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Income Tax Act 2007
Income Tax Act 2007
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Income Tax Act 2007
Part L Tax credits and other credits
Subpart LA—General rules for tax credits
Contents
LA 1 What this Part does
This Part—
(a)
identifies when a person’s tax credit arises; and
(b)
provides the rules that govern the use of a tax credit in satisfying an obligation under section BB 2 (Main obligations).
Defined in this Act: tax credit
LA 2 Satisfaction of income tax liability
A person must use their total tax credit for a tax year to satisfy their income tax liability for the tax year.
Defined in this Act: income tax liability, tax year, total tax credit
Compare: 2004 No 35 s BC 9
LA 3 When total tax credit less than or equal to income tax liability
Unsatisfied income tax liability
(1)
If a person’s total tax credit for a tax year is less than their income tax liability for the tax year, the person has an amount of unsatisfied income tax liability for the tax year.
Amount
(2)
The amount of unsatisfied income tax liability is—
(a)
equal to the difference between the person’s total tax credit for the tax year and their income tax liability for the tax year:
(b)
satisfied when the person pays their terminal tax for the tax year.
Defined in this Act: amount, income tax liability, tax year, terminal tax, total tax credit
Compare: 2004 No 35 s BC 9
LA 4 When total tax credit more than income tax liability
Satisfied income tax liability
(1)
If a person’s total tax credit for a tax year is greater than their income tax liability for the tax year, the person must use their total tax credit, including the credits listed in paragraphs (a) to (d), to satisfy their income tax liability by using—
(a)
first, a non-refundable tax credit:
(b)
second, a tax credit for a supplementary dividend:
(c)
third, a tax credit for an imputation credit:
(cb)
fourth, a research and development tax credit under section LY 1(3)(b):
(cc)
fifth, a research and development tax credit under section LY 1(3)(a):
(d)
sixth, a refundable tax credit.
Remaining tax credits
(2)
A person who has satisfied their income tax liability under subsection (1) must deal with their remaining tax credits for the tax year under section LA 5.
Defined in this Act: imputation credit, income tax liability, non-refundable tax credit, refundable tax credit, research and development tax credit, supplementary dividend, tax credit, tax year, total tax credit
Compare: 2004 No 35 ss BC 8(2), BC 9(1), BC 10, KD 4(2), LD 3(3), LD 3A(4), LE 2(6)
Section LA 4(1)(cb): inserted, on 1 April 2019, by section 8(1) (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
Section LA 4(1)(cc): inserted, on 1 April 2019, by section 8(1) (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
Section LA 4(1)(d): amended, on 1 April 2019, by section 8(2) (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
Section LA 4 list of defined terms research and development tax credit: inserted, on 1 April 2019, by section 8(3) (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
LA 5 Treatment of remaining credits
What this section applies to
(1)
This section applies to a remaining tax credit referred to in section LA 4(2).
Non-refundable credits
(2)
A non-refundable tax credit is extinguished. However, this subsection does not apply to a tax credit for income tax and foreign income tax paid in relation to foreign attributed income used under section LK 4 (Use of remaining credits).
Credits for supplementary dividends
(3)
A person uses a tax credit for a supplementary dividend by applying section LP 3 (Use of remaining credits).
Credits for imputation credits
(4)
A person uses a tax credit for an imputation credit by applying section LE 2, LE 2B, or LE 3 (which relate to the use of remaining tax credits).
Research and development tax credits
(4B)
A person’s research and development tax credit is used by—
(a)
first, the Commissioner refunding the tax credit up to the maximum limit of the person’s refundability cap, by treating it as a refundable tax credit and applying section LA 6(2). There is no maximum limit for refunding the tax credit, if and to the extent to which—
(i)
the person is a levy body researcher:
(ii)
the tax credit is for eligible research and development expenditure on approved research providers:
(b)
secondly, applying section LY 8 (Carry forward for remaining research and development tax credits), to the extent to which paragraph (a) does not apply to the tax credit.
Refundable credits
(5)
The Commissioner refunds a refundable tax credit by applying section LA 6, LA 7, or LA 8.
Meaning of refundability cap
(5B)
For the purposes of this section, refundability cap is the amount calculated for the tax year using the following formula:
own tax + other wholly-owned tax + other controller tax − double-dip allocation.
Definition of items in formula
(5C)
In the formula,—
(a)
own tax is the total amount of PAYE, ESCT, and FBT that the person (person A) pays for the tax year to the extent to which the total amount has not been allocated under paragraph (b) or (c) to another person for the purposes of calculating their refundability cap for the tax year:
(b)
other wholly-owned tax is zero or, if person A is a company and is a member of a wholly-owned group of companies, is the amount of PAYE, ESCT, and FBT that the other members pay for the tax year and that is allocated to person A for the purposes of calculating person A’s refundability cap for the tax year:
(c)
other controller tax is zero or, if person A is a company, is the total amount of PAYE, ESCT, and FBT that companies that directly or indirectly control person A pay for the tax year and that is allocated to person A for the purposes of calculating their refundability cap for the tax year:
(d)
double-dip allocation means the total amount allocated to person A under paragraphs (b) and (c) that has been allocated to a person other than person A for the purposes of calculating the other person’s refundability cap for the tax year.
Relationship with material
(5D)
Section LZ 14 (Research and development tax credits’ refundability: option for 2019–20 income year) may modify this section for a person’s research and development tax credits for the 2019–20 income year.
Defined in this Act: approved research provider, Commissioner, eligible research and development expenditure, ESCT, FBT, foreign attributed income, foreign income tax, imputation credit, income tax, levy body researcher, non-refundable tax credit, PAYE, refundability cap, refundable tax credit, research and development tax credit, supplementary dividend, tax credit
Compare: 2004 No 35 ss BC 9, BC 10
Section LA 5(4): amended (with effect on 1 July 2010), on 7 September 2010, by section 85 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section LA 5(4B) heading: inserted, on 1 April 2019, by section 9(1) (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
Section LA 5(4B): replaced (with effect on 1 April 2019), on 25 March 2020, by section 15(1) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5(5B) heading: inserted (with effect on 1 April 2019), on 25 March 2020, by section 15(2) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5(5B): inserted (with effect on 1 April 2019), on 25 March 2020, by section 15(2) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5(5C) heading: inserted (with effect on 1 April 2019), on 25 March 2020, by section 15(2) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5(5C): inserted (with effect on 1 April 2019), on 25 March 2020, by section 15(2) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5(5D) heading: inserted (with effect on 1 April 2019), on 25 March 2020, by section 15(2) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5(5D): inserted (with effect on 1 April 2019), on 25 March 2020, by section 15(2) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5 list of defined terms approved research provider: inserted (with effect on 1 April 2019), on 25 March 2020, by section 15(3)(a) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5 list of defined terms associated person: repealed (with effect on 1 April 2019), on 25 March 2020, by section 15(3)(b) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5 list of defined terms eligible research and development expenditure: inserted (with effect on 1 April 2019), on 25 March 2020, by section 15(3)(a) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5 list of defined terms ESCT: inserted (with effect on 1 April 2019), on 25 March 2020, by section 15(3)(a) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5 list of defined terms exempt income: repealed (with effect on 1 April 2019), on 25 March 2020, by section 15(3)(b) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5 list of defined terms FBT: inserted (with effect on 1 April 2019), on 25 March 2020, by section 15(3)(a) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5 list of defined terms levy body researcher: inserted (with effect on 1 April 2019), on 25 March 2020, by section 15(3)(a) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5 list of defined terms listed company: repealed (with effect on 1 April 2019), on 25 March 2020, by section 15(3)(b) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5 list of defined terms PAYE: inserted (with effect on 1 April 2019), on 25 March 2020, by section 15(3)(a) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5 list of defined terms refundability cap: inserted (with effect on 1 April 2019), on 25 March 2020, by section 15(3)(a) (and see section 15(4) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
Section LA 5 list of defined terms research and development tax credit: inserted, on 1 April 2019, by section 9(2) (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
LA 6 Remaining refundable credits: PAYE, RWT, and certain other items
What this section applies to
(1)
This section applies to a person’s tax credit remaining for a tax year under section LA 5(5) if it is a tax credit under—
(a)
section LB 1 (Tax credits for PAYE income payments):
(b)
section LB 2 (Tax credits for provisional tax payments):
(c)
section LB 3 (Tax credits for resident withholding tax):
(cb)
section LB 6 (Tax credits for RSCT):
(cc)
section LB 6B (Tax credits for RLWT):
(d)
[Repealed](db)
[Repealed](e)
subpart LO (Tax credits for Maori authority credits):
(f)
section LS 1 (Tax credits for multi-rate PIEs):
(g)
section LS 2 (Tax credits for investors in multi-rate PIEs) and the person is not a natural person, or is a natural person who—
(i)
has the tax credit as a beneficiary of a trust:
(ii)
uses the tax credit in the calculation of their PIE schedular income under section HM 36B (Calculating PIE schedular income adjustments for natural person investors):
(h)
section LS 3 (Tax credits for zero-rated investors), and the person is not a natural person or is a natural person having the tax credit as a beneficiary of a trust:
(i)
section LS 4 (Tax credits for certain exiting investors) and the person is not a natural person, or is a natural person who—
(i)
has the tax credit as a beneficiary of the trust:
(ii)
uses the tax credit in the calculation of their PIE schedular income under section HM 36B:
(ib)
subpart LT (Tax credits for petroleum miners):
(j)
section LU 1 (Tax credits for mineral miners).
Use of credits
(2)
The Commissioner must—
(a)
first, use a tax credit to satisfy the person’s income tax liability for a tax year that is before the tax year referred to in subsection (1):
(b)
second, use a tax credit to satisfy the person’s income tax liability for a tax year that is later than the tax year referred to in subsection (1), applying this paragraph to earlier tax years before later tax years:
(c)
third, pay the person’s provisional tax for a tax year that is later than the tax year referred to in subsection (1), applying this paragraph to earlier tax years before later tax years:
(d)
fourth, treat a tax credit as tax paid in excess and as transferable under section LB 1B (Treatment of tax credits of certain companies with shareholders who are employees) or Part 10B of the Tax Administration Act 1994:
(e)
fifth, refund a tax credit by applying sections RB 4, RM 2 to RM 8, and RM 10 (which relate to refunds and their use), as applicable, and the Tax Administration Act 1994.
Time bar
(3)
The Commissioner may amend an assessment or a determination to give effect to this section despite the time bar.
Defined in this Act: assessment, Commissioner, income tax liability, PAYE, PIE schedular income, provisional tax, RWT, tax credit, tax year, time bar
Compare: 2004 No 35 ss LD 1, LD 3, LD 3A, LD 6–LD 8, LD 12(5), MD 1
Section LA 6(1)(cb): inserted, on 1 April 2008, by section 433(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LA 6(1)(cc): inserted, on 1 July 2016, by section 43 of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
Section LA 6(1)(d): repealed, on 1 April 2017, by section 153(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LA 6(1)(db): repealed (with effect on 1 April 2009), on 30 March 2017, by section 153(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LA 6(1)(e): amended (with effect on 1 April 2008), on 6 October 2009, by section 308(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LA 6(1)(f): added (with effect on 1 April 2008), on 6 October 2009, by section 308(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LA 6(1)(f): amended, on 17 July 2013, by section 68(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section LA 6(1)(f): amended, on 1 April 2010 (applying for the 2010–11 and later income years), by section 308(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LA 6(1)(g): replaced, on 1 April 2020, by section 156(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LA 6(1)(h): inserted, on 17 July 2013, by section 68(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section LA 6(1)(i): replaced (with effect on 1 April 2020), on 30 March 2021, by section 115 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LA 6(1)(ib): inserted, on 1 April 2018, by section 152(1) (and see section 152(3) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LA 6(1)(j): inserted, on 1 April 2014 (applying for the 2014–15 and later income years), by section 102(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section LA 6(2)(d): amended, on 29 March 2018 (with effect on 1 April 2017), by section 152(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LA 6 compare note: amended (with effect on 1 April 2008), on 17 July 2013, by section 68(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section LA 6 compare note: amended, on 1 April 2008, by section 433(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LA 6 list of defined terms PIE schedular income: inserted, on 1 April 2020, by section 156(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
LA 7 Remaining refundable credits: tax credits for social policy and other initiatives
What this section applies to
(1)
This section applies to a person’s tax credit remaining for a tax year under section LA 5(5), if it is a tax credit under—
(a)
section LB 4 (Tax credits for families):
(ab)
section LB 4B (Tax credit for R&D tax losses):
(b)
section LD 1(5) (Tax credits for charitable and other public benefit gifts).
Use of credits
(2)
The Commissioner must treat the person’s tax credit as transferable under Part 10B of the Tax Administration Act 1994 or refundable under sections RB 4, RM 2 to RM 8, and RM 10 (which relate to refunds and their use), as applicable.
Defined in this Act: Commissioner, tax credit, tax year
Compare: 2004 No 35 ss BC 8(1), KD 4(2), MD 1
Section LA 7 heading: substituted (with effect on 1 April 2008), on 6 October 2009, by section 309(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LA 7 heading: amended (with effect on 1 April 2015 and applying for income years beginning on or after that date), on 24 February 2016, by section 198(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section LA 7(1) heading: substituted (with effect on 1 April 2008), on 6 October 2009, by section 309(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LA 7(1): substituted (with effect on 1 April 2008), on 6 October 2009, by section 309(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LA 7(1)(ab): inserted (with effect on 1 April 2015 and applying for income years beginning on or after that date), on 24 February 2016, by section 198(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section LA 7 list of defined terms family scheme income: repealed (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 140(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
LA 8 Remaining refundable credits: non-resident withholding tax
What this section applies to
(1)
This section applies to a person’s tax credit remaining for a tax year under section LA 5(5), if it is a tax credit under section LB 5 (Tax credits for non-resident withholding tax).
Use of credits
(2)
The Commissioner must—
(a)
first, treat the tax credit as tax paid in excess and as transferable under Part 10B of the Tax Administration Act 1994:
(b)
second, refund the tax credit under sections RB 4, RM 2 to RM 8, and RM 10 (which relate to refunds and their use), as applicable.
Defined in this Act: Commissioner, tax credit, tax year
Compare: 2004 No 35 ss LD 2, MD 1
Section LA 8 list of defined terms non-resident withholding tax: repealed, 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).
LA 8B General rules particular to life insurers
Apportionment
(1)
For the purposes of this subpart, a life insurer’s total tax credit is apportioned between their policyholder base and shareholder base, to the extent to which section EY 4 (Apportionment of income of particular source or nature, and of tax credits) applies and apportions the credit.
Unsatisfied income tax liability
(2)
Despite section LA 3,—
(a)
a life insurer has an unsatisfied income tax liability to the extent to which—
(i)
the tax credit apportioned to their policyholder base is less than their schedular income tax liability for schedular policyholder base income (the policyholder base income tax liability):
(ii)
the tax credit apportioned to their shareholder base is less than their income tax liability for the tax year, calculating their income tax liability (the shareholder base income tax liability) as if they only had shareholder base income and allowable deductions:
(b)
the amount of unsatisfied income tax liability is the total of the difference, if any, described in paragraph (a)(i) and the difference, if any, described in paragraph (a)(ii):
(c)
the amount of unsatisfied income tax liability under paragraph (b) is satisfied when the life insurer pays their terminal tax for the tax year.
Use of credits
(3)
Despite section LA 4,—
(a)
if the tax credit apportioned to the policyholder base or the shareholder base is greater than the relevant base income tax liability described in subsection (2)(a)(i) or (ii), the tax credit is used, in the order prescribed in section LA 4(1), to satisfy the relevant base income tax liability. There is no cross-crediting:
(b)
tax credits not used under paragraph (a) are treated as remaining tax credits referred to in section LA 4(2) and the life insurer must deal with the credits under section LA 5.
Defined in this Act: income tax liability, life insurer, policyholder base, schedular policyholder base income, shareholder base, shareholder base allowable deduction, shareholder base income, tax credit, tax year
Section LA 8B: inserted, on 1 July 2010, by section 310(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LA 9 Use of tax credits
An amount of a tax credit is used once, so far as it extends.
Defined in this Act: amount, tax credit
Compare: 2004 No 35 ss BC 9(1), LB 2(2), LE 2(4), (8)
Section LA 9: amended (with effect on 1 April 2008), on 6 October 2009, by section 311(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LA 9: amended, on 1 April 2008, by section 435 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
LA 10 Meaning of tax credit
An amount is a tax credit of a person if it is their tax credit under a provision in this Part.
Defined in this Act: amount, tax credit
Compare: 2004 No 35 s BC 9
Subpart LB—Tax credits for payments, deductions, and family payments
Subpart LB heading: substituted, on 1 April 2008, by section 436 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Contents
LB 1 Tax credits for PAYE income payments
When this section applies
(1)
This section applies in a tax year when an employer provides the Commissioner with employment income information that shows an amount of tax withheld from a PAYE income payment of a person who is an employee.
Amount of credit
(2)
The person has a tax credit for the tax year equal to the amount of tax shown as withheld.
Application to close companies
(3)
Despite subsection (2), the amount of the tax credit must be no more than the amount of tax paid to the Commissioner if—
(a)
the employer is a close company; and
(b)
the employer and the person are associated persons, or the employer and the spouse, civil union partner, or de facto partner of the person are associated persons; and
(c)
the employer withheld the amount of tax for the PAYE income payment shown in their employment income information.
Exclusions
(4)
The person’s credit is extinguished if the Commissioner does not receive employment income information for the relevant amount of tax, or when the relevant particulars of the schedule are incorrect. However, the credit is restored to the person if the relevant matter is corrected and, for the purposes of this section, it is as if the error had not been made.
Defined in this Act: amount, amount of tax, associated person, close company, Commissioner, employee, employer, employment income information, pay, PAYE income payment, tax credit
Section LB 1: substituted (with effect on 1 April 2008), on 6 October 2009, by section 312 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LB 1(1): amended, on 1 April 2019, by section 153(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 1(3)(c): amended, on 1 April 2019, by section 153(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 1(4): amended, on 1 April 2019, by section 153(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 1 list of defined terms employer monthly schedule: repealed, on 1 April 2019, by section 153(4)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 1 list of defined terms employment income information: inserted, on 1 April 2019, by section 153(4)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
LB 1B Treatment of tax credits of certain companies with shareholders who are employees
When this section applies
(1)
This section applies when—
(a)
a company to which section RD 3B or RD 3C (which relate to income derived by shareholders who are employees) applies, pays an amount to a person who is both a shareholder and an employee of the company; and
(b)
the amount is paid or allocated—
(i)
under section GB 29 (Attribution rule: calculation); or
(ii)
as a shareholder salary, being a payment treated as income other than from a PAYE income payment under section RD 3B(1)(b) or RD 3C(1)(b); and
(c)
an amount of tax has been withheld from the payment in relation to which the company has, or will have, a tax credit under section LB 1.
Use of tax credits
(2)
Despite section LA 6(2)(a) to (c) (Remaining refundable credits: PAYE, RWT, and certain other items), the company may apply to have an amount of the company’s tax credit transferred under section LA 6(2)(d) to the person, treating the amount as tax paid in excess.
Treatment for company
(3)
The amount of the company’s tax credit under section LB 1 is reduced by the amount that is transferred to the shareholder and, for the purposes of section OB 32 (ICA refund of tax or transfer from account), the amount transferred is treated as a refund of income tax.
Treatment for shareholder
(4)
The amount of the shareholder’s tax credit under section LB 1 is increased by the amount that is transferred under subsection (2).
Defined in this Act: amount, amount of tax, company, employee, income, income tax, pay, PAYE income payment, shareholder, tax credit
Section LB 1B: inserted, on 29 March 2018 (with effect on 1 April 2017), by section 154 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 1B(3): amended, on 30 March 2022, by section 129 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
LB 2 Tax credits for provisional tax payments
A person has a tax credit for a tax year equal to the amount of provisional tax for the tax year paid by—
(a)
the person; or
(b)
an agent of the person, if the agent is liable to pay provisional tax on behalf of the person.
Defined in this Act: agent, amount, pay, provisional tax, tax credit, tax year
LB 3 Tax credits for resident withholding tax
Tax credit
(1)
A person has a tax credit for a tax year equal to the amount of tax withheld and paid in relation to their resident passive income for the tax year if the evidential requirements of section 78D of the Tax Administration Act 1994 are met. The amount of tax includes a payment of RWT for a non-cash dividend.
Exclusion
(2)
No credit exists under subsection (1) for an amount of tax for resident passive income that is a replacement payment.
Multi-rate PIEs and their investors
(3)
For a multi-rate PIE and an investor in a multi-rate PIE, the amount of a tax credit is limited to the extent allowed under subpart HM (Portfolio investment entities).
Detached tax credits
(4)
A trustee of a trust may detach some or all of a tax credit referred to in subsection (1) for resident passive income—
(a)
that is derived by the trustee in an income year; and
(b)
that is distributed to a person (person A) who is a beneficiary of the trust in—
(i)
the income year referred to in paragraph (a); or
(ii)
the extended period referred to in section HC 6(1)(b) (Beneficiary income); and
(c)
in relation to which the trustee makes an RWT substitution payment under section RE 2(7).
Allocation and tax credits
(5)
The trustee may, in a return of income for the income year referred to in subsection (4)(a), choose to allocate, for that year, an amount to a beneficiary of the trust that is equal to some or all of the amount of the detached tax credit referred to in subsection (4). The trustee has a tax credit equal to the amount that is not allocated to a beneficiary, and a beneficiary has a tax credit for the amount that is allocated to them.
Treatment of amounts
(6)
Despite subsection (1), an amount of a tax credit that person A would have under this section in the absence of subsections (4) and (5) must be reduced by an amount equal to the RWT substitution payment received by person A.
Evidential requirements
(7)
Subsection (5) does not apply in the circumstances set out in section HD 4(b) (Treatment of principals).
Meaning of detached tax credit
(8)
A detached tax credit, for a beneficiary and an income year, means an amount equal to the amount of an RWT substitution payment referred to in subsection (4)(c) that meets the requirements of subsection (4)(a) and (b).
