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Income Tax Act 2007

Avoidance and non-market transactions - Avoidance: specific

GB 15B: Supplies affecting default test for non-attributing active CFC

You could also call this:

“Rules for overseas companies providing goods or services to influence tax tests”

This section of the law applies to you if you have a controlled foreign company (CFC) that provides goods or services to someone. It’s important if that someone wouldn’t normally be part of your CFC’s test group under section EX 21D(1)(a) to (c). The law comes into effect if your CFC is trying to increase the amount in the bottom part of a calculation in section EX 21D(4).

If this happens, the money your CFC makes from providing these goods or services needs to be included in something called ‘gross adjustments’. You can find more information about ‘gross adjustments’ in section EX 21D(9)(d).

This rule is designed to make sure that companies don’t try to change their numbers to avoid paying taxes. It’s part of the government’s efforts to keep the tax system fair for everyone.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2566600.

Topics:

Money and consumer rights > Taxes

GB 15BA: CFC income or loss: arrangements for inclusion of CFC in test group, or

“Rules for grouping foreign companies to manage income and losses”

GB 15C: Arrangements related to accounting test for non-attributing active CFC, or

“Rules to prevent tax avoidance through overseas company accounting practices”

Part G Avoidance and non-market transactions
Avoidance: specific

GB 15BSupplies affecting default test for non-attributing active CFC

This section applies when a CFC makes a supply—
to a person who would not meet the requirements of section EX 21D(1)(a) to (c) (Non-attributing active CFC: default test) for the person to be a member of a test group, under that section, with the CFC; and
with the purpose of increasing the amount given by the denominator in the formula in section EX 21D(4) for the CFC.

The income from the supply is included in the item gross adjustments in section EX 21D(9)(d).

Notes

Section GB 15B: inserted (with effect on 30 June 2009), on 6 October 2009, by section 237(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).