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Income Tax Act 2007

Taxation of certain entities - Qualifying companies (QC)

HA 37: Period of grace for new shareholder

You could also call this:

“New shareholders have 63 days to meet qualifying company requirements”

If you own a qualifying company, you need to know about a grace period for new shareholders. This applies when your company stops meeting the requirements because someone new buys shares or an existing shareholder gains legal capacity.

Don’t worry, your company won’t lose its status right away. You have 63 days from when the shares were bought or the shareholder gained legal capacity to make an election about all of the relevant shares.

If you need more time, you can ask the Commissioner to extend this 63-day period. You, the new shareholder, the existing shareholder, or someone who can make an election as a shareholder can make this request.

Remember, these rules are linked to [section HA 5], which talks about the requirements for being a qualifying company and who can make elections.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517222.

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Money and consumer rights > Taxes
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HA 36: Period of grace following revocation of joint election, or

“Grace period for making a new election after a joint decision is cancelled for a qualifying company”

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HA 38: Elections by directors and shareholders required, or

“Directors and shareholders no longer need to make tax-related elections”

Part H Taxation of certain entities
Qualifying companies (QC)

HA 37Period of grace for new shareholder

  1. This section applies when a company has been a qualifying company but fails to meet the requirement of section HA 5 when—

  2. a person other than an existing shareholder acquires shares in the company; or
    1. an existing shareholder acquires legal capacity.

      1. The company’s status as a qualifying company does not end if, within 63 days of the date on which either the shares were acquired or the shareholder acquired legal capacity, an election relating to the whole of the relevant shareholding is made.

      2. The Commissioner may extend the 63-day period in subsection (2) on the application of the company, the new shareholder, the existing shareholder, or a person who is entitled to make an election as shareholder under section HA 5.

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      Notes
      • Section HA 37 list of defined terms apply: inserted, on , by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).