Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Income from equity

CD 10: Bonus issue by foreign unit trust instead of money or property

You could also call this:

“Foreign unit trusts may give bonus units instead of cash or property, which counts as a dividend”

If you own units in a foreign unit trust, which is a type of company, you might receive a bonus issue. This is when the trust gives you extra units instead of money or property. The law says this bonus issue counts as a dividend for you.

The trust might decide to give you a bonus issue instead of giving you actual money or property that you would own. When this happens, it’s treated as if you got a dividend.

The amount of the dividend is the same as the value of the money or property you would have received if you didn’t get the bonus issue. This means the bonus issue is worth the same as what you would have gotten otherwise.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1512562.

Topics:
Money and consumer rights > Taxes
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CD 9: Interests in money or property of foreign unit trust, or

“Money or property you receive from owning part of a foreign unit trust is treated as a dividend”

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CD 11: Avoidance arrangements, or

“Rules for treating certain tax-avoiding arrangements as dividends”

Part C Income
Income from equity

CD 10Bonus issue by foreign unit trust instead of money or property

  1. A bonus issue made to a unit holder by a unit trust that is a foreign company is a dividend for the unit holder if the issue is made under an arrangement or decision that the unit trust will make the bonus issue instead of causing a beneficial interest in money or property of the unit trust to vest absolutely in the unit holder.

  2. The amount of the dividend is the value of the money or property in which a beneficial interest would have vested in the unit holder if the bonus issue had not been made.

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