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Income Tax Act 2007

Avoidance and non-market transactions - Avoidance: general

GA 2: Commissioner’s power to adjust: fringe benefit tax

You could also call this:

“Tax commissioner can adjust fringe benefit tax to prevent avoidance”

This law gives the tax commissioner special powers when it comes to fringe benefit tax. If someone tries to avoid paying the right amount of fringe benefit tax through a tricky arrangement, the commissioner can step in and fix things.

If the commissioner finds out about such an arrangement, they can change how much excluded income a person has. Excluded income is money you don’t have to pay tax on. The commissioner does this to make sure the person doesn’t get an unfair tax advantage.

When deciding how to adjust the excluded income, the commissioner can think about how much excluded income the person would have had if they hadn’t tried to avoid tax. They can also consider how much excluded income the person might have had, or what they would likely have had without the tricky arrangement.

The commissioner can look at the person’s own excluded income, or even excluded income that another person got because of the arrangement. This helps make sure everything is fair.

If the commissioner decides to count some excluded income as taxable income for one person, they can’t also count it as taxable income for someone else. This stops the same money from being taxed twice.

All of this helps make sure that people pay the right amount of fringe benefit tax and don’t get away with avoiding it through clever schemes.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516867.

Topics:
Money and consumer rights > Taxes
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Part G Avoidance and non-market transactions
Avoidance: general

GA 2Commissioner’s power to adjust: fringe benefit tax

  1. This section applies if—

  2. an arrangement is void under section BG 1 (Tax avoidance); and
    1. the arrangement involves altering the incidence of fringe benefit tax (FBT).

      1. The Commissioner may adjust the excluded income under section CX 3 (Excluded income) of a person affected by the arrangement in a way the Commissioner thinks appropriate, in order to counteract a tax advantage obtained by the person from or under the arrangement.

      2. When applying subsection (2), the Commissioner may have regard to 1 or more of the amounts listed in subsection (4) which, in the Commissioner’s opinion, had the arrangement not occurred, the person—

      3. would have had; or
        1. would in all likelihood have had; or
          1. might be expected to have had.

            1. The amounts referred to in subsection (3) are—

            2. an amount of excluded income of the person:
              1. an amount of excluded income of the person, if the person had been allowed the benefit of an amount of excluded income derived by another person as a result of the arrangement.

                1. If the Commissioner includes an amount of excluded income in calculating the taxable income of the person, it must not be included in calculating the taxable income of another person.

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