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Income Tax Act 2007

Timing and quantifying rules - Controlled foreign company and foreign investment fund rules - Calculation of person’s income interest

EX 8: Income interests: total of direct and indirect interests

You could also call this:

“Calculating your total income interest in a foreign company”

Your income interest in a CFC (which stands for Controlled Foreign Company) is made up of two parts. The first part is any direct income interest you have in the CFC. The second part is any indirect income interest you have in the CFC. When you add these two parts together, you get your total income interest in the CFC.

There are some special rules that might change how your income interest is calculated. These rules are found in different sections of the law. Here are the sections that might apply:

Section GB 9 deals with temporary disposals of direct control or income interests. Section GB 10 is about temporary acquisitions of direct control or income interests. Section GB 11 covers temporary increases in totals for control interest categories. Section GB 12 talks about temporary reductions in totals for control interest categories. Section GB 13 applies when a combination of changes reduces income. Lastly, section GB 14 is about when a combination of changes increases loss.

These sections help make sure that your income interest is calculated fairly, even when there are temporary changes or special situations.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515428.

Topics:
Money and consumer rights > Taxes
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EX 7: Indirect control interests, or

“How ownership in a foreign company is calculated through a controlled foreign company”

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EX 9: Direct income interests, or

“How your share of ownership or control in a foreign company is calculated”

Part E Timing and quantifying rules
Controlled foreign company and foreign investment fund rules: Calculation of person’s income interest

EX 8Income interests: total of direct and indirect interests

  1. A person’s income interest in a CFC at any time is the total of the following:

  2. any direct income interest that the person holds in the CFC:
    1. any indirect income interest that the person holds in the CFC.

      1. Any of the following sections may apply to the calculation of a person’s income interest:

      2. section GB 9 (Temporary disposals of direct control or income interests):
        1. section GB 10 (Temporary acquisitions of direct control or income interests):
          1. section GB 11 (Temporary increases in totals for control interest categories):
            1. section GB 12 (Temporary reductions in totals for control interest categories):
              1. section GB 13 (When combination of changes reduces income):
                1. section GB 14 (When combination of changes increases loss).

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