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Income Tax Act 2007

Taxation of certain entities - Other entities

HR 9B: Bankruptcy-remote property during application of section HR 9

You could also call this:

“Property protected from tax debt during special funding arrangements”

When section HR 9 applies, there are special rules about what can happen to an originator’s property. Usually, this property can’t be used to pay the originator’s tax debt. This means it can’t be taken, sold, or used in any way to settle what the originator owes in taxes.

However, there are two exceptions to this rule. First, if the tax debt isn’t about income tax or provisional tax, and it would have been owed by the debt funding special purpose vehicle if section HR 9 didn’t exist, then the property can be used to pay that debt. Second, if the property could have been used to pay the tax debt without section HR 9 in place, then it can still be used that way.

Remember, these rules only apply to property that the originator has because of section HR 9. It’s important to understand that this law is designed to protect certain property from being used to pay tax debts in most situations.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM3238984.

Topics:
Money and consumer rights > Taxes
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Part H Taxation of certain entities
Other entities

HR 9BBankruptcy-remote property during application of section HR 9

  1. Despite section HR 9, property that an originator holds because of the application of section HR 9 cannot be attached, charged, disposed of, or otherwise used in the payment of the originator’s tax debt, except to the extent to which—

  2. the tax debt—
    1. does not relate to income tax or provisional tax; and
      1. would have been the relevant debt funding special purpose vehicle’s tax debt in the absence of section HR 9:
      2. the property could have been attached, charged, disposed of, or otherwise used in payment of the tax debt in the absence of section HR 9.

        Notes
        • Section HR 9B: replaced, on , by section 224(1) (and see section 224(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).