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Income Tax Act 2007

Taxation of certain entities - Terminating provisions

HZ 10: What happens when election is made under section HZ 9?

You could also call this:

“What happens to tax when a special company takes over a financial arrangement under section HZ 9?”

When you make an election under section HZ 9 for a debt funding special purpose vehicle, this section applies. You must have a financial arrangement or an excepted financial arrangement that was transferred to the special purpose vehicle by one of its originators. The special purpose vehicle must hold this arrangement before the election is made.

For income tax purposes, you treat the originator as if they acquired and held the financial arrangement, not the special purpose vehicle. The originator is also treated as if they paid any consideration for the arrangement and received any consideration from it. The special purpose vehicle does not calculate a base price adjustment for the financial arrangement, despite what section EW 29 says.

Section HR 10 overrides this section in certain situations. This section does not affect the Goods and Services Tax Act 1985.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS179943.

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Part H Taxation of certain entities
Terminating provisions

HZ 10What happens when election is made under section HZ 9?

  1. This section applies when—

  2. an originator makes an election under section HZ 9 that relates to a debt funding special purpose vehicle; and
    1. immediately before the election is made, the special purpose vehicle holds a financial arrangement or an excepted financial arrangement that was transferred to the special purpose vehicle by 1 of its originators.

      1. For the purposes of calculating the income tax liability of the special purpose vehicle and its originators for the income year in which the election is made and later income years (the post-disposal periods),—

      2. the relevant originator is treated for the post-disposal periods as if they had acquired and held the financial arrangement or excepted financial arrangement, not the special purpose vehicle:
        1. the relevant originator is treated for the post-disposal periods as if they had paid any consideration originally paid by the special purpose vehicle for or under the financial arrangement or excepted financial arrangement, and the special purpose vehicle is treated as not having paid that consideration:
          1. the relevant originator is treated for the post-disposal periods as if they had received any consideration originally received by the special purpose vehicle for or under the financial arrangement or excepted financial arrangement, and the special purpose vehicle is treated as not having received that consideration:
            1. the special purpose vehicle is, for the financial arrangement, a party that is not required to calculate a base price adjustment, despite section EW 29 (When calculation of base price adjustment required).

              1. Section HR 10 (What happens when vehicle stops being transparent debt funding special purpose vehicle?) overrides this section.

              2. Subsection (2) does not give rise to a supply of goods or services under the Goods and Services Tax Act 1985.

              Notes
              • Section HZ 10: inserted, on , by section 227(1) (and see section 227(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
              • Section HZ 10(1)(b): amended, on , by section 97(1) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
              • Section HZ 10(2): amended, on , by section 97(1) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
              • Section HZ 10(2)(a): amended, on , by section 97(1) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
              • Section HZ 10(2)(b): amended, on , by section 97(1) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
              • Section HZ 10(2)(c): amended, on , by section 97(1) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
              • Section HZ 10(2)(d): amended, on , by section 97(1) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
              • Section HZ 10(4) heading: inserted, on , by section 97(2) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
              • Section HZ 10(4): inserted, on , by section 97(2) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).