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LAWCOMM 403 long notes.docx
LAWCOMM_403_long_notes.docx
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LAWCOMM 403 long notes.docx-CONTENTS Tips ...........
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
LAWCOMM 403 long notes.docx-CONTENT...
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
Page 54
DEFINITION OF “DIRECTOR”
“Director” means (
secon YA 1
):
o
persons occupying the posion of director “whatever tle is used”
o
persons “in accordance with whose … instrucon [the directors] are accustomed to act”
This means people who instruct directors to act – therefore,
New Zealand Forest Products Finance
might not have the same result today if the directors of the subsidiary are merely doing what the New
Zealand head office people instruct them to do; then the company might be regarded as resident in
New Zealand
o
deemed directors
o
directors of enes deemed or assumed to be companies
SOURCE
Basic rules and definions:
o
Non-residents’ foreign-sourced income is exempt from tax (
secon BD 1(5)
)
o
An amount of income of a person is “non-residents’ foreign-sourced income” if (
secon BD 1(4)
):
The amount is a foreign-sourced amount; and
The person is a non-resident when it is derived
o
“Foreign-sourced amount” means an amount of income that is not treated as having a source in New Zealand
(
secon YA 1
)
The source of income is significant for two main reasons:
o
Non-residents pay New Zealand tax on income having a New Zealand source
o
New Zealand residents are entled to credit for foreign taxes paid on income not having a New Zealand source
You only get a foreign tax credit if the income is not sourced from New Zealand
Usually, the source rules of different countries are compable – but it is possible that they won’t be
(i.e. both countries assert that the income is sourced from their country and thus not give a foreign
tax credit)
In purely domesc operaons, the source of income is usually obvious
o
However, any kind of cross-border acvity is likely to give rise to difficules
o
Examples – Juliet, a solicitor pracsing in England, travels to New Zealand, takes detailed instrucons from a
client here and offers immediate advice. She then returns to England, draſts a detailed leer of advice and
sends it to the client.
Perhaps part of the income is derived from New Zealand and part of it is derived from the UK
INCOME DEFINED AS SOURCED IN NEW ZEALAND UNDER STATUTE
BUSINESS IN NEW ZEALAND
YD 4
Classes of income treated as having New Zealand source
…
(2)
Income derived from a business has a source in New Zealand if—
(a)
the business is wholly carried on in New Zealand:
(b)
the business is partly carried on in New Zealand …
If the business is only partly carried on in New Zealand, the income must be apporoned under
secon YD 5
– you pay
New Zealand tax on the part of the income derived from New Zealand
CONTRACTS MADE OR PERFORMED IN NEW ZEALAND
YD 4
Classes of income treated as having New Zealand source
…
(3)
Income derived by a person from a contract has a source in New Zealand if the contract is—
(a)
made in New Zealand …
(b)
made outside New Zealand but the person wholly or partly performs the contract here …
However, apporonment of the income may be required under
secon YD 5
if:
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