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Income Tax Act 2007

Avoidance and non-market transactions - Avoidance: specific

GB 34: ICA arrangements for carrying amounts forward

You could also call this:

“Rules for companies carrying forward imputation credit account balances”

You need to know about a rule for companies that have something called an imputation credit account (ICA). This rule is about arrangements that let these companies carry forward certain amounts.

If a company’s shares have been part of an arrangement that changes the rights attached to them, and this arrangement helps the company meet certain requirements, there might be a problem. The requirements are about keeping the same shareholders over time.

If the arrangement was made to get around these shareholder requirements, then the company won’t be allowed to use it. The law says that if this happens, the company will be treated as if it didn’t meet the requirements for those shares.

This rule is there to stop companies from trying to cheat the system by making special arrangements with their shares just to keep their ICA benefits.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516995.

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Part G Avoidance and non-market transactions
Avoidance: specific

GB 34ICA arrangements for carrying amounts forward

  1. This section applies when—

  2. a share in an imputation credit account (ICA) company or another company has been subject to an arrangement, including an arrangement directly or indirectly altering rights attached to the share; and
    1. the arrangement allows the ICA company to meet the requirements of section OA 8(2), (7), and (8) (Shareholder continuity requirements for memorandum accounts); and
      1. a purpose of the arrangement is to defeat the intent and application of section OA 8(2), (7), and (8).

        1. The ICA company is treated as not meeting the requirements in relation to the share.

        Compare
        Notes
        • Section GB 34(1)(b): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 119(1)(a) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
        • Section GB 34(1)(c): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 119(1)(b) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).