Section EW 46 — Income Tax Act 2007: Consideration when debtor released as condition of new start grant

EW 46 Consideration when debtor released as condition of new start grant When this section applies (1) This section applies when in an income year of a person— (a) the person carries on a business of— (i) animal husbandry: (ii) poultry-keeping: (iii) beekeeping: (iv) breeding horses other than bloodstock: (v) horticulture: (vi) cropping; and (b) the person is paid a new start grant for the business for an event that is declared to be an emergency event; and (c) the person incurs a liability to make a payment under a financial arrangement— (i) in carrying on the business; and (ii) before the declaration of the emergency event; and (d) the liability is forgiven or otherwise remitted— (i) as a prerequisite for the payment of the new start grant; and (ii) before the date that is 18 months after the end of the period for which the declaration applies; and (e) in the absence of this section, the amount of the remitted liability would be income of the person. Consideration (2) The person is treated as having paid, on the date on which the liability is forgiven or remitted, the part of the amount owing that is the greater of zero and the amount calculated using the formula— remitted amount − current loss − loss balance − other loss. Definition of items in formula (3) In the formula,— (a) remitted amount is the amount of the remitted liability: (b) current loss is the tax loss that the person would have for the income year in which the liability is remitted in the absence of this section: (c) loss balance is the amount of loss balance that the person may subtract from their net income for the income year in which the liability is remitted: (d) other loss is a loss that— (i) is incurred by a person associated with the person who receives the new start grant; and (ii) meets the requirements of subsection (4). Loss incurred by associated person from business or land (4) The loss referred to in subsection (3)(d)— (a) is incurred by a person who— (i) carries on or has carried on the business for which the new start grant is paid or owns or has owned an estate in fee simple or leasehold estate in land used in the business; and (ii) in the opinion of the Commissioner, is under a substantial degree of control by the person; and (iii) in the opinion of the Commissioner, has a substantial identity of interests with the person; and (b) is incurred in relation to— (i) the business referred to in paragraph (a)(i): (ii) land that is used in the business; and (c) is, for the income year in which the liability is remitted,— (i) a tax loss of the associated person: (ii) a loss balance for the associated person; and (d) is included in the calculation in subsection (3) to an extent to which the Commissioner determines, having regard to the interests of the associated person that are separate from those of the person. Notice to associated person (5) The Commissioner must give the associated person notice of a determination under subsection (4)(d). Defined in this Act: associated person , business , Commissioner , deduction , diminished value , emergency event , income , income year , loss balance , notice , pay , tax loss , Compare: 2004 No 35 s EW 47B Section EW 46(1): substituted, on 6 October 2009, by section 148(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 46 list of defined terms emergency event : inserted, on 6 October 2009, by section 148(2)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 46 list of defined terms qualifying event : repealed, on 6 October 2009, by section 148(2)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).