Section DV 4 — Income Tax Act 2007: Carry forward of expenditure

DV 4 Carry forward of expenditure When this section applies (1) This section applies when— (a) the expenditure treated as being incurred by the master superannuation fund, under section DV 2(3) , is more than the maximum amount for which it is allowed a deduction, as calculated under section DV 3 , so there is surplus expenditure; and (b) the member superannuation fund chooses to deal with the surplus expenditure under this section, rather than deducting it itself; and (c) the member superannuation fund has funds invested in the master superannuation fund at the time referred to in section DV 2(1)(b) and while its election under section DV 2(3) continues and while it deals with the surplus expenditure under this section. What this section does not apply to (1B) This section does not apply to a transfer of expenditure to a master superannuation fund that is a multi-rate PIE. KiwiSaver schemes [Repealed] (2) [Repealed] Surplus carried forward (3) The member superannuation fund carries the surplus expenditure forward to the next income year and takes the following steps: (a) it gets the combined expenditure by adding the surplus expenditure to the expenditure, if any, incurred by it in the income year that it chooses to treat as being incurred by the master superannuation fund: (b) it calculates the maximum deduction for the income year, using the formula in section DV 3 : (c) if the combined expenditure is the same as or less than the maximum deduction, it— (i) treats the surplus expenditure as expenditure incurred by the master superannuation fund in deriving assessable income in the income year; and (ii) applies subsections (5) to (8): (d) if the combined expenditure is more than the maximum deduction, it— (i) carries forward the new surplus expenditure to the next income year; and (ii) applies subsection (4). Surplus dealt with until gone (4) The member superannuation fund repeats the steps in subsection (3) for the following income years until all surplus expenditure is deducted. Deduction allowed to master superannuation fund (5) Expenditure treated under subsection (3)(c)(i) as incurred by the master superannuation fund in deriving income is allowed as a deduction in the income year in which it is so treated. The amount of the deduction is limited by subsection (6). Amount of deduction (6) The maximum amount of a deduction under subsection (5) is the maximum deduction for the income year, calculated using the formula in section DV 3 . Deducted expenditure not incurred by member superannuation fund (7) Expenditure for which the master superannuation fund is allowed a deduction is treated as not being incurred by the member superannuation fund. Sequential deductions (8) Expenditure for which the master superannuation fund is allowed a deduction must be deducted in sequence according to the income year in which the member superannuation fund incurred it. Link with subpart DA (9) The link between this section and subpart DA (General rules) is as follows: (a) subsection (5) supplements the general permission and overrides the capital limitation; the other general limitations still apply: (b) subsection (7) overrides the general permission. Defined in this Act: amount , assessable income , capital limitation , deduction , general limitation , general permission , income , income year , KiwiSaver scheme , multi-rate PIE , superannuation fund , superannuation scheme , supplement , Compare: 2004 No 35 s DV 4 Section DV 4(1B) heading: substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 103(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section DV 4(1B): substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 103(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section DV 4(2) heading: repealed, on 1 May 2011, by section 56 of the Kiwisaver Amendment Act 2011 (2011 No 8). Section DV 4(2): repealed, on 1 May 2011, by section 56 of the Kiwisaver Amendment Act 2011 (2011 No 8). Section DV 4 list of defined terms multi-rate PIE : inserted, on 1 April 2010, by section 103(4)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section DV 4 list of defined terms portfolio tax rate entity : repealed, on 1 April 2010, by section 103(4)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).