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Tax Administration Act 1994

Interest - Specific provisions

120OE: Interest paid on deposits in tax pooling accounts

You could also call this:

"Earning interest on money in a tax pooling account"

Illustration for Tax Administration Act 1994

When you put money in a tax pooling account, you earn interest on it. The interest is for the tax pooling intermediary, from when the money is deposited until it is either refunded or transferred under section RP 19 of the Income Tax Act 2007. The interest is paid to the intermediary when the money is moved to another account or refunded. When a tax pooling intermediary pays their client, or a client pays their tax pooling intermediary, it can be treated as a payment of interest for tax purposes, such as under section CC 4 of the Income Tax Act 2007. This payment can also be treated as an expense for the person making the payment. Money in a tax pooling account is treated as tax paid for some purposes, like calculating use of money interest.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1264972.

Topics:
Money and consumer rights > Taxes
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120OD: Application of sections 120A, 120AA and 120C to 120I to intermediaries who operate tax pooling accounts, or

"Rules for people who manage tax pooling accounts"

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120P: Spreading tax liability or apportioning income back over earlier income years, or

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Part 7Interest
Specific provisions

120OEInterest paid on deposits in tax pooling accounts

  1. Interest paid by the Commissioner on an amount deposited in a tax pooling intermediary's tax pooling account accrues to the benefit of the intermediary from the date of the deposit to, as applicable,—

  2. the date the amount is refunded; or
    1. the date of a transfer under section RP 19 of the Income Tax Act 2007.

      1. The interest referred to in subsection (1) is payable to the intermediary on the date the amount is credited to another account with the Commissioner, or on the date the amount is refunded to the intermediary.

      2. A deposit in a tax pooling account is treated as tax paid by the intermediary for the purposes of calculating use of money interest, but for no other purpose.

      3. Subsection (5) applies when a payment is made either by a tax pooling intermediary to their client, or by a client to their tax pooling intermediary, and the payment represents a difference between funds held in a tax pooling account for a period of time and an amount paid for the entitlement to the funds.

      4. The payment is treated as—

      5. a payment of interest to the person who derives the payment for the purposes of section CC 4 of the Income Tax Act 2007, the RWT rules, and the NRWT rules:
        1. expenditure incurred in deriving the income of the person making the payment.

          Compare
          Notes
          • Section 120OE: 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).
          • Section 120OE(1): replaced, on , by section 667 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).