Section LP 10 — Income Tax Act 2007: Limitation on deductions

LP 10 Limitation on deductions Limitation on total annual deductions (1) Despite section BD 4 (Allocation of deductions to particular income years), the annual total deduction of a supplementary dividend holding company under section BC 3 (Annual total deduction) for a tax year must not be more than an amount calculated using the formula— company's income − total credit's + supplementary dividends tax rate. Definition of items in formula (2) In the formula,— (a) company’s income is the supplementary dividend holding company’s income for the income year that corresponds to the tax year: (b) total credits is the supplementary dividend holding company’s total amount of tax credits that are non-refundable tax credits, tax credits for imputation credits, and tax credits for foreign dividend payment (FDP) credits for the income year that corresponds to the tax year: (c) supplementary dividends is the total amount of supplementary dividends derived by the supplementary dividend holding company for the income year that corresponds to the tax year: (d) tax rate is the basic rate of income tax set out in schedule 1, part A (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits). Tax loss components (3) A deduction that would, in the absence of subsection (1), be allocated to the tax year is a tax loss component that may be carried forward under Part I (Treatment of tax losses) if the relevant requirements of that Part are met. Calculating credits under this Part (4) Subsection (1) does not affect the calculation of the amount of a supplementary dividend holding company’s tax credit under this Part. Defined in this Act: amount , annual total deduction , corresponding income year , deduction , FDP credit , imputation credit , income , income tax , income year , non-refundable tax credit , supplementary dividend , supplementary dividend holding company , tax credit , tax loss component , tax year , Compare: 2004 No 35 ss LE 3(10) , LE 4 Section LP 10(1): amended (with effect on 1 April 2008), on 7 September 2010, by section 89(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section LP 10(1) formula: substituted (with effect on 1 April 2008), on 7 September 2010, by section 89(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section LP 10(2)(b): amended (with effect on 1 April 2008), on 7 September 2010, by section 89(3)(a) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section LP 10(2)(c): amended (with effect on 1 April 2008), on 7 September 2010, by section 89(3)(b) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section LP 10(2)(d): amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).