Section DC 3 — Income Tax Act 2007: Pension payments to former partners

DC 3 Pension payments to former partners When this section applies (1) This section applies when— (a) a person is a partner in a partnership; or (b) a person who was a partner in a partnership is in business on their own account. Exclusion (2) This section does not apply to a partnership or a business that is engaged wholly or mainly in investing money or in holding, or dealing in, shares, securities, investments, or estates or interests in land. Deduction (3) The person is allowed a deduction for their share of an amount, to the extent to which the amount is reasonable, paid as a pension to a former partner, or to the spouse, civil union partner, or de facto partner of a deceased former partner, if— (a) the partnership in which the former partner was a partner (the old partnership ) carried on the same business as that now carried on either by the partnership that is paying the pension or by the person in business who is paying the pension; and (b) the former partner retired from the old partnership or their employment ended through retirement; and (c) the former partner or their spouse, civil union partner, or de facto partner has a right to receive the pension under a deed for a fixed period or for life or, in the case of the spouse, civil union partner, or de facto partner, until the spouse, civil union partner, or de facto partner enters a new marriage, civil union, or de facto relationship; and (d) the pension is paid for the former partner’s services in the old partnership. Link with subpart DA (4) This section supplements the general permission and overrides the capital limitation. The other general limitations still apply. Defined in this Act: amount , business , capital limitation , deduction , estate , general limitation , general permission , interest , land , pay , share , supplement , Compare: 2004 No 35 s DC 3