Plain language law

New Zealand law explained for everyone

 Plain Language Law homepage
Back to
DB 12: Base price adjustment under old financial arrangements rules
or “Deductions allowed for specific old financial arrangements”
You could also call this:

“When someone pays off your debt, you may be able to claim a tax deduction”

If you owe money and someone else pays it off for you, you might be able to claim a deduction. This can happen in two situations:

  1. When someone related to you buys your debt from the person you owe at a lower price than what you originally owed.

  2. When someone in your economic group guarantees your debt.

In these cases, you can deduct the amount specified in the relevant part of the law. This rule is an exception to the usual limits on what you can deduct from your taxes.

You don’t need to worry about getting permission to make this deduction. It’s allowed even if other rules might say you can’t deduct it.

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 It might be out of date or be missing some parts.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

Next up: DB 14: Security payment

or “Deductions allowed for losses covered by security payments”
Next

Part D Deductions
Specific rules for expenditure types

DB 13Repayment of debt in certain circumstances

  1. When section EW 49(5)(b) (Income and deduction when debt disposed of at discount to associate of debtor) or EW 49B(5)(b) (Guarantees within economic group) applies, the debtor is allowed a deduction for the amount quantified in the relevant subsection.

  2. This section supplements the general permission and overrides all the general limitations.

Compare
Notes
  • Section DB 13 heading: amended, on , by section 47(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
  • Section DB 13(1): amended, on (applying for the 2017–18 and later income years), by section 47(2)(a) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
  • Section DB 13(1): amended, on (applying for the 2017–18 and later income years), by section 47(2)(b) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
  • Section DB 13(1): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).