Plain language law

New Zealand law explained for everyone

Tax Administration Act 1994

Assessments

92AB: Assessments of liabilities of shareholders of qualifying companies

You could also call this:

"When you own shares in a company, you might have to help pay its unpaid income tax."

Illustration for Tax Administration Act 1994

You can be held responsible for paying some of the income tax a company owes if you agree to it under section HA 8 of the Income Tax Act 2007. The Commissioner can decide you are liable for this tax. You are acting as an agent for the company when you pay this tax. You might not have to pay as much tax if you buy or sell shares in the company during the income year. The Commissioner must agree this is fair and you must give them the right information. This information shows the company's tax liability is smaller for the time you owned the shares. The Commissioner can assess the company and you separately. This means they can decide how much tax the company and you owe, and these amounts can be different.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1264851.

Topics:
Money and consumer rights > TaxesBusiness > Industry rules
Previous

92AA: Assessment for tax credits under Part M of Income Tax Act 2007, or

"How tax credits are worked out"

Next

92A: Basic rates of income tax, or

"How much income tax you pay at the basic rate"

Part 6Assessments

92ABAssessments of liabilities of shareholders of qualifying companies

  1. The Commissioner may assess the liability of a shareholder who has agreed under section HA 8 of the Income Tax Act 2007 to be personally liable for their share of the income tax payable by a qualifying company.

  2. A person assessed under subsection (1) is liable as agent for the company.

  3. The Commissioner may reduce a person’s agreed liability if, in the relevant income year,—

  4. they first acquire shares in the company; or
    1. they dispose of all their shares in the company.

      1. To reduce a person’s liability under subsection (3),—

      2. the Commissioner must be satisfied that the reduction is appropriate; and
        1. the person must provide adequate accounts and other relevant information to show that the company’s income tax liability attributable to the part of the income year in which they were a shareholder is proportionately smaller than the liability attributable to the full income year.

          1. An assessment of the company or the person does not prevent an assessment of the other.

          Compare
          Notes
          • Section 92AB: inserted, on (effective for 2008–09 income year and later income years, unless the context requires otherwise), by section ZA 2 of the Income Tax Act 2007 (2007 No 97).