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Income Tax Act 2007

Income - Excluded income - Definitions

CX 55: Proceeds from disposal of investment shares

You could also call this:

“Tax rules for selling certain investment shares”

When you sell investment shares, you might not have to pay tax on the money you make. This applies to some special types of investors, like certain investment funds, the New Zealand Superannuation Fund, and some insurance companies. It also applies to some companies that the government owns.

For these investors, the money they make from selling shares is not counted as income they have to pay tax on. This is true as long as they haven’t made a deal with someone else to make sure they’ll profit from selling the shares.

The shares they sell must be from companies that are based in New Zealand or Australia. These companies must follow certain rules, like being listed on the stock exchange and keeping track of their taxes in a special way.

This rule doesn’t apply to all types of shares. Some shares that have fixed interest rates or that you can cancel for a set amount of money are not included.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513475.

Topics:
Money and consumer rights > Taxes
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Part C Income
Excluded income: Definitions

CX 55Proceeds from disposal of investment shares

  1. This section applies in an income year to the following entities unless the entity is assured, under an arrangement with another person, of having a gain on the disposal:

  2. a portfolio investment entity other than a life fund PIE:
    1. the Crown as owner of the New Zealand Superannuation Fund:
      1. a Fund investment entity that is treated as being wholly owned by the Crown under section HR 4B (Activities relating to New Zealand Superannuation Fund):
        1. a company that is treated as being wholly owned by the Crown under section HR 4B:
          1. the Crown as owner of the VCF:
            1. a VCF investment vehicle, as referred to in section 25 of the Venture Capital Fund Act 2019, that is treated as being wholly owned by the Crown under section HR 4B:
              1. a life insurer.

                1. An amount that the entity derives from the disposal in the income year of a share issued by a company referred to in subsection (3) is—

                2. excluded income of the entity for the income year, if the entity is described in subsection (1)(a), (b), (bb), or (bc); or
                  1. excluded income of the entity for the income year to the extent to which the amount is actuarially determined to be policyholder base income, if the entity is a life insurer.

                    1. The company referred to in subsection (2) is,—

                    2. at all times in the income year, a company resident in New Zealand and not treated under and for the purposes of a double tax agreement as not resident in New Zealand; or
                      1. a company that meets the following requirements:
                        1. a company that, at all times in the income year, is resident in Australia and not treated as resident in a country other than Australia under an agreement between Australia and the other country, that would be a double tax agreement if negotiated between New Zealand and the other country; and
                          1. a company that, at the start of the income year or at the time the shares are first acquired in the income year, is included on the official list of ASX Limited, a market licensee under Chapter 7 of the Corporations Act 2001 (Aust); and
                            1. a company that, at all times in the income year, is required under the Income Tax Assessment Act 1997 (Aust) and the Income Tax Assessment Act 1936 (Aust) to maintain a franking account.

                            2. This section does not apply to—

                            3. a fixed-rate share, within the meaning of paragraphs (a) to (d) of the definition of that term; or
                              1. a share for which the amount payable on cancellation is no more than the available subscribed capital per share calculated under the slice rule.

                                Notes
                                • Section CX 55: substituted, on , by section 63(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                                • Section CX 55(1)(b): replaced, on , by section 5(1) of the Taxation (New Zealand Superannuation and Retirement Income) Act 2015 (2015 No 94).
                                • Section CX 55(1)(bb): amended, on , by section 14(1) of the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Act 2024 (2024 No 16).
                                • Section CX 55(1)(bc): inserted, on , by section 5(1) of the Taxation (New Zealand Superannuation and Retirement Income) Act 2015 (2015 No 94).
                                • Section CX 55(1)(bd): inserted, on , by section 17 of the New Zealand Superannuation and Retirement Income Amendment Act 2019 (2019 No 77).
                                • Section CX 55(1)(be): inserted, on , by section 17 of the New Zealand Superannuation and Retirement Income Amendment Act 2019 (2019 No 77).
                                • Section CX 55(2)(a): amended, on , by section 5(2) of the Taxation (New Zealand Superannuation and Retirement Income) Act 2015 (2015 No 94).
                                • Section CX 55(3)(b)(ii): amended, on (applying for the 2017–18 and later income years), by section 9(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
                                • Section CX 55(4): replaced, on , by section 17(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                                • Section CX 55 list of defined terms available subscribed capital: inserted, on , by section 17(2)(b) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                                • Section CX 55 list of defined terms fixed-rate share: inserted, on , by section 17(2)(b) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                                • Section CX 55 list of defined terms Fund investment entity: inserted, on , by section 14(2) of the New Zealand Superannuation and Retirement Income (Controlling Interests) Amendment Act 2024 (2024 No 16).
                                • Section CX 55 list of defined terms non-participating redeemable share: repealed, on , by section 17(2)(a) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                                • Section CX 55 list of defined terms pay: inserted, on , by section 17(2)(b) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                                • Section CX 55 list of defined terms slice rule: inserted, on , by section 17(2)(b) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                                • Section CX 55 list of defined terms VCF: inserted, on , by section 17 of the New Zealand Superannuation and Retirement Income Amendment Act 2019 (2019 No 77).