Income Tax Act 2007

Timing and quantifying rules - Controlled foreign company and foreign investment fund rules - Commissioner’s default assessment power

EX 72: Commissioner’s default assessment power

You could also call this:

"What happens if you don't give the Commissioner the information they need about your overseas investments?"

The Commissioner can make an assessment if you have not given them the information they need about your control interest or income interest in a CFC or attributing interest in a FIF, as required under section 61 of the Tax Administration Act 1994 or section 17B of that Act. This can also happen if you cannot get enough information to calculate your attributed CFC income or loss or FIF income or loss for a period. The Commissioner may make an assessment of the amount of attributed CFC income or loss or FIF income or loss for the relevant period.

The Commissioner can base the assessment on the accounts of the CFC or FIF for the relevant period. They can also use a rate of presumed increase of 10% or more, compounded annually, to the CFC's net attributable CFC income or to the FIF's net attributable FIF income, for a previous period. The Commissioner can use other methods to make the assessment, such as an imputed rate of return on the market value of the interest at the start of the period, or the actual gains or losses of the person in the period from holding or disposing of the interest. They can also use the change in the market value of the interest over the period to make the assessment.

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This page was last updated on 20 May 2025

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515754.

EX 71: Non-market transactions in FIF interests, or

"Rules for buying or selling foreign investment fund interests at non-market prices"

EX 73: Election that CFC not non-attributing active CFC or FIF not non-attributing active FIF, or

"Choosing to treat your foreign company or fund as active for tax purposes"

Part ETiming and quantifying rules
Controlled foreign company and foreign investment fund rules: Commissioner’s default assessment power

EX 72Commissioner’s default assessment power

This section applies when—
a person has failed to disclose their control interest or income interest in a CFC or attributing interest in a FIF, under section 61 of the Tax Administration Act 1994:
a person has failed to disclose information regarding their control interest or income interest in a CFC or attributing interest in a FIF, requested under section 17B of that Act:
a person cannot obtain enough information to calculate their attributed CFC income or loss or FIF income or loss for a period.

The Commissioner may make an assessment of the amount of attributed CFC income or loss or FIF income or loss for the relevant period.
Without limiting the Commissioner’s discretion, the assessment may be based on any of the following:
the accounts of the CFC or FIF for the relevant period prepared for tax authorities, creditors, shareholders, or others:
the application of a rate of presumed increase of 10% or more, compounded annually, to the CFC's net attributable CFC income or to the FIF's net attributable FIF income, for a previous period:
the application of a rate of presumed increase of 10% or more, compounding annually, to the CFC’s or FIF’s accounting profits as shown in its accounts for a previous period:
an imputed rate of return on the market value of the interest at the start of the period:
the actual gains or losses of the person in the period from holding or disposing of the interest:
the change in the market value of the interest over the period.

Compare

2004 No 35 s EX 60

Notes

Section EX 72(1)(b): amended (with effect on 18 March 2019), on 29 March 2025, by section 55 of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
Section EX 72(1)(c): replaced (with effect on 1 July 2009 and applying for income years beginning on or after that date), on 7 May 2012, by section 49(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section EX 72(2): amended, on 24 February 2016, by section 155 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section EX 72(3)(b): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 49(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section EX 72 list of defined terms attributed repatriation: repealed (with effect on 1 July 2011), on 7 May 2012, by section 49(3)(a) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section EX 72 list of defined terms attributable FIF income method: inserted (with effect on 1 July 2011), on 7 May 2012, by section 49(3)(b) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section EX 72 list of defined terms branch equivalent income: repealed (with effect on 1 July 2011), on 7 May 2012, by section 49(3)(a) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section EX 72 list of defined terms net attributable CFC income: inserted (with effect on 1 July 2011), on 7 May 2012, by section 49(3)(b) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section EX 72 list of defined terms net attributable FIF income: inserted (with effect on 1 July 2011), on 7 May 2012, by section 49(3)(b) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
Section EX 72 list of defined terms request: inserted, on 2 June 2016, by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).