Section DD 2 — Income Tax Act 2007: Limitation rule

DD 2 Limitation rule What rule applies to (1) The expenditure to which the limitation rule applies is expenditure on the forms of entertainment described in subsections (2) to (6). Corporate boxes (2) The limitation rule— (a) applies to deductions for expenditure on corporate boxes, corporate marquees or tents, or other exclusive areas, whether temporary or permanent, at— (i) cultural, sporting, or other recreational events: (ii) activities taking place off the person’s business premises; and (b) applies to the cost of tickets or other rights of entry to the areas; and (c) applies to the cost of food and drink incidental to this form of entertainment. Holiday accommodation (3) The limitation rule— (a) applies to deductions for expenditure on accommodation in a holiday home, time-share apartment, or similar leisure venue; and (b) does not apply to accommodation that is merely incidental to business activities or employment duties; and (c) applies to the cost of food and drink incidental to this form of entertainment. Pleasure craft (4) The limitation rule— (a) applies to deductions for expenditure on yachts or other pleasure craft; and (b) applies to the cost of food and drink incidental to this form of entertainment. Entertainment off premises (5) The limitation rule applies to deductions for expenditure on food and drink that a person provides off their business premises. Entertainment on premises (6) The limitation rule applies to deductions for expenditure on food and drink that a person provides, other than light refreshments such as a morning tea and whether or not guests are present,— (a) on their business premises at a celebration meal, party, reception, or other similar social function: (b) in an area of the premises that at the time is reserved for senior employees to use and is not open to all the person’s employees working in the premises. Meaning of expenditure (7) Expenditure includes,— (a) in subsections (2) to (4),— (i) an amount of depreciation loss; and (ii) expenditure or loss on running costs and maintenance and similar matters; and (iii) a deduction for a lease premium under section DZ 9 (Premium paid on land leased before 1 April 1993); and (b) in subsections (2) to (6), any incidental expenditure on matters such as hireage of crockery, glassware, or utensils, waiting staff, and music or other entertainment provided in association with the specified kind of entertainment. Defined in this Act: amount , business , business premises , deduction , depreciation loss , expenditure , limitation rule , pay , Compare: 2004 No 35 s DD 2