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Income Tax Act 2007

Avoidance and non-market transactions - Market value substituted

GC 11: Applications for matching treatment

You could also call this:

“How to request fair tax treatment in international business deals”

When the government changes the amount of money in a business deal to make it fair, some other rules apply. This can happen when you’re doing business with a company you control in another country.

If this happens to you, the other person in the deal can ask the government to treat them the same way. They need to do this within 6 months of you getting your tax bill. The government will decide if it’s fair to do this.

If the government agrees, they will use the new amount when looking at the other person’s taxes too. But this won’t change how much money they got as a dividend.

If the other person is a company you control in another country, this might change how much money from that company is taxed in New Zealand. It could also change how much loss from that company can be used to reduce taxes here.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517107.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
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“Receiving more than fair market value in a related transaction”

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“Adjustments don't change your withholding responsibilities”

Part G Avoidance and non-market transactions
Market value substituted

GC 11Applications for matching treatment

  1. This section applies when—

  2. an arm’s length amount of consideration is substituted under section GC 7 or GC 8 in relation to a transfer pricing arrangement entered into by a person (the taxpayer); and
    1. the other party to the arrangement or, if the other party is a controlled foreign company (CFC), a person with an income interest in the CFC, applies to the Commissioner within 6 months after an assessment is made for the taxpayer which reflects the substitution; and
      1. the Commissioner considers it is fair and reasonable to apply subsection (2), having regard to an adjustment made under a double tax agreement or any other matter; and
        1. the Commissioner has notified the other party.

          1. The substitution applies for the purposes of the application of this Act to the other party—

          2. excluding the determination of the extent to which the other party has derived or been paid a dividend; and
            1. including, when the other party is a CFC, the calculation of net attributable CFC income or net attributable CFC loss in relation to the other party, and the resultant calculation of the attributed CFC income or an attributed CFC loss or attributed CFC net loss of a person.

              Compare
              Notes
              • Section GC 11 heading: amended, on , by section 47(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
              • Section GC 11(1)(b): amended, on , by section 47(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
              • Section GC 11(2)(b): substituted (with effect on 30 June 2009), on , by section 248(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
              • Section GC 11 list of defined terms apply: inserted, on , by section 47(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
              • Section GC 11 list of defined terms branch equivalent income: repealed (with effect on 30 June 2009), on , by section 248(2)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
              • Section GC 11 list of defined terms branch equivalent loss: repealed (with effect on 30 June 2009), on , by section 248(2)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
              • Section GC 11 list of defined terms net attributable CFC income: inserted (with effect on 30 June 2009), on , by section 248(2)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
              • Section GC 11 list of defined terms net attributable CFC loss: inserted (with effect on 30 June 2009), on , by section 248(2)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
              • Section GC 11 list of defined terms notify: inserted, on , by section 47(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).