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New Zealand law explained for everyone

Income Tax Act 2007

Taxation of certain entities - Agents

HD 13B: AIM companies

You could also call this:

“Companies using AIM for provisional tax with shareholder-employee pay arrangements”

When you run a company that uses the AIM provisional tax method, this law applies to you in certain situations. If your company sets aside money for a shareholder-employee’s pay and makes a tax payment for them, there are special rules to follow.

In this case, your company is treated as an agent for the shareholder-employee when it comes to figuring out their residual income tax. This means your company acts on behalf of the shareholder-employee for this specific tax purpose.

There’s another rule called Section HD 2 that usually applies to agents, but it doesn’t apply in this situation. The only exception is if your company is acting as an agent for the shareholder-employee for reasons other than what’s described here.

Remember, these rules only apply when your company uses the AIM provisional tax method, sets aside money for a shareholder-employee’s pay, and makes a tax payment for them.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS43766.

Topics:
Money and consumer rights > Taxes
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Part H Taxation of certain entities
Agents

HD 13BAIM companies

  1. This section applies when a company—

  2. uses the AIM provisional tax method; and
    1. makes a provision that relates to expenditure on employment income for a shareholder-employee of the company; and
      1. makes a payment of tax for the shareholder-employee.

        1. The company is treated as agent for the shareholder-employee for the purposes of the definition of residual income tax.

        2. Section HD 2 does not apply to the agency, unless the agency does not arise only under this section.

        Notes
        • Section HD 13B: inserted, on , by section 118 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).