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Income Tax Act 2007

Income - Recoveries

CG 8: Capital contributions

You could also call this:

“Rules for counting capital contributions as income over 10 years”

This part of the law talks about capital contributions. It affects you if you receive a capital contribution in a certain year. The rules apply for that year and the next 9 years after it.

For each of those years, you need to count some of the capital contribution as income. You do this by dividing the total capital contribution by 10. This gives you the amount you need to count as income for that year.

The capital contribution mentioned in the calculation is the one you got in the first year.

You don’t have to follow these rules if you’ve chosen to use a different part of the law instead. This other part is called section DB 64.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM3019315.

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Part C Income
Recoveries

CG 8Capital contributions

  1. This section applies for the income year (the first year) in which a person derives a capital contribution and for the 9 income years after that first year.

  2. For an income year, the amount given by the following formula is income of the person derived in that income year:

    capital contribution ÷ 10.

    Where:

    • In the formula, capital contribution is the capital contribution that the person derives in the first year.

    • This section does not apply for the capital contribution if the person has chosen, in accordance with section DB 64(1)(c) (Capital contributions), to apply section DB 64 instead.

    Notes
    • Section CG 8: added (with effect on 20 May 2010), on (applying for capital contributions derived after 20 May 2010), by section 75(1) of the Taxation (Budget Measures) Act 2010 (2010 No 27).