rehabilitation payment
Section CZ 36: inserted (with effect on 1 July 2008), on 26 June 2019, by section 54 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
CZ 37 Income equalisation schemes
Income
(1)
A refund made to a person under section EZ 80 (Refund of excess deposit in main income equalisation account as consequence of election under section EZ 4B) or EZ 81 (Refund of excess deposit in adverse event income equalisation account as consequence of election under section EZ 4B) is, to the extent to which the refund is interest payable under section EH 6 (Interest on deposits in main income equalisation account) or EH 40 (Interest on deposits in adverse event income equalisation account), income of the person and is allocated to the income year in which the person receives the refund.
Excluded income
(2)
A refund under section EZ 80 or EZ 81 is, to the extent to which the refund is not interest payable under section EH 6 or EH 40, excluded income.
Defined in this Act: excluded income, income, income year, interest, pay
Section CZ 37: inserted (with effect on 1 April 2017), on 30 March 2021, by section 24(1) (and see section 24(2) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
CZ 38 Disposals of trading stock to non-associates without business purpose
An amount that a person is treated as deriving in an income year under section GZ 5 (Disposals of trading stock to non-associates) is income of the person for the income year.
Defined in this Act: amount, income, income year
Section CZ 38: inserted (with effect on 17 March 2020), on 30 March 2021, by section 25 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
CZ 39 Disposal within 5 years: bright-line test for residential land: acquisition on or after 29 March 2018
When this section applies
(1)
This section applies to a person’s disposal of residential land, if the person first acquires an estate or interest in the residential land on or after 29 March 2018 and section CB 6A (Disposal within 10 years: bright-line test for residential land) does not apply. However, this section does not apply to—
(a)
a person’s disposal of a freehold estate in residential land that the person acquired as the owner of a leasehold estate with a perpetual right of renewal, if the person was granted the leasehold estate before 29 March 2018:
(b)
a person’s disposal of an estate or interest in residential land that the person acquired as the result of the completion of a land development or subdivision, if before 29 March 2018 the person entered into the agreement under which they acquired the estate or interest upon the completion of the land development or subdivision.
When this section does not apply
(1B)
This section does not apply to a person’s disposal of residential land if the land meets the requirements of section CB 6AB, CB 6AC, CB 6AE, or FB 3A (which relate to residential land), and the transferor first acquired an estate or interest in the land before 29 March 2018.
Disposal within 5 years
(2)
An amount that a person derives from disposing of residential land is income of the person, if the bright-line date for the residential land is within 5 years of—
(a)
the date (the bright-line acquisition date) on which the instrument to transfer the land to the person was registered—
(i)
under the Land Transfer Act 2017; or
(ii)
under foreign laws of a similar nature to the Land Transfer Act 2017, if the land is outside New Zealand; or
(b)
their date of acquisition (the bright-line acquisition date) of the land, if an instrument to transfer the land to the person is not registered on or before the bright-line date.
Subdivision
(3)
Despite subsection (2), an amount that a person derives from disposing of residential land that results from the person subdividing other land (the undivided land) is income of the person if the bright-line date for the residential land is within 5 years of—
(a)
the date (the bright-line acquisition date) on which the instrument to transfer the undivided land to the person was registered—
(i)
under the Land Transfer Act 2017; or
(ii)
under foreign laws of a similar nature to the Land Transfer Act 2017, if the land is outside New Zealand; or
(b)
their date of acquisition (the bright-line acquisition date) of the undivided land, if the land is not registered as described in paragraph (a) at the bright-line date.
Leases with perpetual right of renewal
(4)
Despite subsection (2), an amount that a person derives from disposing of a freehold estate in residential land, acquired as the owner of a leasehold estate with a perpetual right of renewal, is income if the bright-line date for the freehold estate is within 5 years of the the date of the grant of the leasehold estate (the bright-line acquisition date).
Estate or interest acquired upon completion of land development or subdivision
(5)
Despite subsection (2), an amount that a person derives from disposing of an estate or interest in residential land, acquired as the result of the completion of a land development or subdivision, is income if the bright-line date for the estate or interest is within 5 years of the date of the person entering into the agreement (the bright-line acquisition date) under which they acquired the estate or interest upon the completion of the land development or subdivision.
Joint tenancy converted to tenancy in common
(5B)
Despite subsection (2), for residential land transferred in the case and to the extent to which the residential land is held as a tenant in common in a share equal to all joint owners, converted subsequent to, and to the extent to which it was previously being held as a joint tenant nominally in the same share equal to the same joint owners, an amount that a person derives from disposing of the residential land is income of the person if the bright-line disposal date for the residential land is within 5 years of the date (the bright-line acquisition date) that was the person’s bright-line acquisition date for the land prior to the conversion.
