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Income Tax Act 2007

Avoidance and non-market transactions - Avoidance: specific

GB 15BA: CFC income or loss: arrangements for inclusion of CFC in test group

You could also call this:

“Rules for grouping foreign companies to manage income and losses”

This section is about how you can choose to group a Controlled Foreign Company (CFC) with other CFCs for testing purposes. You can do this under two specific sections of the law. However, if you make arrangements to include the CFC in the test group for one accounting period but not for another, and this results in you having less CFC income when the CFC is in the group and more CFC losses when it’s not, the Commissioner can step in. They can decide whether to treat your choice as made or not made, to stop you from getting this advantage. This applies when the CFC wouldn’t be a non-attributing active CFC unless you chose to test it as part of a group, and when you do this for two or more accounting periods.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6820320.

Topics:
Money and consumer rights > Taxes
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“Rules for transferring CFC interests and measuring income to prevent tax avoidance”

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GB 15B: Supplies affecting default test for non-attributing active CFC, or

“Rules for overseas companies providing goods or services to influence tax tests”

Part G Avoidance and non-market transactions
Avoidance: specific

GB 15BACFC income or loss: arrangements for inclusion of CFC in test group

  1. This section applies when—

  2. for a person and 2 or more accounting periods, a CFC is not a non-attributing active CFC unless the person chooses to test the CFC together with other CFCs as a group (the test group) under—
    1. section EX 21D (Non-attributing active CFC: default test); or
      1. section EX 21E (Non-attributing active CFC: test based on accounting standard); and
      2. the person enters into an arrangement to—
        1. choose to include the CFC in the test group for 1 of the accounting periods; and
          1. not choose to include the CFC in the test group for another of the accounting periods; and
          2. the effect of the arrangement in the absence of this section would be that the person had less net attributable CFC income when the CFC was in the test group and greater net attributable CFC losses when the CFC was not in the test group.

            1. The Commissioner may treat an election as having been made or not made, as appropriate to prevent the arrangement having the effect referred to in subsection (1)(c).

            Notes
            • Section GB 15BA: inserted, on (applying for the 2016–17 and later income years), by section 183(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).