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Income Tax Act 2007

Avoidance and non-market transactions - Avoidance: specific

GB 21: Dealing that defeats intention of financial arrangements rules

You could also call this:

“Rules to prevent unfair dealings in financial arrangements”

If you and someone else are involved in a financial arrangement, the Commissioner of Inland Revenue might look at how you’re dealing with each other. They want to make sure you’re not trying to get around the financial arrangements rules.

The Commissioner will check if you’re following the rules when you start the arrangement, change it, or end it. If they think you’re not playing fair, they can step in.

If the Commissioner believes you’re not dealing with each other in the right way, they can change things. They can decide what the arrangement should look like if you were dealing with each other fairly, without trying to take advantage.

The Commissioner can set a new price or value for the arrangement. This would be the amount that people who don’t know each other and are just doing business would agree on. This helps make sure everyone follows the rules and no one gets an unfair advantage.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516953.

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

GB 21Dealing that defeats intention of financial arrangements rules

  1. This section applies if the Commissioner considers that the parties to a financial arrangement were dealing with each other in a way that defeats the intention of the financial arrangements rules at the time the financial arrangement was—

  2. entered into or otherwise acquired; or
    1. varied; or
      1. disposed of.

        1. The Commissioner may treat the relevant transaction as having occurred for the consideration that parties dealing at arm’s length would have agreed on.

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