Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Income from equity

CD 14: Notional distributions of emigrating companies

You could also call this:

“Tax rules for pretend dividends when a company moves overseas”

When a company leaves New Zealand, it’s called an emigrating company. If this happens, you might get something called a notional distribution. This is like a pretend dividend that the company gives to its shareholders.

If you own shares in the company, this notional distribution counts as a dividend for you. It’s not real money, but it’s treated like a dividend for tax purposes.

How much this pretend dividend is worth depends on your rights as a shareholder. The rules for working this out are explained in section FL 2 or section FL 3 of the law. These sections talk about what happens to emigrating companies and their shareholders.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1512570.

Topics:
Money and consumer rights > Taxes
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“How tax credits are included when you receive a dividend”

Part C Income
Income from equity

CD 14Notional distributions of emigrating companies

  1. A notional distribution of an emigrating company under section FL 2 or FL 3 (which relate to the treatment of emigrating companies and their shareholders) is a dividend for a shareholder of the company.

  2. The amount of the dividend is determined by a shareholder’s entitlement in the circumstances set out in section FL 2 or FL 3, as applicable.

Compare
Notes
  • Section CD 14(1): amended (with effect on 30 August 2022), on , by section 11(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
  • Section CD 14(2): amended (with effect on 30 August 2022), on , by section 11(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).