Section GB 14 — Income Tax Act 2007: When combination of changes increases loss

GB 14 When combination of changes increases loss When this section applies (1) This section applies when,— (a) before the end of a quarter, either— (i) a person directly or indirectly acquires a direct control interest or direct income interest in a foreign company (the acquisition ); or (ii) a decrease occurs in the total of direct control interests in a foreign company in any of the control interest categories (the total decrease ); and (b) in the case of the acquisition, the acquisition is not from a New Zealand resident who, immediately before the acquisition, has an income interest of 10% or more in the foreign company from which they have an attributed CFC loss; and (c) in the case of the acquisition, within 365 days after the acquisition, an increase occurs in the total of direct control interests in the foreign company in any of the control interest categories (the total increase ); and (d) in the case of the total reduction, within 365 days after the total reduction, a person directly or indirectly disposes of a direct control interest or direct income interest in the foreign company (the disposal ); and (e) the acquisition or total reduction has the effect of reducing an attributed CFC loss 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 acquisition and total increase or total reduction and disposal are part of an arrangement that has an effect of defeating the intent and application of the international tax rules. Treatment of acquisition or total reduction (2) The acquisition or total reduction 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 increase or disposal has the effect of reversing the effect of the acquisition or total reduction on the level of the interest holder’s control interest or income interest. Defined in this Act: arrangement , associated person , attributed CFC loss , 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)