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Income Tax Act 2007

Timing and quantifying rules - Controlled foreign company and foreign investment fund rules - Calculation of attributed CFC income or loss

EX 18: Formula for calculating attributed CFC income or loss

You could also call this:

“How to work out your share of a foreign company's income or loss”

When you have income or loss from a foreign company that you partly own, you need to figure out how much of that income or loss belongs to you. To do this, you use a special calculation.

First, you look at how much of the company you own during the time period you’re calculating for. Then, you look at how much money the company made or lost during that same time. You multiply these two numbers together.

The result tells you how much of the company’s income or loss is yours. This is important because it affects how much tax you might need to pay.

If you want to know more about when this applies to you, you can check section CQ 2 for income and section DN 2 for losses.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515461.

Topics:
Money and consumer rights > Taxes
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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”

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EX 19: Taxable distribution from non-complying trust, or

“Tax on money your company gets from a rule-breaking trust”

Part E Timing and quantifying rules
Controlled foreign company and foreign investment fund rules: Calculation of attributed CFC income or loss

EX 18Formula for calculating attributed CFC income or loss

  1. If a person has attributed CFC income under section CQ 2 (When attributed CFC income arises) or an attributed CFC loss under section DN 2 (When attributed CFC loss arises), the amount of a person’s attributed CFC income or loss from a CFC for an accounting period is calculated using the formula—

    person’s income interest for accounting period× net attributable CFC income or loss of CFC for accounting period.

    Where:

    Compare
    Notes
    • Section EX 18 formula: amended (with effect on 30 June 2009), on , by section 154(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
    • Section EX 18 list of defined terms branch equivalent income: repealed (with effect on 30 June 2009), on , by section 154(2)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
    • Section EX 18 list of defined terms net attributable CFC income: inserted (with effect on 30 June 2009), on , by section 154(2)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).