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Income Tax Act 2007

Timing and quantifying rules - Controlled foreign company and foreign investment fund rules - Ten percent threshold and variations in income interest level

EX 17: Income interest if variations within period

You could also call this:

“Calculating your share of a foreign company's income when it changes”

When your income interest in a Controlled Foreign Company (CFC) changes during a period, you need to calculate it in a special way. Your income interest for the whole period is the sum of daily amounts. For each day, you divide your income interest for that day by the total number of days in the period. If your income interest changes during a day, you use the income interest at the start of that day. This method helps you figure out your overall income interest when it’s not the same throughout the period.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515454.

Topics:
Money and consumer rights > Taxes
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EX 16: Income interests for certain purposes, or

“How your ownership in foreign companies affects your tax obligations”

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EX 18A: Scheme for finding person's attributed CFC income or loss, or

“How to calculate tax on income from a foreign company you partly own”

Part E Timing and quantifying rules
Controlled foreign company and foreign investment fund rules: Ten percent threshold and variations in income interest level

EX 17Income interest if variations within period

  1. This section applies when a person’s income interest in a CFC, calculated under sections EX 8 to EX 16, varies between days in a period.

  2. The person’s income interest for the period is the total of the amounts for the period, each of which is calculated using the formula in subsection (3) for a day in the period.

  3. The formula is—

    income interest for day ÷ days in period.

    Where:

    • In the formula,—

    • income interest for day is—
      1. the income interest during the day, if the income interest does not vary during the day:
        1. the income interest at the start of the day, if the income interest varies during the day:
        2. days in period is the number of days in the period.

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