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Income Tax Act 2007

Deductions - Specific rules for expenditure types

DB 58: Adjustment for avoidance arrangements

You could also call this:

“Rules for claiming deductions when avoidance arrangements are involved”

You can’t claim a deduction if it’s denied under certain rules. These rules cover things like the Commissioner’s power to adjust, excessive amounts for film rights or production costs, arrangements to acquire film rights or incur production costs, excessive pay to relatives, and close company pay to shareholders, directors, or relatives.

However, some amounts can still be claimed as deductions. These include amounts treated as deductions under rules about the Commissioner’s power to adjust, excessive pay to relatives, attribution rule calculations, and deferral of surplus deductions from arrangements.

The first part of this rule overrides the general permission to claim deductions, while the second part adds to it. The general limitations on deductions still apply in both cases.

If you want to know more about any of these specific rules, you can click on the links in the original text to read about them in detail.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513753.

Topics:
Money and consumer rights > Taxes
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Part D Deductions
Specific rules for expenditure types

DB 58Adjustment for avoidance arrangements

  1. An amount is not a deduction of a person if the deduction is denied under—

  2. section GA 1 (Commissioner’s power to adjust):
    1. section GB 17 (Excessive amounts for film rights or production expenditure):
      1. section GB 18 (Arrangements to acquire film rights or incur production expenditure):
        1. section GB 23 (Excessive remuneration to relatives):
          1. section GB 25 (Close company remuneration to shareholders, directors, or relatives).

            1. An amount treated as a deduction of a person under any of the following sections is a deduction of the person:

            2. section GA 1:
              1. section GB 23:
                1. section GB 29 (Attribution rule: calculation):
                  1. section GB 46 (Deferral of surplus deductions from arrangements).

                    1. Subsection (1) overrides, and subsection (2) supplements, the general permission. The general limitations still apply.

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