Defined in this Act: amount, amount of tax, Commissioner, detached tax credit, income tax liability, income year, investor, multi-rate PIE, notify, replacement payment, resident passive income, RWT substitution payment, tax credit, tax withheld, tax year, trustee, trustee income
Compare: 2004 No 35 ss LD 3(2), NF 1(2)(b)(ix), (x), NF 8B(b)
Section LB 3(1): amended, on 29 March 2018, by section 155(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3(3) heading: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 313(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LB 3(3): substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 313(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LB 3(4) heading: replaced, on 29 March 2018 (with effect on 1 April 2008), by section 155(2) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3(4): replaced, on 29 March 2018 (with effect on 1 April 2008), by section 155(2) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3(5) heading: replaced, on 29 March 2018 (with effect on 1 April 2008), by section 155(2) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3(5): replaced, on 29 March 2018 (with effect on 1 April 2008), by section 155(2) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3(6) heading: inserted, on 29 March 2018 (with effect on 1 April 2008), by section 155(2) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3(6): inserted, on 29 March 2018 (with effect on 1 April 2008), by section 155(2) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3(7) heading: inserted, on 29 March 2018 (with effect on 1 April 2008), by section 155(2) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3(7): inserted, on 29 March 2018 (with effect on 1 April 2008), by section 155(2) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3(8) heading: inserted, on 29 March 2018 (with effect on 1 April 2008), by section 155(2) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3(8): inserted, on 29 March 2018 (with effect on 1 April 2008), by section 155(2) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3 list of defined terms amount: inserted, on 29 March 2018 (with effect on 1 April 2008), by section 155(3) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3 list of defined terms Commissioner: inserted, on 29 March 2018 (with effect on 1 April 2008), by section 155(3) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3 list of defined terms detached tax credit: inserted, on 29 March 2018 (with effect on 1 April 2008), by section 155(3) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3 list of defined terms income tax liability: inserted, on 29 March 2018 (with effect on 1 April 2008), by section 155(3) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3 list of defined terms income year: inserted, on 29 March 2018 (with effect on 1 April 2008), by section 155(3) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3 list of defined terms multi-rate PIE: inserted, on 1 April 2010, by section 313(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LB 3 list of defined terms notify: inserted, on 29 March 2018 (with effect on 1 April 2008), by section 155(3) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 3 list of defined terms portfolio tax rate entity: repealed, on 1 April 2010, by section 313(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LB 3 list of defined terms resident withholding tax: repealed, 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).
Section LB 3 list of defined terms RWT substitution payment: inserted (with effect on 1 April 2008), on 29 August 2011, by section 99(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LB 3 list of defined terms trustee: added (with effect on 1 April 2008), on 29 August 2011, by section 99(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LB 3 list of defined terms trustee income: inserted, on 29 March 2018 (with effect on 1 April 2008), by section 155(3) (and see section 155(4) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
LB 4 Tax credits for families
Tax credits under subparts MD and ME
(1)
A person has a tax credit for a tax year equal to the total amount of their tax credit under subpart MD (Abating WFF tax credits), their minimum family tax credit under subpart ME (Minimum family tax credit), and their Best Start tax credit under subpart MG (Best Start tax credit) for the tax year.
Adjustments for credits used
(2)
The person’s tax credit is adjusted if an instalment of the credit under subpart MF (Payment of credits) is used to satisfy an amount of tax for an earlier income year. The adjustment to the tax credit is equal to the total amount of instalments payable under section MF 1 (Application for payment of tax credit by instalment) that are recovered by the Commissioner under section MF 6 (Overpayment or underpayment of tax credit) as tax payable by the person.
Defined in this Act: amount, amount of tax, corresponding income year, family scheme income, minimum family tax credit, pay, tax credit, tax year
Compare: 2004 No 35 ss KD 1A(2), KD 2(1), KD 3(2), MD 1(3A)
Section LB 4 heading: substituted, on 1 April 2008, by section 437(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LB 4(1) heading: inserted (with effect on 1 April 2008), on 6 October 2009, by section 314(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LB 4(1): amended, on 1 July 2018, by section 156 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LB 4(1): amended, on 1 April 2008, by section 437(2)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LB 4(1): amended, on 1 April 2008, by section 437(2)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LB 4(2) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 314(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LB 4(2): added (with effect on 1 April 2008), on 6 October 2009, by section 314(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LB 4 list of defined terms amount of tax: inserted (with effect on 1 April 2008), on 6 October 2009, by section 314(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LB 4 list of defined terms corresponding income year: inserted (with effect on 1 April 2008), on 6 October 2009, by section 314(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LB 4 list of defined terms family assistance credit: repealed, on 1 April 2008, by section 437(3)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LB 4 list of defined terms family tax credit: repealed, on 1 April 2008, by section 437(3)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LB 4 list of defined terms minimum family tax credit: inserted, on 1 April 2008, by section 437(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LB 4 list of defined terms pay: inserted (with effect on 1 April 2008), on 6 October 2009, by section 314(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LB 4 compare note: amended (with effect on 1 April 2008), on 6 October 2009, by section 314(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LB 4B Tax credit for R&D tax losses
A person has a tax credit for a tax year equal to their R&D loss tax credit under subpart MX (Tax credits for R&D tax losses) for the tax year.
Defined in this Act: R&D loss tax credit, tax credit, tax year
Section LB 4B: inserted (with effect on 1 April 2015 and applying for income years beginning on or after that date), on 24 February 2016, by section 199(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
LB 5 Tax credits for non-resident withholding tax
A person has a tax credit for a tax year equal to the amount of tax withheld and paid in relation to their non-resident passive income for the tax year.
Defined in this Act: amount of tax, non-resident passive income, pay, tax credit, tax withheld, tax year
Compare: 2004 No 35 s LD 2
Section LB 5 list of defined terms non-resident withholding tax: repealed, 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).
LB 6 Tax credits for RSCT
When this section applies
(1)
This section applies when—
(a)
a person derives income as a retirement scheme contribution in an income year; and
(b)
the retirement scheme contributor pays RSCT for the contribution; and
(c)
the income is not excluded income of the person under section CX 50B (Contributions to retirement savings schemes).
Tax credit: New Zealand resident
(2)
If the person is resident in New Zealand, they have a tax credit for the tax year corresponding to the income year of an amount equal to the RSCT withheld.
Tax credit: non-resident
(3)
If the person is not resident in New Zealand, they have a tax credit for the tax year corresponding to the income year of an amount equal to the excess of RSCT withheld over NRWT paid in relation to the contribution.
When contribution is taxable Maori authority distribution
(4)
If the person is not resident in New Zealand and the retirement scheme contribution is a taxable Maori authority distribution, they have a tax credit for the tax year corresponding to the income year of an amount equal to the RSCT withheld.
Defined in this Act: amount, excluded income, income, income year, non-resident, NRWT, pay, resident in New Zealand, retirement scheme contribution, retirement scheme contributor, RSCT, tax credit, tax year
Compare: 2004 No 35 s LD 12(1)–(4)
Section LB 6: substituted, on 1 April 2008, by section 438(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
LB 6B Tax credits for RLWT
A person has a tax credit, for the tax year corresponding to an income year in which they dispose of residential land, equal to the amount of RLWT paid in relation to that residential land.
Defined in this Act: amount, dispose, income year, residential land, RLWT, tax credit, tax year
Section LB 6B: inserted, on 1 July 2016, by section 44 of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
LB 7 Tax credits related to personal service rehabilitation payments: providers
When this section applies
(1)
This section applies when—
(a)
a person—
(i)
is paid under the Accident Compensation Act 2001 a personal service rehabilitation payment for a period for a key aspect of social rehabilitation referred to in the definition of personal service rehabilitation payment; and
(ii)
pays another person (a provider) for providing the key aspect to them for the period; or
(b)
the Accident Compensation Corporation pays a provider a personal service rehabilitation payment for a period for providing a key aspect of social rehabilitation to the person.
Tax credit
(2)
For the tax year corresponding to the income year in which the payment falls,—
(a)
the provider has a tax credit if the payment is not a reimbursement payment referred to in subsection (5):
(b)
the recipient of the payment has a tax credit if the payment is a reimbursement payment referred to in subsection (5).
Amount
(3)
The amount of the tax credit is calculated using the formula—
amount paid × tax rate ÷ (1 − tax rate).
Definition of items in formula
(4)
In the formula,—
(a)
amount paid is the amount paid to the provider for providing a key aspect of social rehabilitation to the person for the period, to the extent to which the amount is equal to or less than the amount of the personal service rehabilitation payment for the period after taking into account any amount of tax withheld:
(b)
tax rate is the rate of tax applying to the personal service rehabilitation payment under section RD 10B (Amounts of tax for schedular payments).
Reimbursement payments
(5)
For the purposes of this section and section LB 8, the payment of a personal service rehabilitation payment for a period includes a payment made under the Accident Compensation Act 2001 that is received as a reimbursement payment in a later period.
Defined in this Act: amount, amount of tax, income year, pay, personal service rehabilitation payment, reimbursement payment, tax credit, tax year
Compare: 2004 No 35 s LD 1B
Section LB 7: added, on 1 July 2008, by section 438(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LB 7(1)(a)(i): amended, on 21 December 2010, by section 189 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section LB 7(2): replaced (with effect on 1 April 2018), on 26 June 2019, by section 68 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
Section LB 7(4)(b): replaced, on 1 April 2017, by section 82 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Section LB 7(5) heading: inserted (with effect on 1 April 2018), on 18 March 2019, by section 228(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section LB 7(5): inserted (with effect on 1 April 2018), on 18 March 2019, by section 228(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section LB 7 list of defined terms reimbursement payment: inserted (with effect on 1 April 2018), on 18 March 2019, by section 228(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
LB 8 Tax credits related to personal service rehabilitation payments: payers
When this section applies
(1)
This section applies when—
(a)
a person is paid under the Accident Compensation Act 2001 a personal service rehabilitation payment for a period for a key aspect of social rehabilitation referred to in the definition of personal service rehabilitation payment; and
(b)
the person pays another person (the provider) for providing the key aspect to them for the period; and
(c)
the amount paid to the provider is less than the amount of the personal service rehabilitation payment to the person for the period after taking into account any amount of tax withheld.
Tax credit
(2)
The person has a tax credit for the tax year corresponding to the income year in which the period falls to the extent of the amount calculated using the formula—
total tax withheld − (amount paid × tax rate ÷ (1 − tax rate)).
Definition of items in formula
(3)
In the formula,—
(a)
total tax withheld is the total amount of tax withheld from the personal service rehabilitation payment paid to the person for the period:
(b)
amount paid is the amount paid to the provider:
(c)
tax rate is the rate of tax applying to the personal service rehabilitation payment under section RD 10B (Amounts of tax for schedular payments).
Defined in this Act: amount, amount of tax, income year, pay, personal service rehabilitation payment, tax credit, tax year
Compare: 2004 No 35 s LD 1C
Section LB 8: added, on 1 July 2008, by section 438(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LB 8(1)(a): amended, on 21 December 2010, by section 189 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section LB 8(3)(c): replaced, on 1 April 2017, by section 83 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
Subpart LC—Tax credits for natural persons
Contents
| [Repealed] | |||
| LC 1 | When net income under low income amount [Repealed] | ||
| LC 2 | When net income in low income abatement range [Repealed] | ||
| [Repealed] | |||
| LC 3 | Child’s income [Repealed] | ||
| [Repealed] | |||
| LC 4 | Tax credits for transitional circumstances [Repealed] | ||
| LC 5 | Meaning of engaged in full-time work [Repealed] | ||
| [Repealed] | |||
| LC 6 | Tax credits for housekeeping [Repealed] | ||
| LC 7 | Meaning of housekeeper [Repealed] | ||
| LC 8 | Some definitions [Repealed] | ||
| [Repealed] | |||
| LC 9 | Tax credits for absentees [Repealed] | ||
| [Repealed] | |||
| LC 10 | Adjustment for change in return date [Repealed] | ||
| LC 11 | Adjustment when person is non-resident for part of tax year [Repealed] | ||
| LC 12 | Assessment when person is non-resident [Repealed] | ||
| LC 13 | Tax credits for independent earners | ||
Tax credits for persons on low incomes[Repealed]
Heading: repealed (with effect from 1 April 2008), on 29 May 2008, by section 24(1) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
LC 1 When net income under low income amount
[Repealed]Section LC 1: repealed (with effect from 1 April 2008), on 29 May 2008, by section 24(1) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
LC 2 When net income in low income abatement range
[Repealed]Section LC 2: repealed (with effect from 1 April 2008), on 29 May 2008, by section 25(1) of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Tax credits for children[Repealed]
Heading: repealed, on 29 May 2012 (applying for the 2012–13 and later tax years), by section 6(1)(a) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
LC 3 Child’s income
[Repealed]Section LC 3: repealed, on 29 May 2012 (applying for the 2012–13 and later tax years), by section 6(1)(b) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
Tax credits for transitional circumstances[Repealed]
Heading: repealed, on 29 May 2012 (applying for the 2012–13 and later tax years), by section 6(1)(c) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
LC 4 Tax credits for transitional circumstances
[Repealed]Section LC 4: repealed, on 29 May 2012 (for the purposes of schedule 2, and of sections 24B and 24H(7) of the Tax Administration Act 1994, applying for PAYE income payments made on or after 1 April 2013) by section 6(1)(d) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
LC 5 Meaning of engaged in full-time work
[Repealed]Section LC 5: repealed, on 29 May 2012 (for the purposes of schedule 2, and of sections 24B and 24H(7) of the Tax Administration Act 1994, applying for PAYE income payments made on or after 1 April 2013) by section 6(1)(d) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
Tax credits for housekeeping[Repealed]
Heading: repealed, on 29 May 2012 (applying for the 2012–13 and later tax years), by section 6(1)(e) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
LC 6 Tax credits for housekeeping
[Repealed]Section LC 6: repealed, on 29 May 2012 (applying for the 2012–13 and later tax years), by section 6(1)(f) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
LC 7 Meaning of housekeeper
[Repealed]Section LC 7: repealed, on 29 May 2012 (applying for the 2012–13 and later tax years), by section 6(1)(f) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
LC 8 Some definitions
[Repealed]Section LC 8: repealed, on 29 May 2012 (applying for the 2012–13 and later tax years), by section 6(1)(f) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
Tax credits for absentees[Repealed]
Heading: repealed, on 29 May 2012 (applying for the 2012–13 and later tax years), by section 6(1)(g) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
LC 9 Tax credits for absentees
[Repealed]Section LC 9: repealed, on 29 May 2012 (applying for the 2012–13 and later tax years), by section 6(1)(h) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
Adjustments to certain tax credits[Repealed]
Heading: repealed, on 29 May 2012 (applying for the 2012–13 and later tax years), by section 6(1)(i) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
LC 10 Adjustment for change in return date
[Repealed]Section LC 10: repealed, on 29 May 2012 (applying for the 2012–13 and later tax years), by section 6(1)(j) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
LC 11 Adjustment when person is non-resident for part of tax year
[Repealed]Section LC 11: repealed, on 29 May 2012 (applying for the 2012–13 and later tax years), by section 6(1)(j) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
LC 12 Assessment when person is non-resident
[Repealed]Section LC 12: repealed, on 29 May 2012 (applying for the 2012–13 and later tax years), by section 6(1)(j) of the Taxation (Budget Measures) Act 2012 (2012 No 38).
Tax credits for independent earners
Heading: added, on 1 April 2009, by section 31 of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
LC 13 Tax credits for independent earners
When this section applies
(1)
This section applies for a natural person, for a period (the credit period) in a tax year when the person—
(a)
is not receiving a main benefit; and
(b)
is not receiving a veteran’s pension; and
(c)
is not receiving New Zealand superannuation; and
(d)
is not entitled to a WFF tax credit; and
(e)
is not the spouse, civil union partner, or de facto partner of a person who is entitled to a WFF tax credit; and
(f)
is not receiving an amount that is—
(i)
granted outside New Zealand; and
(ii)
in the nature of, and paid for similar purposes as, a benefit, pension, superannuation payment, or tax credit described in paragraphs (a) to (d); and
(g)
is not the spouse, civil union partner, or de facto partner of a person who receives an amount that is—
(i)
granted outside New Zealand; and
(ii)
in the nature of, and paid for similar purposes as, a tax credit described in paragraph (d); and
(h)
is resident in New Zealand.
Amount of credit
(2)
For the credit period, the person has a tax credit equal to the positive amount calculated using the formula—
(person’s credit − full year abatement) × credit period months ÷ 12.
Definition of items in formula
(3)
The items in the formula are defined in subsections (4) to (6).
Person’s credit
(4)
Person’s credit is, if the person’s net income for the tax year is equal to or more than $24,000, $520. Otherwise it is zero.
Full year abatement
(5)
Full year abatement is, if the person’s net income is greater than $44,000 for the tax year, 13 cents for each complete dollar of the excess.
Credit period months
(6)
Credit period months is the number of whole months in the credit period.
Defined in this Act: amount, civil union partner, de facto partner, main benefit, net income, New Zealand superannuation, resident in New Zealand, tax credit, tax year, veteran’s pension, WFF tax credit
Section LC 13: added, on 1 April 2009, by section 31 of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
Section LC 13(1)(a): amended, 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 LC 13 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 LC 13 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).
Subpart LD—Tax credits for gifts and donations
Subpart LD heading: amended, on 6 January 2010, by section 319 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Contents
Charitable and other public benefit gifts
Heading: inserted, on 6 January 2010, by section 320 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LD 1 Tax credits for charitable or other public benefit gifts
Amount of credit
(1)
A person who makes a charitable or other public benefit gift in a tax year and who meets the requirements of section 41A of the Tax Administration Act 1994 has a tax credit for the tax year equal to the amount calculated using the formula in subsection (2).
Formula
(2)
The formula referred to in subsection (1) is—
total gifts × 33⅓%.
Definition of item in formula
(3)
In the formula, total gifts means the total amount of all charitable or other public benefit gifts made by the person in the tax year.
Administrative requirements
(4)
Despite subsection (1), the requirements of section 41A are modified if a tax agent or representative applies for a refund under that section on behalf of a person, and—
(a)
the tax agent or representative sees the receipt for the person’s charitable or other public benefit gift; and
(b)
the person retains the receipt for 4 tax years after the tax year to which the claim relates.
Refundable credits
(5)
A credit under this section is a refundable tax credit under section LA 7 (Remaining refundable credits: tax credits for social policy and other initiatives) and is excluded from the application of sections LA 2 to LA 6 (which relate to a person’s income tax liability).
Defined in this Act: amount, apply, charitable or other public benefit gift, refundable tax credit, representative, tax agent, tax credit, tax year
Compare: 2004 No 35 s KC 5
Section LD 1(1): substituted, on 1 April 2008, by section 440(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LD 1(2): amended, on 1 April 2008, by section 440(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LD 1(4): amended, on 18 March 2019, by section 229(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section LD 1(4)(a): amended, on 18 March 2019, by section 229(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section LD 1(5): amended (with effect on 1 April 2015), on 24 February 2016, by section 200 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section LD 1(5): amended (with effect on 1 April 2008), on 6 October 2009, by section 321 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LD 1(5): amended, on 1 April 2008, by section 440(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LD 1 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).
Section LD 1 list of defined terms representative: inserted, on 18 March 2019, by section 229(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
LD 2 Exclusions
Section LD 1 does not apply to—
(a)
an absentee:
(b)
a company:
(c)
a public authority:
(d)
a Maori authority:
(e)
an unincorporated body:
(f)
a trustee liable for income tax under subpart HC, and section HZ 2 (which relate to trusts and distributions from trusts):
(g)
in relation to the credit, a person who has a tax credit for a payroll donation.
Defined in this Act: absentee, company, income tax, Maori authority, public authority, trustee
Compare: 2004 No 35 s KC 5(1)
Section LD 2: amended, on 6 January 2010, by section 322(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LD 2(f): amended, on 6 January 2010, by section 322(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LD 2(g): added, on 6 January 2010, by section 322(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LD 3 Meaning of charitable or other public benefit gift
Meaning
(1)
For the purposes of sections DB 41 and DV 12 (which relate to deductions for gifts of money), and this subpart, a charitable or other public benefit gift—
(a)
means a gift of money of $5 or more that is paid to a society, institution, association, organisation, trust, or fund (the entity), if—
(i)
the entity is described in subsection (2)(a), (ab), (b), (c), or (d), and the name of the entity is on the list published by the Commissioner under section 41A(14) to (16) of the Tax Administration Act 1994:
(ii)
the entity is described in subsection (2)(ac), (bb), or (bc):
(iii)
the name of the entity is listed in schedule 32 (Recipients of charitable or other public benefit gifts):
(b)
includes a subscription of $5 or more paid to an entity only if the subscription does not confer any rights arising from membership in that entity or any other society, institution, association, organisation, trust, or fund:
(c)
does not include—
(i)
a testamentary gift:
(ii)
a gift made by forgiving some or all of a debt.
Description of organisations
(2)
The following are the entities referred to in subsection (1)(a) and (b):
(a)
a society, institution, association, organisation, or trust that is not carried on for the private pecuniary profit of an individual, and whose funds are applied wholly or mainly to charitable, benevolent, philanthropic, or cultural purposes within New Zealand:
(ab)
an entity that, but for this paragraph, no longer meets the requirements of this subsection, but only for the period starting on the day it fails to meet those requirements and ending on the later of—
(i)
the day the entity is removed from the register of charitable entities under the Charities Act 2005:
(ii)
the day on which all reasonably contemplated administrative appeals and Court proceedings, including appeal rights, are finalised or exhausted in relation to the person’s charitable status.
(ac)
a community housing entity, if the gift is made at a time the entity is eligible to derive exempt income under section CW 42B (Community housing trusts and companies):
(b)
a public institution maintained exclusively for any 1 or more of the purposes within New Zealand set out in paragraph (a):
(bb)
a board that is constituted under subpart 5 of Part 3 of the Education and Training Act 2020 and is not carried on for the private pecuniary profit of any individual:
(bc)
a tertiary education institution:
(c)
a fund established and maintained exclusively for the purpose of providing money for any 1 or more of the purposes within New Zealand set out in paragraph (a), by a society, institution, association, organisation, or trust that is not carried on for the private pecuniary profit of an individual:
(d)
a public fund established and maintained exclusively for the purpose of providing money for any 1 or more of the purposes within New Zealand set out in paragraph (a).
Exception for certain entities
(3)
Despite subsection (2)(a), (b), (c), and (d), a society, institution, association, organisation, trust, or fund is not a relevant entity for the purposes of subsection (1) if the society, institution, association, organisation, trust, or fund,—
(a)
is not a tax charity, because it is not registered as a charitable entity under the Charities Act 2005; and
(b)
in the opinion of the Commissioner, is eligible to be registered as a charitable entity under that Act.
Defined in this Act: charitable or other public benefit gift, charitable purpose, community housing entity, New Zealand, pay, tax charity, tertiary education institution
Compare: 2004 No 35 s KC 5(1)(aa)–(cp), (4)
Section LD 3(1): amended (with effect on 1 April 2008), on 23 March 2020, by section 157(1) (and see section 157(3) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LD 3(1)(a): replaced, on 1 April 2020, by section 231(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section LD 3(1)(b): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 24 February 2016, by section 201(2)(a) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section LD 3(1)(b): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 24 February 2016, by section 201(2)(b) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section LD 3(1)(c): replaced (with effect on 1 April 2008), on 23 March 2020, by section 157(2) (and see section 157(3) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LD 3(2): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 24 February 2016, by section 201(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section LD 3(2)(ab): inserted, on 30 June 2014, by section 131(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section LD 3(2)(ac): inserted (with effect on 14 April 2014), on 30 June 2014, by section 131(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section LD 3(2)(ac): amended, on 29 March 2018 (with effect on 14 April 2014), by section 157 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LD 3(2)(bb): inserted, on 1 July 2008, by section 31 of the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Act 2008 (2008 No 36).