Tenancy in common converted to joint tenancy
(5C)
Despite subsection (2), for residential land transferred in the case and to the extent to which the residential land is held as a joint tenant nominally in a share equal to all joint owners, converted subsequent to, and to the extent to which it was previously being held as a tenant in common in the same share equal to the same joint owners, an amount that a person derives from disposing of the residential land is income of the person if the bright-line disposal date for the residential land is within 5 years of the date (the bright-line acquisition date) that was the person’s bright-line acquisition date for the land prior to the conversion.
Land-owning person
(5D)
In the case and to the extent to which a person who owns land (pre-existing land) has more land transferred to them (the transfer land) or transfers part of their pre-existing land (also, the transfer land), the instrument of transfer for the transfer land is for the transfer land only and is treated as not being for the pre-existing land, for the purposes of the definition of bright-line acquisition date.
Beginning of 5-year period for transfers by registration if trustees change
(6)
If the person referred to in subsection (2)(a) or (3)(a) is a trustee of a trust who has been transferred the land or undivided land from a trustee of the trust, the date on which the instrument was registered is treated as occurring on,—
(a)
for subsection (2)(a),—
(i)
the earliest date (the first date) on which an instrument to transfer the land to a trustee of the trust was registered under the relevant law referred to in the subsection, if there has been no intervening transfer to a person who is not a trustee; or
(ii)
the first date following the intervening transfer, if there has been an intervening transfer to a person who is not a trustee:
(b)
for subsection (3)(a),—
(i)
the earliest date (the undivided date) on which an instrument to transfer the undivided land to a trustee of the trust was registered under the relevant law referred to in the subsection, if there has been no intervening transfer to a person who is not a trustee; or
(ii)
the undivided date following the intervening transfer, if there has been an intervening transfer to a person who is not a trustee.
Residential land transferred for certain family trusts
(6B)
Despite subsections (2) to (5C), for residential land transferred, as described in section CB 6AB (Residential land transferred in relation to certain family trusts and other capacities), to trustees or settlors of certain family trusts, an amount that a person derives from disposing of the residential land is income of the person if the bright-line disposal date for the residential land is within 5 years of the bright-line acquisition date given by section CB 6AB.
Residential land transferred to Maori authorities, or similar eligible persons, for certain family trusts
(6C)
Despite subsections (2) to (5C), for residential land transferred, as described in section CB 6AC (Residential land transferred in relation to certain Māori family trusts), an amount that a person derives from disposing of the residential land is income of the person if the bright-line disposal date for the residential land is within 5 years of the bright-line acquisition date given by section CB 6AC.
Certain transfers of residential land included in settlement of claim under the Treaty of Waitangi
(6D)
Despite subsections (2) to (5C), for certain transfers of residential land, as described in section CB 6AE (Certain transfers of residential land included in settlement of claim under the Treaty of Waitangi), an amount that a person derives from disposing of the residential land is income of the person if the bright-line disposal date for the residential land is within 5 years of the bright-line acquisition date given by section CB 6AE.
Exception: disposal of land by executor, administrator, or beneficiary
(7)
This section does not apply to an amount that an executor or administrator described in section FC 1(1)(a) (Disposals to which this subpart applies), or a beneficiary described in section FC 1(1)(b), derives from disposing of residential land that was transferred to them on the death of a person (see also: section FC 9 (Residential land transferred to executor, administrator, or beneficiary on death of person).
Relationship with subject matter
(8)
This section applies if none of sections CB 6 to CB 12 apply.
A definition
(9)
In this section, date of acquisition means the latest date on which the person acquires the estate or interest in the residential land.
