Section RD 40 — Income Tax Act 2007: Goods

RD 40 Goods Market value or cost (1) The value of a fringe benefit that an employer provides to an employee in goods is determined as follows: (a) when the person providing the goods manufactured, produced, or processed them, their market value: (b) when the person providing the goods bought them, or paid for them to be bought, dealing at arm’s length with the supplier of the goods, the cost of the goods to the person: (c) if the person providing the goods is a company included in a group of companies, then, as the person chooses, the value of the benefit under either paragraph (a) or (b), applying the provisions as if the group of companies were 1 company. Sale in open market (2) Despite subsection (1), if the value of the fringe benefit as determined under that subsection would be more than the amount that would have been paid to the employer for the purchase of the goods in a sale described in paragraphs (a) to (d), then the value is treated as that amount. The sale must be— (a) at retail in the open market in New Zealand; and (b) freely offered; and (c) made on ordinary trade terms; and (d) to a member of the public with whom the employer is at arm’s length. Some definitions (3) In this section,— cost , for a registered person who may claim input tax for the goods, means the GST-inclusive cost of the goods bought or the amount that the person paid for the goods market value means the lowest price, at the time at which the goods were provided to the employee, for which identical goods were sold by the same person to an arm’s length buyer, whether wholesaler, retailer, or the public, in the open market in New Zealand in a sale freely offered and made on ordinary trade terms price , for a registered person who may claim input tax for goods that they manufacture, produce, or process, means the GST-inclusive price of those goods to that person. Defined in this Act: amount , company , cost , employee , employer , group of companies , GST , identical goods , input tax , market value , New Zealand , pay , price , registered person , Compare: 2004 No 35 s ND 1J