Section LD 3(2)(bb): amended, on 1 August 2020, by section 668 of the Education and Training Act 2020 (2020 No 38).
Section LD 3(2)(bc): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 24 February 2016, by section 201(4) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section LD 3(3) heading: inserted, on 1 April 2020, by section 231(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section LD 3(3): inserted, on 1 April 2020, by section 231(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section LD 3 list of defined terms charitable or other public benefit: repealed (with effect on 1 April 2008), on 2 November 2012, by section 115(a) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section LD 3 list of defined terms charitable or other public benefit gift: inserted (with effect on 1 April 2008), on 2 November 2012, by section 115(b) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section LD 3 list of defined terms community housing entity: inserted, on 30 June 2014, by section 131(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section LD 3 list of defined terms gift: repealed (with effect on 1 April 2008), on 2 November 2012, by section 115(a) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section LD 3 list of defined terms tax charity: inserted, on 1 April 2020, by section 231(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section LD 3 list of defined terms tertiary education institution: inserted (with effect on 1 April 2008), on 24 February 2016, by section 201(5) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Payroll donations
Heading: added, on 6 January 2010, by section 323 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LD 4 Tax credits for payroll donations
Who this section applies to
(1)
This section applies to a person who—
(a)
is an employee whose employer—
(i)
provides employment income information by electronic means with particulars relating to the person’s PAYE income payments for a pay period; and
(ii)
agrees to offer payroll giving to their employees; and
(b)
chooses to make a payroll donation in the pay period from an amount derived as pay.
Amount of credit
(2)
The person has a tax credit for the pay period equal to an amount calculated using the formula—
total donations × 33⅓%.
Definition of item in formula
(3)
In the formula, total donations is the total amount of all payroll donations made by the person in the pay period.
Maximum credit
(4)
Despite subsection (2), the amount of the tax credit must not be more than the amount of tax for the person’s pay for the period.
Non-refundable credits
(5)
A credit under this section is a non-refundable tax credit to which section LA 4(1) (When total tax credit more than income tax liability) applies for the tax year in which the period falls.
No refunds for donations
(6)
A person who has a tax credit under this section may not make an application under section 41A of the Tax Administration Act 1994 for any refund relating to the amount of a payroll donation.
Meaning of pay for payroll donation purposes
(7)
For the purposes of this section, and sections LD 8(1) and 124ZG of the Tax Administration Act 1994, pay, for a person,—
(a)
means an amount referred to in section RD 5(1)(a) or (b)(i) (Salary or wages); and
(b)
includes any similar amount earned by an employee in the normal course of their employment; and
(c)
[Repealed]Defined in this Act: amount, amount of tax, employee, employer, employment, employment income information, non-refundable tax credit, pay, pay period, PAYE income payment, payroll donation, salary or wages, tax credit
Section LD 4: added, on 6 January 2010, by section 323 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LD 4(1)(a)(i): amended, on 1 April 2019, by section 158(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LD 4(7): amended, on 1 April 2019, by section 232 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section LD 4(7)(c): repealed, on 7 January 2010, by section 74 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section LD 4 list of defined terms employer monthly schedule: repealed, on 1 April 2019, by section 158(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LD 4 list of defined terms employment income information: inserted, on 1 April 2019, by section 158(3)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LD 4 list of defined terms PAYE income payment form: repealed, on 1 April 2019, by section 158(3)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
LD 5 Calculating amount of tax credit and filing particulars
Employer’s responsibility
(1)
The employer of a person who makes a payroll donation in a pay period must calculate the amount of the person’s tax credit for the pay period under section LD 4, and include the amount in the particulars described in section LD 4(1)(a).
Credit extinguished
(2)
The tax credit is extinguished if—
(a)
the Commissioner does not receive the employment income information relating to the relevant payroll donation:
(b)
the relevant particulars filed are incorrect.
When matters corrected
(3)
Despite subsection (2), the credit is restored to the person if the relevant matter is corrected and, for the purposes of this section, it is as if the error had never been made.
Defined in this Act: amount, Commissioner, employer, employment income information, pay period, payroll donation, tax credit
Section LD 5: added, on 6 January 2010, by section 323 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LD 5(2)(a): amended, on 1 April 2019, by section 159(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LD 5 list of defined terms employer monthly schedule: repealed, on 1 April 2019, by section 159(2)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LD 5 list of defined terms employment income information: inserted, on 1 April 2019, by section 159(2)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LD 5 list of defined terms PAYE income payment form: repealed, on 1 April 2019, by section 159(2)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
LD 6 When donation is paid to ineligible recipient
When this section applies
(1)
This section applies for the purposes of section LD 4 when the employer or PAYE intermediary transfers the person’s payroll donation to an entity that is not a donee organisation.
Credit extinguished
(2)
The tax credit is extinguished.
Consequences when credit extinguished
(3)
The consequences that arise when a tax credit is extinguished under subsection (2) are—
(a)
the amount of the credit is removed from the person’s tax credits for PAYE income payments under section LB 1 (Tax credits for PAYE income payments) for the tax year in which the pay period falls:
(b)
when the extinguishing of the credit results in a shortfall in an amount of tax for a PAYE income payment, section RD 4 (Payment of amounts of tax to Commissioner) applies to the shortfall.
Defined in this Act: amount, amount of tax, donee organisation, employer, pay period, PAYE income payment, PAYE intermediary, payroll donation, tax credit, tax year
Section LD 6: added, on 6 January 2010, by section 323 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LD 6(3)(a): amended, on 7 January 2010, by section 75 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section LD 6 list of defined terms PAYE intermediary: inserted (with effect on 6 January 2010), on 23 March 2020, by section 158 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
LD 7 When donation returned to person
When this section applies
(1)
This section applies for the purposes of section LD 4 when the amount of a payroll donation is, for whatever reason, returned to the person.
Treatment of credit
(2)
The tax credit is extinguished.
Consequences when credit extinguished
(3)
The consequences that arise when a tax credit is extinguished under subsection (2) are—
(a)
the amount of the credit is removed from the person’s tax credits for PAYE income payments under section LB 1 (Tax credits for PAYE income payments) for the tax year in which the pay period falls:
(b)
when the extinguishing of the credit results in a shortfall in an amount of tax for a PAYE income payment, section RD 4 (Payment of amounts of tax to Commissioner) applies to the shortfall.
Defined in this Act: amount, amount of tax, pay period, PAYE income payment, payroll donation, tax credit, tax year
Section LD 7: added, on 6 January 2010, by section 323 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LD 7(3)(a): amended, on 7 January 2010, by section 76 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
LD 8 Meaning and ranking of payroll donation
Meaning
(1)
A payroll donation, for a pay period and employer who agrees to offer payroll giving to their employees, is an amount that a person asks their employer to transfer from the amount of the person’s pay for the period to a donee organisation.
Priorities of amounts withheld and other deductions
(2)
A person may make a payroll donation for a pay period only after satisfying—
(a)
any tax obligation they may have:
(b)
any statutory or legal requirement they may be obliged to meet from their PAYE income payment.
Defined in this Act: amount, ask, donee organisation, pay, pay period, PAYE income payment, payroll donation
Section LD 8: added, on 6 January 2010, by section 323 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LD 8 list of defined terms ask: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Subpart LE—Tax credits for imputation credits
Contents
LE 1 Tax credits for imputation credits
Amount of credit
(1)
A person whose assessable income for an income year includes an imputation credit has a tax credit for the tax year corresponding to the income year of an amount equal to the sum of the amount of the imputation credit and any credit carried forward from an earlier tax year. Section OZ 11 (Tax credits for imputation credits) may apply to modify this section.
Multi-rate PIEs and their investors
(1B)
An investor in a multi-rate PIE who has an imputation credit attributed for use under section HM 54 (Use of tax credits other than foreign tax credits by investors) has a tax credit for the tax year of an amount equal to the amount of the imputation credit.
Exclusion
(2)
For a returning share transfer, a share user does not have a tax credit for an imputation credit attached to a dividend derived in a period in which they hold a share acquired under the transfer. However, a person providing a share under a returning share transfer is allowed a tax credit for the amount of an imputation credit recorded in the credit transfer notice, see section LE 7 except if the person is related to the share user or the returning share transfer is a structured arrangement, see section FH 4(5) (Receipts under financial instruments producing deduction without income).
When amount altered
(3)
The amount of the person’s credit in subsection (1) may be reduced or increased if any of sections LE 4 to LE 10 apply.
Portfolio tax rate entities and investors in entities[Repealed]
(4)
[Repealed]FIF income
(4B)
For the purposes of this section, an amount that would, in the absence of section EX 59 (Codes: comparative value method, deemed rate of return method, fair dividend rate method, and cost method), be income of a person from an attributing interest in a FIF is treated as if it were assessable income of the person.
Arrangements for tax advantage
(5)
A person’s credit under this section is extinguished if any of the following sections apply:
(a)
section GB 36 (Reconstruction of imputation arrangements to obtain tax advantage):
(b)
section GB 37 (Arrangements for payment of dividend by other companies):
(c)
section GB 38 (When sections GB 35 to GB 37 apply to consolidated groups).
Defined in this Act: amount, assessable income, attributing interest, credit transfer notice, dividend, FIF, imputation credit, income, income year, investor, multi-rate PIE, related, returning share transfer, share, share user, structured arrangement, tax credit, tax year
Compare: 2004 No 35 ss LB 1(1)(j), (k), LB 2(1), (1B), (1C), (2C)
Section LE 1(1): amended, on 1 April 2017, by section 154 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LE 1(1): amended (with effect on 1 April 2008), on 6 October 2009, by section 324(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LE 1(1B) heading: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 324(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LE 1(1B): substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 324(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LE 1(2): amended, on 1 July 2018, by section 45(1) (and see section 45(3) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
Section LE 1(4) heading: repealed (with effect on 1 April 2008), on 6 October 2009, pursuant to section 324(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LE 1(4): repealed (with effect on 1 April 2008), on 6 October 2009, by section 324(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LE 1(4B) heading: inserted, on 1 April 2008, by section 441(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LE 1(4B): inserted, on 1 April 2008, by section 441(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LE 1 list of defined terms attributing interest: inserted, on 1 April 2008, by section 441(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LE 1 list of defined terms FIF: inserted, on 1 April 2008, by section 441(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LE 1 list of defined terms income: inserted, on 1 April 2008, by section 441(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LE 1 list of defined terms multi-rate PIE: inserted, on 1 April 2010, by section 324(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LE 1 list of defined terms portfolio tax rate entity: repealed, on 1 April 2010, by section 324(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LE 1 list of defined terms related: inserted, on 1 July 2018, by section 45(2) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
Section LE 1 list of defined terms structured arrangement: inserted, on 1 July 2018, by section 45(2) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
LE 2 Use of remaining credits by companies and trustees
When this section applies
(1)
This section applies when—
(a)
a person described in subsection (2) has an amount of tax credit remaining for a tax year under section LA 5(4) (Treatment of remaining credits):
(b)
a life insurer has an amount of tax credit remaining for a tax year under section LA 5(4), but only to the extent to which the amount is for their shareholder base.
Certain persons only
(2)
The person referred to in subsection (1)(a) must be—
(a)
a company that is not a life insurer; or
(b)
a trustee (other than the Maori trustee); or
(c)
a Maori authority.
Calculating amount of tax loss component
(3)
The person or the life insurer, as applicable, has a tax loss component for the corresponding income year equal to an amount calculated using the formula—
person’s remaining credit ÷ tax rate.
Definition of items in formula
(4)
In the formula,—
(a)
person’s remaining credit is the amount of the tax credit remaining for the tax year under section LA 5(4), but, for a life insurer, only to the extent to which the amount is for their shareholder base:
(b)
tax rate is the basic rate of income tax set out in schedule 1, part A (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits).
Defined in this Act: amount, company, corresponding income year, income tax, life insurer, Maori authority, shareholder base, tax loss component, tax year, trustee
Compare: 2004 No 35 ss GC 22(4), (5), (9), GC 23, GC 24, LB 2(2B), (3)
Section LE 2(1) heading: substituted, on 1 July 2010, by section 325(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LE 2(1): substituted, on 1 July 2010, by section 325(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LE 2(2): amended, on 1 July 2010, by section 325(2)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LE 2(2)(a): amended, on 1 July 2010, by section 325(2)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LE 2(3): amended, on 1 July 2010, by section 325(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LE 2(4)(a): amended, on 1 July 2010, by section 325(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LE 2(4)(b): amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LE 2 list of defined terms life insurer: inserted, on 1 July 2010, by section 325(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LE 2 list of defined terms shareholder base: inserted, on 1 July 2010, by section 325(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LE 2B Use of remaining credits by life insurer on policyholder base
When this section applies
(1)
This section applies to a life insurer who has an amount of tax credit remaining for a tax year (the surplus credit year) under section LA 5(4) (Treatment of remaining credits), but only to the extent to which the amount is for their policyholder base.
Policyholder base allowable deduction
(2)
The life insurer has a deduction included as their policyholder base allowable deduction, for the income year corresponding to the tax year after the surplus credit year equal to an amount calculated using the formula—
policyholder remaining credit ÷ policyholder rate.
Definition of items in formula
(3)
In the formula,—
(a)
policyholder remaining credit is the amount of the tax credit remaining for the surplus credit year under section LA 5(4), but only to the extent to which the amount is for the life insurer’s policyholder base:
(b)
policyholder rate is the basic rate of income tax set out in schedule 1, part A, clause 8 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits).
Defined in this Act: amount, deduction, income tax, income year, life insurer, policyholder base, policyholder base allowable deduction, tax credit, tax year
Section LE 2B: inserted, on 1 July 2010, by section 326(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LE 3 Use of remaining credits by others
When this section applies
(1)
This section applies when a person other than a person referred to in section LE 2(2) or a life insurer has an amount of tax credit remaining for a tax year under section LA 5(4) (Treatment of remaining credits).
Amount carried forward
(2)
The amount may be carried forward to the next tax year as a credit carried forward.
Amount of reduction
(3)
The person’s credit is reduced by an amount equal to the amount carried forward and extinguished by the Commissioner under section 177C of the Tax Administration Act 1994.
Defined in this Act: amount, Commissioner, life insurer, tax credit, tax year
Compare: 2004 No 35 ss LB 1(1)(hb), LB 2(2B), (3B), (3C)
Section LE 3(1): amended, on 1 July 2010, by section 327(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LE 3 list of defined terms life insurer: inserted, on 1 July 2010, by section 327(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LE 4 Trustees for minor beneficiaries
When this section applies
(1)
This section applies when a person who has a tax credit under section LE 1 is the trustee of a trust for a minor who derives beneficiary income from the trust.
Trustee treated as beneficiary
(2)
To the extent to which section HC 7(2) (Trustee income) applies, the person is treated as deriving the minor’s beneficiary income as a beneficiary.
Defined in this Act: beneficiary income, minor, tax credit, trustee
Compare: 2004 No 35 ss LB 1(1)(ab), LB 1A
LE 5 Beneficiaries of trusts
When this section applies
(1)
This section applies when a person who has a tax credit under section LE 1 is the beneficiary of a trust and, in that capacity, derives a dividend with an imputation credit attached.
Limitation on amount of credit
(2)
The person’s credit and imputation credit is limited to an amount calculated using the formula—
(person’s distributions ÷ trust distributions)
× (total beneficiary credits − person’s supplementary dividend).
Definition of items in formula
(3)
In the formula,—
(a)
person’s distributions is the total distributions for the tax year made to the person in their capacity as beneficiary of the trust:
(b)
trust distributions is the total distributions for the tax year made to all beneficiaries of the trust in their capacity as beneficiaries and includes all supplementary dividends paid to them:
(c)
total beneficiary credits is the total imputation credits attached to dividends and total supplementary dividends for the tax year paid to all beneficiaries of the trust in their capacity as beneficiaries:
(d)
person’s supplementary dividend is the total supplementary dividends for the tax year paid to the person in their capacity as beneficiary of the trust.
Defined in this Act: amount, distribution, dividend, imputation credit, pay, supplementary dividend, tax credit, tax year
Compare: 2004 No 35 s LB 1(1)(a), (2)–(3A)
Section LE 5(2): amended (with effect on 1 April 2008), on 31 March 2023, by section 88(1) (and see section 88(2) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
LE 6 Partners in partnerships
When this section applies
(1)
This section applies when a person who has a tax credit under section LE 1 is a partner in a partnership and, through the partnership, derives a dividend with an imputation credit attached.
Limitation on amount of credit
(2)
The person’s credit is limited to an amount calculated using the formula—
(partner’s income ÷ partnership income)
× (partnership imputation credits − partner’s supplementary dividend).
Definition of items in formula
(3)
In the formula,—
(a)
partner’s income is the total assessable income of the person for the tax year derived as a partner of the partnership excluding—
(i)
an imputation credit attached to a dividend derived by the person:
(ii)
a supplementary dividend derived by the person as a non-resident partner of the partnership:
(b)
partnership income is the total assessable income for the tax year of all the partners of the partnership excluding—
(i)
all imputation credits attached to dividends derived by the partners:
(ii)
all supplementary dividends derived by non-resident partners of the partnership:
(c)
partnership imputation credits is the total imputation credits attached to dividends and total supplementary dividends for the tax year derived by all partners of the partnership:
(d)
partner’s supplementary dividend is the total supplementary dividends for the tax year derived by the person as a non-resident partner of the partnership.
Defined in this Act: amount, assessable income, dividend, imputation credit, non-resident, supplementary dividend, tax credit, tax year
Compare: 2004 No 35 s LB 1(1)(b), (4), (4A), (4B)
Section LE 6(3)(a)(i): amended, on 1 April 2017, by section 155(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LE 6(3)(b)(i): amended, on 1 April 2017, by section 155(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LE 6 list of defined terms FDP credit: repealed, on 1 April 2017, by section 155(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
LE 7 Credit transfer notices
When this section applies
(1)
This section applies in relation to a tax credit when a share supplier is given a credit transfer notice under section 30C of the Tax Administration Act 1994 by a share user under a share-lending arrangement.
Amount of reduction
(2)
The person’s credit is limited to the amount shown in the credit transfer notice.
Defined in this Act: amount, credit transfer notice, share-lending arrangement, share supplier, share user, tax credit
Compare: 2004 No 35 s LB 2(1C)
LE 7B Credit of RSCT for imputation credit
Retirement scheme contributions
(1)
A retirement scheme contributor who attaches an imputation credit to a retirement scheme contribution for a person in an income year has a tax credit for the corresponding tax year of an amount equal to the lesser of—
(a)
the amount of the imputation credit:
(b)
the liability of the contributor for RSCT on the contribution.
When credit more than liability
(2)
If the amount of the imputation credit is more than the liability of the contributor for RSCT on the contribution,—
(a)
the amount of the excess is treated as an imputation credit attached to a distribution from the contributor to the person; and
(b)
the person responsible for withholding the RSCT must, within 30 days of the contribution, notify the person of the amount of the excess credit.
Defined in this Act: amount, imputation credit, income year, notify, retirement scheme contribution, retirement scheme contributor, RSCT, tax credit, tax year
Compare: 2004 No 35 s LB 3
Section LE 7B: inserted, on 1 April 2008, by section 442 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
LE 8 Application of imputation ratio
When this section applies
(1)
This section applies when a person who has a tax credit under section LE 1 receives an imputation credit attached to a dividend, and the dividend has an imputation ratio greater than the maximum permitted ratio calculated under section OA 18 (Calculation of maximum permitted ratios). Section OZ 10 (Modifying ratios for imputation credits) may apply to modify this section.
Amount of reduction
(2)
The person’s credit is reduced by an amount equal to the amount by which the credit is greater than the maximum permitted ratio.
Defined in this Act: amount, dividend, imputation credit, imputation ratio, maximum permitted ratio, tax credit
Compare: 2004 No 35 s LB 1(1)(c)
Section LE 8(1): amended, on 1 April 2017, by section 156 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LE 8(1): amended, on 1 April 2008, by section 443 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
LE 8B Dividends from certain FIF interests
When this section applies
(1)
This section applies when a person has assessable income for the purposes of section LE 1 because section LE 1(4B) applies (the LE 1(4B) income), and the LE 1(4B) income includes an imputation credit.
Tax credit limited
(2)
The person’s tax credit for the imputation credit is limited to the lesser of the imputation credit and the following amount:
imputation ratio × FIF income.
Definition of items in formula
(3)
In the formula,—
(a)
imputation ratio is the imputation ratio referred to in section OB 60 (Imputation credits attached to dividends) if the relevant amount of LE 1(4B) income is treated as a dividend, and the imputation credit is attached to it.
(b)
FIF income is the person’s FIF income for the income year in which the imputation credit is received, to the extent to which the FIF income is for the attributing interest for which the imputation credit is received.
Defined in this Act: assessable income, attributing interest, dividend, FIF income, imputation credit, imputation ratio, income year, tax credit
Section LE 8B: inserted, on 1 April 2014, by section 104 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
LE 9 Application of combined imputation and FDP ratio
[Repealed]Section LE 9: repealed, on 1 April 2017, by section 157 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
LE 10 When income tax unpaid
When this section applies
(1)
This section applies when—
(a)
a person has a tax credit under section LE 1 and an imputation credit is attached to a dividend; and
(b)
the dividend is paid by a company that has a debit balance in its imputation credit account at the end of the tax year; and
(c)
the company has not paid further income tax by the due date in section OB 65(3) (Further income tax for ICA closing debit balance).
Amount of reduction
(2)
The Commissioner may reduce the person’s credit by an amount equal to their proportion of the unpaid amount under subsection (1)(c).
When failure to pay remedied
(3)
To the extent to which a company remedies the failure after the due date, this section does not apply.
Defined in this Act: amount, Commissioner, company, dividend, further income tax, imputation credit, imputation credit account, pay, tax credit, tax year
Compare: 2004 No 35 ss LB 1(1)(h), LB 2(5), (6)
LE 11 Evidential requirements
If a person who has a tax credit under section LE 1 does not meet the evidential requirements of section 78D of the Tax Administration Act 1994, the person’s credit may be reduced.
