General issues

These items clarify a range of general issues.

QB 11/03: Income tax - look through companies and interest deductibility

This QWBA examines the effect of the tax transparency provisions set out at section HB 1(4) of the Income Tax Act 2007. It confirms that interest deductions previously allowed will continue to be allowed where a loss-attributing qualifying company becomes a look-through company (subject to the limitations on deductions in sections HB 11 and 12).

QB 11/02: Deductibility of expenditure incurred by bloodstock breeders in respect of horses that they race

This QWBA clarifies the deductibility of expenditure incurred by bloodstock breeders in respect of horses that they race, or prepare for racing, as part of their breeding business.

QB 11/01: Residential investment property or properties in Australia owned by New Zealand resident - NRWT treatment of interest paid to Australian financial institution

This QWBA clarifies Inland Revenue's position on whether New Zealand residents who borrow money from Australian financial institutions to purchase residential investment properties in Australia are liable for non-resident withholding tax (NRWT) on the interest payable. This item considers the same issues as QB 09/05, which is on the same topic. It is substantially the same as QB 09/05 but has been updated for the Australia - New Zealand Double Tax Agreement, which came into force in March 2010, and related domestic legislative amendments.

QB 09/06: GST - Apportionment of the cost of bare land for the purposes of a change-in-use adjustment

This QWBA considers the appropriate apportionment method for determining the cost of bare land in situations where a registered person buys land for a taxable purpose and then uses part of that land for private or exempt purposes.

QB 10/06: Elections for qualifying company status

This question we've been asked clarifies the Commissioner's position on who should sign shareholders' elections for qualifying company (QC) status where nominees or bare trustees are involved. The QWBA also briefly considers elections for look-through company status where nominees or bare trustees are involved.

QB 10/01: Reimbursing shareholder-employees for motor vehicle expenses and the use of the Commissioner's mileage rate

This question we've been asked item considers whether an employer who reimburses an employee for the business use of their private motor vehicle is able to use the Commissioner's mileage rate and clarifies the "employee criteria" when it comes to reimbursing shareholder-employees. The item also considers whether the 5,000km limitation on using that mileage rate also applies when reimbursing employees.

Are tax sparing disclosures still required?

A taxpayer who has claimed a foreign tax credit in respect of a tax sparing arrangement under a double taxation agreement must file a Tax sparing disclosure return (IR 486).

QB 09/05: Residential investment property or properties in Australia owned by New Zealand resident - NRWT treatment of interest paid to Australian financial institution

This QWBA clarifies Inland Revenue's position on whether New Zealand residents who borrow money from Australian financial institutions to purchase residential investment properties in Australia are liable for non-resident withholding tax (NRWT) on the interest payable.

QB 09/03: Decisions on application of CA 1(2) - common law interest and income under ordinary concepts

This QWBA addresses the implication of section CA 1(2) of the Income Tax Act 2007 to common law interest, and more specifically the judgement in CIR v Buis and Burston (2005) 22 NZTC 19,278.

QB 09/02: Holiday houses - income tax treatment

This item considers the income tax treatment of holiday houses that are rented out by their owners, and addresses the circumstances where owners of holiday houses will be allowed a deduction for expenditure incurred in owning the holiday house.

QB 09/01: Payments made in addition to financial redress under Treaty of Waitangi settlements - income tax treatment

We have been asked whether an amount paid by the Crown in addition to Financial and Commercial Redress under a Treaty of Waitangi settlement, that is calculated on the agreed Financial and Commercial Redress (cash and commercial assets) and that is described in the Deed of Settlement as "interest", is income. This amount is referred to in this item as "settlement interest".

QB 08/04: Income Tax Act 2007: research and development credits (subpart LH) - tax avoidance (section BG1)

This QWBA considers the tax avoidance (section BG1) implications of a particular form of restructuring undertaken by a group of companies in order to become eligible for research and development tax credits.

Kiwisaver - creditable membership

Questions and answers to some questions we've received on "creditable membership" and eligibility for the member tax credit.

QB 08/03: Application for a private ruling or product ruling on an issue dealt with in a mutual agreement made under a Double Tax Agreement - Tax Administration Act 1994, sections 91E(4)(D)(ii) and 91F(4)(D)

This item addresses the procedure that would be followed by the Commissioner where an application for a binding ruling is made in respect of an issue that is dealt with in a mutual agreement under a Double Tax Agreement.

