Section DT 2 — Income Tax Act 2007: Arrangement for petroleum exploration expenditure and sale of property

DT 2 Arrangement for petroleum exploration expenditure and sale of property What this section applies to (1) This section applies to a person and an arrangement if— (a) the person may incur expenditure under the arrangement and would be allowed a deduction for the expenditure under section DT 1 ; and (b) the person or a person associated with them may dispose of property— (i) under the arrangement; or (ii) under a right given by the arrangement to the person or the associated person; or (iii) in meeting an obligation of the person or the associated person arising from a right given by the arrangement; and (c) the property is not— (i) exploratory material; or (ii) a petroleum permit; or (iii) material or a permit that relates to petroleum mining operations undertaken outside New Zealand, and that material or permit are substantially the same as those described in subparagraphs (i) or (ii), with necessary modifications made to this subpart and the Crown Minerals Act 1991 . Amount of deduction (2) The person is allowed a deduction in an income year for the expenditure described in subsection (1)(a) but only to the extent of an amount equal to the greater of zero and the amount calculated using the formula— expenditure − (consideration − lesser amount). Exclusion (3) If consideration for the property is derived in an income year, the person’s deductions in earlier income years for the expenditure described in subsection (1)(a) are reduced so that the total of those deductions is equal to the greater of zero and the amount calculated using the formula— previous expenditure − consideration. Definition of items in formulas (4) In the formulas in subsections (2) and (3),— (a) expenditure is the amount of expenditure for which the person would be allowed a deduction in the income year under section DT 1(1) : (b) consideration is the total consideration for the property that is derived before or during the income year: (c) lesser amount is the lesser of— (i) the amount of consideration; and (ii) the amount of expenditure for which a person would be allowed a deduction in earlier income years under section DT 1(1) : (d) previous expenditure is the amount of expenditure for which a person would be allowed a deduction in earlier income years under section DT 1(1) . Order of reduction (5) When an adjustment under subsection (3) is being made, deductions are treated as denied in the same order in time as they would have been allowed under section DT 1(1) . Application of Tax Administration Act 1994 (6) Section 44A of the Tax Administration Act 1994 applies to a person to whom this section applies. Amendment of assessment (7) Despite the time bar, the Commissioner may amend an assessment at any time in order to give effect to this section. Relationship with section DT 1 (8) This section overrides section DT 1 . Link with subpart DA (9) This section supplements the general permission and overrides the capital limitation. The other general limitations still apply. Defined in this Act: amount , arrangement , assessment , associated person , Commissioner , consideration , deduction , dispose , exploration permit , exploratory material , income year , petroleum , petroleum exploration expenditure , prospecting permit , supplement , time bar , Compare: 2004 No 35 s DT 2 Section DT 2(1)(b): amended, on 1 April 2010 (applying for the 2010–11 and later income years), by section 98(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section DT 2(1)(b): amended (with effect on 1 April 2008), on 6 October 2009, by section 98(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section DT 2(1)(c)(ii): substituted (with effect on 1 April 2008), on 6 October 2009, by section 98(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section DT 2(1)(c)(iii): substituted (with effect on 1 April 2008), on 6 October 2009, by section 98(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section DT 2 list of defined terms 1973 version provisions : repealed, on 1 April 2010, by section 98(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section DT 2 list of defined terms 1988 version provisions : repealed, on 1 April 2010, by section 98(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section DT 2 list of defined terms 1990 version provisions : repealed, on 1 April 2010, by section 98(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).