Income Tax Act 2007 section 407

Events counting as recovery of capital for section 406

Section 407 defines which events count as a recovery of capital from a company, partnership, or co-operative for the purposes of restricting interest relief under section 406.

• Capital is recovered from a company when an individual receives consideration for selling, exchanging, or assigning shares or debts, receives a repayment of share capital, or has a loan repaid by the company.
• Capital is recovered from a partnership when an individual receives consideration for disposing of their partnership interest or assigning a debt, or the partnership repays a loan or returns capital.
• Capital is recovered from a co-operative when an individual receives consideration for disposing of or having repaid their shares, assigns a debt, or has a loan repaid by the co-operative.
• Where a sale or assignment is not at arm's length, market value is substituted for the actual consideration received.