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Income Tax Act 2007

Timing and quantifying rules - Financial arrangements rules

EW 8: Election to treat certain excepted financial arrangements as financial arrangements

You could also call this:

“Choose to treat certain financial deals as financial arrangements for tax purposes”

You can choose to treat certain types of financial deals as financial arrangements. This applies to deals that are usually not considered financial arrangements.

You can choose to do this for all deals described in sections EW 5(21) to (25) if the money spent on these deals is allowed as a deduction for you. You can also choose to do this for any deal described in section EW 5(10).

You can choose to treat a group of short-term sale and purchase agreements as financial arrangements if the money spent on these agreements is allowed as a deduction for you. You need to group these agreements by the currency they use and how long they last.

To make this choice, you need to include the income you earn or the money you spend from these deals in your tax return, treating them as financial arrangements.

If you want to change your mind, you can tell the Commissioner when you file your tax return. This change will apply to any new deals you make after that tax year.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515249.

Topics:
Money and consumer rights > Taxes
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EW 7: Change from private or domestic purpose, or

“Changing how you use a personal money agreement”

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EW 9: Persons to whom financial arrangements rules apply, or

“Who needs to follow the financial arrangements rules”

Part E Timing and quantifying rules
Financial arrangements rules

EW 8Election to treat certain excepted financial arrangements as financial arrangements

  1. A person may choose to treat as financial arrangements—

  2. all the excepted financial arrangements to which the person is a party that are described in any of section EW 5(21) to (25), if the expenditure under the agreements satisfies the general permission and is not denied by the general limitation as a deduction for the person:
    1. any excepted financial arrangement to which the person is a party that is described in section EW 5(10).

      1. A person may choose to treat as financial arrangements a class of short-term agreements for sale and purchase if the expenditure under the agreements satisfies the general permission and is not denied by a general limitation as a deduction for the person. The person must identify the class by—

      2. the currency that applies to the agreements:
        1. the term of the agreements.

          1. The person makes an election by returning income derived or expenditure incurred under the chosen arrangements under the financial arrangements rules in their return of income.

          2. The person revokes the election by giving notice to the Commissioner with their return of income and within the time that the return must be filed under section 37 of the Tax Administration Act 1994.

          3. The revocation applies to excepted financial arrangements the person enters into after the income year in which the notice is given.

          Compare
          Notes
          • Section EW 8 heading: replaced (with effect on 27 September 2012), on , by section 75(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
          • Section EW 8(1) heading: replaced (with effect on 27 September 2012 and applying for a person and an excepted financial arrangement on and after that date, except if the person takes a tax position for the excepted financial arrangement, relying on an election made under section EW 8 as amended by section 50 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 and before its amendment by section 75(2) and (4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014: (i) in a return of income received by the Commissioner before 14 April 2014; (ii) under a determination or binding ruling made by the Commissioner before 14 April 2014; and chooses after 14 April 2014 to continue taking the tax position), on , by section 75(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
          • Section EW 8(1) heading: replaced (with effect on 17 July 2013 and applying for a person and an excepted financial arrangement on and after that date, except if the person takes a tax position for the excepted financial arrangement referred to in section 75(5)(a) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 and chooses under section 75(5)(b) of that Act to continue taking the tax position), on , by section 75(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
          • Section EW 8(1): replaced (with effect on 1 April 2011 and applying for income years beginning on or after that date), on , by section 71(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
          • Section EW 8(2) heading: replaced (with effect on 27 September 2012 and applying for a person and an excepted financial arrangement on and after that date, except if the person takes a tax position for the excepted financial arrangement, relying on an election made under section EW 8 as amended by section 50 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 and before its amendment by section 75(2) and (4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014: (i) in a return of income received by the Commissioner before 14 April 2014; (ii) under a determination or binding ruling made by the Commissioner before 14 April 2014; and chooses after 14 April 2014 to continue taking the tax position), on , by section 75(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
          • Section EW 8(2) heading: replaced (with effect on 17 July 2013 and applying for a person and an excepted financial arrangement on and after that date, except if the person takes a tax position for the excepted financial arrangement referred to in section 75(5)(a) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 and chooses under section 75(5)(b) of that Act to continue taking the tax position), on , by section 75(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
          • Section EW 8(2): replaced (with effect on 27 September 2012 and applying for a person and an excepted financial arrangement on and after that date, except if the person takes a tax position for the excepted financial arrangement, relying on an election made under section EW 8 as amended by section 50 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 and before its amendment by section 75(2) and (4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014: (i) in a return of income received by the Commissioner before 14 April 2014; (ii) under a determination or binding ruling made by the Commissioner before 14 April 2014; and chooses after 14 April 2014 to continue taking the tax position), on , by section 75(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
          • Section EW 8(2): replaced (with effect on 17 July 2013 and applying for a person and an excepted financial arrangement on and after that date, except if the person takes a tax position for the excepted financial arrangement referred to in section 75(5)(a) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 and chooses under section 75(5)(b) of that Act to continue taking the tax position), on , by section 75(3) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
          • Section EW 8(3): amended (with effect on 27 September 2012 and applying for a person and an excepted financial arrangement on and after that date, except if the person takes a tax position for the excepted financial arrangement, relying on an election made under section EW 8 as amended by section 50 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 and before its amendment by section 75(2) and (4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014: (i) in a return of income received by the Commissioner before 14 April 2014; (ii) under a determination or binding ruling made by the Commissioner before 14 April 2014; and chooses after 14 April 2014 to continue taking the tax position), on , by section 75(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
          • Section EW 8(5): amended (with effect on 1 April 2008), on , by section 50(4) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).