Section GB 25 — Income Tax Act 2007: Close company remuneration to shareholders, directors, or relatives

GB 25 Close company remuneration to shareholders, directors, or relatives When this section applies (1) This section applies when— (a) a close company provides remuneration for services to a person (the service provider ) who is— (i) a shareholder or director of the company; or (ii) a relative of a shareholder or director of the company; and (b) the Commissioner considers that the amount provided is excessive; and (c) the exemption in subsection (3) does not apply. Excess treated as dividend (2) For the purposes of this Act, the excess is treated as a dividend paid by the company and derived by the service provider. Exemption: residents working full-time (3) This section does not apply when— (a) the service provider is an adult employed substantially full-time in the business of the company; and (b) the service provider participates in the management or administration of the company; and (c) the amount provided to the service provider was not influenced by their relationship with a shareholder or director; and (d) the service provider is a New Zealand resident. Defined in this Act: close company , Commissioner , company , director , dividend , New Zealand resident , shareholder , Compare: 2004 No 35 s GD 5 Section GB 25(3)(b): amended (with effect on 1 April 2008), on 7 September 2010 (applying for the 2008–09 and later income years), by section 53(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).