Taxation Flashcards
What does YD 1 (2) of the Income Act refer to?
YD 1 (2) refers to the permeant place of abode test
What is the permeant place of abode test?
YD 1 (2) permeant place of abode test is used to determine if a natural person is a New Zealand tax resident. A natural person is a New Zealand resident if they have a permanent place of abode in New Zealand, even if they also have a permanent place of abode elsewhere.
What does YD 1 (3) of the income Act refer to?
Yd 1 (3) of the New Zealand income Act 2007 refers to the 183 day rule test, which means a natural person is a New Zealand resident if they are personally present in New Zealand for more than 183 days in total in a 12-month period.
What year is the New Zealand income Act?
2007
What does YD 1 (5) of the NZ income Act refer to?
YD 1 (5) refers to the 325 day rule.
What is the 325 day rule?
A natural person treated as a New Zealand resident only under subsection (3) stops being a New Zealand resident if they are personally absent from New Zealand for more than 325 days in total in a 12-month period.
What is the 183 day rule?
Means a natural person is a New Zealand resident if they are personally present in New Zealand for more than 183 days in total in a 12-month period.
What does YD 1 (7) of the NZ income Act refer to?
A natural person who is personally absent from New Zealand in the service, in any capacity, of the New Zealand Government is treated as a New Zealand resident during the absence.
Does YD 1 (7) apply to non resident natural persons that takes up a position for a government department based outside of New Zealand whilst outside of New Zealand
No. If non tax resident who lives outside of NZ they are exempt from YD 1 (7)
What are the four tests of residences for Companies?
A company is a New Zealand resident for the purposes of this Act if—
(a) it is incorporated in New Zealand:
(b) its head office is in New Zealand:
(c) its centre of management is in New Zealand:
(d) its directors, in their capacity as directors, exercise control of the company in New Zealand, even if the directors’ decision-making also occurs outside New Zealand.
What section of the income act is the incorporation test?
sYD 2 (1) (a)
What does section YD 2 (1) (a) of the income Act 2007 refer to?
sYD 2(1) (a) refers to the incorporated in New Zealand test. If a company is incorporated in New Zealand it is automatically a NZ tax resident.
What section of the income act is the Head Office test?
sYD 2 (1) (b)
What does section YD 2 (1) (b) of the income Act 2007 refer to?
sYD 2 (1) (b) refers to the head office test. Which stipulates that a company is a tax resident if its head office is in located in New Zealand. The test places importance of a physical place where admin and management of business is conducted.
What are some relevant factors in determining if a head office is in New Zealand?
Location of senior management
Where major strategic & policy decisions are made
Whether staff consider the office to be the head office
What section is the centre of management test?
sYD 2(1)(c)
What does sYD 2 (1)(c) of the income Act 2007 refer to?
sYD 2 (1) (c) refers to the centre of management test. Provides that a company is resident for the purposes of tax if its centre of management is in New Zealand
What are some relevant factors in determining if a the centre of management is in New Zealand?
- Focus is on the management of the company as a whole not part of the companies operation.
- Defacto test meaning location is matter of fact.
What is sYD2 (1)(d) of the income Act 2007?
The director control test
What is the director control test?
A company is a New Zealand resident if its directors in their capacity as directors exercise control of the company in New Zealand
What section of the income act 2007 is the directors control test?
sYD2 (1)(d)
What is importance of control in the directors control test?
Control must be the majority control. Therefore if there are 5 directors who share control equally and only 2 are in New Zealand the control is not in New Zealand.
Can directors be natural persons and companies for the directors control test?
Yes
Can the residence of a company change?
Yes- if a company is not incorporated in New Zealand then a change in a qualifying factor may result in the company losing its residence status.
