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Income Tax Act 2007

Recharacterisation of certain transactions - Interest apportionment on thin capitalisation - New Zealand group

FE 25: New Zealand group for excess debt entity that is a company or non-resident owning body

You could also call this:

“How to determine the New Zealand group for companies or non-resident bodies with excessive debt”

When you have a company or non-resident owning body that has too much debt, you need to figure out its New Zealand group. To do this, you follow these steps:

First, you find out who the New Zealand parent is. You can learn how to do this in section FE 26.

Next, you work out which companies the parent controls. Section FE 27 explains how to do this.

Then, you identify who belongs to the New Zealand group. You can find out how to do this in sections FE 28 and FE 29.

Finally, if a non-resident owns parts of more than one New Zealand group, you check if these groups can be joined into one big group. Section FE 30 tells you how to do this.

These rules apply to companies and non-resident owning bodies with too much debt. However, if a company with too much debt is based overseas, the last step about joining groups doesn’t apply to them.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516509.

Topics:
Money and consumer rights > Taxes
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FE 26: Identifying New Zealand parent, or

“How to determine which company is the New Zealand parent for tax purposes”

Part F Recharacterisation of certain transactions
Interest apportionment on thin capitalisation: New Zealand group

FE 25New Zealand group for excess debt entity that is a company or non-resident owning body

  1. The following steps are used to determine the membership of the New Zealand group of an excess debt entity that is a company or non-resident owning body:

  2. identifying the New Zealand parent, see section FE 26:
    1. establishing the companies under the parent’s control, see section FE 27:
      1. identifying the members of the New Zealand group, see sections FE 28 and FE 29:
        1. if a non-resident has ownership interests in 2 or more New Zealand groups, establishing whether the groups may be combined into a single New Zealand group, see section FE 30.

          1. Sections FE 26 to FE 30 apply to an excess debt entity that is a company or a non-resident owning body. However, section FE 30 does not apply to an excess debt outbound company.

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          Notes
          • Section FE 25 heading: amended, on , by section 113(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
          • Section FE 25(1): amended, on (applying for the 2015–16 and later income years), by section 113(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
          • Section FE 25(2) heading: amended, on , by section 113(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
          • Section FE 25(2): amended, on (applying for the 2015–16 and later income years), by section 113(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
          • Section FE 25(2): amended (with effect on 30 June 2009), on , by section 219(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
          • Section FE 25 list of defined terms control: repealed, on , by section 594 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
          • Section FE 25 list of defined terms excess debt outbound company: inserted (with effect on 30 June 2009), on , by section 219(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
          • Section FE 25 list of defined terms ownership interest: inserted, on , by section 113(5) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).