Defined in this Act: amount, bright-line acquisition date, bright-line date, date of acquisition, dispose, estate, income, interest, land, mortgage, person, residential land, trustee, year
Section CZ 39: inserted (with effect on 27 March 2021), on 30 March 2021, by section 26 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CZ 39(1B) heading: inserted (with effect on 27 March 2021), on 31 March 2023, by section 35(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CZ 39(1B): inserted (with effect on 27 March 2021), on 31 March 2023, by section 35(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CZ 39(2)(a): amended (with effect on 27 March 2021), on 30 March 2022, by section 61(1) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 39(2)(b): amended (with effect on 27 March 2021), on 30 March 2022, by section 61(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 39(3)(a): amended (with effect on 27 March 2021), on 30 March 2022, by section 61(3) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 39(3)(b): amended (with effect on 27 March 2021), on 30 March 2022, by section 61(4) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 39(4): amended (with effect on 27 March 2021), on 30 March 2022, by section 61(5) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 39(5): amended (with effect on 27 March 2021), on 30 March 2022, by section 61(6) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 39(5B) heading: inserted (with effect on 27 March 2021), on 30 March 2022, by section 61(7) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 39(5B): inserted (with effect on 27 March 2021), on 30 March 2022, by section 61(7) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 39(5B): amended (with effect on 27 March 2021), on 31 March 2023, by section 35(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CZ 39(5B): amended (with effect on 27 March 2021), on 31 March 2023, by section 35(3) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CZ 39(5C) heading: inserted (with effect on 27 March 2021), on 30 March 2022, by section 61(7) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 39(5C): inserted (with effect on 27 March 2021), on 30 March 2022, by section 61(7) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 39(5C): amended (with effect on 27 March 2021), on 31 March 2023, by section 35(4) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CZ 39(5C): amended (with effect on 27 March 2021), on 31 March 2023, by section 35(5) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CZ 39(5D) heading: replaced (with effect on 27 March 2021), on 31 March 2023, by section 35(7) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CZ 39(5D): replaced (with effect on 27 March 2021), on 31 March 2023, by section 35(7) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CZ 39(6B) heading: inserted (with effect on 27 March 2021), on 30 March 2022, by section 61(8) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 39(6B): inserted (with effect on 27 March 2021), on 30 March 2022, by section 61(8) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 39(6C) heading: inserted (with effect on 27 March 2021), on 30 March 2022, by section 61(8) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 39(6C): inserted (with effect on 27 March 2021), on 30 March 2022, by section 61(8) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 39(6D) heading: inserted (with effect on 27 March 2021), on 30 March 2022, by section 61(8) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 39(6D): inserted (with effect on 27 March 2021), on 30 March 2022, by section 61(8) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 39(7): amended (with effect on 27 March 2021), on 31 March 2023, by section 35(6) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section CZ 39 list of defined terms bright-line acquisition date: inserted (with effect on 27 March 2021), on 30 March 2022, by section 61(9) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
CZ 40 Main home exclusion for bright-line: acquisition on or after 29 March 2018
When this section applies
(1)
This section applies to a person’s disposal of residential land, if the person first acquires an estate or interest in the residential land on or after 29 March 2018 and section CB 16A (Main home exclusion for disposal within 10 years) does not apply. However, this section does not apply to—
(a)
a person’s disposal of a freehold estate in residential land that the person acquired as the owner of a leasehold estate with a perpetual right of renewal, if the person was granted the leasehold estate before 29 March 2018:
(b)
a person’s disposal of an estate or interest in residential land that the person acquired as the result of the completion of a land development or subdivision, if before 29 March 2018 the person entered into the agreement under which they acquired the estate or interest upon the completion of the land development or subdivision.
Main home exclusion
(2)
Section CZ 39 does not apply to a person (person A) who disposes of residential land, if, for most of the bright-line period, the land has been used predominantly for a dwelling that was the bright-line grandparented home for—
(a)
person A:
(b)
a beneficiary of a trust, if person A is a trustee of the trust and—
(i)
a principal settlor of the trust does not have a main home; or
(ii)
if a principal settlor of the trust does have a main home, it is that main home which person A is disposing of.
When this section does not apply
(3)
The exclusion in subsection (2) does not apply to person A if—
(a)
the exclusion has been used by person A 2 or more times within the 2 years immediately preceding the bright-line date for the residential land:
(b)
person A has engaged in a regular pattern of acquiring and disposing of residential land described in subsection (2).
Person may include group of persons
(4)
For the purposes of subsection (3)(b), in relation to residential land described in subsection (2), person A includes a group of persons if the requirements of subsection (5) are met.
Meaning of group of persons
(5)
For the purposes of subsection (4), a group of persons—
(a)
means 2 or more persons when together all of the persons occupy, or have occupied, residential land described in subsection (2); and
(b)
includes a person other than a natural person (the non-natural person), if another person referred to in paragraph (a) has significant involvement in, or control of, the activities of the non-natural person. For the avoidance of doubt, if the other person is able to direct, alone or as part of a group, the activities of the non-natural person, they have significant involvement in, or control of, the activities of the non-natural person.
Defined in this Act: beneficiary, bright-line date, bright-line grandparented home, bright-line period, dispose, dwelling, group of persons, land, person, principal settlor, residential land, settlor, trustee, year
Section CZ 40: inserted (with effect on 27 March 2021), on 30 March 2021, by section 26 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section CZ 40(5): amended (with effect on 27 March 2021), on 30 March 2022, by section 62(1) (and see section 62(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 40 list of defined terms group of persons: inserted (with effect on 27 March 2021), on 30 March 2022, by section 62(2)(a) (and see section 62(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section CZ 40 list of defined terms settlement: repealed (with effect on 27 March 2021), on 30 March 2022, by section 62(2)(b) (and see section 62(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
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Versions
Income Tax Act 2007
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