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Income Tax Act 2007

Taxation of certain entities - Other entities

HR 9BA: Elections to treat debt funding special purpose vehicles as transparent

You could also call this:

“Choosing to make a debt funding special purpose vehicle transparent for tax purposes”

You can choose to treat a debt funding special purpose vehicle as transparent for tax purposes. To do this, you need to make an election. You can make this election in one of two ways:

  1. You can tell the Commissioner that you want the special purpose vehicle to have certain liabilities and obligations. You need to do this after you form the special purpose vehicle but before you file your tax return.

  2. Or, you can include the income and expenses of the special purpose vehicle in your first tax return after you transfer assets to it.

Once you make this election, you can’t change your mind. The election starts from the date you first transferred any of your assets to the special purpose vehicle. It stays in effect until the company or trust stops being a debt funding special purpose vehicle.

Remember, there’s a special rule in section HZ 9 that overrides this section. It’s about elections for existing debt funding special purpose vehicles.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS179732.

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HR 9: Debt funding special purpose vehicles are transparent if election made by originator, or

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"Property protected from tax debt during special funding arrangements"

Part H Taxation of certain entities
Other entities

HR 9BAElections to treat debt funding special purpose vehicles as transparent

  1. An originator makes an election referred to in section HR 9 by—

  2. after the formation of the debt funding special purpose vehicle and before the return of income referred to in paragraph (b), notifying the Commissioner that the originator chooses to have the liabilities and obligations referred to in section HR 9 that the debt funding special purpose vehicle would have in the absence of the election; or
    1. in the originator’s first return of income filed after the first transfer of assets by the originator to the debt funding special purpose vehicle, returning income derived and expenditure incurred by the debt funding special purpose vehicle.

      1. An election under this section—

      2. cannot be revoked; and
        1. has effect from the date on which the originator first transferred any of their assets to the debt funding special purpose vehicle; and
          1. remains in effect until the relevant company or trustee of a trust stops being a debt funding special purpose vehicle.

            1. This section is overridden by section HZ 9 (Elections to treat existing debt funding special purpose vehicles as transparent).

            Notes
            • Section HR 9BA: inserted, on , by section 223(1) (and see section 223(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
            • Section HR 9BA(1): replaced, on , by section 117 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).