Defined in this Act: tax credit
Compare: 2004 No 35 ss LB 1(1)(f), LB 2(4)
Subpart LF—Tax credits for foreign dividend payment (FDP) credits
[Repealed]Subpart LF: repealed, on 1 April 2017, by section 158 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Contents
| LF 1 | Tax credits for FDP credits [Repealed] | ||
| LF 2 | Trustees for minor beneficiaries [Repealed] | ||
| LF 3 | Beneficiaries of trusts [Repealed] | ||
| LF 4 | Partners in partnerships [Repealed] | ||
| LF 5 | Credit transfer notices [Repealed] | ||
| LF 6 | Application of FDP ratio [Repealed] | ||
| LF 7 | Application of combined imputation and FDP ratio [Repealed] | ||
| LF 8 | Credits for persons who are non-resident or who receive exempt income [Repealed] | ||
| LF 9 | When income tax unpaid [Repealed] | ||
| LF 10 | Evidential requirements [Repealed] | ||
LF 1 Tax credits for FDP credits
[Repealed]Section LF 1: repealed, on 1 April 2017, by section 158 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
LF 2 Trustees for minor beneficiaries
[Repealed]Section LF 2: repealed, on 1 April 2017, by section 158 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
LF 3 Beneficiaries of trusts
[Repealed]Section LF 3: repealed, on 1 April 2017, by section 158 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
LF 4 Partners in partnerships
[Repealed]Section LF 4: repealed, on 1 April 2017, by section 158 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
LF 5 Credit transfer notices
[Repealed]Section LF 5: repealed, on 1 April 2017, by section 158 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
LF 6 Application of FDP ratio
[Repealed]Section LF 6: repealed, on 1 April 2017, by section 158 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
LF 7 Application of combined imputation and FDP ratio
[Repealed]Section LF 7: repealed, on 1 April 2017, by section 158 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
LF 8 Credits for persons who are non-resident or who receive exempt income
[Repealed]Section LF 8: repealed, on 1 April 2017, by section 158 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
LF 9 When income tax unpaid
[Repealed]Section LF 9: repealed, on 1 April 2017, by section 158 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
LF 10 Evidential requirements
[Repealed]Section LF 10: repealed, on 1 April 2017, by section 158 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Subpart LH—Tax credits for expenditure on research and development
[Repealed]Subpart LH: repealed (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 202(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Contents
LH 1 Who this subpart applies to
[Repealed]Section LH 1: repealed, on 1 April 2009, by section 19(1)(c) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
LH 2 Tax credits relating to expenditure on research and development
[Repealed]Section LH 2: repealed, on 1 April 2009, by section 19(1)(c) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
LH 3 Requirements
[Repealed]Section LH 3: repealed, on 1 April 2009, by section 19(1)(c) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
LH 4 Calculation of amount of credit
[Repealed]Section LH 4: repealed, on 1 April 2009, by section 19(1)(c) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
LH 5 Adjustments to eligible expenditure
[Repealed]Section LH 5: repealed, on 1 April 2009, by section 19(1)(c) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
LH 6 Research and development activities outside New Zealand
[Repealed]Section LH 6: repealed, on 1 April 2009, by section 19(1)(c) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
LH 7 Research and development activities and related terms
[Repealed]Section LH 7: repealed (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 202(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
LH 8 Orders in Council
[Repealed]Section LH 8: repealed, on 1 April 2009, by section 19(1)(c) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
LH 9 Internal software development: general
[Repealed]Section LH 9: repealed, on 1 April 2009, by section 19(1)(c) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
LH 10 Internal software development: no associated internal software developer
[Repealed]Section LH 10: repealed, on 1 April 2009, by section 19(1)(c) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
LH 11 Internal software development: associated internal software developer with same income year
[Repealed]Section LH 11: repealed, on 1 April 2009, by section 19(1)(c) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
LH 12 Internal software development: associated internal software developer with different income year
[Repealed]Section LH 12: repealed, on 1 April 2009, by section 19(1)(c) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
LH 13 Internal software development: limit
[Repealed]Section LH 13: repealed, on 1 April 2009, by section 19(1)(c) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
LH 14 Treatment of depreciation loss for certain depreciable property
[Repealed]Section LH 14: repealed, on 1 April 2009, by section 19(1)(c) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
LH 14B Recovery of overpaid tax credit
[Repealed]Section LH 14B: repealed (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 202(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
LH 15 Listed research providers
[Repealed]Section LH 15: repealed, on 1 October 2009, by section 19(1)(d) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
LH 16 Industry research co-operatives
[Repealed]Section LH 16: repealed, on 1 April 2009, by section 19(1)(c) of the Taxation (Urgent Measures and Annual Rates) Act 2008 (2008 No 105).
LH 17 Some definitions
[Repealed]Section LH 17: repealed (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on 24 February 2016, by section 202(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Subpart LJ—Tax credits for foreign income tax
Contents
LJ 1 What this subpart does
When tax credits allowed
(1)
This subpart provides the rules for dividing assessable income from foreign-sourced amounts into segments and allows a tax credit for foreign income tax paid in relation to a segment of that income.
Limited application of rules
(2)
The rules in this subpart apply only when—
(a)
a person resident in New Zealand derives assessable income that is sourced from outside New Zealand; and
(b)
foreign income tax is not paid in a country or territory listed in schedule 27 (Countries and types of income with unrecognised tax) to the extent to which the foreign income tax is paid on the types of income listed in the schedule.
When treated as assessable income[Repealed]
(3)
[Repealed]Source of dividends
(4)
If a company is not resident in New Zealand, and is resident in another territory or is resident in another territory for the purposes of a double tax agreement between New Zealand and the territory, and foreign income tax is imposed by the territory on a dividend paid by the company, a dividend paid by the company has a source in the territory.
Double tax agreements[Repealed]
(5)
[Repealed]Relationship with section YD 5
(6)
Section YD 5 (Apportionment of income derived partly in New Zealand) applies to determine how an amount is apportioned to sources outside New Zealand.
Defined in this Act: amount, assessable income, attributing interest, company, dividend, double tax agreement, FIF, foreign income tax, foreign investment fund, foreign-sourced amount, income, pay, resident in New Zealand, tax credit
Compare: 2004 No 35 ss LC 1(1)–(5), LC 14(1), LC 14A
Section LJ 1(2)(a): amended (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 100 of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LJ 1(2)(a): amended, on 21 December 2010, by section 109(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section LJ 1(3) heading: repealed (with effect on 1 April 2008), on 6 October 2009, pursuant to section 335(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 1(3): repealed (with effect on 1 April 2008), on 6 October 2009, by section 335(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 1(4): replaced, on 30 March 2017, by section 159(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LJ 1(5) heading: repealed, on 30 March 2017, pursuant to section 159(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LJ 1(5): repealed, on 30 March 2017, by section 159(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LJ 1(6) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 335(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 1(6): added (with effect on 1 April 2008), on 6 October 2009, by section 335(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 1 list of defined terms derived from New Zealand: repealed, on 21 December 2010, by section 109(2)(a) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section LJ 1 list of defined terms foreign tax: repealed, on 30 March 2017, by section 159(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LJ 1 list of defined terms source in New Zealand: inserted, on 21 December 2010, by section 109(2)(b) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
LJ 2 Tax credits for foreign income tax
Amount of credit
(1)
A person described in section LJ 1(2)(a) has a tax credit for a tax year for an amount of foreign income tax paid on a segment of foreign-sourced income, determined as if the segment were the net income of the person for the tax year. The amount of the New Zealand tax payable is calculated under section LJ 5.
Limitation on amount of credit
(2)
The amount of the person’s credit in subsection (1) must not be more than the amount of New Zealand tax payable by the person in relation to the segment calculated under section LJ 5(2), modified as necessary under section LJ 5(4).
Amount adjusted
(3)
The amount of the person’s credit in subsection (1) may be reduced or increased if either section LJ 6 or LJ 7 applies.
When person both resident in New Zealand and another country
(4)
A person described in section LJ 1(2)(a) who has, because they are a citizen or resident of, or are domiciled in, a foreign country, paid foreign income tax on their assessable income, has a credit under subsection (1). However, the amount of the credit is limited to the amount of foreign income tax that would have been paid in the foreign country if the person were treated as not a citizen or resident of, or domiciled in, that foreign country.
Multi-rate PIEs and their investors
(5)
For a multi-rate PIE and an investor in a multi-rate PIE, the amount of a tax credit is limited to the extent allowed under subpart HM (Portfolio investment entities).
When subsection (7) applies
(6)
Subsection (7) applies to a person who derives an amount from an attributing interest in a FIF when the amount is treated as not being income under section EX 59(2) (Codes: comparative value method, deemed rate of return method, fair dividend rate method, and cost method).
Tax credit: attributing interest in FIF
(7)
The person has a tax credit under this subpart for foreign income tax paid on or withheld in relation to the amount. The calculation of the maximum amount of the tax credit is made under section LJ 5(2), modified so that the item segment in the formula is the amount of FIF income from the attributing interest that the person derives in the period referred to in section EX 59(2).
When subsections (9) and (10) apply
(8)
Subsections (9) and (10) apply when a person (the associated entity) resident in New Zealand derives an amount (the attributed amount) that—
(a)
is assessable income of the associated entity that is sourced from outside New Zealand; and
(b)
is attributed under sections GB 27 to GB 29 (which relate to the attribution rule for income from personal services) in an income year to another person (the working person) who is resident in New Zealand when the associated entity derives the attributed amount.
Tax credit: attributed income from personal services
(9)
Despite section LJ 1(2)(a), the working person has a tax credit under this subpart for foreign income tax paid on the attributed amount by the associated entity or withheld in relation to the attributed amount. The calculation of the maximum amount of the tax credit is made under section LJ 5(2), modified so that the item segment in the formula is the attributed amount for the income year.
No tax credit for associated entity
(10)
The associated entity does not have a tax credit under this subpart for foreign income tax paid on or withheld in relation to the attributed amount.
Defined in this Act: amount, assessable income, attributing interest, FIF, FIF income, foreign income tax, income, income tax liability, income year, investor, multi-rate PIE, net income, New Zealand, New Zealand tax, pay, resident in New Zealand, segment of foreign-sourced income, tax credit, tax year
Compare: 2004 No 35 ss LC 1(1), (1B), (1C), LC 2
Section LJ 2(2): substituted (with effect on 1 April 2008), on 6 October 2009, by section 336(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 2(5) heading: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 336(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 2(5): substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 336(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 2(6) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 336(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 2(6): added (with effect on 1 April 2008), on 6 October 2009, by section 336(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 2(7) heading: replaced (with effect on 1 April 2008), on 23 March 2020, by section 159(1) (and see section 159(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LJ 2(7): added (with effect on 1 April 2008), on 6 October 2009, by section 336(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 2(8) heading: inserted (with effect on 1 April 2008), on 23 March 2020, by section 159(2) (and see section 159(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LJ 2(8): inserted (with effect on 1 April 2008), on 23 March 2020, by section 159(2) (and see section 159(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LJ 2(9) heading: inserted (with effect on 1 April 2008), on 23 March 2020, by section 159(2) (and see section 159(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LJ 2(9): inserted (with effect on 1 April 2008), on 23 March 2020, by section 159(2) (and see section 159(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LJ 2(10) heading: inserted (with effect on 1 April 2008), on 23 March 2020, by section 159(2) (and see section 159(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LJ 2(10): inserted (with effect on 1 April 2008), on 23 March 2020, by section 159(2) (and see section 159(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LJ 2 list of defined terms attributing interest: inserted (with effect on 1 April 2008), on 6 October 2009, by section 336(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 2 list of defined terms FIF: inserted (with effect on 1 April 2008), on 6 October 2009, by section 336(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 2 list of defined terms FIF income: inserted (with effect on 1 April 2008), on 6 October 2009, by section 336(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 2 list of defined terms income: inserted (with effect on 1 April 2008), on 6 October 2009, by section 336(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 2 list of defined terms income year: inserted (with effect on 1 April 2008), on 23 March 2020, by section 159(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LJ 2 list of defined terms multi-rate PIE: inserted, on 1 April 2010, by section 336(4)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 2 list of defined terms portfolio tax rate entity: repealed, on 1 April 2010, by section 336(4)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 2 list of defined terms resident in New Zealand: inserted (with effect on 1 April 2008), on 23 March 2020, by section 159(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LJ 2 list of defined terms tax credit: inserted (with effect on 1 April 2008), on 6 October 2009, by section 336(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LJ 3 Meaning of foreign income tax
For the purposes of this Part, foreign income tax means—
(a)
an amount of a tax of another country meeting the requirements of section YA 2(5) (Meaning of income tax varied):
(b)
in relation to a double tax agreement providing relief from tax or double taxation, an amount of tax to which the double tax agreement applies.
Section LJ 3: replaced, on 30 March 2017, by section 160 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
LJ 4 Meaning of segment of foreign-sourced income
For the purposes of this Part, a person has a segment of foreign-sourced income equal to an amount of assessable income derived from 1 foreign country that comes from 1 source or is of 1 nature.
Defined in this Act: amount, assessable income
Compare: 2004 No 35 s LC 14(1)
LJ 5 Calculation of New Zealand tax
What this section does
(1)
This section provides the rules that a person must use to calculate the amount of New Zealand tax for an income year in relation to each segment of foreign-sourced income of the person that is allocated to the income year.
Calculation for single segment
(2)
If the person has a notional income tax liability of more than zero, the amount of New Zealand tax for the income year relating to the allocated segment is calculated using the following formula, the result of which can not be less than zero:
((segment − person’s deductions) ÷ person’s net income) × notional liability.
Definition of items in formula
(3)
In the formula in subsection (2),—
(a)
segment is the amount of the segment of foreign-sourced income for the income year:
(b)
person’s deductions is the amount of the person’s deduction for the tax year corresponding to the income year that is attributable to the segment of foreign-sourced income:
(c)
person’s net income is the person’s net income for the tax year corresponding to the income year under section BC 4(1) to (3) (Net income and net loss):
(d)
notional liability is the person’s notional income tax liability for the income year under subsection (5).
When subsection (4B) applies
(4)
Subsection (4B) applies for the income year when the total amount of New Zealand tax for all segments of foreign-sourced income of the person calculated under subsection (2) is more than the notional income tax liability.
Modification to results of formula for single segment
(4B)
Each amount of New Zealand tax calculated under subsection (2) in relation to each segment of foreign-sourced income is adjusted by multiplying the amount by the following ratio:
person’s notional income tax liability ÷ NZ tax.
Definition of item in formula
(4C)
In the formula in subsection (4B), NZ tax is the amount given by adding together the result of the calculation under subsection (2), for each segment of assessable income from all sources, including assessable income sourced in New Zealand.
Person’s notional income tax liability
(5)
For the purposes of this section, a person’s notional income tax liability for a tax year is calculated using the formula—
(person’s net income − losses) × tax rate.
Definition of items in formula
(6)
In the formula in subsection (5),—
(a)
person’s net income is the person’s net income for the tax year:
(b)
losses—
(i)
is the amount of the loss balance carried forward to the tax year that the person must subtract from their net income under section IA 4(1)(a) (Using loss balances carried forward to tax year):
(ii)
must be no more than the amount of the person’s net income:
(c)
tax rate is the basic rate of income tax set out in schedule 1, part A (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits).
Defined in this Act: amount, deduction, income tax, income tax liability, loss balance, net income, New Zealand, New Zealand tax, segment of foreign-sourced income, tax loss component, tax year
Compare: 2004 No 35 s LC 14
Section LJ 5(1) heading: substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 101(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LJ 5(1): substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 101(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LJ 5(2) heading: substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 101(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LJ 5(2): substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 101(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LJ 5(3) heading: substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 101(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LJ 5(3): substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 101(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LJ 5(3)(c): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 June 2014, by section 133(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
Section LJ 5(4) heading: substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 101(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LJ 5(4): substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 101(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LJ 5(4B) heading: substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 101(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LJ 5(4B): substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 101(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LJ 5(4C) heading: inserted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 101(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LJ 5(4C): inserted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 101(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LJ 5(6)(b): substituted (with effect on 1 April 2008), on 6 October 2009, by section 338(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 5(6)(c): amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LJ 5 list of defined terms New Zealand: inserted (with effect on 1 April 2008), on 6 October 2009, by section 338(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LJ 6 Taxable distributions and NRWT rules
When this section applies
(1)
This section applies when a person who is a beneficiary of a trust and resident in New Zealand derives a taxable distribution in their capacity as beneficiary of the trust.
When credit not allowed
(2)
The person is not allowed a tax credit in relation to any foreign income tax paid on the taxable distribution unless the tax has substantially the same nature as non-resident withholding tax (NRWT).
Amount of credit
(3)
The person’s tax credit is equal to an amount calculated using the formula—
(person’s taxable distribution ÷ total distribution) × foreign tax paid.
Definition of items in formula
(4)
In the formula,—
(a)
person’s taxable distribution is the amount of the taxable distribution derived by the person in their capacity as beneficiary of the trust, including a payment of tax that meets the requirements of subsection (2):
(b)
total distribution is the total amount of the distribution derived by the person in their capacity as beneficiary of the trust, including a payment of tax that meets the requirements of subsection (2):
(c)
foreign tax paid is the payment of tax that meets the requirements of subsection (2).
Defined in this Act: amount, distribution, foreign income tax, NRWT, NRWT rules, pay, resident in New Zealand, tax credit, taxable distribution
Compare: 2004 No 35 s LC 1(2)
Section LJ 6 list of defined terms non-resident withholding tax: repealed, 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).
LJ 7 Repaid foreign tax: effect on income tax liability
Who this section applies to
(1)
This section applies to a person who has—
(a)
paid an amount of foreign income tax, or in relation to whom an amount of foreign income tax has been paid, on a segment of foreign-sourced income in relation to which they are entitled to a tax credit under section LJ 2; and
(b)
received a refund, amount, or benefit (the refund) determined directly or indirectly by reference to some or all of the payment of foreign income tax.
When refund received before assessment
(2)
If the person receives the refund before they assess their income tax liability for a tax year, the amount of the tax credit for the foreign income tax paid is reduced by the lesser of—
(a)
the amount of the refund:
(b)
the amount of New Zealand tax payable on the foreign-sourced income calculated under section LJ 5.
When refund received after assessment
(3)
If the person receives the refund after they have assessed their income tax liability for a tax year, have used an amount of foreign tax credit in satisfying that liability, and have not taken the refund into account in that assessment, the person is liable to pay the Commissioner the lesser of—
(a)
the amount of the refund:
(b)
the amount of New Zealand tax payable on the foreign-sourced income calculated under section LJ 5.
Date for payment
(4)
In subsection (3), the date for payment is 30 days after the later of—
(a)
the date on which the person receives the refund:
(b)
the date of the notice of assessment in relation to which the person has used the credit.
Associated persons
(5)
For the purposes of this section, the refund is treated as received by the person, whether it is received by the person, a person who paid the foreign income tax, or a person associated with either of them.
Defined in this Act: amount, associated person, Commissioner, foreign income tax, income tax liability, New Zealand, New Zealand tax, pay, return of income, segment of foreign-sourced income, tax credit, tax year, tax year
Compare: 2004 No 35 ss LC 1(3A), (3B), LC 3
Section LJ 7: substituted (with effect on 1 April 2008), on 6 October 2009, by section 339(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LJ 7(3)(b): amended (with effect on 1 April 2008), on 2 November 2012 (applying for the 2008–09 and later income years), by section 117(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section LJ 7(4): substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 102(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
LJ 8 Repaid foreign tax: effect on FDP liability
[Repealed]Section LJ 8: repealed, on 1 April 2017, by section 161 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Subpart LK—Tax credits relating to attributed controlled foreign company income
Contents
Amounts of credits
LK 1 Tax credits relating to attributed CFC income
Amount of credit
(1)
A person who has an amount of attributed CFC income for an income year has a tax credit for the tax year corresponding to the income year equal to the following amounts paid or payable in relation to the attributed CFC income:
(a)
an amount of income tax paid by the CFC from which the income is derived:
(b)
an amount of tax withheld and paid on behalf of the CFC from which the income is derived:
(c)
the amount of foreign income tax paid by the CFC from which the income is derived:
(d)
the amount of foreign income tax paid by the person in relation to the CFC from which the income is derived:
(e)
the amount of foreign tax paid, under legislation of another country or territory that is equivalent of the international tax rules, by a foreign company in relation to income derived by the CFC.
Credits for parent companies and group companies
(1B)
For the purposes of this section and sections LK 2, LK 3, and LK 6, a company that is part of a group of companies that includes a person with attributed CFC income has a tax credit for the tax year corresponding to the income year of an amount that is equal to an amount of foreign income tax paid by the group company in relation to the CFC from which the income is derived.
Place of incorporation or carrying on business
(1C)
For the purposes of subsection (1B), the requirements set out in section IC 7 (Place of incorporation or carrying on business) do not apply to disallow the use of the tax credit by group companies under section LK 6.
Amount adjusted
(2)
The amount of the person’s credit in subsection (1) may be reduced or increased if section LK 7 applies.
Limitation to quarantined amount
(3)
The person’s use under section LA 2 (Satisfaction of income tax liability) of a credit referred to in subsection (1) is limited to the amount (the quarantined amount) that would be their income tax liability for the tax year if their only assessable income were attributed CFC income derived from a CFC resident in the foreign country or territory referred to in subsection (1) in the accounting period in which the amount of tax giving rise to the credit was paid or payable.
Tax withheld
(4)
In subsections (1) and (1B), a payment of income tax or foreign income tax by the CFC or person, as applicable, includes an amount of tax withheld from income in New Zealand or another country or territory.
When subsection (7) applies
(5)
Subsection (7) applies when—
(a)
a person has a credit under subsection (1) in relation to an amount of income tax or foreign income tax; and
(b)
the credit has been used under section LA 2 (Satisfaction of income tax liability) or is carried forward under section LK 4; and
(c)
the person has received a refund, amount, or benefit (the refund) determined directly or indirectly by reference to some or all of the tax paid.
When refund received before assessment
(6)
If the person receives the refund before they assess their income tax liability for a tax year, the amount of tax credit for the tax paid is reduced by the lesser of—
(a)
the amount of the refund:
(b)
the amount of New Zealand tax payable on the foreign-sourced income calculated under section LJ 5 (Calculation of New Zealand tax).
Credit repayable or extinguished
(7)
The amount of the credit—
(a)
must be paid to the Commissioner if it has been used under section LA 2:
(b)
is extinguished, if it is carried forward under section LK 4.
Date for payment
(8)
In subsection (7)(a), the date for payment is 30 days after the later of—
(a)
the date on which the person who paid the tax receives the refund:
(b)
the date of the notice of assessment in relation to which the person has used the credit.
Associated persons
(9)
For the purposes of subsections (5) to (8), the refund is treated as received by the person, whether it is received by the person, a person who paid the foreign income tax, or a person associated with either of them.
