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FE 26: Identifying New Zealand parent
or “How to determine which company is the New Zealand parent for tax purposes”
You could also call this:

“How to determine which companies are part of a New Zealand tax group”

When you’re part of a New Zealand group for tax purposes, you need to know how to figure out which companies are under your parent company’s control. Your parent company can choose a control threshold, which is a percentage that determines which companies are part of the group. This threshold must be the same for all companies in the group.

Your parent company can pick either more than 50% or 66% or more as the control threshold. If they choose more than 50%, a company is considered controlled if your parent company or any other company in the New Zealand group owns more than half of it directly.

If the threshold is 66% or more, a company is controlled if it’s owned by a combination of your parent company, certain non-residents, and other companies in the New Zealand group. The non-residents must own at least half of both your company and the parent company.

If your parent company doesn’t choose a threshold, it will automatically be set at 66% or more. Whatever threshold is chosen will apply to all of your parent company’s companies for that income year.

The rules for the 66% threshold are a bit more complicated. You might need to look at section FE 28 to fully understand how companies are included in the group under this threshold.

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Next up: FE 28: Identifying members of New Zealand group

or “How to determine which companies belong to a New Zealand tax group”
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Part F Recharacterisation of certain transactions
Interest apportionment on thin capitalisation: New Zealand group

FE 27Establishing companies under parent’s control

  1. A control threshold that the New Zealand parent of an excess debt entity chooses under this section must apply consistently to all companies that are members of the group.

  2. The New Zealand parent of an excess debt entity may choose as the relevant control threshold a percentage that is either—

  3. more than 50%; or
    1. 66% or more.

      1. For a control threshold that is more than 50%, the company or companies treated as controlled by the New Zealand parent are those in which direct ownership interests of more than 50% are held collectively by either or both—

      2. the New Zealand parent; and
        1. any other company included in the New Zealand group.

          1. For a control threshold of 66% or more, the companies treated as controlled by the New Zealand parent are those in which direct ownership interests of 66% or more are held collectively by any combination of—

          2. the New Zealand parent; and
            1. a non-resident if—
              1. they have ownership interests of 50% or more in both the entity and the New Zealand parent; and
                1. a company included in the New Zealand group as a result of the control percentage would have been included in the group under section FE 28 through the application of the control test in subsection (3), had the control percentage in that subsection been chosen; and
                2. any other company or companies that are included in the New Zealand group under section FE 28 through the application of any of these paragraphs.

                  1. If the New Zealand parent does not choose a control threshold under subsection (3) or (4), the control threshold applying to the New Zealand group is 66% or more.

                  2. The control threshold applying for an income year in relation to the entity and its New Zealand parent applies to any company of the New Zealand parent.

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                  Notes
                  • Section FE 27 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 27 list of defined terms ownership interest: inserted, on , by section 116(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).