Section DB 9 — Income Tax Act 2007: Interest incurred on money borrowed to acquire shares in qualifying companies

DB 9 Interest incurred on money borrowed to acquire shares in qualifying companies Deduction for interest incurred (1) The deduction that a shareholder in a qualifying company has for interest in an income year is reduced by the amount of non-cash dividends, other than taxable bonus issues, derived by them or an associated person from the company in the income year. Exempt income (2) In determining the amount of the deduction that the shareholder has for the interest, section CW 15(1) (Dividends paid by qualifying companies) does not apply to treat as exempt income a distribution from the qualifying company to the shareholder, and the distribution is excluded from the definition of dividend . Associated persons (3) If the associated person referred to in subsection (1) is associated with more than 1 shareholder in the company, the amount of non-cash dividends is apportioned among the associated shareholders according to their effective interests in the company in the income year. Allocation of dividend (4) If section CD 39 (Calculation of amount of dividend when property made available) applies to a dividend derived by a shareholder of a qualifying company, the dividend is treated as having been paid and derived at the end of the quarter in which the amount is calculated. Link with subpart DA (5) This section overrides— (a) the general permission; and (b) the exempt income limitation. Defined in this Act: amount , associated person , bonus issue , deduction , dividend , effective interest , exempt income , exempt income limitation , general permission , income year , interest , non-cash dividend , pay , qualifying company , share , shareholder , taxable bonus issue , Compare: 2004 No 35 s HG 9(3)–(5)