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Income Tax Act 2007

Deductions - Expenditure related to use of certain assets

DG 14: Interest expenditure: non-corporate shareholders

You could also call this:

"Claiming expenses when you borrow to buy company shares"

When you have a share in a company, you might be able to claim some expenses back. This happens when you have borrowed money to buy shares in the company and you have expenses related to that loan. You can only claim the expenses that are related to the loan for the shares.

You need to work out how much of the expenses you can claim, and you do this by following the rules in section DG 13. You treat yourself as if you were the company when you are working out the expenses. The amount of expenses you can claim is only for the money you borrowed to buy shares in the company, or in another company mentioned in section DG 13(1)(b).

If you have a company that owes you money, and you have expenses related to that, you might need to adjust those expenses. You do this by following the rules, and then you can claim the adjusted expenses. You must not be a company yourself, and you must have voting rights in the company you have shares in.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM5494560.

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Part DDeductions
Expenditure related to use of certain assets

DG 14Interest expenditure: non-corporate shareholders

  1. This section applies for a person, for an income year and a company (company A) that is a close company or qualifying company, when—

  2. a net asset balance remains outstanding for an income year after the application of—
    1. first, section DG 13, if applicable:
      1. secondly, section DG 12, if applicable:
        1. thirdly, section DG 11, if neither applies; and
        2. the person—
          1. is not a company; and
            1. has a voting interest in company A; and
              1. has interest expenditure for which they are allowed a deduction.

              2. For a natural person, the amount of interest expenditure that must be apportioned is only the amount of interest that the person incurs on money borrowed to acquire shares in company A or in a company referred to in section DG 13(1)(b).

              3. The apportionment is made using the rules set out in section DG 13(2) to (10), treating the person as if they were the company.

              4. Repealed
              Notes
              • Section DG 14: 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 14(1): amended (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); 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 106(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
              • Section DG 14(1)(b): amended (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); 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 106(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
              • Section DG 14(1)(b)(i): amended, on , by section 258 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
              • Section DG 14(4) heading: repealed, on , pursuant to section 44 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
              • Section DG 14(4): repealed, on , by section 44 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
              • Section DG 14 list of defined terms trustee: repealed, on , by section 258 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).