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Income Tax Act 2007

Timing and quantifying rules - Terminating provisions - Entry to new life insurance regime: transitional and miscellaneous provisions

EZ 64: New Zealand Railways Corporation restructure: purpose and initial amounts for tax purposes

You could also call this:

“Setting tax rules for New Zealand Railways Corporation's change to a state enterprise”

This section talks about how tax works when the New Zealand Railways Corporation changes. The main goal is to make sure that when the Railways assets and debts move from a public authority to a state enterprise, there are no tax effects except the ones needed to account for this change.

You need to know that this applies to KiwiRail Holdings Limited, New Zealand Railways Corporation, and companies connected to them. It’s also used for the Tax Administration Act 1994.

For things that KiwiRail Holdings Limited owns that lose value over time, they will calculate how much value these things have lost since 31 December 2012. They’ll do this as if they bought these things on that date, using the value written down in a special list they made.

When it comes to money matters (called financial arrangements), KiwiRail Holdings Limited is treated as if they paid the amount written in their financial accounts on 31 December 2012 for things they got from Railways. For debts they took on from Railways, it’s treated as if they were paid that amount.

Some rules about financial arrangements (EW 38, EW 42, and GB 21) don’t apply to this Railways change.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM5505261.

Topics:

Money and consumer rights > Taxes

Business > Industry rules

EZ 63: Disposal and acquisition upon entry, or

“How life insurance companies handle property when new tax rules begin”

EZ 65: Expenditure or loss incurred, and amounts derived, or

“How KiwiRail and New Zealand Railways Corporation are treated for tax purposes”

Part E Timing and quantifying rules
Terminating provisions: Entry to new life insurance regime: transitional and miscellaneous provisions

EZ 64New Zealand Railways Corporation restructure: purpose and initial amounts for tax purposes

The purpose of this section, sections CW 65, EZ 65 to EZ 67, and YC 18C (which relate to the New Zealand Railways Corporation restructure) is to ensure that the Railways vesting gives rise to no tax consequences other than those necessary to account for the vesting of the Railways assets and liabilities from a public authority to a state enterprise. The treatments of KiwiRail Holdings Limited, New Zealand Railways Corporation, and associated companies in those sections also applies for the purposes of the Tax Administration Act 1994.
For a Railways asset that is depreciable property, KiwiRail Holdings Limited calculates, on and after 31 December 2012, depreciation recovery income and deductions for amounts of depreciation loss as if KiwiRail Holdings Limited had acquired the asset on 31 December 2012 for the amount recorded in a schedule prepared by KiwiRail Holdings Limited for the purposes of this section.
KiwiRail Holdings Limited is treated as—
paying an amount of consideration, for a Railways asset that is a financial arrangement, equal to the amount recorded in KiwiRail Holdings Limited's financial accounts for that arrangement on 31 December 2012:
being paid an amount of consideration, for a Railways liability that is a financial arrangement, equal to the amount recorded in KiwiRail Holdings Limited's financial accounts for that arrangement on 31 December 2012.

Sections EW 38, EW 42, and GB 21 (which relate to financial arrangements) do not apply for the Railways vesting.

Notes

Section EZ 64: inserted (with effect on 31 December 2012), on 17 July 2013, by section 54 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).