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Income Tax Act 2007

Deductions - Expenditure related to use of certain assets

DG 2: Application of this subpart

You could also call this:

"How this part of the tax law applies to individual assets and companies"

This part of the law applies to each asset separately. The rules here override some other rules, like sections DB 5, DB 7, and DB 8, when it comes to spending money on assets. These rules are about how you work out what you can deduct from your taxes.

When you use an asset for personal things, you do not have to pay fringe benefit tax. If a company gives an employee a benefit, like a non-cash gift, and section CX 17 applies, the company must choose to treat it as a dividend. You treat a group of companies as one company if they own each other.

For the purposes of this law, a company's voting interest in another company is not affected by the look-through rule in section YC 4. This means that when working out how much of another company one company owns, you do not use this rule to say the owners of the first company really own it. Having no voting interest or market value interest means you have no interest at all.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM5494504.

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DG 1: What this subpart does, or

"This subpart explains how to calculate tax deductions for mixed-use assets"

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DG 3: Meaning of asset for this subpart, or

"What counts as an asset for tax purposes in this part of the law"

Part DDeductions
Expenditure related to use of certain assets

DG 2Application of this subpart

  1. The rules in this subpart apply on an asset by asset basis.

  2. The rules in this subpart override sections DB 5, DB 7, and DB 8 (which relate to deductions for financing expenditure) in relation to expenditure that this subpart applies to.

  3. Subpart DD (Entertainment expenditure) does not apply to expenditure incurred in relation to the private use of an asset to which this subpart applies.

  4. Repealed

  5. No liability to pay fringe benefit tax arises from the private use of an asset to which this subpart applies. In circumstances where section CX 17 (Benefits provided to employees who are shareholders or investors) applies to a company to which this subpart also applies, the company must choose to treat a non-cash benefit referred to in that section as a dividend.

  6. For the purposes of this subpart,—

  7. a group of companies is treated as a wholly-owned group of companies:
    1. a voting interest in a company includes a market value interest when a market value circumstance exists for the company.

      1. In this subpart,—

      2. for the purposes of determining the extent to which a company (company A) has a voting interest or market value interest in another company (company B), the look-through rule in section YC 4 (Look-through rule for corporate shareholders) does not apply to treat company A's voting interest or market value interest as held by company A's shareholders or anyone else; and
        1. for the purposes of determining the extent to which company A has a voting interest or market value interest of more than 10% in an associated company, the look-through rule in section YC 4 does not apply to treat a voting interest or a market value interest of company A in the associated company as held by their respective shareholders or anyone else; and
          1. a zero voting interest is not a voting interest, and a zero market value interest is not a market value interest.

            Notes
            • Section DG 2: inserted (with effect on 1 April 2013 and applying for the 2013–14 and later income years for an item of property referred to in section DG 3(2)(a)(i), and for the 2014–15 and later income years for an item of property referred to in section DG 3(2)(a)(ii) and (iii)), on , by section 30(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
            • Section DG 2(3B) heading: repealed, on , pursuant to section 41 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
            • Section DG 2(3B): repealed, on , by section 41 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).