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Income Tax Act 2007

Timing and quantifying rules - Controlled foreign company and foreign investment fund rules - Calculation of FIF income or loss

EX 48: Default calculation method

You could also call this:

“How to calculate your FIF income if you don't choose a method”

If you don’t choose a way to calculate your FIF income or loss from an attributing interest for a period, and if other rules don’t tell you which method to use, this is what happens:

You’re treated as if you chose to use the fair dividend rate method if it’s practical to use it. If it’s not practical to use the fair dividend rate method, you’re treated as if you chose to use the cost method.

This rule applies when you haven’t made a choice yourself, and when other parts of the law (section EX 46, section EX 47, and section EX 62) don’t require you to use a specific method.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515563.

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Money and consumer rights > Taxes
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“The accounting profits method is no longer allowed for calculating FIF income or loss”

Part E Timing and quantifying rules
Controlled foreign company and foreign investment fund rules: Calculation of FIF income or loss

EX 48Default calculation method

  1. This section applies when—

  2. a person does not choose a calculation method to calculate FIF income or loss from an attributing interest for a period; and
    1. sections EX 46, EX 47, and EX 62 do not have the effect of requiring a particular calculation method to be used.

      1. The person is treated as having chosen to use, for the period,—

      2. the fair dividend rate method if it is practical to use it; and
        1. the cost method if it is not practical to use the fair dividend rate method.

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          Notes
          • Section EX 48(2) heading: replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on , by section 33(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
          • Section EX 48(2): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on , by section 33(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
          • Section EX 48 list of defined terms accounting profits method: repealed (with effect on 1 July 2011), on , by section 33(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
          • Section EX 48 list of defined terms comparative value method: repealed (with effect on 1 July 2011), on , by section 33(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
          • Section EX 48 list of defined terms deemed rate of return method: repealed (with effect on 1 July 2011), on , by section 33(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).