Part m-memorandum accounts
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MP 92 Consolidated BETA payment of income tax on foreign income Credit(1) A consolidated BETA group has a branch equivalent tax credit as described in table M25: branch equivalent tax credits of consolidated BETA groups, row 2 (payment of income tax on foreign income) for an amount calculated using the formula—
Definition of items in formula(2) In the formula,— (a) group CFC income is the amount of attributed foreign income derived by the group during the income year: (b) group deductions is the total amount for the group for an income year of— (i) attributed CFC loss; and (ii) attributed CFC net loss; and (iii) FIF loss; and (iv) FIF net loss: (c) tax rate is the decimal fraction that is the basic rate of income tax set out in, as applicable,— (i) schedule 1, part A, clause 5 (Basic rates of income tax and specified superannuation contribution withholding tax) if the company is not a Maori authority; or (ii) schedule 1, part A, clause 2 if the company is a Maori authority: (d) foreign tax is the amount of foreign tax credits allowed under section LC 4 or LC 5 (which relate to foreign tax credits of CFCs) relating to the group’s income tax liability for the income year: (e) debit balances is the amount of all debit balances in a branch equivalent tax account applied to satisfy the group’s income tax liability for the income year. Credit date(3) The credit date is the day the nominated company files the return of income for the tax year corresponding to the income year for which the calculation is made. Defined in this Act: amount, attributed CFC loss, attributed CFC net loss, attributed foreign income, basic rate, branch equivalent tax account, branch equivalent tax credit, consolidated BETA group, FDWP, FIF loss, FIF net loss, foreign tax, income tax, income tax liability, income year, Maori authority, nominated company, return of income, tax year Origin: 2004 No 35 s MF 8(2)(a), (3)(a)
When this section applies(1) This section applies when a consolidated BETA group has a debit balance in its branch equivalent tax account or in the branch equivalent tax account of a group company arising as follows: (a) the income of the group for an income year includes attributed CFC income is derived by— (i) the group; or (ii) a company (group company B) that would be in the same group of companies as the group if the group were a single company; and (b) an amount of FDWP that gives rise to a debit included in the debit balance has been paid— (i) directly; or (ii) by reducing a net loss; or (iii) to reduce an FDWP liability under section NH 7 (Reduction in liability under conduit tax relief). Election(2) The nominated company of the consolidated BETA group may choose to apply some or all of the debit balance to satisfy an income tax liability of the group or of group company B for a tax year that corresponds to the income year referred to in subsection (1). Credit(3) The amount that is applied to satisfy the income tax liability referred to in subsection (2) is a branch equivalent tax credit described in table M25: branch equivalent tax credits of consolidated BETA groups, row 3 (payment of income tax) in the group’s branch equivalent tax account. Income tax paid(4) For the purposes of this section, the income tax liability— (a) is calculated by applying the formula in section MP 92 on the basis that the item “debit balances” is zero; and (b) is satisfied to the extent to which the liability is not more than the income tax payable in relation to the amount of attributed CFC income.
Who makes the election(5) The consolidated BETA group makes the election referred to in subsection (2) as follows: (a) if the group’s income tax liability is to be satisfied, the election may be made by— (i) the nominated company; or (ii) another group company; or (iii) a company that would be in the same group of companies as the group if the group were a single company; and (b) if group company B’s income tax liability is to be satisfied, the election must be made by the nominated company. How election made(6) An election is made under subsection (5) by recording the credit in the branch equivalent tax account of the group or group company B. Credit date(7) The credit date is the day of election. Defined in this Act: amount, attributed CFC income, branch equivalent tax account, branch equivalent tax credit, company, consolidated BETA group, dividend, FDWP, income, income tax, income tax liability, income year, Maori authority, net loss, nominated company, pay Origin: 2004 No 35 ss MF 8(2)(c), (3)(b), MF 10(4), (5), (6)
When this section applies(1) This section applies for the purposes of section MP 93 when an income tax liability of a consolidated BETA group or group company is satisfied by applying some of a debit balance in the group’s branch equivalent tax account, or in the account of another company in the same consolidated BETA group, and a debit balance remains after the credit is recorded in the account. Net loss(2) The residue of the debit balance is converted into a net loss for the purposes of subparts IE, IF, and IG (which relate to the treatment of net losses). The amount of the net loss is calculated using the formula—
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