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FF 11: Changes in foreign group membership
or “Removed provision about changes in overseas company groups”
You could also call this:

“This part explains when rules apply to foreign banks lending money to their New Zealand branches”

This part of the law applies when a foreign bank gives money to its New Zealand branch. It’s used for the NRWT rules and the Stamp and Cheque Duties Act 1971.

For this law to apply, three things need to happen:

  1. A foreign bank gives money to its New Zealand branch.
  2. The branch records this as a loan in its accounting records for the year.
  3. When working out its income tax, the branch claims a deduction for this money as if it were an interest-bearing loan.

In this part of the law, a foreign bank means a non-resident company that is both a registered bank and does business in New Zealand through a fixed establishment.

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Next up: FG 2: Notional loans

or “How banks' internal money transfers to branches are treated as loans for tax purposes”
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Part F Recharacterisation of certain transactions
Treatment of notional loans to New Zealand branches of foreign banks

FG 1When this subpart applies

  1. This subpart applies, for the purposes of the NRWT rules and the Stamp and Cheque Duties Act 1971, when—

  2. an amount is made available by a foreign bank (the bank) to a business carried on in New Zealand through a fixed establishment of the bank in New Zealand (the branch); and
    1. the transaction is recorded as a loan in the accounting records of the branch for an income year; and
      1. in calculating its income tax liability for the income year, the branch is allowed a deduction in relation to the amount made available to it, treating—
        1. the amount made available as an interest-bearing loan; and
          1. the amount allowed as a deduction as interest on the loan.

          2. In this subpart, foreign bank means a non-resident that is—

          3. a registered bank; and
            1. engaged in business in New Zealand through a fixed establishment in New Zealand.

              Notes
              • Section FG 1: inserted, on , by section 105(1) (and see section 105(2)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).