Section FE 1 — Income Tax Act 2007: What this subpart does

FE 1 What this subpart does Interest apportionment (1) This subpart applies— (a) to apportion certain interest expenditure between income having a source in New Zealand and other income for a New Zealand taxpayer who has a disproportionately high level of debt funding in relation to their worldwide interest expenditure and who— (i) is controlled by a single non-resident: (ii) is a person (an outbound entity ) with an income interest in a CFC or with an interest in a FIF that satisfies the requirements of section EX 35 (Exemption for interest in FIF resident in Australia) or for which the person uses the attributable FIF income method: (iii) is a New Zealand resident who controls an outbound entity; and (b) to prescribe an acceptable level of equity for a foreign-owned bank for the application of the interest apportionment rules. Structure of subpart (2) This subpart sets out— (a) the persons to whom the interest apportionment rules may apply: (b) the thresholds for the application of the rules: (c) the consequences of application of the rules: (d) how to calculate the debt percentages of a New Zealand group and a worldwide group: (e) how to calculate a reporting bank’s New Zealand equity threshold, net equity, and funding debt: (f) how to determine the membership of a New Zealand group, a worldwide group, and a New Zealand banking group: (g) how to measure ownership interests in companies for the purposes of this subpart. Defined in this Act: attributable FIF income method , CFC , FIF , income , income interest , interest , New Zealand , New Zealand banking group , non-resident , reporting bank , source in New Zealand , taxpayer , Compare: 2004 No 35 s FG 1 Section FE 1(1)(a): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 50(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section FE 1 list of defined terms attributable FIF income method : inserted (with effect on 1 July 2011), on 7 May 2012, by section 50(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section FE 1 list of defined terms CFC : inserted (with effect on 30 June 2009), on 6 October 2009, by section 206(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 1 list of defined terms control : repealed, on 1 April 2010, by section 594 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 1 list of defined terms FIF : inserted (with effect on 1 July 2011), on 7 May 2012, by section 50(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section FE 1 list of defined terms income derived from New Zealand : repealed, on 21 December 2010, by section 64(2)(a) of the Taxation (GST and Remedial Matters) Act 2010 (2010, No 130). Section FE 1 list of defined terms income interest : inserted (with effect on 30 June 2009), on 6 October 2009, by section 206(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 1 list of defined terms source in New Zealand : inserted, on 21 December 2010, by section 64(2)(b) of the Taxation (GST and Remedial Matters) Act 2010 (2010, No 130).