Section Sch51 — Income Tax Act 2007: Identified changes in legislation

Schedule 51 Identified changes in legislation s ZA 3(5) Provisions in Income Tax Act 2007 or Tax Administration Act 1994 (TAA) Change Business-related provisions, listed in the appendix to this schedule The tax year basis for these provisions is omitted, or changed to an income year basis. CD 39(9)(b), (c) A dividend payable to a shareholder by a company when the amount is applied under section CD 39(9)(a) by the shareholder against a loan from the company to the shareholder includes a dividend that is paid without any withholding of an amount of resident withholding tax or non-resident withholding tax. FA 3(2) An ambiguity is removed, which ensures that an amount of the dividend is treated as being derived on the sale of the shares to the extent to which it matches any trading loss of the share dealer. FA 5(6) The time of association is clarified as being the time at which the associated person acquires the asset. FA 9(2) and (3) The time of association is clarified as being the time at which the associated person acquires the asset. FC 2 to FC 6 The transfer on death to the executor/administrator and the subsequent transfer from the executor/administrator to the estate is treated as one transfer. GB 1 Section GB 1(3) is clarified to confirm that the amount of the dividend derived is part of the consideration for the shares. GB 27(2)(c) The $60,000 threshold is clarified in order to take into account all income that would be attributed under section GB 29. GB 35(2)(d) The ambiguity is removed in order to clarify that multiple purposes are referred to. GB 42(2)(d) The ambiguity is removed in order to clarify that multiple purposes are referred to. HC 27(2) The definition of settlor is clarified so that any transfer to a trust that increases the net assets of the trust is a settlement on the trust and any deductible payments settled on a trust are included in trustee income. HC 34(2) The date for the payment of tax on a taxable distribution from a non-complying trust is the terminal tax date of the person liable to pay that tax. IA 4(1) Carried forward tax losses are used first by a person, before the losses may be grouped or otherwise used. LA 1 to LA 10 Tax credits (other than personal and family tax credits) are used for the year that corresponds to the income year in which the credits arise. LC 9(2) This rule relates to the housekeeper and low income tax credits (formerly termed rebates). The policy of the rule is to apportion income of an absentee between periods of the person’s absence and presence in New Zealand. The apportionment set out in the bill is on a daily basis. In the interests of simplification, the bill omits from the 2004 Act corresponding rule, the formula that apportioned the income on a “ weeks ” basis for persons with “ regular pay periods ” . A change in effect is anticipated, but the omission should result at most in a small difference in outcome in favour of taxpayers. The New Zealand Law Society indicated in their submission on the bill that it would be preferable to list this as an intended change. MC 6 The reference to veteran's pension is omitted because the in-work tax credit is an incentive to return to work. RD 36(2) A dividend payable to a shareholder by a company when the amount is applied under section RD 36(1) by the shareholder against a loan from the company to the shareholder includes a dividend that is paid without any withholding of an amount of resident withholding tax or non-resident withholding tax. YA 1 , definition of land The provision is simplified and structured so that the first 3 paragraphs of the rewritten definition are to apply generally for the Act. This is consistent with the objectives of plain accessible legislation and is thought highly unlikely to result in any material change in law. However, as this change in drafting could conceivably result in a change in outcome in some circumstances, the change should be identified for readers. YA 1 , definition of mortgage The definition of mortgage was introduced at a time when mortgages were subject to tax as a subset of land tax. The drafting in the bill provides for an updated and simplified term to apply generally for the Act. This is consistent with the objectives of plain accessible and up-to-date legislation and is thought highly unlikely to result in any material change in law. However, as this change in drafting could conceivably result in a change in outcome in some circumstances, the change should be identified for readers. YA 1 , definition of natural resource A definition of natural resource is inserted for the purposes of section BH 1 , and the definitions of land and New Zealand . YA 1 , definition of pay The provision is simplified and structured so it is to apply generally for the Act. This is consistent with the objectives of plain accessible legislation and is thought highly unlikely to result in any material change in law. However, as this change in drafting could conceivably result in a change in outcome in some circumstances, the change should be identified for readers. Schedule 51: amended (with effect on 1 April 2008), on 21 December 2010 (applying for the 2008–09 and later income years), by section 141(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010, No 130). Schedule 51: amended (with effect on 1 April 2008), on 21 December 2010 (applying for the 2008–09 and later income years), by section 141(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010, No 130). Schedule 51: amended (with effect on 1 April 2008), on 7 December 2009, by section 125(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Schedule 51: amended (with effect on 1 April 2008), on 7 December 2009, by section 125(2) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Schedule 51: amended (with effect on 1 April 2008), on 6 October 2009, by section 592 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Appendix: tax year omitted, or changed to income year CC 11 FO 20 CC 12 GB 1 CG 7 GB 4 CH 6 GB 27 CS 18 GB 28 CV 12 GB 29 CV 13 GC 5 CV 14 GC 9(1) CW 53 HA 42 CW 54 HC 7 CX 59 HC 8 DB 57 HC 10(4) EY 11 HC 13 FA 3 HC 15 FA 5 HC 16 FA 8 HC 17 FA 9 HC 18 FA 10 HC 19 FA 11 HC 20 FB 2 HC 21 FB 8 HC 22 FB 13 HC 25 FB 19 HC 26(1) FB 20 HC 29 FC 4(2)(c) HC 30(6) FE 2 HC 31 FE 5 HC 32(1) FE 7 HC 34 FE 8 HC 35(4)(a) FE 21 HC 36(3) FE 22 HD 5 FE 37 HF 7 FF 2 HR 3(1)–(4) FF 5 RD 3 FF 6 RF 2 FF 7 RG 7(4) and (7) FF 9 YA 1, definition of first business day FF 10 FM 14 YA 1, definition of herd livestock FN 14 93B TAA FO 4 FO 7 FO 9 FO 12 FO 13 FO 14 FO 16 FO 19