New Zealand Legislation: Bills

8 Section CB 26 replaced

• (1) Section CB 26 is replaced by the following:

  “CB 26 Disposal of certain shares by portfolio investment entities

  • “When this section applies

    “(1) This section applies when—

    • “(a) the income from the disposal by a person (the entity) of the share is excluded income under section CX 55 (Proceeds from disposal of investment shares); and

    • “(b) a dividend from the share is—

      • “(i) declared before the disposal; and

      • “(ii) paid to a holder of the share who, after the disposal, becomes entitled to the dividend.

    “Income

    “(2) The entity is treated as deriving an amount of income calculated using the formula—

    (shares at declaration – shares on distribution) × dividend.

    “Definition of items in formula

    “(3) In the formula,—

    • “(a) shares at declaration is the number of shares held by the entity when the dividend is declared:

    • “(b) shares on distribution is the number of shares for which the entity derives a dividend:

    • “(c) dividend is the amount of the dividend or, for a share issued by an ICA company, the amount of the dividend that is not fully imputed as described in section RF 9(2) (When dividends fully imputed or fully credited).

    • “(c) dividend is the amount of the dividend per share or, for a share issued by an ICA company, the amount of the dividend per share that is not fully imputed.

    “Positive result

    “(4) The result of the formula must be a positive amount.

    “Defined in this Act: amount, company, dividend, excluded income, ICA company, income, pay, portfolio investment entity, shareamount, company, dividend, excluded income, fully imputed, ICA company, income, pay, portfolio investment entity, share

    “Compare: 2007 No 97 s CB 26”.

  (2) Subsection (1) applies for the 2009–10 and later income years.

  (2) Subsection (1) applies for the 2010–11 and later income years.