Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Deductions - Terminating provisions

DZ 21: Transfer in 2013–14 income year of assets to which subpart DG applies

You could also call this:

“Rules for companies transferring certain assets to shareholders in 2013-14”

This law is about what happens when a company transfers certain assets to its shareholders in the 2013-14 income year. It applies when a company had an asset on 31 March 2013 that is covered by section DG 3, and the company transfers this asset to its shareholders or their shareholders before the end of the 2013-14 income year. The company must choose to use this law.

For tax purposes, the company is treated as if it sold the asset for its adjusted tax value on the day it was transferred. The shareholder who gets the asset is treated as if they bought it on the same day the company did, for the same price. The shareholder is also treated as if they used the asset in the same way as the company did, used the same depreciation method, and got the same tax deductions for depreciation that the company did.

If more than one shareholder gets part of the asset, how much of the cost and depreciation they can claim is based on how many voting shares they have in the company.

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 It might be out of date or be missing some parts.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=DLM5498070.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
Previous

DZ 20: Expenditure incurred while income-earning activity interrupted by Canterbury earthquake, or

“Tax deductions for business costs during Canterbury earthquake disruptions”

Next

DZ 22: Aircraft maintenance: aircraft engines acquired before 2017–18 income year, or

“Tax deductions for maintaining older aircraft engines”

Part D Deductions
Terminating provisions

DZ 21Transfer in 2013–14 income year of assets to which subpart DG applies

  1. This section applies when—

  2. a company has on 31 March 2013 an asset described in section DG 3 (Meaning of asset for this subpart); and
    1. the asset is transferred before the end of the company's 2013–14 income year to—
      1. 1 or more of the company's shareholders in proportion to their shareholding:
        1. 1 or more of the shareholders of a shareholder in proportion to their shareholding; and
        2. the company chooses to apply this section.

          1. For the purposes of section CG 1 (Amount of depreciation recovery income) and subpart EE (Depreciation),—

          2. the company is treated as disposing of the asset for an amount equal to the adjusted tax value of the asset on the day of the transfer; and
            1. the shareholder is treated as having—
              1. acquired the asset on the date on which the company acquired it for an amount equal to the amount the company paid to acquire it; and
                1. used the asset for the purposes for which the company used it; and
                  1. used the depreciation method used by the company in relation to the asset; and
                    1. been allowed a deduction for an amount of depreciation loss that the company has been allowed since the company's acquisition of the asset.

                    2. For the purposes of subsection (2), if more than 1 shareholder referred to in subsection (1)(b) acquires the asset, their share of the cost of the asset and the amount of depreciation loss is based on the proportion of their voting interests in the company.

                    Notes
                    • Section DZ 21: inserted (with effect on 1 April 2013), on , by section 37 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                    • Section DZ 21 heading: replaced (with effect on 1 April 2013 and applying for the 2013–14 and later income years but not applying in relation to an asset when a shareholder who acquires the asset disposes of it before the date of introduction of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill), on , by section 58(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                    • Section DZ 21(2) heading: replaced (with effect on 1 April 2013 and applying for the 2013–14 and later income years but not applying in relation to an asset when a shareholder who acquires the asset disposes of it before the date of introduction of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill), on , by section 58(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                    • Section DZ 21(2): replaced (with effect on 1 April 2013 and applying for the 2013–14 and later income years but not applying in relation to an asset when a shareholder who acquires the asset disposes of it before the date of introduction of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill), on , by section 58(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                    • Section DZ 21(3) heading: inserted (with effect on 1 April 2013 and applying for the 2013–14 and later income years but not applying in relation to an asset when a shareholder who acquires the asset disposes of it before the date of introduction of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill), on , by section 58(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                    • Section DZ 21(3): inserted (with effect on 1 April 2013 and applying for the 2013–14 and later income years but not applying in relation to an asset when a shareholder who acquires the asset disposes of it before the date of introduction of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill), on , by section 58(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                    • Section DZ 21 example: amended (with effect on 1 April 2013), on , by section 59 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                    • Section DZ 21 list of defined terms deduction: inserted (with effect on 1 April 2013), on , by section 58(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                    • Section DZ 21 list of defined terms depreciation loss: inserted (with effect on 1 April 2013), on , by section 58(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                    • Section DZ 21 list of defined terms pay: inserted (with effect on 1 April 2013), on , by section 58(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                    • Section DZ 21 list of defined terms voting interest: inserted (with effect on 1 April 2013), on , by section 58(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).