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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 55
o
the contract is made in New Zealand but partly or wholly performed outside New Zealand; or
o
the contract is made outside New Zealand but partly or wholly performed in New Zealand.
PERSONAL SERVICES IN NEW ZEALAND
YD 4
Classes of income treated as having New Zealand source
…
(4)
An amount that is income under secon CE 1 (Amounts derived in connecon with employment) has a source in New
Zealand if the amount is earned in New Zealand, even if the employer is not a New Zealand resident.
Commissioner of Tax (NSW) v Cam and Sons Ltd
(1936) 36 NSWLR 544
o
Facts
The respondent lived in Korea and worked on a fishing boat – he is paid wages calculated by reference
to the weight of fish caught
Some of the fish were caught in New Zealand waters
o
Issue
What is the source of the income?
o
Judgment
He must pay tax on the income to the extent that it was derived from New Zealand
ACCIDENT COMPENSATION
YD 4
Classes of income treated as having New Zealand source
…
(5)
[Accident compensaon payments have a source in New Zealand].
PENSIONS
YD 4
Classes of income treated as having New Zealand source
…
(6)
[A pension has a source in New Zealand if payable:]
(a)
[by the New Zealand government; or]
(b)
[out of any superannuaon scheme established in New Zealand].
INCOME FROM LAND IN NEW ZEALAND
YD 4
Classes of income treated as having New Zealand source
…
(7)
Income derived by a person as the owner of land in New Zealand has a source in New Zealand.
If you are non-resident but own land in New Zealand and rent it out, the rent is treated as sourced in New Zealand and
thus taxable
INCOME FROM PERSONAL PROPERTY
YD 4
Classes of income treated as having New Zealand source
…
(8)
[Payments for the use of personal property in New Zealand, or for the right to use personal property in New Zealand,
have a source in New Zealand if:]
(a)
paid by a New Zealand resident:
(b)
paid by a non-resident, [but are deducble by that person for New Zealand tax purposes].
Personal property is non-real property (e.g. chaels, shares, intellectual property)
Note however that this provision excludes royales (payments for intellectual property)
ROYALTIES
YD 4
Classes of income treated as having New Zealand source
…
Page 56
(9)
A royalty has a source in New Zealand if it is—
(a)
paid by a New Zealand resident … [unless the payment is in respect of a business carried on outside New Zealand
through a permanent establishment outside New Zealand]
(b)
paid by a non-resident, [but are deducble by that person for New Zealand tax purposes].
“Royalty” is defined as including any payment in respect of (
secon CC 9(2)
):
o
copyright; patents; trademarks; designs; models; plans; secret formulas; etc;
o
mines and quarries;
o
mber or natural resources;
o
films; videotapes; sound-recordings;
o
scienfic, technical, industrial or commercial informaon;
o
assistance in connecon with the above;
o
forbearance in connecon with the above.
These payments are royales (
secon CC 9(3)
):
o
however described or computed
o
whether periodical or not
o
whether an instalment of the purchase price of any real property
o
whether an instalment of the purchase price of any personal property
Royales (as well as insurance and interest) have their own complicated rule because it is easy to put an IP holding
company in a tax haven
o
Example
If you have a mulnaonal enterprise, you have valuable IP
The parent company transfers the IP to a subsidiary in a tax haven
The subsidiary licences use of the IP to a New Zealand subsidiary that carries out the operaon
Royales received by the tax haven subsidiary will not be taxed
Royales paid by the New Zealand subsidiary will be deducble
DIVIDENDS
YD 4
Classes of income treated as having New Zealand source
…
(10)
Income derived from shares in … a company resident in New Zealand has a source in New Zealand.
DEBT INSTRUMENTS
YD 4
Classes of income treated as having New Zealand source
…
(11)
The following amounts have a source in New Zealand—
(a)
interest or a redempon payment derived from money lent in New Zealand:
(b)
interest or a redempon payment derived from money lent outside New Zealand—
(i)
[if the money is lent to a New Zealand resident (unless the money is used by that person for the purposes
of a business carried on by that person outside New Zealand through a fixed establishment outside New
Zealand)]:
(ii)
[if the money is lent to a person who is non-resident, if the money is used by that person for the purposes
of a business carried on by that person in New Zealand through a fixed establishment in New Zealand]
(c)
income from securies issued by the government of New Zealand;
(d)
income derived from debentures issued by a local authority or public authority;
(e)
income derived from a mortgage of land in New Zealand.
This provision covers interest payments and payments that are in the nature of interest but technically outside the
definion of ‘interest’
YA 1
Definions
In this Act, unless the context requires otherwise,—
…
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