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Inland Revenue

Tax Policy

Other remedial changes

(Clauses 17, 70(5), 71, 126(19) and 141)

All references are to the Income Tax Act 2007 unless stated.

Paragraph (a) of the definition of fixed-rate share in section YA 1 is proposed to be amended with retrospective effect to make it clear that it applies to section FE 6 in the thin capitalisation rules. This corrects an oversight.

Section DX 3 is proposed to be repealed with effect from the 2013–14 income year. This repeal was missed when other provisions relating to supplementary dividend holding companies were repealed in an earlier amending act.

A proposed new subsection IQ 2B(11) provides an explicit currency conversion rule for determining carried-forward losses during a transitional period from the old to the new international tax rules. An explicit rule was not provided at the time the transitional rule was first enacted. The rule follows, broadly speaking, the existing treatment of foreign currency amounts in subpart YF. The amendment has retrospective effect.

The Bill corrects a drafting error in paragraphs IQ 3(1)(a) and (b), with retrospective effect (back to the application date of the Income Tax Act 2007). The paragraphs deal with carried-forward losses of foreign investment funds (FIFs) but erroneously referred to losses of controlled foreign companies (CFCs).

Clause 141 would re-enact a provision whose effective date had been unintentionally over-ridden because of an early application date in the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010.