Section FE 26 — Income Tax Act 2007: Identifying New Zealand parent

FE 26 Identifying New Zealand parent Identifying resident company (1) The New Zealand parent of an excess debt entity is the entity identified in whichever is applicable of subsections (2) to (6). Entity as parent (2) The excess debt entity is treated as the New Zealand parent if— (a) the entity is not resident in New Zealand; or (b) the entity is resident in New Zealand, and— (i) a non-resident has a direct ownership interest in the entity of 50% or more, as determined under section FE 39 ; and (ii) no single non-resident who is carrying on business in New Zealand through a fixed establishment in New Zealand or who derives 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 has an ownership interest in the entity of 50% or more; or (c) the entity is an excess debt outbound company and no single company resident in New Zealand has an ownership interest in the entity of 50% or more. Top tier New Zealand resident company if not excess debt outbound company (3) If subsection (2) does not apply, and the excess debt entity is not an excess debt outbound company, the entity’s New Zealand parent is the company ( company A ) that meets all the following requirements: (a) company A is either— (i) resident in New Zealand; or (ii) not resident in New Zealand but carrying on business in New Zealand through a fixed establishment in New Zealand; or (iii) not resident in New Zealand but deriving 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; and (b) company A has an ownership interest in the entity; and (c) a non-resident has a direct ownership interest in company A; and (d) if company A is resident in New Zealand, a non-resident who has an ownership interest in the entity of 50% or more, also has an ownership interest in company A of 50% or more; and (e) no company that meets the requirements of paragraphs (a) to (d) has a direct ownership interest in company A. When parent controlled by non-resident (4) Despite subsection (3), if the interest apportionment rule in section FE 6 applies to the excess debt entity only through the application of section FE 2(1)(c)(ii) , the entity’s New Zealand parent is the company ( company B ) that meets all the following requirements: (a) company B is either— (i) resident in New Zealand; or (ii) not resident in New Zealand but carrying on business in New Zealand through a fixed establishment in New Zealand; or (iii) not resident in New Zealand but deriving 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; and (b) company B has an ownership interest in the entity; and (c) if company B is resident in New Zealand, a non-resident who has control of the entity by any means, has control of company B by any means; and (d) no company that meets the requirements of paragraphs (a) to (c) has a direct ownership interest in company B. Top tier New Zealand resident company for excess debt outbound company (4B) If subsection (2) does not apply, and the excess debt entity is an excess debt outbound company, the entity’s New Zealand parent is the company ( company C ) that meets all the following requirements: (a) company C— (i) is resident in New Zealand; and (ii) has an ownership interest of 50% or more in the entity; and (b) no company that meets the requirements of paragraph (a)(i) and (ii) has a direct ownership interest in company C. Tie-breaker (5) If more than 1 company is identified as New Zealand parent under subsection (3) or (4), the New Zealand parent is the company that has the highest value in ownership interests calculated by multiplying— (a) the total direct ownership interests in company A or company B of non-residents who also have ownership interests in the entity of 50% or more: (b) the ownership interests of company A or company B in the entity. Entity as parent (6) If subsection (2) does not apply, and no company meets the requirements of subsection (3), (4), or (4B), the excess debt entity is treated as the New Zealand parent. Determining ownership interests in subsections (3) and (4) (7) In subsections (3) to (4B), ownership interests are determined under sections FE 38 to FE 41 , but for the purpose of identifying a New Zealand parent, the ownership interests of an associated person are ignored. Defined in this Act: associated person , business , company , double tax agreement , excess debt entity , excess debt outbound company , fixed establishment , interest , New Zealand , non-resident , non-resident company , non-resident passive income , resident in New Zealand , source in New Zealand , tax Compare: 2004 No 35 s FG 4(10) Section FE 26(2)(b)(ii): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 60(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section FE 26(2)(c): added (with effect on 30 June 2009), on 6 October 2009, by section 220(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 26(3) heading: substituted (with effect on 30 June 2009), on 6 October 2009, by section 220(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 26(3): amended (with effect on 30 June 2009), on 6 October 2009, by section 220(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 26(3)(a)(ii): amended (with effect on 30 June 2009), on 6 October 2009, by section 220(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 26(3)(a)(iii): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 60(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section FE 26(4)(a)(ii): amended (with effect on 30 June 2009), on 6 October 2009, by section 220(6) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 26(4)(a)(iii): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 60(3) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section FE 26(4B) heading: inserted (with effect on 30 June 2009), on 6 October 2009, by section 220(7) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 26(4B): inserted (with effect on 30 June 2009), on 6 October 2009, by section 220(7) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 26(6): substituted (with effect on 30 June 2009), on 6 October 2009, by section 220(8) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 26(7): substituted (with effect on 30 June 2009), on 6 October 2009, by section 220(9) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 26 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 26 list of defined terms double tax agreement : inserted (with effect on 30 June 2009), on 6 October 2009, by section 220(10) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 26 list of defined terms excess debt outbound company : inserted (with effect on 30 June 2009), on 6 October 2009, by section 220(10) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 26 list of defined terms non-resident passive income : inserted (with effect on 1 July 2011), on 7 May 2012, by section 60(4) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section FE 26 list of defined terms source in New Zealand : inserted (with effect on 30 June 2009), on 6 October 2009, by section 220(10) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 26 list of defined terms tax : inserted (with effect on 1 July 2011), on 7 May 2012, by section 60(4) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).