Section GB 13 — Income Tax Act 2007: When combination of changes reduces income

GB 13 When combination of changes reduces income When this section applies (1) This section applies when— (a) before the end of a quarter, either— (i) a person directly or indirectly disposes of a direct control interest or direct income interest in a foreign company (the disposal ); or (ii) an increase occurs in the total of direct control interests in a foreign company in any of the control interest categories (the total increase ); and (b) in the case of the disposal, the disposal is not to a New Zealand resident who, immediately after the disposal, has an income interest of 10% or more in the foreign company from which they derive attributed CFC income or attributed repatriation; and (c) in the case of the disposal, within 365 days after the disposal, a reduction occurs in the total of direct control interests in the foreign company in any of the control interest categories (the total reduction ); and (d) in the case of the total increase, within 365 days after the total increase, a person directly or indirectly acquires a direct control interest or direct income interest in the foreign company (the reacquisition ); and (e) the disposal or total increase has the effect of reducing attributed CFC income or attributed repatriation of— (i) the person (the interest holder ); or (ii) an associated person of the interest holder; or (iii) if the interest holder is a CFC, a person holding an income interest in the interest holder; and (f) the disposal and total reduction or total increase and reacquisition are part of an arrangement that has an effect of defeating the intent and application of the international tax rules. Treatment of disposal or total increase (2) The disposal or total increase is treated as not having occurred, when the interest holder’s control interest or income interest in the foreign company at the end of the quarter is calculated, to the extent to which the total reduction or reacquisition has the effect of reversing the effect of the disposal or total increase on the level of the interest holder’s control interest or income interest. Defined in this Act: arrangement , associated person , attributed CFC income , attributed repatriation , CFC , control interest , control interest category , direct control interest , direct income interest , foreign company , income interest , international tax rules , quarter , Compare: 2004 No 35 s GC 9(3), (4), (7)