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Income Tax Act 2007

Taxation of certain entities - Qualifying companies (QC)

HA 5: Elections to become qualifying company

You could also call this:

“How a company can choose to become a qualifying company”

A company can become a qualifying company if it meets certain requirements. To do this, all the directors and shareholders who are legally able to must agree to it. They need to choose this before the start of a special year called the grandparenting income year. This is the year before the first income year that starts on or after 1 April 2011.

The directors and shareholders must sign a notice saying they want the company to be a qualifying company. They must give this notice to the Commissioner. In some cases, they can make this choice a bit later, but only if it’s the company’s first tax return and it’s for the grandparenting income year.

Once they make this choice, they can’t change their minds before the end of the relevant income year. When signing the notice, a person is considered a director if they hold that position at the time.

There are more rules about these choices in sections HA 28 to HA 39. If you want to know more about when companies need to provide their first tax return, you can check section 37 of the Tax Administration Act 1994.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517139.

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Part H Taxation of certain entities
Qualifying companies (QC)

HA 5Elections to become qualifying company

  1. A company that meets the requirements of sections HA 6 to HA 9 may be a qualifying company only if all the directors of the company and every shareholder in the company with legal capacity, choose, before the start of the grandparenting income year, that the company is to become a qualifying company. Every director and every shareholder with legal capacity must sign a notice of election and give it to the Commissioner.

  2. An election is treated as made before the start of the grandparenting income year for the purposes of subsection (1), if the relevant persons choose before the end of the time allowed by section 37 of the Tax Administration Act 1994 for providing a return for the company's first income year, and—

  3. that income year is—
    1. the grandparenting income year; and
      1. nominated under section HA 30(3); and
      2. the company has not previously been required to provide a return of income.

        1. The elections referred to in subsection (1) must remain in effect and must not have been revoked before the end of the relevant income year.

        2. For the purposes of an election, a person is considered a director of a company if they hold the office at the time the notice is provided.

        3. The elections referred to in this section are dealt with in sections HA 28 to HA 39.

        4. In this section, grandparenting income year means the income year before the first income year that starts on or after 1 April 2011.

        Compare
        Notes
        • Section HA 5(1): amended, on , by section 172 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
        • Section HA 5(1): amended (with effect on 1 April 2010), on (applying for income years beginning on or after 1 April 2010), by section 72(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
        • Section HA 5(1B) heading: inserted (with effect on 1 April 2010), on (applying for income years beginning on or after 1 April 2010), by section 72(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
        • Section HA 5(1B): inserted (with effect on 1 April 2010), on (applying for income years beginning on or after 1 April 2010), by section 72(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
        • Section HA 5(5) heading: added (with effect on 1 April 2010), on (applying for income years beginning on or after 1 April 2010), by section 72(3) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
        • Section HA 5(5): added (with effect on 1 April 2010), on (applying for income years beginning on or after 1 April 2010), by section 72(3) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
        • Section HA 5 list of defined terms grandparenting income year: inserted (with effect on 1 April 2010), on , by section 72(4) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
        • Section HA 5 list of defined terms LAQC: repealed, on , by section 172 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).