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Income Tax Act 2007

Deductions - Specific rules for expenditure types

DB 23B: Revenue account property: certain intra-group transactions

You could also call this:

“Special tax rules for certain financial deals between companies in the same group”

When you’re part of a company group, there are special rules about money you make from deals with other companies in your group. These rules apply when the deal is about a special type of financial item that you plan to sell for profit.

If this financial item stops existing (maybe because it’s paid off, cancelled, or the companies join together), you might not be allowed to claim some costs as expenses. This is true even if you usually could claim these costs.

You can’t claim the cost of buying the financial item as an expense. You also can’t claim the value the item had at the end of the last tax year as an expense.

These rules are strict. They overrule the general rule that lets you claim business expenses, but other general rules about what you can and can’t claim still apply.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS32717.

Topics:
Money and consumer rights > Taxes
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DB 23: Cost of revenue account property, or

“How to claim deductions for property bought to sell for profit”

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Part D Deductions
Specific rules for expenditure types

DB 23BRevenue account property: certain intra-group transactions

  1. This section applies when—

  2. a company that is part of a consolidated group at a time during an income year derives an amount of income from a transaction or arrangement with another company in the consolidated group at the same time; and
    1. the transaction or arrangement relates to an excepted financial arrangement that—
      1. is revenue account property; and
        1. ceases to exist, whether through redemption or cancellation, or on amalgamation or liquidation, or otherwise; and
        2. the amount is excluded income under section FM 8 (Transactions between group companies: income).

          1. Despite section DB 23, the company is denied a deduction for expenditure incurred in relation to the excepted financial arrangement as the cost of revenue account property.

          2. Despite section DB 49, the company is denied a deduction for the value that the excepted financial arrangement had at the end of the previous income year.

          3. This section overrides the general permission. The other general limitations still apply.

          Notes
          • Section DB 23B: inserted, on (with effect on 1 April 2016 and applying for the 2016–17 and later income years), by section 47(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).