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Income Tax Act 2007

Deductions - Petroleum mining expenditure

DT 11: Association ending

You could also call this:

“Rules for petroleum miners when ending an association with a connected buyer of their assets”

When you’re a petroleum miner and you sell a petroleum mining asset to someone connected to you, there are special rules. This person could be directly associated with you, holding the asset for someone associated with you, or holding it for you. If that connection ends while they still have the asset, you might be able to claim a deduction.

You can’t claim this deduction if you end the association just to get the deduction, or if getting the deduction is a big reason for ending it. But if the association ends for other reasons, you can claim a deduction.

The amount you can deduct is the same as what you weren’t allowed to deduct under section DT 9. You claim this deduction in the tax year when the association ends.

This rule adds to the general permission for deductions and overrides the capital limitation. But you still need to follow other general limitations.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514068.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
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DT 10: Disposal of petroleum mining asset outside association, or

“Selling a petroleum mining asset to someone unrelated after an initial sale to a related party”

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DT 12: Damage to assets, or

“Tax deductions for repairing damaged petroleum mining assets”

Part D Deductions
Petroleum mining expenditure

DT 11Association ending

  1. This section applies when—

  2. a petroleum miner disposes of a petroleum mining asset to a person (person A) who is—
    1. an associated person of the miner; or
      1. a person who holds the asset for an associated person of the miner; or
        1. a person who holds the asset for the miner; and
        2. while person A holds the asset,—
          1. the association between the miner and the associated person ends; or
            1. the association between the miner and the person who holds the asset for the miner ends.

            2. This section does not apply when the petroleum miner and the other party to the association end their association—

            3. for the purpose of the miner being allowed a deduction under this section; or
              1. for various purposes, 1 of which is, as a more than merely incidental purpose, the miner being allowed a deduction under this section.

                1. The petroleum miner is allowed a deduction.

                2. The amount of the deduction is the amount for which the petroleum miner is denied a deduction under section DT 9.

                3. The deduction is allocated to the income year in which the association ends.

                4. This section supplements the general permission and overrides the capital limitation. The other general limitations still apply.

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