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Income Tax Act 2007

Avoidance and non-market transactions - Avoidance: specific

GB 50: Arrangements involving partners and owners

You could also call this:

“Adjusting unfair deals between business partners to market value”

This section applies to you if you are a partner in a partnership or an owner of a look-through company. If you enter into an arrangement where the amount of consideration is not at market value, and this arrangement is meant to work against the rules for joint venturers, partners, partnerships, and look-through companies in subparts HB and HG, then the law steps in. In this case, the law will replace the amount you agreed on with a market value amount. This means that the arrangement will be treated as if it was made at a fair market price, regardless of what you actually agreed to.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1695717.

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Part G Avoidance and non-market transactions
Avoidance: specific

GB 50Arrangements involving partners and owners

  1. This section applies when—

  2. a partner of a partnership or an owner of a look-through company enters into an arrangement; and
    1. the arrangement involves an amount of consideration (the arrangement amount of consideration) that is not a market value amount of consideration; and
      1. the arrangement has a purpose or effect of defeating the intent and application of subparts HB and HG (which relate to joint venturers, partners, partnerships, and look-through companies).

        1. A market value amount of consideration is substituted for the arrangement amount of consideration.

        Notes
        • Section GB 50: added, on , by section 17(1) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).
        • Section GB 50 heading: amended, on , by section 122(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
        • Section GB 50(1)(a): replaced, on , by section 122(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
        • Section GB 50(1)(c): amended, on , by section 122(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
        • Section GB 50 list of defined terms look-through company: inserted, on , by section 122(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).