Defined in this Act: accounting period, amount, amount of tax, assessable income, assessment, associated person, attributed CFC income, CFC, Commissioner, company, controlled foreign company, corresponding income year, foreign income tax, group of companies, income, income tax, income tax liability, income year, international tax rules, New Zealand tax, notice, NRWT, pay, quarantined amount, segment of foreign-sourced income, tax credit, tax withheld, tax year
Compare: 2004 No 35 s LC 4(1), (4)
Section LK 1(1): substituted (with effect on 1 April 2008), on 6 October 2009, by section 340(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1(1)(d): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 17 July 2013, by section 70(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section LK 1(1)(e): inserted (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 17 July 2013, by section 70(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section LK 1(1B) heading: inserted, on 29 March 2018 (with effect on 1 July 2009), by section 160(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LK 1(1B): inserted, on 29 March 2018 (with effect on 1 July 2009), by section 160(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LK 1(1C) heading: replaced (with effect on 15 March 2017), on 31 March 2023, by section 89 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section LK 1(1C): replaced (with effect on 15 March 2017), on 31 March 2023, by section 89 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section LK 1(3): amended (with effect on 30 June 2009), on 6 October 2009, by section 340(2)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1(3): amended (with effect on 30 June 2009), on 6 October 2009, by section 340(2)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1(4): replaced, on 29 March 2018 (with effect on 1 April 2008 and applying for the 2008–09 and later income years), by section 160(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LK 1(4): amended, on 29 March 2018 (with effect on 1 July 2009), by section 160(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LK 1(5) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 340(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1(5): added (with effect on 1 April 2008), on 6 October 2009, by section 340(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1(6) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 340(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1(6): added (with effect on 1 April 2008), on 6 October 2009, by section 340(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1(7) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 340(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1(7): added (with effect on 1 April 2008), on 6 October 2009, by section 340(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1(8) heading: substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 104(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LK 1(8): substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 104(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LK 1(9) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 340(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1(9): added (with effect on 1 April 2008), on 6 October 2009, by section 340(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1 list of defined terms assessment: inserted (with effect on 1 April 2008), on 6 October 2009, by section 340(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1 list of defined terms associated person: inserted (with effect on 1 April 2008), on 6 October 2009, by section 340(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1 list of defined terms Commissioner: inserted (with effect on 1 April 2008), on 6 October 2009, by section 340(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1 list of defined terms company: inserted, on 29 March 2018, by section 160(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LK 1 list of defined terms conduit tax relief: repealed (with effect on 30 June 2009), on 6 October 2009, by section 340(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1 list of defined terms CTR company: repealed (with effect on 30 June 2009), on 6 October 2009, by section 340(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1 list of defined terms group of companies: inserted, on 29 March 2018, by section 160(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LK 1 list of defined terms income: inserted, on 29 March 2018, by section 160(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LK 1 list of defined terms international tax rules: inserted (with effect on 1 April 2008), on 6 October 2009, by section 340(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1 list of defined terms New Zealand tax: inserted (with effect on 1 April 2008), on 6 October 2009, by section 340(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1 list of defined terms notice: inserted (with effect on 1 April 2008), on 6 October 2009, by section 340(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1 list of defined terms NRWT: inserted (with effect on 1 April 2008), on 6 October 2009, by section 340(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 1 list of defined terms segment of foreign-sourced income: inserted (with effect on 1 April 2008), on 6 October 2009, by section 340(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LK 2 Calculation of amount of credit
Amount of credit
(1)
For the purposes of section LK 1(1) and (1B), the amount of a tax credit for a tax year for a person is equal to an amount calculated using the formula—
section EX 18 income interest × (tax paid − excluded foreign tax).
Definition of items in formula
(2)
In the formula,—
(a)
section EX 18 income interest is the income interest of the person used to calculate attributed CFC income under section EX 18 (Formula for calculating attributed CFC income or loss) for the accounting period corresponding to the tax year:
(b)
tax paid is the amount of income tax or foreign income tax paid or payable by the CFC or the person or, when section LK 1(1B) applies, the group company, for the accounting period corresponding to the tax year, including an amount withheld by another person and paid or payable on behalf of the CFC:
(c)
excluded foreign tax is an amount of foreign income tax paid in a country or territory listed in schedule 27 (Countries and types of income with unrecognised tax) to the extent to which the foreign income tax is paid on the types of income listed in the schedule.
Modifications to formula: section LK 1(1)(d)
(3)
For the purposes of the formula in this section, when section LK 1(1)(d) applies to provide a tax credit for a tax year when foreign income tax is paid by the person in relation to the CFC from which the income is derived, the calculation of the amount of the tax credit is made under subsection (1), ignoring the section EX 18 income interest in subsection (2)(a).
Modifications to formula: section LK 1(1B)
(4)
For the purposes of the formula in this section, when section LK 1(1B) applies to provide a tax credit for a tax year to a group company, the calculation of the amount of the tax credit is made under subsection (1), ignoring the section EX 18 income interest in subsection (2)(a).
Defined in this Act: accounting period, amount, attributed CFC income, CFC, company, foreign income tax, group of companies, income, income interest, income tax, pay, tax credit, tax year
Compare: 2004 No 35 s LC 4(1)–(3)
Section LK 2(1): amended, on 29 March 2018 (with effect on 1 July 2009), by section 161(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LK 2(2)(b): substituted (with effect on 1 April 2008), on 6 October 2009, by section 341(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 2(2)(b): amended, on 29 March 2018 (with effect on 1 July 2009), by section 161(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LK 2(3) heading: inserted, on 29 March 2018 (with effect on 1 April 2008 and applying for the 2008–09 and later income years), by section 161(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LK 2(3): inserted, on 29 March 2018 (with effect on 1 April 2008 and applying for the 2008–09 and later income years), by section 161(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LK 2(4) heading: inserted, on 29 March 2018 (with effect on 1 July 2009), by section 161(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LK 2(4): inserted, on 29 March 2018 (with effect on 1 July 2009), by section 161(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LK 2 list of defined terms company: inserted, on 29 March 2018, by section 161(5) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LK 2 list of defined terms group of companies: inserted, on 29 March 2018, by section 161(5) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LK 2 list of defined terms income: inserted, on 29 March 2018, by section 161(5) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
LK 3 Currency conversion
If foreign income tax is paid or payable by a CFC in a currency other than New Zealand currency, the amount must be converted into New Zealand currency by applying—
(a)
the close of trading spot exchange rate on the date when the income tax is paid or becomes payable; or
(b)
the average of the close of trading spot exchange rates for the 15th day of each complete month that falls in the period to which the attributed CFC income relates.
Defined in this Act: amount, attributed CFC income, CFC, close of trading spot exchange rate, foreign income tax, New Zealand, pay
Compare: 2004 No 35 s LC 4(1)
Use of credits in later tax years
LK 4 Use of remaining credits
When this section applies
(1)
This section applies for the purposes of section LA 5(2) (Treatment of remaining credits) when a person has a tax credit remaining for a tax year after applying section LA 4(1) (When total tax credit more than income tax liability).
Amount carried forward
(2)
The amount is carried forward to the next tax year as a credit carried forward.
Defined in this Act: amount, tax credit, tax year
Compare: 2004 No 35 s LC 4(4)
LK 5 Companies’ credits carried forward
Company carrying credit forward
(1)
A tax credit carried forward under section LK 4 may be carried forward to a later tax year only if, by treating the credit as a tax loss component to which sections IA 2 to IA 10 (which relate to the treatment of tax losses) and subpart IB (Carrying forward companies’ loss balances: continuity of business activities) apply, those sections would allow the amount to be carried forward.
Timing
(2)
For the purposes of this section, the credit is treated as a tax loss component arising on the last day of the income year corresponding to the tax year for which the person has the credit.
Defined in this Act: amount, company, corresponding income year, tax credit, tax loss component, tax year
Compare: 2004 No 35 s LC 4(4)–(6)
Section LK 5(1): amended (with effect on 1 April 2020), on 30 March 2021, by section 116 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
LK 5B Credits from tax year before first affected year
When this section applies
(1)
This section applies for a person and a country (the jurisdiction) when the person has a credit (the available BE credit) that—
(a)
relates to a tax year (the credit year) before the first tax year for which this section applies to the person; and
(b)
relates to a CFC or FIF that is resident in the jurisdiction in the credit year; and
(c)
is carried forward to a tax year (the conversion year) in which this section applies to the person.
What this section does
(2)
In this section, subsection (3) gives the person an option that an available BE credit for a jurisdiction not be carried forward and subsections (4) to (7) give, for whichever of the 4 possible alternative situations is relevant for the person,—
(a)
the amount of the available BE credit (the converted BE credit) for the jurisdiction that is—
(i)
treated as being converted into an amount referred to in paragraph (b) in the conversion year; and
(ii)
not available to the person to be carried forward as available BE credit for the jurisdiction and a later tax year:
(b)
the amount (the equivalent tax credit) of a tax credit for the jurisdiction that, for the purposes of the rest of this subpart, is treated as arising on the last day of the conversion year.
Option: tax credit not carried forward
(3)
A person may choose by giving a notice in a form and at a time acceptable to the Commissioner that the available BE credit for a jurisdiction not be carried forward under this section.
Person not resident group member: more jurisdictional BE income
(4)
For a person who is not a resident group member and has jurisdictional BE income for the conversion year that is greater than zero and greater than the person’s jurisdictional attributed income for the conversion year,—
(a)
the person’s converted BE credit in the conversion year is the lesser of—
(i)
the amount that would be the person’s income tax liability if the person’s only assessable income were the person’s jurisdictional BE income for the conversion year:
(ii)
the person’s available BE credit for the conversion year:
(b)
the person’s equivalent tax credit in the conversion year is the lesser of—
(i)
the amount that would be the person’s income tax liability if the person’s only assessable income were the person’s jurisdictional attributed income for the conversion year:
(ii)
the amount calculated by dividing the person’s available BE credit for the conversion year by the person’s jurisdictional income ratio for the conversion year.
Person not resident group member: more jurisdictional attributed income
(5)
For a person who is not a resident group member and has jurisdictional attributed income for the conversion year that is greater than or equal to zero and greater than or equal to the person’s jurisdictional BE income for the conversion year,—
(a)
the person’s converted BE credit for the conversion year is the lesser of—
(i)
the person’s available BE credit for the conversion year:
(ii)
the amount that would be the person’s income tax liability if the person’s only assessable income were the person’s jurisdictional attributed income for the conversion year:
(b)
the person’s equivalent tax credit is equal to the person’s converted BE credit for the conversion year.
Resident group member: more jurisdictional BE income
(6)
For a person who is a resident group member for a wholly-owned group of companies and has jurisdictional BE income for the conversion year that is greater than zero and greater than the person’s jurisdictional attributed income for the conversion year,—
(a)
the person’s converted BE credit for the conversion year is the lesser of—
(i)
the person’s available BE credit for the conversion year:
(ii)
the amount that would be the person’s income tax liability if the person’s only assessable income were the greater of the person’s jurisdictional BE income for the conversion year and the amount calculated by multiplying the group’s jurisdictional income ratio for the conversion year by the person’s jurisdictional attributed income for the conversion year:
(b)
the person’s equivalent tax credit is the amount calculated by dividing the person’s converted BE credit for the conversion year by the group’s jurisdictional income ratio for the conversion year.
Resident group member: more jurisdictional attributed income
(7)
For a person who is a resident group member and has jurisdictional attributed income for the conversion year that is greater than or equal to zero and greater than or equal to the person’s jurisdictional BE income for the conversion year,—
(a)
the person’s converted BE credit for the conversion year is the lesser of—
(i)
the person’s available BE credit for the conversion year:
(ii)
the amount that would be the person’s income tax liability if the person’s only assessable income were the person’s jurisdictional attributed income for the conversion year multiplied by the group’s jurisdictional income ratio for the conversion year:
(b)
the person’s equivalent tax credit is equal to the amount calculated by dividing the person’s converted tax credit for the conversion year by the group’s jurisdictional income ratio for the conversion year.
Option to determine jurisdictional BE income from accounts[Repealed]
(8)
[Repealed]Defined in this Act: attributed CFC income, attributed CFC loss, CFC, group of companies, income interest, jurisdictional attributed income, jurisdictional BE income, jurisdictional income ratio, New Zealand resident, notice, resident group member, tax year, wholly-owned group, wholly-owned group of companies
Section LK 5B: inserted (with effect on 30 June 2009), on 6 October 2009, by section 342(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LK 5B(1): replaced (with effect on 1 July 2009 and applying for income years beginning on or after that date), on 7 May 2012, by section 79(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section LK 5B(2): replaced (with effect on 1 July 2009 and applying for income years beginning on or after that date), on 7 May 2012, by section 79(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section LK 5B(8) heading: repealed (with effect on 1 July 2009 and applying for income years beginning on or after that date), on 7 May 2012, pursuant to section 79(3) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section LK 5B(8): repealed (with effect on 1 July 2009 and applying for income years beginning on or after that date), on 7 May 2012, by section 79(3) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section LK 5B list of defined terms branch equivalent income: repealed (with effect on 1 July 2009), on 7 May 2012, by section 79(4) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section LK 5B list of defined terms branch equivalent loss: repealed (with effect on 1 July 2009), on 7 May 2012, by section 79(4) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section LK 5B list of defined terms notice: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
LK 6 Use of credits by group companies
When this section applies
(1)
This section applies when a company (company A) in a group of companies has a tax credit under section LK 1 in relation to an income interest in a CFC (company B) of an amount other than a quarantined amount.
Making credit available
(2)
Company A may choose to make the amount of the tax credit available to another company (company C) that is part of the group of companies for the tax year in which the credit is available to the company if the requirements of subsections (3) and (4) are met.
Amount limited
(3)
The amount of the credit must not be more than the amount that would be company C’s income tax liability if that company’s only assessable income were the attributed CFC income derived in the corresponding income year from a CFC resident in the same country in which company B was resident in the accounting period in which the income tax giving rise to the credit was paid or payable.
Use limited
(4)
Company A may make an amount of a tax credit available to company C to use only if the amount would be able to be used under subpart IC (Grouping tax losses), reading the subpart by substituting—
(a)
a wholly-owned group of companies for a group of companies:
(b)
a credit of company A for a tax loss component of the loss company:
(c)
the use of the credit to satisfy an income tax liability for the use of a tax loss component to reduce net income, in both subpart IC and section GB 4 (Arrangements for grouping tax losses: companies):
(d)
company C for the company B:
(e)
the income tax liability of company C for the net income of company B:
(f)
sections LK 1 to LK 5 for sections IA 3 to IA 5 (which relate to the use of tax losses generally).
Defined in this Act: accounting period, amount, assessable income, attributed CFC income, CFC, company, corresponding income year, group of companies, income interest, income tax, income tax liability, net income, pay, quarantined amount, tax credit, tax loss component, tax year, wholly-owned group of companies
Compare: 2004 No 35 s LC 5
Treatment of taxable distributions
LK 7 Taxable distributions and NRWT rules
When this section applies
(1)
This section applies when a CFC receives a taxable distribution in an accounting period and, for a person with an income interest of 10% or more in the CFC under the rules in sections EX 14 to EX 17 (which relate to the 10% threshold and variations in income interest level), the taxable distribution gives rise to attributed CFC income to which section EX 19 (Taxable distribution from non-complying trust) applies.
When credit not allowed
(2)
The person does not have a tax credit in relation to tax paid on the taxable distribution unless the tax is substantially the same as non-resident withholding tax (NRWT).
Amount of tax on distribution
(3)
The amount of tax that gives rise to the credit must not be more than an amount calculated using the formula—
(person’s taxable distribution ÷ total distribution) × foreign tax paid.
Definition of items in formula
(4)
In the formula in subsection (3),—
(a)
person’s taxable distribution is the amount of the taxable distribution derived by the CFC, including a payment of tax that meets the requirements of subsection (2):
(b)
total distribution is the total amount of the distribution derived by the CFC, including a payment of tax that meets the requirements of subsection (2):
(c)
foreign tax paid is the payment of tax that meets the requirements of subsection (2).
Amount of person’s credit
(5)
The amount of a credit of a person under this section is equal to an amount calculated using the formula—
section EX 18 income interest × amount of tax.
Definition of items in formula
(6)
In the formula in subsection (5),—
(a)
section EX 18 income interest is the income interest of the person used to calculate attributed CFC income under section EX 18 (Formula for calculating attributed CFC income or loss) for the accounting period corresponding to the tax year:
(b)
amount of tax is the amount of tax determined under subsection (3).
Defined in this Act: accounting period, amount, amount of tax, attributed CFC income, CFC, distribution, income interest, NRWT, NRWT rules, pay, tax year, taxable distribution
Compare: 2004 No 35 s LC 4(7)
Section LK 7 list of defined terms non-resident withholding tax: repealed, 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).
Consolidated companies
LK 8 Tax credits of consolidated companies
If a consolidated group has a tax credit under section LK 1, the credit is treated as the consolidated group’s credit and not the credit of a group company.
Defined in this Act: company, consolidated group, tax credit
Compare: 2004 No 35 s LC 16(1)
LK 9 Use of company’s credits carried forward
When this section applies
(1)
This section applies when a company that is part of a consolidated group of companies in an income year has a credit carried forward for the tax year corresponding to the income year.
First use by consolidated group
(2)
The amount must first be used to satisfy the income tax liability of the consolidated group for the income year. However, the amount must not be more than the consolidated group’s quarantined amount.
Second use by group company or another consolidated group
(3)
If, after applying subsection (2), an amount remains, the amount may be used to satisfy the income tax liability of the company or the income tax liability of another consolidated group in the income year. Sections LK 10 and LK 11 override this subsection.
Third use: amount carried forward
(4)
If, after applying subsections (2) and (3), a balance remains, the amount must be carried forward to the next income year under section LK 4(2).
Defined in this Act: amount, company, consolidated group, corresponding income year, income tax liability, income year, quarantined amount, tax year
Compare: 2004 No 35 s LC 16(2), (3)
LK 10 When group membership lacking in tax year in which credit arises
When this section applies
(1)
This section applies when a company that is part of a consolidated group of companies has a credit carried forward for a tax year, but the company was not part of the same consolidated group as 1 or more companies in the consolidated group in an earlier tax year in which the credit arises.
Limitation on amount used
(2)
The amount of the credit carried forward and made available for the consolidated group to use under section LK 9(2) is limited to the sum of—
(a)
the amount of the credit carried forward that the company could use under section LA 2 or LA 4 (which relate to the company’s income tax liability), if the company were not part of the consolidated group for the tax year; and
(b)
the amount that each company in the consolidated group would have under section LK 6 in relation to the amount of credit carried forward if—
(i)
the consolidation of the companies is ignored; and
(ii)
all required steps are presumed taken for section LK 6 to apply.
Relationship with section FM 3
(3)
In subsection (2), section FM 3 (Liability of consolidated groups and group companies) applies to the calculation of the income tax liability.
Defined in this Act: amount, company, consolidated group, income tax liability, tax year
Compare: 2004 No 35 s LC 16(4)
LK 11 When group membership lacking in tax year in which credit used
When this section applies
(1)
This section applies when a company that is part of a consolidated group of companies has a credit carried forward for a tax year, but the company is not part of the consolidated group for the whole tax year in which the credit carried forward is used.
Limitation on amount
(2)
The amount of the credit carried forward and made available for the consolidated group to use under section LK 9(2) is limited to the least of—
(a)
the amount of the credit carried forward shown in financial statements provided with the consolidated group’s return of income for the income year corresponding to the tax year that—
(i)
relate to the part of the income year when the company was part of the consolidated group; and
(ii)
disclose the amount that would be the net income attributable to the part of the income year when the company is part of the consolidated group, determined on a fair and reasonable basis of attribution:
(b)
the amount of the credit calculated using the formula in subsection (3):
(c)
the amount referred to in section LK 10(2).
Formula
(3)
The amount referred to in subsection (2)(b) is calculated using the formula—
amount carried forward − (part-year credits + pre-consolidation credits).
Definition of items in formula
(4)
In the formula,—
(a)
amount carried forward is the amount of the credit carried forward under section LK 9(2) before applying section LK 10 and this section:
(b)
part-year credits is the amount of the credit carried forward that the company may use under section LA 2 or LA 4 (which relate to the company’s income tax liability) for the part of the tax year before the company becomes part of the consolidated group:
(c)
pre-consolidation credits is the amount of the credits carried forward that the company must make available for another consolidated group of which it was part before becoming part of the consolidated group.
Defined in this Act: amount, company, consolidated group, corresponding income year, income year, net income, return of income, tax year
Compare: 2004 No 35 s LC 16(5)
Amalgamations of companies
LK 12 Treatment of credits when companies amalgamate
On an amalgamation, for the purposes of determining whether a credit carried forward is available under section LK 5 or whether the requirements of section LK 6 are met, the amalgamated company is treated as if it were the amalgamating company with the same holders of shares and options over shares.
Defined in this Act: amalgamated company, amalgamating company, amalgamation, share
LK 13 Use of credits by amalgamated company
When this section applies
(1)
This section applies when an amalgamating company ends its existence on a resident’s restricted amalgamation and the company has a tax credit under this subpart that—
(a)
has not otherwise been used by the amalgamating company before the date of amalgamation:
(b)
if treated as a credit remaining for a tax year under section LA 4(1) (When total tax credit more than income tax liability), could be made available to each of the amalgamated company, unless it is a company incorporated only on amalgamation, and a company that is amalgamated with the amalgamated company.
Amalgamated company’s credit
(2)
The tax credit is treated as a credit of the amalgamated company for the tax year in which the amalgamation occurs.
Defined in this Act: amalgamated company, amalgamating company, company, resident’s restricted amalgamation, tax credit, tax year
Compare: 2004 No 35 s LC 8
LK 14 Use by amalgamated company of credits carried forward
When this section applies
(1)
This section applies when an amalgamated company has a tax credit under this subpart for a tax year before that in which the amalgamation takes place, and the credit has not been used before the date of amalgamation.
Restrictions on carrying credit forward: year of amalgamation
(2)
The credit may be carried forward to the tax year of amalgamation or a later tax year only if—
(a)
the requirements of sections LK 1 to LK 5 are met; and
(b)
the credit could be made available under section LK 6 for the part of the tax year ending with the date of the amalgamation to each amalgamating company.
Restrictions on carrying credit forward: order
(3)
If the tax credits of 2 or more amalgamating companies are credited under section LK 13 against the amalgamated company’s income tax liability for a tax year, those tax credits must—
(a)
if resulting from tax payable in 2 or more tax years, be credited in the same order as arising; and
(b)
if resulting from tax payable in the same tax year, be credited, so far as the tax extends,—
(i)
in the order chosen by the amalgamated company by notice to the Commissioner; or
(ii)
otherwise, on a pro rata basis.
Defined in this Act: amalgamated company, amalgamating company, amalgamation, Commissioner, income tax liability, notice, pay, tax credit, tax year
Compare: 2004 No 35 ss LC 9, LC 10
Section LK 14 list of defined terms notice: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
LK 15 Use of amalgamating company’s credits
When this section applies
(1)
This section applies when a company has a tax credit under this subpart arising in whole or in part before an amalgamation.
Restrictions on use
(2)
The amalgamated company may use the credit only if the company and each amalgamating company meet the requirements of section LK 6.
