Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Avoidance and non-market transactions - Avoidance: specific

GB 7: Arrangements involving CFC control interests

You could also call this:

“Rules for foreign company ownership to prevent tax avoidance”

This law is about how New Zealand deals with people trying to avoid rules about foreign companies.

If you and other New Zealanders make a plan where someone else owns part of a foreign company, and you’re doing this to stop the foreign company from being called a controlled foreign company (CFC), the government has a way to handle this.

In this case, the government will act as if you and the other New Zealanders each own an equal share of the foreign company. They do this to check if the company should be called a CFC.

This rule helps make sure people can’t use clever plans to avoid the CFC rules.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516891.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
Previous

GB 6: Arrangements involving qualifying companies, or

“Rules for arrangements that try to misuse qualifying company status”

Next

GB 8: Arrangements involving attributed repatriation from CFCs, or

“This rule about overseas companies' money and taxes no longer applies”

Part G Avoidance and non-market transactions
Avoidance: specific

GB 7Arrangements involving CFC control interests

  1. This section applies when—

  2. 2 or more persons who are New Zealand residents enter into an arrangement; and
    1. under the arrangement, a control interest in a foreign company is held by another person; and
      1. a purpose of the arrangement is to prevent the foreign company being a controlled foreign company (CFC).

        1. The control interest is treated as being held by the New Zealand residents in equal proportions, for the purposes of determining whether the company is a CFC.

        Compare