Section FE 6B — Income Tax Act 2007: Alternative apportionment of interest by some excess debt entities

FE 6B Alternative apportionment of interest by some excess debt entities Who this section applies to (1) This section applies to a company or person that is required by section FE 5(1D) to apportion its interest expenditure for an income year under this section. Formula (2) The company or person is treated under section CH 9 (Interest apportionment: excess debt entity) as deriving from New Zealand in the income year an amount of income calculated for the income year using the formula— net interest × NZ group ratio – threshold ratio NZ group ratio. Definition of items in formula (3) In the formula,— (a) net interest is the deductions for interest allowed to the company or person under sections DB 6 to DB 9 (which relate to deductions for interest) from a financial arrangement providing funds to the company or person, reduced by the income of the company or person from a financial arrangement on arm's-length terms providing funds to a person who meets the requirements of section FE 13(3) : (b) NZ group ratio is the interest-income ratio given by section FE 5(1E) for the New Zealand group of the company or person: (c) threshold ratio is the lesser of— (i) 50%: (ii) 110% of the interest-income ratio given by section FE 5(1E) for the worldwide group of the company or person. Defined in this Act: company , deduction , income , income year , interest , New Zealand Section FE 6B: inserted (with effect on 1 July 2009 and applying for income years beginning on or after that date), on 7 May 2012, by section 54(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section FE 6B(3)(a): amended (with effect on 1 July 2009), on 2 November 2012, by section 68 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).