Section FE 12 — Income Tax Act 2007: Calculation of debt percentages

FE 12 Calculation of debt percentages Requirement for New Zealand group (1) An excess debt entity must calculate the debt percentage of its New Zealand group under the rules set out in sections FE 14 to FE 16 . A natural person or an excess debt entity must calculate their debt percentage under the rules set out in sections FE 13 to FE 16 and FE 18 . Requirement for worldwide group (2) If the debt percentage of the New Zealand group is, as applicable, more than 60% as described in section FE 5(1)(a) , or more than 75% as described in section FE 5(1)(b), then the entity must calculate the debt percentage of their worldwide group under the rules set out in sections FE 17 and FE 18 . Debt percentage of group (3) A debt percentage of a group is found by dividing the amount of total group debt by the amount of total group assets of the group for an income year or accounting year, as applicable. The amounts are calculated on a consolidated basis. Total group debt and total group assets for an income year or accounting year are defined in— (a) sections FE 15 and FE 16 for a New Zealand group; and (b) section FE 18 for a worldwide group. Membership of company’s New Zealand group (4) For an excess debt entity that is a company, the New Zealand group is made up of all companies, traced tier by tier, that are identified as within the control threshold of the New Zealand parent, see section FE 27 . Section FE 25 provides the process for determining who is a member of a group based on the identification of a New Zealand parent and the establishment of the control threshold. Membership of company’s worldwide group (5) For an excess debt entity that is a company, the worldwide group is made up of all companies included as members of the worldwide group under–– (a) sections FE 31 and FE 32 , for an excess debt entity that is not an excess debt outbound company: (b) sections FE 31B to FE 32 , for an excess debt outbound company. Natural persons: membership of New Zealand groups (6) For a natural person, the membership of the New Zealand group is determined as described in section FE 3(1) and (2) , as applicable. Trustees: membership of New Zealand and worldwide groups (7) For a trustee, the memberships of the New Zealand group and the worldwide group are determined as described in section FE 3(1) and (2) , as applicable. Defined in this Act: accounting year , amount , company , excess debt entity , excess debt outbound company , income year , natural person , New Zealand , non-resident , total group assets , total group debt , trustee , ultimate parent , Compare: 2004 No 35 ss FG 3 , FG 4(1) , FG 5(1) Section FE 12(1): amended (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 46(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section FE 12(1): amended (with effect on 30 June 2009), on 6 October 2009, by section 212(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 12(2): amended, on 1 April 2011 (applying for the 2011–12 and later income years), by section 89(1) of the Taxation (Budget Measures) Act 2010 (2010 No 27). Section FE 12(2): amended (with effect on 30 June 2009), on 6 October 2009, by section 212(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 12(5) heading: substituted (with effect on 30 June 2009), on 6 October 2009, by section 212(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 12(5): substituted (with effect on 30 June 2009), on 6 October 2009, by section 212(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 12(6) heading: substituted (with effect on 30 June 2009), on 6 October 2009, by section 212(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 12(6): substituted (with effect on 30 June 2009), on 6 October 2009, by section 212(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 12(7) heading: added (with effect on 30 June 2009), on 6 October 2009, by section 212(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 12(7): added (with effect on 30 June 2009), on 6 October 2009, by section 212(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 12 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 12 list of defined terms excess debt outbound company : inserted (with effect on 30 June 2009), on 6 October 2009, by section 212(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).