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Income Tax Act 2007

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

FE 38: Measuring ownership interests in companies

You could also call this:

“How to calculate your total ownership in a company”

When figuring out how much of a company you own, you need to add up a few different things. First, you count any part of the company that you own directly. Then, you add any part that people connected to you own directly. Next, you include any indirect ownership you have in the company. Finally, you add any indirect ownership that people connected to you have. When you add all these parts together, you get your total ownership interest in the company.

People who are connected to you in this way are called “associated persons”. This might include family members or business partners, but the exact definition can be found in another part of the law.

Direct ownership means you own shares or other parts of the company yourself. Indirect ownership is when you own part of the company through owning part of another company that owns it.

This way of measuring ownership is used in a specific part of the tax law that deals with New Zealand banking groups.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516544.

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Money and consumer rights > Taxes
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FE 39: Direct ownership interests, or

“How to calculate your share of company ownership”

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

FE 38Measuring ownership interests in companies

  1. For the purposes of this subpart, a person’s ownership interest in a company is the total of the following percentages:

  2. any direct ownership interests they hold in the company; and
    1. any direct ownership interests held in the company by an associated person; and
      1. any indirect ownership interests they hold in the company; and
        1. any indirect ownership interests held in the company by an associated person.

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          Notes
          • Section FE 38 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).