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Income Tax Act 2007

Timing and quantifying rules - Controlled foreign company and foreign investment fund rules - Calculation of FIF income or loss

EX 47B: Method required for shares subject to certain returning share transfers

You could also call this:

“How to calculate income for borrowed foreign shares”

You need to use a special method called the comparative value method to figure out your FIF income or loss for a year if you’re borrowing shares from someone else. This applies when:

You’re the one using the shares.

The person lending you the shares lives in another country.

You’re related to the person lending the shares, or this share borrowing is part of a bigger plan.

The other country’s tax rules say the person lending the shares still owns them.

FIF stands for Foreign Investment Fund. When you use shares that belong to someone else like this, it’s called a returning share transfer.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS65342.

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Money and consumer rights > Taxes
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Part E Timing and quantifying rules
Controlled foreign company and foreign investment fund rules: Calculation of FIF income or loss

EX 47BMethod required for shares subject to certain returning share transfers

  1. A person must use the comparative value method to calculate FIF income or FIF loss for an income year from an attributing interest that is a share subject to a returning share transfer if—

  2. the person is the share user; and
    1. the share supplier is resident in a country or territory outside New Zealand (the foreign jurisdiction); and
      1. the person is related to the share supplier or the returning share transfer is or is part of a structured arrangement; and
        1. the taxation law of the foreign jurisdiction treats the share supplier as owning the shares subject to the returning share transfer.

          Notes
          • Section EX 47B: inserted, on , by section 16(1) (and see section 16(2) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).