Defined in this Act: amalgamated company, amalgamating company, amalgamation, company, tax credit
Compare: 2004 No 35 s LC 12
Subpart LL—Underlying foreign tax credits (UFTC)
[Repealed]Subpart LL: repealed (with effect on 30 June 2009), on 6 October 2009, by section 343(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Contents
| LL 1 | What this subpart does [Repealed] | ||
| LL 2 | Tax credits for underlying foreign tax [Repealed] | ||
| LL 3 | Meaning of grey list dividend [Repealed] | ||
| LL 4 | Tracking accounts [Repealed] | ||
| LL 5 | Meaning of foreign dividend company net earnings [Repealed] | ||
| LL 6 | Foreign dividend company lower tier UFTCs [Repealed] | ||
| LL 7 | Conduit financing arrangements [Repealed] | ||
| LL 8 | Currency conversion [Repealed] | ||
| LL 9 | Some definitions [Repealed] | ||
LL 1 What this subpart does
[Repealed]Section LL 1: repealed (with effect on 30 June 2009), on 6 October 2009, by section 343(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LL 2 Tax credits for underlying foreign tax
[Repealed]Section LL 2: repealed (with effect on 30 June 2009), on 6 October 2009, by section 343(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LL 3 Meaning of grey list dividend
[Repealed]Section LL 3: repealed (with effect on 30 June 2009), on 6 October 2009, by section 343(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LL 4 Tracking accounts
[Repealed]Section LL 4: repealed (with effect on 30 June 2009), on 6 October 2009, by section 343(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LL 5 Meaning of foreign dividend company net earnings
[Repealed]Section LL 5: repealed (with effect on 30 June 2009), on 6 October 2009, by section 343(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LL 6 Foreign dividend company lower tier UFTCs
[Repealed]Section LL 6: repealed (with effect on 30 June 2009), on 6 October 2009, by section 343(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LL 7 Conduit financing arrangements
[Repealed]Section LL 7: repealed (with effect on 30 June 2009), on 6 October 2009, by section 343(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LL 8 Currency conversion
[Repealed]Section LL 8: repealed (with effect on 30 June 2009), on 6 October 2009, by section 343(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LL 9 Some definitions
[Repealed]Section LL 9: repealed (with effect on 30 June 2009), on 6 October 2009, by section 343(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Subpart LO—Tax credits for Maori authority credits
Contents
LO 1 Tax credits for Maori authority credits
Amount of credit
(1)
A person who derives a taxable Maori authority distribution in a tax year has a tax credit for the tax year equal to the amount of the Maori authority credit attached to the distribution.
Amount altered
(2)
The amount of the person’s credit in subsection (1) may be reduced or increased if any of sections LO 2 to LO 4 apply.
Arrangements for tax advantage
(3)
A person’s credit under this section is extinguished if sections GB 42 and GB 43 (which relate to Maori authority arrangements to obtain tax advantage) apply.
Defined in this Act: amount, Maori authority credit, tax credit, tax year, taxable Maori authority distribution
Compare: 2004 No 35 ss LB 1(1)(m), LD 3A(1)
LO 2 Beneficiaries of trusts
When this section applies
(1)
This section applies when a person who has a tax credit under section LO 1 is a beneficiary of a trust and, in that capacity, derives a taxable Maori authority distribution.
Limitation on amount of credit
(2)
The person’s credit is limited to an amount calculated using the formula—
(person’s distributions ÷ trust distributions)
× (total beneficiary credits − person’s supplementary dividend).
Definition of items in formula
(3)
In the formula,—
(a)
person’s distributions is the total distributions for the tax year made to the person in their capacity as beneficiary of the trust:
(b)
trust distributions is the total distributions for the tax year made to all beneficiaries of the trust in their capacity as beneficiaries, and includes all supplementary dividends paid to them:
(c)
total beneficiary credits is the total Maori authority credits attached to taxable Maori authority distributions and total supplementary dividends for the tax year made to all beneficiaries of the trust in their capacity as beneficiaries:
(d)
person’s supplementary dividend is the total supplementary dividends for the tax year paid to the person in their capacity as beneficiary of the trust.
Defined in this Act: amount, distribution, Maori authority credit, pay, supplementary dividend, tax credit, tax year, taxable Maori authority distribution
Compare: 2004 No 35 s LB 1(3), (3A)
Section LO 2(3)(a): amended (with effect on 1 April 2008), on 23 March 2020, by section 160(1) (and see section 160(2) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
LO 2B Credit of RSCT for Maori authority credit
Retirement scheme contributions
(1)
A retirement scheme contributor who attaches a Maori authority credit to a retirement scheme contribution for a person in an income year has a credit of RSCT equal to the lesser of—
(a)
the amount of the Maori authority credit:
(b)
the liability of the contributor for RSCT on the contribution.
When credit more than liability
(2)
If the amount of the Maori authority credit is more than the liability of the contributor for RSCT on the contribution,—
(a)
the amount of the excess is treated as a Maori authority credit attached to a taxable Maori authority distribution from the contributor to the person; and
(b)
the person responsible for withholding the RSCT must, within 30 days of the contribution, notify the person of the amount of the excess credit.
Defined in this Act: amount, income year, Maori authority credit, notify, retirement scheme contribution, retirement scheme contributor, RSCT
Compare: 2004 No 35 s LD 4
Section LO 2B: inserted, on 1 April 2008, by section 449 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
LO 3 Application of Maori authority distribution ratio
When this section applies
(1)
This section applies when a person who has a tax credit under section LO 1 derives a taxable Maori authority distribution that has a Maori authority credit ratio greater than the maximum permitted ratio calculated under section OA 18 (Calculation of maximum permitted ratios).
Amount of reduction
(2)
The person’s credit is reduced by an amount equal to the amount by which the credit is greater than the maximum permitted ratio.
Defined in this Act: amount, Maori authority credit ratio, maximum permitted ratio, tax credit, taxable Maori authority distribution
Compare: 2004 No 35 s LB 1(1)(ea)
LO 4 When income tax unpaid
When this section applies
(1)
This section applies when—
(a)
a person has a tax credit under section LO 1 and a Maori authority credit is attached to a dividend; and
(b)
the dividend is paid by a Maori authority that has a debit balance in their Maori authority credit account at the end of the tax year; and
(c)
the authority has not paid further income tax by the due date referred to in section OK 21 (Further income tax for closing debit balance).
Amount of reduction
(2)
The Commissioner may reduce the person’s credit by an amount equal to their proportion of the unpaid amount under subsection (1)(c).
When failure to pay remedied
(3)
To the extent to which a Maori authority remedies the failure after the due date, this section does not apply.
Defined in this Act: amount, Commissioner, dividend, further income tax, Maori authority, Maori authority credit, Maori authority credit account, pay, tax credit, tax year
Compare: 2004 No 35 s LD 3A(6)
LO 5 Evidential requirements
If a person who has a tax credit under section LO 1 does not meet the evidential requirements of section 78D of the Tax Administration Act 1994, the person’s credit may be reduced.
Defined in this Act: tax credit
Compare: 2004 No 35 s LD 3A(5)
Subpart LP—Tax credits for supplementary dividends
Contents
Introductory provision
LP 1 What this subpart does
Supplementary dividends
(1)
This subpart provides the rules for the treatment of a tax credit for a supplementary dividend. The amount of the credit is determined by reference to an imputation credit attached to a dividend paid by a company to a non-resident. For a credit to arise under this subpart, the company must pay a supplementary dividend, and the amount of the credit is equal to the amount of the supplementary dividend.
Supplementary dividend holding companies[Repealed]
(2)
[Repealed]Defined in this Act: amount, company, dividend, imputation credit, non-resident, pay, supplementary dividend, supplementary dividend holding company, tax credit
Compare: 2004 No 35 s LE 1
Section LP 1(2) heading: repealed, on 1 April 2011, pursuant to section 77 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section LP 1(2): repealed, on 1 April 2011, by section 77 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Use of credits
LP 2 Tax credits for supplementary dividends
When this section applies
(1)
This section applies when a company resident in New Zealand pays a dividend and a related supplementary dividend to—
(a)
a non-resident, if—
(i)
the non-resident has less than a 10% direct voting interest in the company; and
(ii)
the post-treaty tax rate for the dividend and the related supplementary dividend is 15% or more; or
(b)
[Repealed](c)
a foreign investment PIE if—
(i)
a notified foreign investor (a qualifying investor) in the PIE meets the requirements of paragraph (a); and
(ii)
an amount representing the dividend and the related supplementary dividend is attributed to the qualifying investor, or would be attributed to them in the absence of section HM 44B(2) (NRWT calculation option); and
(iii)
the PIE notifies the company under section HM 55FB (Notified foreign investors and tax credits for supplementary dividends), providing the relevant information on those qualifying investors who have an entitlement to the dividend and related supplementary dividend.
Amount of credit
(2)
For the tax year corresponding to the income year in which the company pays the dividend, the company has a tax credit equal to an amount calculated using the formula—
credit amount × 54 ÷ 119.
Definition of item in formula
(3)
In the formula, credit amount is the imputation credit that would, in the absence of this subpart, be attached to the dividend.
When dividends derived by foreign investment PIEs
(3B)
For the purposes of subsection (1)(c) and the calculation of the amount of the credit, the following apply in relation to a qualifying investor in a foreign investment PIE:
(a)
the item credit amount in the formula is the imputation credit that would, in the absence of this subpart, be attached to the portion of the dividend attributed to the investor:
(b)
the relevant amount of the dividend and related supplementary dividend is treated as if it were paid by the company directly to the investor:
(c)
the investor’s voting interest in the company is treated as if it were a direct voting interest.
Limitation on use of credit[Repealed]
(4)
[Repealed]Meaning of year of payment[Repealed]
(5)
[Repealed]Associated persons test[Repealed]
(6)
[Repealed]Relationship with section OZ 12
(7)
Section OZ 12 (Tax credits for non-resident investors) may apply to modify subsection (2).
Defined in this Act: amount, associated person, company, consolidated group, corresponding income year, direct voting interest, dividend, imputation credit, non-resident, notify, pay, post-treaty tax rate, resident in New Zealand, supplementary dividend, tax credit, tax year
Compare: 2004 No 35 ss LE 2(1), (2), (2A), LE 3(5)
Section LP 2(1)(a): substituted, on 1 February 2010, by section 78(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section LP 2(1)(b): repealed, on 1 April 2011, by section 78(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section LP 2(1)(c): inserted, on 1 April 2013 (applying for the 2013–14 and later income years), by section 118(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section LP 2(2): amended, on 1 April 2011, by section 78(3) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section LP 2(2) formula: amended (with effect on 1 April 2008), on 30 March 2017, by section 162(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LP 2(2) formula: amended, on 1 April 2011 (applying for the 2011–12 and later income years), by section 91(1) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
Section LP 2(2) formula: amended, on 1 April 2008, by section 450(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LP 2(3): amended (with effect on 1 April 2008), on 30 March 2017, by section 162(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LP 2(3B) heading: inserted, on 1 April 2013 (applying for the 2013–14 and later income years), by section 118(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section LP 2(3B): inserted, on 1 April 2013 (applying for the 2013–14 and later income years), by section 118(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Section LP 2(3B)(a): amended (with effect on 1 April 2008), on 30 March 2017, by section 162(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LP 2(4) heading: repealed, on 1 April 2013 (applying for the 2013–14 and later income years), pursuant to section 78(4) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section LP 2(4): repealed, on 1 April 2013 (applying for the 2013–14 and later income years), by section 78(4) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section LP 2(5) heading: repealed, on 1 April 2011, pursuant to section 78(5) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section LP 2(5): repealed, on 1 April 2011, by section 78(5) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section LP 2(6) heading: repealed, on 1 April 2011, by section 78(5) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section LP 2(6): repealed, on 1 April 2011, by section 78(5) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section LP 2(7) heading: inserted (with effect on 1 April 2008), on 17 July 2013, by section 71 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section LP 2(7): added, on 1 April 2008, by section 450(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section LP 2 list of defined terms direct voting interest: 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).
Section LP 2 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 LP 2 list of defined terms post-treaty tax rate: 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).
Section LP 2 list of defined terms supplementary dividend holding company: repealed (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).
Section LP 2 list of defined terms year of payment: repealed (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).
LP 3 Use of remaining credits
When this section applies
(1)
This section applies when a company (company A) has a tax credit arising under section LP 2 remaining for a tax year (the current year) under section LA 5(3) (Treatment of remaining credits).
Use of remaining credits by group companies
(2)
If company A belongs to a wholly-owned group of companies for the income year corresponding to the current year, company A may make an amount of the tax credit available, for satisfying an income tax liability for the current year, to another company (company B) that belongs to the wholly-owned group for the corresponding income year.
Carrying amount back to earlier tax years
(3)
If an amount of the tax credit has not previously been carried forward or back from a tax year under this section, company A may carry the amount back and—
(a)
use the amount to satisfy an income tax liability for a tax year in the period of 4 tax years before the current year; or
(b)
make the amount available, for satisfying an income tax liability for a tax year in the period of 4 tax years before the current year, to another company that belongs to the same wholly-owned group as company A for the income years corresponding to the current year and the tax year in which the amount is used.
Carrying amount forward
(4)
If company A has an amount of the tax credit remaining for the current year after applying subsections (2) and (3), and the amount has not been previously carried back under subsection (3), the amount is carried forward under section LA 5(3) to the tax year following the current year.
Notifying Commissioner
(5)
The company makes a choice under subsection (2) or (3) by notifying the Commissioner in their return of income for the income year that corresponds to the tax year.
When companies in same group
(6)
For the purposes of subsections (2) and (3), the company and company B must be part of the same wholly-owned group of companies for the whole of the relevant income year or, if 1 of the companies exists for only part of the year, for the whole of the period of the income year when both companies are in existence.
Defined in this Act: amount, Commissioner, company, corresponding income year, income year, notify, return of income, tax credit, tax year, wholly-owned group of companies
Compare: 2004 No 35 s LE 2(3), (4), (6), (7)
Section LP 3(1) heading: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on 30 March 2017, by section 163(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LP 3(1): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on 30 March 2017, by section 163(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LP 3(2) heading: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on 30 March 2017, by section 163(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LP 3(2): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on 30 March 2017, by section 163(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LP 3(3) heading: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on 30 March 2017, by section 163(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LP 3(3): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on 30 March 2017, by section 163(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LP 3(4) heading: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on 30 March 2017, by section 163(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LP 3(4): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on 30 March 2017, by section 163(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LP 3(5): amended (with effect on 1 April 2008), on 6 October 2009, by section 344(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LP 4 Continuity rules for carrying credits forward
When this section applies
(1)
This section applies for the purposes of section LA 5(3) (Treatment of remaining credits) when a company has an amount of a tax credit that must be carried forward under section LP 3(4).
Minimum interests required
(2)
The amount is available for use under section LP 3(4) if a group of persons exists that has, for the continuity period,—
(a)
minimum voting interests in the company that add up to 49% or more; and
(b)
when a market value circumstance exists for the company in the continuity period, minimum market value interests in the company that add up to 49% or more.
Carry forward of credits despite continuity breach
(2B)
Despite a breach of continuity under subsection (2), the amount is available for use under section LP 3(4) if the amount could be carried forward to the tax year following the current year under subpart IB (Carrying forward companies’ loss balances: continuity of business activities), treating the amount as a tax loss component arising on the last day of the income year corresponding to the tax year in which the tax credit first arose.
Some definitions
(3)
In this section,—
continuity period means the period that starts on the first day of the income year that corresponds to the tax year in which the tax credit first arises and ends on the last day of the income year that corresponds to the tax year to which the amount of the credit has been carried forward
minimum market value interest means the lowest market value interest that a person has in the company for the continuity period
minimum voting interest means the lowest voting interest that a person has in the company for the continuity period.
Defined in this Act: amount, company, continuity period, corresponding income year, group of persons, income year, market value circumstance, market value interest, minimum market value interest, minimum voting interest, tax credit, tax loss component, tax year, voting interest
Compare: 2004 No 35 s LE 2(5)
Section LP 4(2): substituted (with effect on 1 April 2008), on 6 October 2009, by section 345(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LP 4(2B) heading: inserted (with effect on 1 April 2020), on 30 March 2021, by section 117(1) (and see section 117(3) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LP 4(2B): inserted (with effect on 1 April 2020), on 30 March 2021, by section 117(1) (and see section 117(3) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LP 4 list of defined terms market value circumstance: inserted (with effect on 1 April 2008), on 6 October 2009, by section 345(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LP 4 list of defined terms tax loss component: inserted (with effect on 1 April 2020), on 30 March 2021, by section 117(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
LP 5 Application of benchmark dividend rules and imputation credit ratio
Applying benchmark dividend rules
(1)
The benchmark dividend rules in section OB 61 (ICA benchmark dividend rules) and sections GB 35 and GB 36 (which relate to imputation arrangements to obtain a tax advantage) apply as if the company had never paid the supplementary dividend.
Increase in imputation credit
(2)
The maximum permitted ratio referred to in section OB 60(5) (Imputation credits attached to dividends) and sections GB 35 and GB 36 apply to a dividend as if the imputation credit attached to the dividend were increased by an amount equal to the related supplementary dividend.
Relationship with section OZ 12
(3)
Section OZ 12 (Tax credits for non-resident investors) may apply to modify this section.
Defined in this Act: amount, benchmark dividend, company, imputation credit, maximum permitted ratio, supplementary dividend
Compare: 2004 No 35 s LE 2(9), (10)
Section LP 5(1): amended, on 1 April 2017, by section 164 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section LP 5(3) heading: inserted (with effect on 1 April 2008), on 17 July 2013, by section 72 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Section LP 5(3): added, on 1 April 2008, by section 451 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
LP 6 Deriving supplementary dividend and breach of terms of trust
Class of shares
(1)
The payment of a supplementary dividend on only some shares in a class of shares does not constitute a breach of—
(a)
section 53 of the Companies Act 1993; or
(b)
the company’s constitution, unless the provision expressly refers to this subsection; or
(c)
any other provision.
Trusts
(2)
If a trustee derives a dividend and is required under the terms of a trust to distribute it as beneficiary income to a beneficiary, the trustee’s distribution of a supplementary dividend does not breach the terms of the trust.
Defined in this Act: beneficiary income, company, distribution, dividend, pay, share, supplementary dividend, trustee
Compare: 2004 No 35 s LE 2(11), (12)
Section LP 6(1)(b): amended, on 5 December 2013, by section 14 of the Companies Amendment Act 2013 (2013 No 111).
Supplementary dividend holding companies[Repealed]
Heading: repealed, on 24 February 2016, by section 203 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
LP 7 Requirements for supplementary dividend holding companies
[Repealed]Section LP 7: repealed, on 1 April 2013 (applying for the 2013–14 and later income years), by section 79(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
LP 8 Relationship with exempt income rules
[Repealed]Section LP 8: repealed, on 1 April 2013 (applying for the 2013–14 and later income years), by section 80(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
LP 9 Relationship with RWT rules
[Repealed]Section LP 9: repealed, on 1 April 2013 (applying for the 2013–14 and later income years), by section 81(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
LP 10 Limitation on deductions
[Repealed]Section LP 10: repealed, on 1 April 2013 (applying for the 2013–14 and later income years), by section 82(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Subpart LQ—Tax credits of conduit tax relief companies
[Repealed]Subpart LQ heading: repealed, on 27 February 2014, by section 131 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Contents
| LQ 1 | Tax credits of CTR companies [Repealed] | ||
| LQ 2 | Limitation on amount of credit [Repealed] | ||
| LQ 3 | Determining percentage of non-resident shareholders [Repealed] | ||
| LQ 4 | Date for determining percentage of non-resident shareholders [Repealed] | ||
| LQ 5 | CTR additional dividends [Repealed] | ||
LQ 1 Tax credits of CTR companies
[Repealed]Section LQ 1: repealed (with effect on 30 June 2009), on 6 October 2009, by section 346(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LQ 2 Limitation on amount of credit
[Repealed]Section LQ 2: repealed (with effect on 30 June 2009), on 6 October 2009, by section 346(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LQ 3 Determining percentage of non-resident shareholders
[Repealed]Section LQ 3: repealed (with effect on 30 June 2009), on 6 October 2009, by section 346(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LQ 4 Date for determining percentage of non-resident shareholders
[Repealed]Section LQ 4: repealed (with effect on 30 June 2009), on 6 October 2009, by section 346(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
LQ 5 CTR additional dividends
[Repealed]Section LQ 5: repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 80(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Subpart LR—Tax credits for policyholder income
[Repealed]Subpart LR: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 105 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Contents
| LR 1 | Tax credits for policyholder income [Repealed] | ||
LR 1 Tax credits for policyholder income
[Repealed]Section LR 1: repealed, on 1 April 2014 (applying for the 2014–15 and later income years), by section 105 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Subpart LS—Tax credits for multi-rate PIEs and investors
Subpart LS: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 348(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Contents
LS 1 Tax credits for multi-rate PIEs
Tax credit
(1)
A multi-rate PIE has a tax credit for a tax year for the amount determined—
(a)
under sections HM 51 and HM 53 (which relate to certain tax credits) for an imputation credit or a credit for tax paid or withheld:
(b)
under section HM 55 (Tax credits for losses) arising from a tax loss attributed to an investor.
When this section does not apply
(2)
This section does not apply—
(a)
in relation to—
(i)
a zero-rated investor:
(ii)
an exiting investor who is treated under section HM 61 (Certain exiting investors zero-rated) as zero-rated:
(iii)
a notified foreign investor in a foreign investment PIE in relation to an imputation credit attached to a dividend derived by the PIE:
(b)
if the PIE pays tax using the provisional tax calculation option under section HM 44 (Provisional tax calculation option).
Amount of credit
(3)
The amount of the tax credit equals the amount determined under the relevant section.
Timing
(4)
The PIE has the tax credit for the tax year in which the relevant calculation period falls.
Exception: timing under exit calculation option
(5)
If the PIE calculates its income tax liability using the exit calculation option under section HM 42 (Exit calculation option), the amount of a credit attributable to an investor is able to be used to satisfy a tax obligation relating to the investor.
Defined in this Act: amount, calculation period, foreign investment PIE, imputation credit, income tax liability, investor, multi-rate PIE, notified foreign investor, pay, PIE, provisional tax, tax credit, tax loss, tax year, zero-rated investor
Compare: 2007 No 97 s LS 1
Section LS 1: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 348(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LS 1(2)(a)(iii): added, 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 105(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LS 1 list of defined terms foreign investment PIE: inserted, on 29 August 2011, by section 105(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LS 1 list of defined terms notified foreign investor: inserted, on 29 August 2011, by section 105(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
LS 2 Tax credits for investors in multi-rate PIEs
When this section applies
(1)
This section applies when—
(a)
an investor has attributed PIE income from a multi-rate PIE for a tax year; and
(b)
the investor’s prescribed investor rate is—
(i)
more than zero:
(ii)
for an investor who is a trustee, the rate set out in schedule 6, table 1, row 5 or 7 (Prescribed rates: PIE investments and retirement scheme contributions), as applicable; and
(c)
the income is not excluded income of the investor because—
(i)
the test in section CX 56(1)(b) (Attributed income of certain investors in multi-rate PIEs) is not met; or
(ii)
section CX 56(2)(b), (c), or (d) applies.
Amount of credit
(2)
The investor has a tax credit for the income year in which the PIE’s tax year ends. The amount of the credit is equal to the amount of income tax liability satisfied by the PIE in relation to the attributed PIE income, and may be used to satisfy the investor’s income tax liability for the tax year.
Relationship with section HM 36B
(3)
Despite subsection (2), when the amount of an investor’s tax credit is taken into account in calculating an adjustment for PIE schedular income under section HM 36B (Calculating PIE schedular income adjustments for natural person investors), the amount of the credit is extinguished for any other purpose.
