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Income Tax Act 2007

Deductions - Expenditure specific to certain entities

DV 10: Building societies

You could also call this:

“Deductions available for building societies on certain expenses and share-related costs”

If you’re a building society, you can deduct some specific expenses from your income. You can deduct the cost of borrowing money through withdrawable shares. You can also deduct interest and other financial charges when you provide money for an interest-free loan to someone with a terminating share. Additionally, you can deduct the cost of buying a balloted loan right from someone who has a terminating share.

When you buy a balloted loan right, you can deduct that cost in the same year you pay for it.

A balloted loan right comes from a special draw that a building society holds. This draw is for terminating shares and helps decide which shareholders can get an interest-free loan related to their shares.

Even though these deductions are allowed, you still need to follow the general permission rule. Other general limitations also apply, but you don’t have to worry about the capital limitation for these deductions.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514161.

Topics:
Money and consumer rights > Taxes
Money and consumer rights > Banking and loans
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“Rules for income and deductions in trusts for beneficiaries and trustees”

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Part D Deductions
Expenditure specific to certain entities

DV 10Building societies

  1. A building society is allowed a deduction for—

  2. expenditure incurred on money borrowed by way of withdrawable shares:
    1. interest and other financial charges incurred in providing money that is used to provide an interest-free loan to a person who holds a terminating share:
      1. an amount incurred in purchasing a balloted loan right from a person who holds a terminating share.

        1. The deduction for the amount referred to in subsection (1)(c) is allocated to the income year in which the amount is paid.

        2. In this section, balloted loan right means a right arising from a ballot that—

        3. is held by or for a building society; and
          1. is of terminating shares; and
            1. is held for the purpose of finding out which of the holders of the shares are entitled to receive an interest-free loan relating to their shares.

              1. This section overrides the capital limitation. The general permission must still be satisfied and other general limitations still apply.

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