Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Terminating provisions

CZ 9: Available capital distribution amount: 1965 and 1985–1992

You could also call this:

“How to calculate capital gains for companies based on pre-1992 profits and tax rules”

You can get a capital gain amount for your company in two ways. The first way is if your company made a profit before 1 April 1988 that was covered by a special rule in an old tax law. The second way is if your company gets money from certain things that happened between 1985 and 1992. These things include:

  • Getting a tax break for livestock in the 1985-86 or 1986-87 tax years
  • Changing the value of livestock between the 1986-87 and 1991-92 tax years
  • Getting a tax break for revaluing wine, brandy, and whisky stock in the 1988-89 tax year

There are also two situations where money or shares given out by a company are not treated as dividends or bonus issues. These are:

  • When the money was not counted as a dividend under an old law from 1954
  • When the shares were not counted as a bonus issue under an old law from 1976

Remember, these rules are part of figuring out your company’s available capital distribution amount.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513521.

Topics:
Money and consumer rights > Taxes
Previous

CZ 8: Farm-out arrangements for petroleum mining before 16 December 1991, or

“Rules for old petroleum mining deals made before 16 December 1991”

Next

CZ 9B: Available capital distribution amount: 1988 to 2010, or

“Calculating capital distribution amounts for 1988-2010 (now removed)”

Part C Income
Terminating provisions

CZ 9Available capital distribution amount: 1965 and 1985–1992

  1. For the purposes of section CD 44(7)(e) (Available capital distribution amount), a company derives a capital gain amount if—

  2. before 1 April 1988, a net profit or gain was derived by the company to which section 4(5) of the Income Tax Act 1976 applied immediately before that provision was repealed by section 31(1) of the Income Tax Amendment Act (No 5) 1988; or
    1. an amount is derived by the company that is attributable to—
      1. a deduction allowed in the 1985–86 or 1986–87 tax year for livestock under section 86E of the Income Tax Act 1976; or
        1. a revaluation of livestock in any of the 1986–87 to 1991–92 tax years under section 86A of the Income Tax Act 1976; or
          1. a deduction allowed in the 1988–89 tax year for the revaluation of trading stock of wine, brandy, and whisky under section 87A of the Income Tax Act 1976.

          2. For the purposes of section CD 44(14)(b),—

          3. the amount has been excluded by section 4(3) of the Land and Income Tax Act 1954 from treatment as a dividend; or
            1. the issue has been excluded by section 3(3) of the Income Tax Act 1976 from treatment as a bonus issue.

              Compare
              Notes
              • Section CZ 9(1)(a): amended, on (with effect on 30 March 2017), by section 43 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Section CZ 9(1)(a): amended, on , by section 42 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).