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Income Tax Act 2007

Taxation of certain entities - Qualifying companies (QC)

HA 33: Revocation of shareholders’ elections: by event

You could also call this:

“When a shareholder's election can be automatically cancelled”

Your election as a shareholder can be cancelled if certain things happen. If you die, your election is cancelled. If you sell all your shares, your election is cancelled, unless you sell them to another shareholder who already has an election. If a beneficiary gains legal capacity, the election can be cancelled in some cases. If a minority shareholder’s interests grow to 50% or more, or if the majority shareholders’ interests drop below 50%, the election is cancelled. If you made the election with other people and one of them cancels it, the whole election is cancelled.

When an election is cancelled because of these events, it stops being valid from the start of the income year when the event happened. However, there are some rules that can override this cancellation in certain situations.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517214.

Topics:
Money and consumer rights > Taxes
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Part H Taxation of certain entities
Qualifying companies (QC)

HA 33Revocation of shareholders’ elections: by event

  1. An election by a person as shareholder under section HA 5 is revoked if an event described in the following paragraphs occurs:

  2. the person dies:
    1. the person disposes of all of their shares, unless they dispose of them to an existing shareholder in the company for whom an election exists:
      1. if section HA 28(b) applies, or section HA 29 applies and the election is made in accordance with section HA 28(b), a beneficiary acquires legal capacity:
        1. if section HA 29 applies,—
          1. the effective interests of a minority shareholder increase to 50% or more; or
            1. the total effective interests of the majority shareholder or shareholders fall below 50%:
            2. for an election made jointly by 2 or more persons, 1 person revokes the election or is treated as having revoked the election.

              1. The revocation of an election under this section takes effect at the start of the income year in which the event occurred.

              2. Sections HA 11(6) and HA 34 to HA 37 override this section.

              Compare
              Notes
              • Section HA 33(1)(c): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 60(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).