Section HA 11 — Income Tax Act 2007: When requirements no longer met: qualifying companies

HA 11 When requirements no longer met: qualifying companies When this section applies (1) This section applies when, through changed circumstances, a qualifying company no longer meets the requirements of sections HA 5 to HA 9 . Status at end (2) The company’s status as a qualifying company is ended, whether or not it is, or could be, known at the time the circumstances arise that the company no longer meets the requirements. Qualifying companies (3) The company’s status as a qualifying company is treated as ended from the start of the income year in which the change of circumstances occurs. Subsection (6) overrides this subsection. LAQCs [Repealed] (4) [Repealed] Distribution of dividends (5) Despite subsection (1), a company's status as a qualifying company is not ended merely because it does not comply with section HA 7(2) when— (a) all dividends that can, under general law, be distributed by the trustee are beneficiary income of a beneficiary other than— (i) a trustee beneficiary; or (ii) a beneficiary that is a company other than a qualifying company; and (b) some of the dividends derived by the trustee from the qualifying company have vested or have been distributed as beneficiary income of a beneficiary other than— (i) a trustee beneficiary; or (ii) a beneficiary that is a company other than a qualifying company. Deferring date (6) On an application by a qualifying company, the Commissioner may defer the date on which the company’s status ends to the start of a later income year if— (a) the company did not know, and could not reasonably be expected to have known, at the time the circumstances arose that it no longer met the requirements; and (b) in the circumstances, it would be an unduly harsh or inappropriate outcome. Examples for subsection (6)(a) (7) Examples of the circumstances that may apply for the purposes of subsection (6)(a) are a reasonable expectation or belief that— (a) the company would continue to meet the requirements through an extension under section HA 34 , HA 35 , or HA 37 ; or (b) an amount of foreign non-dividend income that the company derives would not breach the threshold in section HA 9 ; or (c) the dividends referred to in section HA 7(2) would be distributed as beneficiary income. Examples for subsection (6)(b) (8) Examples of the circumstances that may apply for the purposes of subsection (6)(b) are— (a) the length of time between the start of the income year and the date of the change in circumstances: (b) the length of time between the date of the change in circumstances and the date when the company knew, or could reasonably be expected to have known, that the requirements were not met: (c) the kinds of transactions that the company made during the periods of time described in paragraphs (a) and (b). Defined in this Act: amount , beneficiary income , Commissioner , company , dividend , foreign non-dividend income , income year , LAQC, qualifying company , trustee , Compare: 2004 No 35 ss HG 7 , HG 18 , OB 3(3A) Section HA 11 heading: substituted (with effect on 1 April 2008), on 7 September 2010, by section 59(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section HA 11(4) heading: repealed (with effect on 1 April 2008), on 7 September 2010 (applying for the 2008–09 and later income years), pursuant to section 59(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section HA 11(4): repealed (with effect on 1 April 2008), on 7 September 2010 (applying for the 2008–09 and later income years), by section 59(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section HA 11(5): substituted (with effect on 1 April 2008), on 6 October 2009, by section 254(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).