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EW 12: When use of spreading method required
or “When you must spread income or expenses from financial arrangements over multiple years”
You could also call this:

“When you don't need to use spreading methods for financial arrangements”

You don’t need to use any spreading methods for a financial arrangement in the year when you have to calculate a base price adjustment for it under section EW 29.

If you’re a trustee managing compensation for personal injury and you’re a cash basis person, you don’t need to use spreading methods for the financial arrangement. This applies to compensation under the Accident Compensation Act 2001, the Accident Insurance Act 1998, older Acts mentioned in section 13 of the Accident Insurance Act 1998, the Workers’ Compensation Act 1956, or a court order.

If you’re a cash basis person, you don’t have to use spreading methods, but you can choose to use them under section EW 61 if you want to.

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Next up: EW 14: What spreading methods do

or “Spreading methods divide income and expenses from financial arrangements over time”
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Part E Timing and quantifying rules
Financial arrangements rules

EW 13When use of spreading method not required

  1. A person does not use any of the spreading methods for a financial arrangement in the income year in which section EW 29 requires them to calculate a base price adjustment for it.

  2. A trustee who holds a financial arrangement in trust to manage compensation paid for personal injury under the Accident Compensation Act 2001, the Accident Insurance Act 1998, any of the former Acts as defined in section 13 of the Accident Insurance Act 1998, the Workers' Compensation Act 1956, or a court order does not use any of the spreading methods for the financial arrangement if the trustee is a cash basis person.

  3. A cash basis person is not required to use any of the spreading methods, but may choose to do so under section EW 61.

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Notes
  • Section EW 13(2): substituted, on , by section 6(1) of the Taxation (Business Tax Measures) Act 2009 (2009 No 5).
  • Section EW 13(2): amended, on (with effect on 1 April 2009), by section 77 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
  • Section EW 13(2): amended, on , by section 189 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).