Defined in this Act: amount, attributed PIE income, excluded income, income, income year, investor, multi-rate PIE, PIE, PIE schedular income, prescribed investor rate, tax credit, tax year
Compare: 2007 No 97 s LS 2
Section LS 2: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 348(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LS 2(1): substituted (with effect on 1 April 2009), on 6 October 2009, by section 347(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LS 2(1)(a): amended, on 1 April 2010, by section 347(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LS 2(1)(b)(ii): amended, on 1 April 2010 (applying for income years beginning on or after 1 April 2010), by section 83(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).
Section LS 2(1)(c): substituted (with effect on 1 April 2010), on 29 August 2011 (applying for the 2010–11 and later income years), by section 106(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
Section LS 2(1)(c)(ii): amended, on 1 April 2020, by section 161(1) (and see section 161(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LS 2(2): amended (with effect on 1 April 2010), on 7 September 2010 (applying for the 2010–11 and later income years), by section 91(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section LS 2(3) heading: inserted, on 1 April 2020, by section 161(2) (and see section 161(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LS 2(3): inserted, on 1 April 2020, by section 161(2) (and see section 161(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LS 2 list of defined terms pay: repealed (with effect on 1 April 2010), on 7 September 2010, by section 91(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section LS 2 list of defined terms PIE schedular income: inserted, on 1 April 2020, by section 161(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
LS 3 Tax credits for zero-rated investors
When this section applies
(1)
This section applies when a zero-rated investor has attributed PIE income from a multi-rate PIE for a tax year.
Amount of credit
(2)
The investor has a tax credit that may be used to satisfy their income tax liability for the tax year equal to the amount of income tax liability satisfied by the PIE for the attributed income for the tax year.
Credit for PIE’s foreign tax
(3)
A zero-rated investor also has a tax credit for the tax year for the amount determined under section HM 52 (Use of foreign tax credits by zero-rated investors) for foreign income tax paid by the PIE.
Credit for PIE’s other tax credits
(4)
A zero-rated investor also has a tax credit for the tax year for the amount determined under section HM 54 (Use of tax credits other than foreign tax credits by investors) for tax paid or withheld.
Timing
(5)
The investor has the tax credit for the tax year corresponding to the income year in which the PIE’s tax year ends.
Defined in this Act: amount, attributed PIE income, income tax, income tax liability, income year, multi-rate PIE, pay, PIE, tax credit, tax year, zero-rated investor
Compare: 2007 No 97 s LS 3
Section LS 3: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 348(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LS 3(2): amended (with effect on 1 April 2010), on 7 September 2010 (applying for the 2010–11 and later income years), by section 93(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
Section LS 3(3): amended (with effect on 1 April 2020), on 30 March 2021, by section 118 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
LS 4 Tax credits for certain exiting investors
When this section applies
(1)
This section applies when an exiting investor in a multi-rate PIE who is treated under section HM 61 (Certain exiting investors zero-rated) as zero-rated has attributed PIE income from the PIE for a tax year in which the exit period falls.
Amount of credit
(2)
The investor has a tax credit that may be used to satisfy their income tax liability for the tax year equal to any amount paid by the PIE under section HM 43(4) (Quarterly calculation option) to the Commissioner after the investor exits from the PIE for the residual value of the investor interest of the investor.
Credit for PIE’s foreign tax[Repealed]
(3)
[Repealed]Credit for PIE’s other tax credits
(4)
An exiting investor also has a tax credit for the tax year for the amount determined under section HM 54 (Use of tax credits other than foreign tax credits by investors) for tax paid or withheld.
Treatment of credits for individual investors
(4B)
Despite subsections (2) and (4), when an exiting investor who is a natural person resident in New Zealand has an available tax credit, the amount must be taken into account in an adjustment under section HM 36B (Calculating PIE schedular income adjustments for natural person investors) for the purposes of calculating the income tax liability of the person.
Timing
(5)
The investor has the tax credit for the tax year corresponding to the income year in which the PIE’s tax year ends.
Defined in this Act: attributed PIE income, exit period, income tax liability, income year, investor, investor interest, multi-rate PIE, natural person, pay, PIE, resident in New Zealand, tax credit, tax year
Compare: 2007 No 97 s LS 4
Section LS 4: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 348(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section LS 4(2): amended (with effect on 1 April 2010), on 21 December 2010, by section 110 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
Section LS 4(3) heading: repealed (with effect on 1 April 2020), on 30 March 2021, pursuant to section 119(1) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LS 4(3): repealed (with effect on 1 April 2020), on 30 March 2021, by section 119(1) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LS 4(4B) heading: inserted (with effect on 1 April 2020), on 30 March 2021, by section 119(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LS 4(4B): inserted (with effect on 1 April 2020), on 30 March 2021, by section 119(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LS 4 list of defined terms foreign income tax: repealed (with effect on 1 April 2020), on 30 March 2021, by section 119(3)(a) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LS 4 list of defined terms natural person: inserted (with effect on 1 April 2020), on 30 March 2021, by section 119(3)(b) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LS 4 list of defined terms resident in New Zealand: inserted (with effect on 1 April 2020), on 30 March 2021, by section 119(3)(b) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Subpart LT—Tax credits for petroleum miners
Subpart LT: inserted, on 1 April 2018, by section 162(1) (and see section 162(2) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
LT 1 Tax credits for petroleum miners
When this section applies
(1)
This section applies for an income year if a petroleum miner or a farm-in party—
(a)
has—
(i)
been allocated under section EJ 13(4) (Permanently ceasing petroleum mining operations) a deduction for the income year:
(ii)
incurred expenditure for which they are entitled to a deduction under section DT 16 (Decommissioning):
(iii)
incurred expenditure in plugging and abandoning an exploratory well for which they are entitled to a deduction; and
(b)
notifies the Commissioner before they file the return of income for the income year; and
(c)
has a net loss for the tax year corresponding to the income year.
Tax credits
(2)
The petroleum miner or farm-in party has a tax credit for the tax year corresponding to the income year less than or equal to the amount (the current loss credit) calculated using the formula—
amount of loss × tax rate.
Definition of items in formula
(3)
In the formula,—
(a)
amount of loss is the amount of the net loss described in subsection (1)(c) to the extent to which the amount does not exceed the total of the amounts for the deductions referred to in subsection (1)(a)(i) to (iii):
(b)
tax rate is the basic rate of income tax set out in schedule 1, part A (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits).
Maximum amounts
(4)
The amount of the credit must not be more than the lesser of—
(a)
the amount of total tax given by subsection (4B); and
(b)
the amount calculated using the formula—
current loss credit – exploration abandonment excess.
Total tax
(4B)
In subsection (4)(a), total tax is the amount of income tax paid by,—
(a)
for a petroleum miner, the petroleum miner and any consolidated group of which they are a member on net income derived for all earlier tax years, calculated on a year-by-year basis and aggregated:
(b)
for a farm-in party, the farm-in party and any consolidated group of which they are a member on net income derived for all earlier tax years, calculated on a year-by-year basis and aggregated.
Current loss credit
(4C)
In the formula in subsection (4)(b), the item current loss credit is the amount given by subsection (2).
Exploration abandonment excess
(4D)
In the formula in subsection (4)(b), the item exploration abandonment excess is the greater of zero and,—
(a)
if the amount described in subsection (1)(a)(iii) is zero or the amount of the net loss described in subsection (1)(c) is less than or equal to the total amount of the deductions described in subsection (1)(a)(i) and (ii), zero; or
(b)
if the amount of the net loss described in subsection (1)(c) is equal to or exceeds the total amount of the deductions described in subsection (1)(a)(i) to (iii) and the amount described in subsection (1)(a)(iii) is greater than zero, the amount calculated by multiplying the amount referred to in subsection (1)(a)(iii) for the income year by the tax rate referred to in subsection (3)(b) and subtracting the amount of income tax (the post-abandonment tax) paid by,—
(i)
for a petroleum miner, the petroleum miner and any consolidated group of which they are a member on net income derived for tax years beginning after drilling for the purposes of exploration ceased in the exploratory well, calculated on a year-by-year basis and aggregated:
(ii)
for a farm-in party, the farm-in party and any consolidated group of which they are a member on net income derived for tax years beginning after drilling for the purposes of exploration ceased in the exploratory well, calculated on a year-by-year basis and aggregated; or
(c)
if neither of paragraphs (a) and (b) applies, the amount calculated using the formula—
(net loss - decommissioning deductions) × tax rate - post-abandonment tax.
Definition of items in formula
(4E)
In the formula in subsection (4D)(c),—
(a)
net loss is the amount of the net loss described in subsection (1)(c):
(b)
decommissioning deductions is the total amount of the deductions described in subsection (1)(a)(i) and (ii):
(c)
tax rate is the tax rate referred to in subsection (3)(b):
(d)
post-abandonment tax is the amount of income tax described in subsection (4D)(b).
Consolidated groups
(5)
For the purposes of subsections (4B) and (4D), the amount of income tax paid by the consolidated group includes income tax paid on net income derived for tax years before the petroleum miner or farm-in party joined the group.
Treatment of trustees
(6)
For the purposes of subsections (4B) and (4D), if the petroleum miner or farm-in party is a trustee of a trust, the amount of tax paid for each earlier tax year is determined—
(a)
first, by reference to the amount of income tax paid under the obligations of a trustee under section HC 32 (Liability of trustee as agent); and
(b)
secondly, by reference to the amount of tax paid on trustee income; and
(c)
calculated on a year-by-year basis and aggregated.
Calculations on year-by-year basis
(7)
In subsections (4B), (4D), and (6)(c) a reference to a calculation on a year-by-year basis refers to a calculation starting with the immediately preceding tax year and working backwards to earlier tax years until the amount of tax paid is equal to or more than the current loss credit.
Treatment of tax losses
(8)
To the extent to which the petroleum miner or farm-in party has a tax credit under this section, the amount of the net loss giving rise to the credit does not form part of a tax loss component for the petroleum miner or farm-in party.
Nature of tax credits
(9)
The tax credit is available for use under section LA 6(2) (Remaining refundable credits: PAYE, RWT, and certain other items).
Relationship with other sections
(10)
Subsection (8) overrides section IA 2 (Tax losses).
Defined in this Act: amount, amount of tax, Commissioner, consolidated group, decommissioning, deduction, farm-in party, income, income tax, income year, interest, net income, net loss, pay, permit area, petroleum miner, petroleum mining operations, petroleum permit, notify, return of income, tax credit, tax loss, tax loss component, tax year, trustee, trustee income
Section LT 1: inserted, on 1 April 2018, by section 162(1) (and see section 162(2) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section LT 1(1)(a)(ii): amended, on 30 March 2022, by section 130(1) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(1)(a)(iii): inserted, on 30 March 2022, by section 130(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(2): amended, on 30 March 2022, by section 130(3) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(3)(a): amended, on 30 March 2022, by section 130(4) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(4) heading: replaced, on 30 March 2022, by section 130(5) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(4): replaced, on 30 March 2022, by section 130(5) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(4B) heading: inserted, on 30 March 2022, by section 130(5) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(4B): inserted, on 30 March 2022, by section 130(5) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(4C) heading: inserted, on 30 March 2022, by section 130(5) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(4C): inserted, on 30 March 2022, by section 130(5) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(4D) heading: inserted, on 30 March 2022, by section 130(5) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(4D): inserted, on 30 March 2022, by section 130(5) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(4D)(a): amended (with effect on 30 March 2022), on 31 March 2023, by section 90 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section LT 1(4E) heading: inserted, on 30 March 2022, by section 130(5) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(4E): inserted, on 30 March 2022, by section 130(5) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(5): amended, on 30 March 2022, by section 130(6) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(6): amended, on 30 March 2022, by section 130(7) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(7): amended, on 30 March 2022, by section 130(8)(a) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LT 1(7): amended, on 30 March 2022, by section 130(8)(b) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
LT 2 Petroleum mining operations outside New Zealand
Section LT 1 applies with modifications
(1)
Section LT 1 applies as modified by this section to a petroleum miner undertaking petroleum mining operations or decommissioning outside New Zealand through a branch or a controlled foreign company in relation to those operations outside New Zealand.
Net losses
(2)
The net loss referred to in section LT 1(1)(c) for the petroleum miner is the net loss the petroleum miner would have if section DT 1A(4) (Ring-fenced allocations) did not apply.
Maximum amounts
(3)
The maximum amount of the credit referred to in section LT 1(4) for the petroleum miner in relation to the petroleum mining operations or decommissioning outside New Zealand must not be more than the lesser of—
(a)
the result of the formula in section LT 1(2); and
(b)
the amount of income tax paid by the petroleum miner and any consolidated group of which the petroleum miner is a member on net income derived for all earlier tax years that relates to the petroleum mining operations or decommissioning outside New Zealand, calculated on a year-by-year basis and aggregated.
Consolidated groups, trustees, calculations on year-by year basis
(4)
Section LT 1(5), (6), and (7) applies, with any necessary modifications, for the purposes of subsection (3).
Defined in this Act: amount, consolidated group, controlled foreign company, decommissioning, farm-in party, income tax, net income, net loss, New Zealand, pay, petroleum miner, petroleum mining operations, tax credit, tax year
Section LT 2: inserted, on 1 April 2018, by section 162(1) (and see section 162(2) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Subpart LU—Tax credits for mineral miners
Subpart LU: inserted, on 1 April 2014 (applying for the 2014–15 and later income years), by section 106(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Contents
LU 1 Tax credits for mineral miners
When this section applies
(1)
This section applies for an income year when—
(a)
either—
(i)
a mineral miner incurs an amount of mining rehabilitation expenditure in relation to a mining permit area; or
(ii)
a mineral miner derives an amount under section CU 2 (Treatment of mining land) from the disposal of land or an interest in land in a mining permit area, and the amount the mineral miner derives from the disposal is less than the consideration that the mineral miner paid to acquire the land or interest in land; or
(iii)
a mineral miner incurs an amount of mining development expenditure in relation to a mining permit area for which the mining permit has been relinquished, has expired, has been revoked or surrendered, as those terms are used in the Crown Minerals Act 1991, and the miner has no existing privilege for the permit area; and
(b)
the mineral miner has a net mining loss for the mining permit area for the income year that is greater than the net income of the mineral miner for the income year from all other sources (the difference being the excess amount), calculated as follows:
(i)
the mineral miner’s net mining loss is treated as if their only income were income derived from the mining permit area:
(ii)
the net income of the mineral miner from other sources is treated as if there were no income from the mining permit area.
Tax credit
(2)
The mineral miner has a tax credit for the tax year corresponding to the income year for an amount calculated using the formula—
expenditure or loss × tax rate.
Definition of items in formula
(3)
In the formula,—
(a)
expenditure or loss is the excess amount referred to in subsection (1)(b) to the extent to which it consists of the amounts referred to in subsection (1)(a)(i) to (iii):
(b)
tax rate is the basic rate of income tax set out in schedule 1, part A (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits).
Maximum
(4)
Despite subsection (2), the maximum amount of the credit must not be more than the lesser of—
(a)
the result of the formula; and
(b)
the amount of income tax paid by the mineral miner on net income derived for all earlier tax years to the extent to which it relates to the mining permit area, calculated on a year-by-year basis and aggregated.
Treatment of trustees
(5)
For the purposes of subsection (4), if the mineral miner is a trustee of a trust, the amount of tax paid for each earlier tax year is determined—
(a)
first, by reference to the amount of income tax paid under the obligations of a trustee under section HC 32 (Liability of trustee as agent); and
(b)
secondly, by reference to the amount of tax paid on trustee income; and
(c)
calculated on a year-by-year basis and aggregated.
Treatment of individuals
(6)
For the purposes of subsection (4), if the mineral miner is an individual, the amount of tax paid for earlier tax years is calculated on a year-by-year basis and aggregated, as if their only income were income derived from the mining permit area.
Calculated on a year-by-year basis
(7)
In subsections (4)(b), (5)(c) and (6), a reference to a calculation on a year-by-year basis refers to a calculation starting with the immediately preceding tax year and working backwards to earlier tax years until the amount of tax paid is equal to or more than the amount referred to in subsection (4)(a).
Treatment of tax loss
(8)
To the extent to which the mineral miner has a tax credit under this section, the amount of the net mining loss giving rise to the credit does not form part of either a tax loss component or a net mining loss for the mineral miner.
Nature of tax credit
(9)
The tax credit is available for use under section LA 6(2) (Remaining refundable credits: PAYE, RWT, and certain other items).
Relationship with other sections
(10)
Subsection (8) overrides sections IA 2 and IA 7 (which relate to losses generally) and IS 1, IS 2, and IS 6 (which relate to tax losses for mineral mining).
Defined in this Act: amount, income, income year, interest, land, mineral miner, mining development expenditure, mining rehabilitation expenditure, net income, net mining loss, pay, permit area, tax credit, tax loss, tax loss component, tax year
Section LU 1: inserted, on 1 April 2014 (applying for the 2014–15 and later income years), by section 106(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section LU 1(4)(b): amended (with effect on 1 April 2014), on 24 February 2016, by section 204(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section LU 1 list of defined terms net income: inserted (with effect on 1 April 2014), on 24 February 2016, by section 204(2)(b) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section LU 1 list of defined terms net mining income: repealed (with effect on 1 April 2014), on 24 February 2016, by section 204(2)(a) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Subpart LY—Research and development tax credits
Subpart LY: inserted, on 1 April 2019, by section 10 (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
Contents
LY 1 Research and development tax credits
Purpose
(1)
The purpose of this subpart is to—
(a)
provide a tax credit (a research and development tax credit) as an incentive to a person for performing, or contracting for the performance of, activities to create new knowledge, or new or improved processes, services, or goods; and
(b)
ensure that activities, expenditure and losses do not inappropriately qualify for research and development tax credits.
General structure of this subpart
(2)
In this subpart—
(a)
research and development activity is defined in section LY 2, along with other key terms:
(b)
section LY 3 provides when this subpart applies:
(c)
the amount of a person’s research and development tax credit for a tax year is calculated under section LY 4 by reference to their expenditure or loss in relation to their research and development activities. Sections LY 5, LY 6, and LY 7 provide detailed rules as to what is eligible expenditure:
(d)
section LY 8 provides for the carry forward of unused research and development tax credits from the current tax year:
(e)
section LY 9 provides an empowering provision for the Governor-General to make Orders in Council to maintain the lists in schedules 21 and 21B (which relate to activities and expenditure or loss for the research and development tax credit):
(f)
section LY 10 provides for a 5-yearly evaluation of the research and development tax credit regime.
Tax credit
(3)
A person has a tax credit for the tax year equal to the total of—
(a)
their credit calculated under section LY 4; and
(b)
their credit carried forward and credited to the year, as provided by section LY 8.
Tax credit: joint venturers’ apportionment
(4)
Despite subsection (3), a person who is a member of a joint venture in relation to research and development activities has a tax credit for the tax year equal to their proportion of their interest in the joint venture.
Anti-avoidance
(5)
Section GB 56 (Arrangements involving research and development tax credits) provides a specific anti-avoidance provision.
Expenditure or loss: GST
(6)
For the purposes of calculating the amount of a person’s expenditure or loss, section DB 2 (Goods and services tax) is applied to the amounts.
Defined in this Act: amount, goods, income year, research and development activity, research and development tax credit, services, tax year
Section LY 1: inserted, on 1 April 2019, by section 10 (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
Section LY 1(4): amended (with effect on 1 April 2019), on 23 March 2020, by section 162(1) (and see section 162(2) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
LY 2 Key terms
Meaning of core research and development activity
(1)
Core research and development activity—
(a)
means an activity that—
(i)
is conducted using a systematic approach; and
(ii)
has a material purpose of creating new knowledge, or new or improved processes, services, or goods; and
(iii)
has a material purpose of resolving scientific or technological uncertainty; but
(b)
does not include an activity, if knowledge required to resolve the uncertainty, described in paragraph (a)(iii), is—
(i)
publicly available:
(ii)
deducible by a competent professional in the relevant scientific or technological field; and
(c)
does not include an activity to the extent to which it is performed outside New Zealand; and
(d)
does not include an activity to the extent to which it is described in schedule 21, part A.
Meaning of research and development activity
(2)
Research and development activity, for a person, means an activity that is—
(a)
a core research and development activity:
(b)
a supporting research and development activity.
Meaning of supporting research and development activity
(3)
Supporting research and development activity—
(a)
means an activity that has the only or main purpose of, is required for, and integral to, conducting a person’s core research and development activity; but
(b)
does not include an activity to the extent to which it is described in schedule 21, part B.
Defined in this Act: core research and development activity, goods, New Zealand, research and development activity, services, supporting research and development activity
Section LY 2: inserted, on 1 April 2019, by section 10 (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
LY 3 When this subpart applies
When this subpart applies
(1)
This subpart applies for a person for an income year, if—
(a)
the person or a joint venture of which the person is a member performs a core research and development activity in New Zealand, or, if the person does not perform a core research and development activity in New Zealand, a research and development contractor performs a core research and development activity in New Zealand on behalf of the person as part of a business that the contractor carries on in New Zealand through a fixed establishment in New Zealand; and
(b)
the person or a joint venture of which the person is a member carries on a business in New Zealand through a fixed establishment in New Zealand; and
(c)
the person or a joint venture of which the person is a member may use the results of the relevant core research and development activity and any related supporting research and development activities for no consideration, or the results of the relevant core research and development activity and any related supporting research and development activity are—
(i)
owned by the person:
(ii)
if the person is a company, owned by another company that is resident in New Zealand or in a country with which New Zealand has a double tax treaty, and the other company is in the same group of companies as the person:
(iii)
owned by a joint venture of which the person is a member; and
(d)
the relevant research and development activity and the person, as applicable, are approved under section 68CB or 68CC of the Tax Administration Act 1994 (which relate to in-year approval).
When this subpart does not apply
(2)
Despite subsection (1), this subpart does not apply for a person, for an income year,—
(a)
if they fail to file a return of income for the income year on or before the date that is 1 year after the latest date for them to file the return of income for the year under section 37 of the Tax Administration Act 1994:
(b)
if they receive a Callaghan Innovation Growth Grant, or they are directly or indirectly controlled by, or associated with, a recipient of a Callaghan Innovation Growth Grant:
(c)
to the extent to which the person is a research and development contractor for another person (person B) in relation to a research and development activity, if person B carries on a business in New Zealand through a fixed establishment in New Zealand:
(d)
if the person is, or is directly or indirectly controlled by, or is associated with,—
(i)
a Crown research institute:
(ii)
Health New Zealand:
(iii)
a tertiary education organisation, including a foreign tertiary education organisation:
(iv)
Callaghan Innovation:
(e)
if the person is a member of a joint venture or a partner in a partnership or has owner’s interests for a look-through company, and the person is not resident in New Zealand in the tax year:
Exception: carry forward
(3)
Despite subsection (1), sections LY 1(3)(b) and LY 8 may apply to carry forward a person’s research and development tax credit.
Special rule: levy body researcher
(4)
For the purposes of subsection (1), a person that is a levy body researcher is treated as carrying on a business in New Zealand through a fixed establishment in New Zealand.
