Section FE 14 — Income Tax Act 2007: Consolidation of debts and assets

FE 14 Consolidation of debts and assets Company calculation (1) For an excess debt entity that is a company, the debt percentage of a New Zealand group is calculated under generally accepted accounting practice for the consolidation of companies for the purposes of eliminating intra-group balances by consolidating the debts and assets of the members of the entity’s New Zealand group. Natural persons' and trustees' calculation (2) For a natural person and an excess debt entity that is a trustee, the debt percentage of a New Zealand group is calculated under generally accepted accounting practice for the consolidation of companies for the purposes of eliminating intra-group balances by consolidating the debts and assets for the group. When member not resident (3) If a member of a New Zealand group is not resident in New Zealand, the assets and debts of the member are included in a consolidation only to the extent to which the assets and debts are for the group member to— (a) carry on business in New Zealand through a fixed establishment in New Zealand: (b) derive income, other than non-resident passive income, that has a source in New Zealand and for which relief from New Zealand tax under a double tax agreement is unavailable. Treatment of specified leases and particular interest expenditure (4) In this subpart, in the determination of total group debt and total group assets and the calculation of an amount for which a deduction is denied,— (a) a specified lease under section FZ 2 (Effect of specified lease on lessor and lessee) is treated as a financial arrangement that provides funds to the issuer; and (b) expenditure incurred by the lessee under a specified lease for which a deduction is allowed under section BD 2 (Deductions) is treated as an amount of interest to which any of sections DB 6 to DB 8 (which relate to deductions for interest expenditure) applies; and (c) interest that is allowed as a deduction under either of the following sections is treated as an amount of interest to which any of sections DB 6 to DB 8 applies, if not already allowed under those sections: (i) section DP 1(1)(b) (Expenditure of forestry business): (ii) section DV 10(1)(a) or (b) (Building societies). Defined in this Act: amount , associated person , business , company , deduction , double tax agreement , excess debt entity , financial arrangement , fixed establishment , generally accepted accounting practice , interest , issuer , lessee , New Zealand , non-resident passive income , resident in New Zealand , source in New Zealand , specified lease , tax , total group assets , total group debt , trustee , Compare: 2004 No 35 ss FG 4(9), (15), (17) , FG 9 Section FE 14(2) heading: substituted (with effect on 30 June 2009), on 6 October 2009, by section 214(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 14(2): substituted (with effect on 30 June 2009), on 6 October 2009, by section 214(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 14(3) heading: substituted (with effect on 30 June 2009), on 6 October 2009, by section 214(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 14(3): substituted (with effect on 30 June 2009), on 6 October 2009, by section 214(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 14(3)(b): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 57(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section FE 14 list of defined terms double tax agreement : inserted (with effect on 30 June 2009), on 6 October 2009, by section 214(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 14 list of defined terms non-resident passive income : inserted (with effect on 1 July 2011), on 7 May 2012, by section 57(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section FE 14 list of defined terms source in New Zealand : inserted (with effect on 30 June 2009), on 6 October 2009, by section 214(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 14 list of defined terms tax : inserted (with effect on 1 July 2011), on 7 May 2012, by section 57(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).