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Income Tax Act 2007

Recharacterisation of certain transactions - Hybrid and branch mismatches of deductions and income from multi-jurisdictional arrangements

FH 2: Order of application of provisions

You could also call this:

“How to decide which rule applies when multiple rules could affect your tax deductions or income”

If more than one rule in this part of the law could stop you from claiming a deduction for an expense or loss, or could identify an amount as a mismatch, you need to apply the rules in a specific order. This order is set out in the law.

For denying deductions or identifying mismatch amounts in expenses or losses, you should follow this order:

  1. Section FH 3
  2. Section FH 5
  3. Section FH 7
  4. Section FH 11
  5. Section FH 8
  6. Section FH 9
  7. Section FH 10

If more than one rule could identify an amount you receive as a mismatch, you should apply the rules in this order:

  1. Section FH 4
  2. Section FH 6

You need to follow these orders when you’re working out how the rules apply to your situation.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS65820.

Topics:
Money and consumer rights > Taxes
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Part F Recharacterisation of certain transactions
Hybrid and branch mismatches of deductions and income from multi-jurisdictional arrangements

FH 2Order of application of provisions

  1. If more than 1 provision in this subpart may deny an amount of expenditure or loss as a deduction or identify the amount as a mismatch amount in a situation, the provisions are applied in the order given by the sections, which is—

  2. section FH 3:
    1. section FH 5:
      1. section FH 7:
        1. section FH 11:
          1. section FH 8:
            1. section FH 9:
              1. section FH 10.

                1. If more than 1 provision in this subpart may identify an amount received as a mismatch amount in a situation, the provisions are applied in the order given by the sections, which is—

                2. section FH 4:
                  1. section FH 6.

                    Notes
                    • Section FH 2: inserted, on , by section 35(1) (and see section 35(2) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).