The Issues Log

PricewaterhouseCoopers

Section / Provision Income Tax Act 2007

Section / Provision Income Tax Act 2004

Date Received

The definitions of a controlled foreign company (CFC) included in the 2004 and 2007 Income

Tax Acts (ITA) are different to the definition included in the 1994 ITA.

In summary, under the 1994 ITA a foreign company is not a CFC where the control interest

held by a non resident is equal to or greater than the control interest of a single New Zealand

resident who holds a control interest of 40% or greater. Under the 2004 and 2007 ITA the

foreign company is not a CFC where the control interest held by the non resident is equal to

or greater than 40%, irrespective of whether the non-resident’s control interest is greater than

that held by the New Zealand resident.

That section EX 1(1)(b) of the Income Tax Act 2004 and the Income Tax Act 2007 be amended retrospectively and a savings provision for persons who might have adopted a tax position in a tax return or disclosure form filed prior to 28^th October 2009.