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EW 13: When use of spreading method not required
or “When you don't need to use spreading methods for financial arrangements”
You could also call this:

“Spreading methods divide income and expenses from financial arrangements over time”

Spreading methods are ways to calculate and divide income and expenses from a financial arrangement over its duration. You can use different spreading methods depending on your situation.

There are several types of spreading methods you can use. These include methods for IFRS, yield to maturity, straight-line, market valuation, determination, financial reporting, and default methods. Each of these methods has specific rules that you need to follow.

When you use a spreading method, it helps you figure out how much money you’ve earned or spent in a given year. The amount you calculate using a spreading method is either income you’ve earned or an expense you’ve paid during that year.

If you’re not sure which spreading method to use, you can ask the Commissioner for advice. The Commissioner can give you a binding ruling on how to use certain spreading methods. This means they can tell you the right way to use the method, and you can rely on their advice.

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Next up: EW 15: What is included when spreading methods used

or “Explanation of what to include when using spreading methods for financial arrangements”
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Part E Timing and quantifying rules
Financial arrangements rules

EW 14What spreading methods do

  1. The spreading methods are methods of calculating and allocating income and expenditure under a financial arrangement over the arrangement’s term.

  2. A spreading method is 1 of the following:

  3. a method for IFRS, to which sections EW 15B to EW 15I relate; or
    1. the yield to maturity method or an alternative, to which sections EW 16, EW 19, and EW 23 are relevant; or
      1. the straight-line method, to which sections EW 17 and EW 19 are relevant; or
        1. a market valuation method, to which sections EW 18, EW 19, and EW 23 are relevant; or
          1. a determination method or an alternative, to which sections EW 20 and EW 23 are relevant; or
            1. a financial reporting method, to which sections EW 21 and EW 23 are relevant; or
              1. a default method, to which section EW 22 is relevant.

                1. The amount calculated for and allocated to the income year under a spreading method is—

                2. income, under section CC 3 (Financial arrangements), derived by the person in the income year; or
                  1. expenditure incurred by the person in the income year.

                    1. The Commissioner may make a binding ruling under section 91CC(1)(b) of the Tax Administration Act 1994 on the use of a spreading method described in subsection (2)(aa) to (e) for the purposes of sections EW 15E and EW 15I.

                    Compare
                    Notes
                    • Section EW 14(2)(aa): inserted, on , by section 364(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                    • Section EW 14(2)(e): substituted (with effect on 1 April 2008), on , by section 133 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section EW 14(4) heading: inserted, on , by section 176(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                    • Section EW 14(4): inserted, on , by section 176(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                    • Section EW 14 list of defined terms binding ruling: inserted, on , by section 176(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).