Section HM 13 — Income Tax Act 2007: Maximum shareholdings in investments

HM 13 Maximum shareholdings in investments When this section applies (1) This section applies when an entity has an investment consisting of shares in a company other than shares in— (a) a PIE, or an entity that qualifies for PIE status: (b) a foreign PIE equivalent: (c) a land investment company. Voting interests: companies other than unit trusts (2) The investment must carry voting interests in the company of no more than 20%. This subsection does not apply to a unit trust. Subsection (5) overrides this subsection. Investments in unit trusts (3) For an investment in a unit trust, the investment must have a market value no more than 20% of the market value of all interests in the unit trust. Subsection (5) overrides this subsection. Class requirements (4) For each investment and each investor class of the entity, the percentage thresholds set out in subsections (2) and (3) apply to the investment by the class in the same way as they apply to the investment by the entity. Subsection (5) overrides this subsection. Exception for limited non-complying investments (5) Despite subsections (2) to (4), the 20% cap in those subsections can be exceeded if the total market value of all investments where the cap is exceeded is not more than 10% of the market value of the total investments of the entity or investor class. Certain investments of foreign investment PIEs (6) Despite the exclusion in subsection (1)(a) and (c), if a foreign investment variable-rate PIE has an investment in a land investment company resident in New Zealand or in an entity that qualifies for PIE status, the investment must–– (a) carry voting interests in the company or entity, as applicable, of no more than 20%; or (b) have a market value of no more than 20% of all interests in the entity, if the entity is a unit trust. Exceeding threshold (7) Section HM 55H(4) and (5) apply in the case of a breach of subsection (6). Defined in this Act: company , foreign investment PIE , foreign PIE equivalent , investor class , land investment company , market value , PIE , resident in New Zealand , share , unit trust , voting interest Compare: 2007 No 97 s HL 10(3)–(5) Section HM 13: inserted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 292(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section HM 13(6) heading: added, on 29 August 2011 (applying for the 2012–13 and later income years for a foreign investment variable-rate PIE and a notified foreign investor in the PIE), by section 60(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section HM 13(6): added, on 29 August 2011 (applying for the 2012–13 and later income years for a foreign investment variable-rate PIE and a notified foreign investor in the PIE), by section 60(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section HM 13(7) heading: added, on 29 August 2011 (applying for the 2012–13 and later income years for a foreign investment variable-rate PIE and a notified foreign investor in the PIE), by section 60(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section HM 13(7): added, on 29 August 2011 (applying for the 2012–13 and later income years for a foreign investment variable-rate PIE and a notified foreign investor in the PIE), by section 60(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section HM 13 list of defined terms foreign investment PIE : inserted, on 29 August 2011, by section 60(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section HM 13 list of defined terms resident in New Zealand : inserted, on 29 August 2011, by section 60(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).