Relationship with subject matter
(5)
Section LZ 13 (Part-year override of section LY 3(2)(b)) overrides subsection (2)(c) for the 2020–21 income year.
Defined in this Act: associated, business, core research and development activity, exempt income, fixed establishment, group of companies, levy body researcher, look-through company, New Zealand, owner’s interests, partner, partnership, research and development contractor, return of income
Section LY 3: inserted, on 1 April 2019, by section 10 (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
Section LY 3(1)(d): replaced, on 1 April 2020, by section 40(1) (and see section 38 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
Section LY 3(2)(d)(ii): amended, on 1 July 2022, by section 104 of the Pae Ora (Healthy Futures) Act 2022 (2022 No 30).
Section LY 3(2)(d)(iii): replaced (with effect on 1 April 2019), on 23 March 2020, by section 163(1) (and see section 163(8) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LY 3(2)(d)(iv): inserted (with effect on 1 April 2019), on 23 March 2020, by section 163(1) (and see section 163(8) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LY 3(2)(f): inserted, on 1 April 2020, by section 163(2) (and see section 163(7) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LY 3(4) heading: amended, on 1 April 2020, by section 163(3) (and see section 163(7) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LY 3(4): amended, on 1 April 2020, by section 163(4) (and see section 163(7) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LY 3(5) heading: inserted, on 1 April 2020, by section 40(2) (and see section 38 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
Section LY 3(5): inserted, on 1 April 2020, by section 40(2) (and see section 38 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
Section LY 3(5): amended, on 1 April 2020, by section 163(5) (and see section 163(7) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LY 3 list of defined terms exempt income: inserted, on 1 April 2020, by section 163(6)(a) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LY 3 list of defined terms levy body researcher: inserted, on 1 April 2020, by section 163(6)(a) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LY 3 list of defined terms non-business researcher: repealed, on 1 April 2020, by section 163(6)(b) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
LY 4 Calculation of tax credit
When this section applies: thresholds
(1)
This section applies for a tax year and a person, ignoring, for purposes of this subsection only, sections HB 1 and HG 2 (which relate to entity transparency) and substituting as the relevant person the person’s partnership or look-through company, when—
(a)
the person’s eligible research and development expenditure, together with eligible research and development expenditure for any joint venture of which the person is a member, is $50,000 or more for the year:
(b)
the person has, for the year, eligible research and development expenditure for an approved research provider performing a research and development activity on behalf of the person.
Calculation of tax credit
(2)
A person’s research and development tax credit for a tax year is calculated using the formula—
0.15 × total eligible R & D expenditure.
Definition of item in formula
(3)
In the formula, total eligible R & D expenditure means the lesser of—
(a)
$120 million, or the person’s approved research and development cap if the person has an approved research and development cap:
(b)
the total amount of the person’s eligible research and development expenditure for the corresponding income year.
Defined in this Act: amount, approved research and development cap, approved research provider, eligible research and development expenditure, look-through company, loss, partnership, research and development activity, tax year
Section LY 4: inserted, on 1 April 2019, by section 10 (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
LY 5 Eligible research and development expenditure
Eligible research and development expenditure
(1)
For the purposes of this subpart, eligible research and development expenditure—
(a)
means expenditure or loss, described in schedule 21B, part A, if, for the income year, the expenditure or loss—
(i)
directly relates to a research and development activity; and
(ii)
is required for a research and development activity; and
(iii)
is integral to a research and development activity; and
(ab)
includes expenditure or loss, described in schedule 21B, part A, to the extent to which the expenditure or loss is incurred on a supporting research and development activity conducted—
(i)
in the income year immediately before the income year that this subpart first applies for the core research and development activity to which the supporting activity relates:
(ii)
in the income year immediately after the income year that this subpart last applies for the core research and development activity to which the supporting activity relates; but
(b)
does not include expenditure or loss, to the extent to which the expenditure or loss is described in schedule 21B, part B:
(c)
does not include expenditure or loss that would have been incurred in the absence of the research and development activity, if—
(i)
the research and development activity is performed in the course of commercial production; and
(ii)
the expenditure or loss is not in relation to an employee’s contribution to a research and development activity.
Modification of eligible research and development expenditure
(2)
Despite subsection (1), for an amount that is otherwise eligible research and development expenditure,—
(a)
an amount that is for a research and development contractor to perform research and development activities for the person is only eligible research and development expenditure to the extent to which section LY 6 provides:
(b)
an amount that is incurred on a research and development activity performed outside New Zealand, or is a payment of salary or wages to a non-resident, or is a payment for a service performed by a non-resident is only eligible research and development expenditure to the extent to which section LY 7 provides.
No double dip for contractors and others
(3)
A person does not have eligible research and development expenditure to the extent to which the relevant expenditure or loss is eligible research and development expenditure of another person.
Defined in this Act: amount, eligible research and development expenditure, income year, loss, New Zealand, non-resident, pay, research and development activity, research and development contractor, salary or wages
Section LY 5: inserted, on 1 April 2019, by section 10 (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
Section LY 5(1)(a): replaced (with effect on 1 April 2019), on 30 March 2021, by section 120(1) (and see section 120(2) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LY 5(1)(a): amended (with effect on 1 April 2020), on 30 March 2022, by section 131(1) (and see section 131(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LY 5(1)(ab): inserted (with effect on 1 April 2020), on 30 March 2022, by section 131(2) (and see section 131(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
LY 6 Contracted research and development expenditure
When this section applies
(1)
This section applies for a person for the purposes of section LY 5(2)(a) if the person has an amount of expenditure or loss (contracted research and development expenditure) for a research and development contractor to perform research and development activities for them.
Calculation of eligible research and development expenditure: contracted research and development expenditure
(2)
For the purposes of section LY 5(2)(a), eligible research and development expenditure includes an amount of contracted research and development expenditure, described in subsection (1), to the extent of the amount calculated using the formula—
contract amount − ineligible expenditure.
Definition of items in formula
(3)
In the formula,—
(a)
contract amount means the amount of consideration paid or payable by the person to a contractor to perform research and development activities:
(b)
ineligible expenditure means the contractor’s expenditure or loss in relation to performing the research and development activity, to the extent to which the expenditure or loss is not eligible research and development expenditure under section LY 5(1), treating the contractor as the relevant person for the purposes of that section.
Relationship with subject matter
(4)
If an amount of contracted research and development expenditure, described in subsection (1), is also foreign research and development expenditure, described in section LY 7(1), then section LY 7 overrides this section in relation to that amount.
Defined in this Act: amount, eligible research and development expenditure, loss, research and development activity, research and development contractor
Section LY 6: inserted, on 1 April 2019, by section 10 (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
LY 7 Foreign research and development expenditure
When this section applies
(1)
This section applies for a person for the purposes of section LY 5(2)(b) if the person has an amount of expenditure or loss (foreign research and development expenditure) that—
(a)
is incurred on a supporting research and development activity performed outside New Zealand:
(b)
is a payment of salary or wages to a non-resident person, and the non-resident performs the relevant activity in New Zealand:
(c)
is a payment for a service performed by a non-resident person, and the non-resident performs the relevant activity in New Zealand.
Calculation of eligible research and development expenditure: foreign research and development expenditure
(2)
For the purposes of section LY 5(2)(b), eligible research and development expenditure includes an amount of foreign research and development expenditure, described in subsection (1), to the extent the amount is less than or equal to the lesser of—
(a)
the amount given by the formula in subsection (3):
(b)
the amount given by the formula in subsection (5).
Actual overseas expenditure amount
(3)
For the purposes of subsection (2)(a), the amount is calculated using the formula—
contract amount − ineligible expenditure + foreign in-house amount.
Definition of items in formula
(4)
In the formula in subsection (3),—
(a)
contract amount means the amount of foreign research and development expenditure, described in subsection (1)(a) and (c), for another person (a foreign contractor) to perform research and development activities on behalf of the person:
(b)
ineligible expenditure means the foreign contractor’s expenditure or loss in relation to performing the research and development activities, to the extent to which the expenditure or loss is not eligible research and development expenditure under section LY 5(1), treating the foreign contractor as the relevant person for the purposes of that section:
(c)
foreign in-house amount means the amount of foreign research and development expenditure, described in subsection (1), under section LY 5(1) but ignoring amounts for a foreign contractor to perform research and development activities for the person.
Capped overseas expenditure amount
(5)
For the purposes of subsection (2)(b), the amount is calculated using the formula—
0.1 × total NZ R & D expenditure ÷ 0.9.
Definition of item in formula
(6)
In the formula in subsection (5), total NZ R & D expenditure means the amount of eligible research and development expenditure under section LY 5, but excluding any amount in relation to foreign research and development expenditure, described in subsection (1).
Defined in this Act: amount, core research and development activity, eligible research and development expenditure, loss, New Zealand, non-resident, research and development activity
Section LY 7: inserted, on 1 April 2019, by section 10 (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
LY 8 Carry forward for remaining research and development tax credits
Carry forward
(1)
For the purposes of section LA 5(4B) (Treatment of remaining credits), a person’s remaining research and development tax credit for a tax year is carried forward to the next tax year and credited under section LY 1(3)(b) for that next tax year.
Carry forward: exception
(2)
Despite subsection (1), if the person is a company, the remaining tax credit is extinguished and must not be carried forward and credited, unless the continuity rules in subsection (3) are met. This subsection is subject to subsections (4B) to (6).
Carry forward: another exception
(2B)
Continuity rules
(3)
For a company, the remaining tax credit is carried forward and credited if a group of persons exists that has, for the continuity period,—
(a)
minimum voting interests in the company that total 49% or more; and
(b)
when a market value circumstance exists for the company in the continuity period, minimum market value interests in the company that total 49% or more.
Some definitions
(4)
In this section,—
continuity period means the period that starts on the first day of the income year that corresponds to the tax year in which the research and development tax credit first arises and ends on the last day of the income year that corresponds to the tax year to which the credit is being carried forward and credited to:
minimum market value interest means the lowest market value interest that a person has in the company for the continuity period:
minimum voting interest means the lowest voting interest that a person has in the company for the continuity period.
Breach of continuity
(4B)
If a company’s remaining tax credit cannot be carried forward and credited because the requirements of subsection (3) are not met, the company may apply subsection (4C), or subsections (5) and (6), to determine whether some or all of its remaining tax credit is carried forward and credited.
Carry forward of credits despite continuity breach
(4C)
Despite a breach of continuity under subsection (3), a company may carry forward a remaining research and development tax credit arising in a tax year to a later tax year and credit it under section LY 1(3)(b) for that later tax year, if the remaining tax credit could be carried forward to that later tax year under subpart IB (Carrying forward companies’ loss balances: continuity of business activities), treating the remaining tax credit as a tax loss component arising on the last day of the income year corresponding to the tax year in which the credit first arose.
Credits for earlier income years
(5)
Despite a breach of continuity under subsection (3), a person’s remaining research and development tax credit for an earlier tax year may be carried forward to a tax year (year A) and credited under section LY 1(3)(b) to the extent to which—
(a)
the requirements for continuity of ownership would be met if the continuity period included only part of the income year of the company that corresponds to year A; and
(b)
the company provides the Commissioner with adequate financial statements relating to the continuity period, calculating the amount of the person’s income tax liability for the relevant part of the corresponding income year.
Credits for year of breach
(6)
Despite a breach of continuity under subsection (3), a person’s remaining research and development tax credit may be carried forward to the tax year (year B) from year A and credited under section LY 1(3)(b) to the extent to which—
(a)
the requirements for continuity of ownership would be met if the continuity period included only part of the income year of the company that corresponds to year A; and
(b)
the company provides the Commissioner with adequate financial statements relating to the continuity period, calculating the amount of the person’s research and development tax credit for the relevant part of the corresponding income year.
Defined in this Act: company, continuity period, corresponding income year, exempt income, group of persons, income year, market value circumstance, market value interest, minimum market value interest, minimum voting interest, research and development tax credit, tax credit, tax loss component, tax year, voting interest
Section LY 8: inserted, on 1 April 2019, by section 10 (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
Section LY 8(2): amended (with effect on 1 April 2020), on 30 March 2021, by section 121(1) (and see section 121(6) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LY 8(2B) heading: inserted (with effect on 1 April 2019), on 23 March 2020, by section 164(1) (and see section 164(3) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LY 8(2B): inserted (with effect on 1 April 2019), on 23 March 2020, by section 164(1) (and see section 164(3) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LY 8(4B) heading: inserted (with effect on 1 April 2020), on 30 March 2021, by section 121(2) (and see section 121(6) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LY 8(4B): inserted (with effect on 1 April 2020), on 30 March 2021, by section 121(2) (and see section 121(6) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LY 8(4C) heading: inserted (with effect on 1 April 2020), on 30 March 2021, by section 121(2) (and see section 121(6) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LY 8(4C): inserted (with effect on 1 April 2020), on 30 March 2021, by section 121(2) (and see section 121(6) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LY 8(5): amended (with effect on 1 April 2020), on 30 March 2021, by section 121(3) (and see section 121(6) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LY 8(6): amended (with effect on 1 April 2020), on 30 March 2021, by section 121(4) (and see section 121(6) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section LY 8 list of defined terms exempt income: inserted (with effect on 1 April 2019), on 23 March 2020, by section 164(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
Section LY 8 list of defined terms tax loss component: inserted (with effect on 1 April 2020), on 30 March 2021, by section 121(5) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
LY 9 Orders in Council
Purpose
(1)
The purpose of subsection (2) is to provide a power to maintain the intent of the research and development tax credit regime in accordance with its stated purpose in section LY 1(1).
Order in Council
(2)
The Governor-General may, by Order in Council made on the joint recommendation of the Minister of Revenue and the Minister of Research, Science, and Innovation,—
(a)
add the description of an activity or of an expenditure or loss, as applicable, to—
(i)
(ii)
(b)
remove the description of an activity or of an expenditure or loss, as applicable, from—
(i)
(ii)
Recommendation
(3)
Before making a recommendation referred to in subsection (2), the Ministers must be satisfied that—
(a)
they have consulted with persons they consider to be appropriate in light of the relevant addition or removal; and
(b)
they have had regard to—
(i)
the purpose in section LY 1(1) and maintaining the intent of the definitions of research and development activity and eligible research and development expenditure; and
(ii)
the effect of the recommendation on the creation of new scientific or technological knowledge; and
(iii)
the fiscal impact of the recommendation.
Application for future tax years
(4)
An addition or removal by Order in Council under this section must apply for the income year corresponding to the tax year after the tax year in which it is made, and subsequent income years.
Secondary legislation
(4B)
An Order in Council under this section is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
Sunset
(5)
An Order in Council under this section expires on the date that is 3 years after the last day of the tax year that the Order first applies for.
Defined in this Act: eligible research and development expenditure, income year, loss, research and development activity, research and development tax credit, tax year
| 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 LY 9: inserted, on 1 April 2019, by section 10 (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
Section LY 9(4B) heading: inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section LY 9(4B): inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
Section LY 9 list of defined terms research and development tax credit: inserted (with effect on 1 April 2019), on 30 March 2022, by section 132 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LY 9 list of defined terms research and development tax credits: repealed (with effect on 1 April 2019), on 30 March 2022, by section 132 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
LY 10 Evaluation
The Minister of Research, Science and Innovation will lay a report before the House of Representatives as soon as practicable after the end of the 2023–24 tax year, and every 5 years subsequent, objectively and independently evaluating the research and development tax credit regime in terms of all of the following:
(a)
the delivery of the policy intent of the regime:
(b)
the stimulation of spending on research and development activities:
(c)
the compliance costs of the regime:
(d)
the administration of the regime:
(e)
the compliance with the legal requirements of the regime by taxpayers:
(f)
any other criteria specified by the Minister of Research, Science and Innovation.
Defined in this Act: research and development activity, research and development tax credit
Section LY 10: inserted, on 1 April 2019, by section 10 (and see section 3 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
Section LY 10 list of defined terms research and development activities: repealed (with effect on 1 April 2019), on 30 March 2022, by section 133(a) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LY 10 list of defined terms research and development activity: inserted (with effect on 1 April 2019), on 30 March 2022, by section 133(a) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LY 10 list of defined terms research and development tax credit: inserted (with effect on 1 April 2019), on 30 March 2022, by section 133(b) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section LY 10 list of defined terms research and development tax credits: repealed (with effect on 1 April 2019), on 30 March 2022, by section 133(b) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Subpart LZ—Terminating provisions
Contents
Underlying foreign tax credits[Repealed]
Heading: repealed, on 30 June 2014, by section 134 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
LZ 1 Low tax jurisdiction companies
[Repealed]Section LZ 1: repealed, on 2 November 2012, by section 119 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
Credits for certain non-resident investment companies[Repealed]
Heading: repealed, on 30 June 2014, by section 134 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
LZ 2 Certain development projects
[Repealed]Section LZ 2: repealed (with effect on 1 April 2013 and applying for the 2013–14 and later income years), on 17 July 2013, by section 74(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
LZ 3 Interest derived from development investments
[Repealed]Section LZ 3: repealed (with effect on 1 April 2013 and applying for the 2013–14 and later income years), on 17 July 2013, by section 74(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
LZ 4 Dividends derived from development investments
[Repealed]Section LZ 4: repealed (with effect on 1 April 2013 and applying for the 2013–14 and later income years), on 17 July 2013, by section 74(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
LZ 5 Some definitions
[Repealed]Section LZ 5: repealed (with effect on 1 April 2013 and applying for the 2013–14 and later income years), on 17 July 2013, by section 74(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
Credits for interest on home vendor mortgages
LZ 6 Interest on home vendor mortgages
When this section applies
(1)
This section applies when, in a tax year, a person derives interest in relation to a home vendor mortgage.
Exclusions
(2)
This section does not apply to—
(a)
an absentee; or
(b)
a company; or
(c)
a public authority; or
(d)
a Maori authority; or
(e)
an unincorporated body; or
(f)
a trustee liable for income tax under subpart HC (Trusts) and section HZ 2 (Trusts that may become complying trusts).
Tax credit
(3)
The person is entitled to a tax credit equal to an amount calculated using the formula—
interest × 0.020.
Definition of item in formula
(4)
In the formula, interest means the amount of interest in complete dollars that the person derives in the tax year in relation to a home vendor mortgage.
Relationship to section LZ 7
(5)
This section is overridden by section LZ 7.
Defined in this Act: absentee, amount, company, distribution, home vendor mortgage, income tax, interest, Maori authority, public authority, tax credit, tax year, trustee
Compare: 2004 No 35 s KE 1(1)
LZ 7 Maximum amount of credit under section LZ 6
Maximum amount: 1 person
(1)
If only 1 person has provided the loan secured by a home vendor mortgage, the maximum amount of tax credit that the person is entitled to under section LZ 6 in a tax year is $500.
Maximum amount: 2 or more persons
(2)
When 2 or more persons have provided the loan secured by a home vendor mortgage, for each person who has provided the loan, the maximum amount of tax credit under section LZ 6 in a tax year is calculated using the formula—
(loan provided ÷ loan secured) × $500.
Definition of items in formula
(3)
In the formula,—
(a)
loan provided is the amount of the loan provided by the persons:
(b)
loan secured is the total amount of the loan secured by the home vendor mortgage.
Defined in this Act: amount, home vendor mortgage, loan, tax credit, tax year
Compare: 2004 No 35 s KE 1(1)
LZ 8 Meaning of home vendor mortgage
In sections LZ 6 and LZ 7, home vendor mortgage means a mortgage—
(a)
that secures a loan provided by the vendor or vendors of a house; and
(b)
that is guaranteed by the Housing New Zealand Corporation under its housing mortgage guarantee scheme; and
(c)
that has been approved by the Housing New Zealand Corporation, on or before 5 August 1982, for the purpose of the credit under this section; and
(d)
for which notice of such guarantee and approval and of any variation has been delivered by the Housing New Zealand Corporation to the Commissioner.
Defined in this Act: Commissioner, home vendor mortgage, loan, notice
Compare: 2004 No 35 s KE 1(3)
Credits for savings in special home ownership accounts[Repealed]
Heading: repealed, on 2 June 2016, by section 50 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
LZ 9 Savings in special home ownership accounts
[Repealed]Section LZ 9: repealed, on 2 June 2016, by section 50 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
LZ 10 Maximum amount for 1 special home ownership account for 1 tax year
[Repealed]Section LZ 10: repealed, on 2 June 2016, by section 50 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
LZ 11 Maximum amount for all special home ownership accounts for all tax years
[Repealed]Section LZ 11: repealed, on 2 June 2016, by section 50 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
LZ 12 Meaning of increase in savings
[Repealed]Section LZ 12: repealed, on 2 June 2016, by section 50 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Research and development tax credits
Heading: inserted, on 1 April 2020, by section 41 (and see section 38 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
LZ 13 Part-year override of section LY 3(2)(b)
When this section applies
(1)
This section applies for a person’s 2020–21 income year if—
(a)
the person’s 2020–21 income year starts after 1 April 2020; and
(b)
the person receives a Callaghan Innovation Growth Grant for only part of the 2020–21 income year.
Part-year override of section LY 3(2)(b)
(2)
Despite section LY 3(2)(b) (When this subpart applies), subpart LY may apply to a person for the part of the year after their Callaghan Innovation Growth Grant contract ends, to the extent to which they appropriately apportion their eligible research and development expenditure to the research and development tax credit and not to the Callaghan Innovation Growth Grant for that part of the year.
Defined in this Act: eligible research and development expenditure, income year, research and development tax credit
Section LZ 13: inserted, on 1 April 2020, by section 41 (and see section 38 for application) of the Taxation (Research and Development Tax Credits) Act 2019 (2019 No 15).
Section LZ 13(2): amended, on 1 April 2020, by section 165 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
LZ 14 Research and development tax credits’ refundability: option for 2019–20 income year
When this section applies
(1)
This section applies for a person’s 2019–20 income year when a person chooses to apply this section in their return of income for the 2019–20 income year.
(2)
Despite section LA 5(4B), (5B), and (5C), a person’s research and development tax credit is used by—
(a)
first, the Commissioner refunding the tax credit up to a maximum of $255,000, by treating it as a refundable tax credit and applying section LA 6(2), if the person—
(i)
meets the corporate eligibility criteria in section MX 2 (Corporate eligibility criteria); and
(ii)
meets the wage intensity criteria in section MX 3 (Wage intensity criteria); and
(iii)
does not derive exempt income, ignoring exempt income under sections CW 9 and CW 10 (which relate to income from dividends); and
(iv)
is not associated with a person that derives exempt income, ignoring exempt income under sections CW 9 and CW 10:
(b)
secondly, applying section LY 8 (Carry forward for remaining research and development tax credits), to the extent to which paragraph (a) does not apply to the tax credit.
Defined in this Act: associated person, exempt income, income year, refundable tax credit, research and development tax credit, return of income, tax credit
Section LZ 14: inserted (with effect on 1 April 2019), on 25 March 2020, by section 16(1) (and see section 16(2) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
"Related Legislation
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Versions
Income Tax Act 2007
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