Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Taxation of certain entities - Other entities

HR 9: Debt funding special purpose vehicles are transparent if election made by originator

You could also call this:

“Originator's tax treatment changes when choosing special status for debt funding vehicle”

If you are an originator and you make a special choice about a debt funding special purpose vehicle, some interesting things happen for tax purposes. You are treated as if you are doing the things that the vehicle does, as long as those things are related to assets you gave to the vehicle. This means you are seen as carrying out the vehicle’s activities, having its intentions, and holding its property if you originally gave that property to the vehicle. You are also treated as being part of any arrangements the vehicle is involved in if those arrangements are about assets you gave it. The vehicle, on the other hand, is treated as if it’s not doing these things or holding this property. This special treatment applies to most tax laws, but not to some specific rules about how to handle financial arrangements. You can find more details about how to make this choice in section HR 9BA or section HZ 9.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2575743.

Topics:
Money and consumer rights > Taxes
Previous

HR 8: Transitional residents, or

“Tax benefits for new residents returning to New Zealand after a long absence”

Next

HR 9BA: Elections to treat debt funding special purpose vehicles as transparent, or

“Choosing to make a debt funding special purpose vehicle transparent for tax purposes”

Part H Taxation of certain entities
Other entities

HR 9Debt funding special purpose vehicles are transparent if election made by originator

  1. For the purposes of the liabilities and obligations under an Inland Revenue Act, other than under sections EW 24 to EW 25B (which relate to consistency of use of spreading methods for financial arrangements), of an originator and the relevant debt funding special purpose vehicle, if an election has been made by any of the debt funding special purpose vehicle’s originators under section HR 9BA or HZ 9 (Elections to treat existing debt funding special purpose vehicles as transparent),—

  2. the originator is treated as carrying on an activity carried on by the debt funding special purpose vehicle, and having a status, intention, and purpose of the debt funding special purpose vehicle to the extent to which that activity, status, intention, or purpose relates to assets the originator transferred to the debt funding special purpose vehicle, and the debt funding special purpose vehicle is treated as not carrying on that activity or having that status, intention, or purpose:
    1. the originator is treated as holding property that the debt funding special purpose vehicle holds if the originator transferred that property to the debt funding special purpose vehicle, and the debt funding special purpose vehicle is treated as not holding that property:
      1. the originator is treated as being a party to any arrangement to which the debt funding special purpose vehicle is a party if the originator transferred that arrangement to the debt funding special purpose vehicle, or if that arrangement relates to assets the originator transferred to the debt funding special purpose vehicle, and the debt funding special purpose vehicle is treated as not being a party to that arrangement:
        1. the originator is treated as doing a thing and being entitled to a thing that the debt funding special purpose vehicle does or is entitled to if that thing relates to assets the originator transferred to the debt funding special purpose vehicle, and the debt funding special purpose vehicle is treated as not doing that thing or being entitled to that thing.

          Notes
          • Section HR 9: replaced, on , by section 222(1) (and see section 222(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).