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Income Tax Act 2007

Timing and quantifying rules - Controlled foreign company and foreign investment fund rules - Change of FIF’s balance date

EX 69: Change of FIF’s balance date

You could also call this:

“Changing the accounting year for calculating FIF income or loss”

If you have an attributing interest in a Foreign Investment Fund (FIF) and you calculate your FIF income or loss using the attributable FIF income method, you might want to change the accounting year you use for these calculations. To do this, you need to get permission from the Commissioner.

The Commissioner will look at different things when deciding whether to let you change. They might consider if you want to change because someone new owns the FIF, or because of tax or legal rules in the country where the FIF is based. They’ll also think about whether the change might delay you paying income tax on FIF income.

If the Commissioner says yes, you can use the new accounting year. If the change means you have a longer accounting period that ends in a later income year, and this would lead to FIF income in that later year, there’s a special rule. In this case, you divide the FIF income by the number of days in the longer period. You then count that amount as FIF income for each day in the period.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515742.

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Part E Timing and quantifying rules
Controlled foreign company and foreign investment fund rules: Change of FIF’s balance date

EX 69Change of FIF’s balance date

  1. This section applies when a person—

  2. has an attributing interest in a FIF; and
    1. calculates their FIF income or loss from the FIF using the attributable FIF income method; and
      1. has calculated FIF income or loss from the FIF on the basis of 1 accounting year (the old accounting year); and
        1. wants to change to use a different accounting year (the new accounting year) for the calculations.

          1. The person may make the change only if the Commissioner agrees.

          2. The Commissioner may take into account any relevant factors when making the decision, including—

          3. whether the change is sought because ownership of the FIF has changed; and
            1. whether the change is sought because of taxation or other legal requirements in a country where the FIF is resident or does business; and
              1. whether the change would postpone liability to income tax on FIF income.

                1. If the change is approved, the person may use the new accounting year.

                2. If, in order to make the transition, the transitional accounting period is more than 1 year and ends in a later income year than the old accounting year ends in, and that would result in an amount of FIF income being derived in the later income year, subsection (6) applies and section CQ 5(1)(g) (When FIF income arises) does not.

                3. For the transitional accounting period, the FIF income is divided by the number of days in the period and the resulting amount is FIF income of the person derived on each day in the period.

                Compare
                Notes
                • Section EX 69(1)(b): amended (with effect on 1 July 2011 and applying for income years beginning on or after that date), on , by section 48(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
                • Section EX 69 list of defined terms accounting profits method: repealed (with effect on 1 July 2011), on , by section 48(2)(a) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
                • Section EX 69 list of defined terms attributable FIF income method: inserted (with effect on 1 July 2011), on , by section 48(2)(b) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
                • Section EX 69 list of defined terms branch equivalent method: repealed (with effect on 1 July 2011), on , by section 48(2)(a) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).