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EX 37B: Share in grey list company acquired under venture investment agreement
or “ Special rules for certain shares in overseas companies acquired through venture investments ”
You could also call this:

“Certain employee share schemes exempt from Foreign Investment Fund rules”

You don’t have to worry about attributing interests in a Foreign Investment Fund (FIF) in two situations:

  1. If you’re a person who gets shares in a foreign company through your job, you don’t have to worry about it being an attributing interest if:

    You get the shares directly, and the company is from a country New Zealand has good tax agreements with. The company can’t be on a special list in the tax rules. When you get the shares, the company must either employ you or own the company that employs you. You must get the shares through an employee share scheme that has rules about when you can sell the shares. At the start of the tax year, either those rules are still in place, or they ended less than 6 months ago.

  2. You also don’t have to worry about your rights in a FIF being an attributing interest if:

    You get the shares or related interests directly through an employee share scheme. At the start of the tax year, the date when the shares are taxed (called the share scheme taxing date) hasn’t happened yet.

Remember, these rules are quite specific, so it’s always a good idea to check with a grown-up who knows about taxes if you’re not sure.

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Next up: EX 39: Terminating exemption for grey list company with numerous New Zealand shareholders

or “Ending of tax exemption for foreign companies with many NZ shareholders”
Next

Part E Timing and quantifying rules
Controlled foreign company and foreign investment fund rules: Attributing interests in FIFs

EX 38Exemptions for employee share schemes

  1. A person’s rights in a FIF in an income year are not an attributing interest if—

  2. the person is a natural person; and
    1. the rights are a direct income interest; and
      1. the FIF is a grey list company; and
        1. the FIF is not an entity described in schedule 25, part B (Foreign investment funds); and
          1. at the time the person acquires the shares, the FIF—
            1. employs the person:
              1. owns, directly or indirectly, the person’s employer; and
              2. the person acquires the shares under an employee share scheme; and
                1. the employee share scheme includes a restriction on the disposal of the shares; and
                  1. at the beginning of the year, the period of the restriction—
                    1. has not expired:
                      1. has expired for a period of less than 6 months.

                      2. A person’s rights in a FIF in an income year are not an attributing interest to the extent to which—

                      3. the rights are a direct income interest; and
                        1. section EX 30(1)(c) does not apply; and
                          1. the person acquires the shares or related interests under an employee share scheme; and
                            1. at the beginning of the year, the share scheme taxing date for the shares or related interests has not passed.

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                              Notes
                              • Section EX 38 heading: replaced, on , by section 87(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                              • Section EX 38(1) heading: inserted, on , by section 87(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                              • Section EX 38(1)(f): amended (with effect on 29 September 2018), on , by section 60 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                              • Section EX 38(1)(g): substituted (with effect on 1 April 2008), on , by section 172 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                              • Section EX 38(1)(g): amended, on , by section 87(4) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                              • Section EX 38(2) heading: inserted, on , by section 87(5) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                              • Section EX 38(2): inserted, on , by section 87(5) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                              • Section EX 38 list of defined terms employee share scheme: inserted, on , by section 87(6)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                              • Section EX 38 list of defined terms share purchase agreement: repealed, on , by section 87(6)(b) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                              • Section EX 38 list of defined terms share scheme taxing date: inserted, on , by section 87(6)(a) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).