QB 08/02: Commissioner's power to issue a replacement ruling that operates retrospectively

A question has been asked whether the Commissioner may withdraw a ruling and issue a replacement ruling that operates retrospectively for all or some of the same period as the withdrawn ruling. This applies if the withdrawn ruling contains an error that cannot be dealt with under section 91GI of the Tax Administration Act 1994, the error is not material, and the Commissioner and taxpayer consider that the error does not affect the technical conclusion reached, but agree that the error should still be corrected.

QB 08/01: Tax Administration Act 1994 - Section 91E(4)(f) and self-assessment

This question we've been asked addresses whether s91E(4)(f) of the TAA '94 applies to a taxpayer's self-assessment where that taxpayer has has filed a tax return containing their assessment before lodging a binding ruling application regarding a transaction and year covered by that return.

QB 07/05 - Ability to rule where the Commissioner is auditing or investigating - whether the Commissioner has a discretion to rule or is prohibited

This item addresses the question of whether the Commissioner has a discretion to make a private ruling as to how the tax laws apply to a taxpayer and to an arrangement where that taxpayer is being audited or investigated, or whether the relevant provision is a mandatory prohibition.

QB 07/02 - Whether The Minor Beneficiary Rule Exemption In Section HH 3B Applies On A $1,000 "Per Beneficiary" Or On A $1,000 "Per Beneficiary Per Trust" Basis.

We have been asked to clarify the correct application of section HH 3B of the Income Tax Act 2004 (the minor beneficiary rule exemption). This QWBA sets out the operational guidelines regarding the minor beneficiary rule exemption.

Tax treatment of wooden scaffolding planks

We have recently been asked to clarify the income tax treatment of wooden planks used in scaffolding, ie, planks used as working platforms on metal-framed scaffolding.

Exemption from gift duty for dispositions of property made by or under an order of the Court: section 75(A) Estate and Gift Duties Act 1968

This item clarifies when the exemption from gift duty applies to relationship property. As indicated in the Exposure Draft of this item, the interpretation statement of the law outlined in this item will be applied by the Commissioner to dispositions of property made after 5 October 2005 by or under an order of the Court pursuant to section 25 of the Property (Relationships) Act 1976. The Commissioner has considered the submissions received in respect of the Exposure Draft and has not significantly changed the view taken in the Exposure Draft, although amendments have been made to the item to clarify the Commissioner's position.

Private and product binding rulings - to whom do they apply?

This item oulines whom such rulings apply to.

Bankrupt's ability to carry forward accumulated losses

This item considers whether a taxpayer is entitled to carry forward pre-bankruptcy losses where the loss arises from the taxpayer paying the debts owing.

Records for controlled foreign companies or foreign investment funds to be available in English

Clarification of Inland Revenue's position as to whether taxpayers are required to provide financial and other underlying records, including evidence of foreign tax paid, in English for any controlled foreign companies ("CFCs") or foreign investment funds ("FIFs") they may hold when using the branch equivalent tax calculation method.

Website expenditure - deductibility

This item clarifies the tax treatment of expenditure incurred in creating a website to be used in deriving gross income.

Qualifying foreign private annuity exemption from the Foreign Investment Fund regime

This item clarifies the operation of the qualifying foreign annuity exemption in section CG 15(2)(g) of the Income Tax Act 1994.

Tourism service providers' payments made to tour guides or drivers - the income tax liability of those parties and the tour operator employing the guide or driver

This item concludes that the tour operator has no tax obligations in respect of the payments as the payments are not from the tour operators, not received in respect of or in relation to the employment of the payee.

Managing communications associated with a dispute referred to the Adjudication Unit

This item outlines how the Adjudication and Rulings groug of Inland Revenue deals with communications it receives that are associated with a dispute that has been referred to the Adjudication Unit.

When does derivation occur in relation to land sales with a deferred settlement, by business taxpayers who provide vendor finance?

This item sets out the Commissioner's view that derivation occurs when a sale takes place and a debt arises which can be sued upon.

Section 108 Tax Administration Act 1994 (TAA) - commencement of four year statutory period (November 2002)

Clarification of when the four-year statutory period in section 108 of the TAA commences for taxpayers with non-standard balance dates and when the time bar takes effect.

Date published: 31 Jan 2006

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