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EZ 28: Meaning of qualifying asset
or “Assets eligible for depreciation deductions, excluding buildings and some cars”
You could also call this:

“Rules for accident insurance companies' tax reserves”

This section of the law talks about what happens when an insurance company has money set aside (called a reserve) to cover accidents that happened before the end of the tax year. The reserve is for claims that haven’t been settled yet, claims they expect to get, and claims for accidents they don’t know about yet.

If the reserve at the end of the tax year is bigger than it was at the start, the insurance company can take off some money from their taxes. The amount they can take off is the difference between the end amount and the start amount.

If the reserve at the start of the tax year is bigger than at the end, the insurance company has to add some money to their income for taxes. This amount is the difference between the start amount and the end amount.

The reserve at the end of the tax year can be worked out in two ways. It can be an amount that a special maths expert (called an actuary) calculates and the insurance company uses for their financial reports. Or, if they haven’t done that, the tax department (Commissioner) can decide the amount, maybe asking an actuary for help.

When working out the reserve amount, the person doing it needs to think about proper accounting rules, proper actuary rules, and what future payments might be worth now.

This section adds to the general permission for deductions in tax law, but the general limitations still apply.

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Next up: EZ 30: Base premium for 1998–99 premium year under Accident Insurance Act 1998

or “Rules for timing and treatment of 1998-99 accident insurance base premium payments”
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Part E Timing and quantifying rules
Terminating provisions: Definitions

EZ 29Private insurers under Accident Insurance Act 1998

  1. This section applies when an insurer, as defined in paragraph (a) of the definition of insurer in section 13 of the Accident Insurance Act 1998, has a reserve in a tax year to cover the following, all of which relate to events covered by the Accident Insurance Act 1998 occurring before the end of the tax year:

  2. claims that have been made with the insurer but have not been settled before the end of the tax year; and
    1. claims that are expected to be made with the insurer in relation to events that the insurer knows about; and
      1. an estimate of claims that have not been reported to the insurer in relation to events that the insurer does not know about.

        1. When the closing value of the reserve for a tax year is more than the opening value, the deduction that the insurer is allowed is adjusted by an amount equal to the amount calculated using the formula—

          closing value − opening value.

          Where:

          • When the opening value of the reserve for a tax year is more than the closing value, the income of the insurer is adjusted by an amount equal to the amount calculated using the formula—

            opening value − closing value.

            Where:

            • The reserve at the end of the tax year is—

            • an amount calculated by an actuary applying subsection (5) and adopted by the insurer for financial reporting purposes; or
              1. if no such amount has been calculated, an amount determined by the Commissioner, who may seek the advice of an actuary in determining it.

                1. A person calculating or determining the amount of a reserve under subsection (4) must ensure that the amount has regard to—

                2. generally accepted accounting practice; and
                  1. generally accepted actuarial practice; and
                    1. the present value of expected future payments.

                      1. This section supplements the general permission. The general limitations still apply.

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                      Notes
                      • Section EZ 29(4)(b): amended, on , by section 82 of the Financial Markets Authority Act 2011 (2011 No 5).