Tax Avoidance: Causes and Solutions - Scholarly Commons Home

share of profits as income in the hands of the recipient and to treat certain payments as a
dividend for tax purposes.
Section GD 4 is related to payments between husband and wife. Under s GD 4, no
deduction is permitted for a payment of any kind made by a taxpayer to his or her spouse or
civil union partner unless the Commissioner consents to that deduction before the
deduction is claimed.
Section GD 5, is related to the excessive remuneration paid by a close company to a
shareholder or a relative of a shareholder. Under s GD 5, when a close company pays or
credits any sum as remuneration for services rendered by a shareholder, a director or one of
their relatives, the Commissioner is authorised to limit the deduction available to a
reasonable level of remuneration.
Section GD 6 includes within a superannuation fund's income the fringe benefit value of a
low-interest loan to a scheme member.
Section GD 7 requires certain property of a life insurer to be treated as trading stock for the
purposes of ss GD 1 (sale for inadequate consideration) and GD 2 (trading stock distributed
to shareholders). Note that s GD 2 was repealed with effect from the beginning of the
2005/06 tax year.
Section GD 8 sets out how superannuation schemes stand in relation to the life insurance
regime, eg, when the provision of a benefit by superannuation schemes to a member will be
treated as if it were the provision of life insurance.
Section GD 9(1) is related to the transfer of land between associated persons where profit
from sale of the land might be assessable.
Section GD 10 applies where property is leased to a relative or a related company for less
than an adequate rent. It applies only to the extent that the leased property is used by the
lessee in the derivation of gross income or exempt income.
Section GD 12(1) and (2) is related to artificial arrangements made in the course of
producing a New Zealand film.
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