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Income Tax Act 2007

Definitions and related matters - Residence and source in New Zealand

YD 5B: Attribution of income and expenditure to permanent establishment in New Zealand

You could also call this:

“How to calculate income and expenses for your New Zealand-based permanent business location”

When you have a business that operates through a permanent establishment in New Zealand, this law tells you how to figure out the income and expenses for that establishment.

You need to treat the permanent establishment as if it were a separate business, doing the same kind of work under the same conditions. Imagine that this separate business is dealing with your main business in a completely independent way.

The income and expenses you attribute to the permanent establishment should be what you would expect it to earn and spend if it really was this separate, independent business.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS65028.

Topics:
Money and consumer rights > Taxes
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Part Y Definitions and related matters
Residence and source in New Zealand

YD 5BAttribution of income and expenditure to permanent establishment in New Zealand

  1. This section applies when a person carries on business activities through a permanent establishment in New Zealand.

  2. The amounts of income and expenditure of the person that must be attributed to the permanent establishment are the amounts of income and expenditure that the permanent establishment might be expected to derive and incur if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the person.

Notes
  • Section YD 5B: inserted, on , by section 53(1) (and see section 53(2) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).