FE 23Banking group’s funding debt

1. A reporting bank must calculate the funding debt of its New Zealand banking group for a tax year using the formula—

   $(total\; interest\; +\; interest\; deductions\; -\; shares\; -\; mismatch)\; ÷\; days\; in\; quarter.$

   Where:

2. In the formula,—

3. total interest is the financial value of the total interest-bearing debt for the group, measured on the last day of a quarter in the reporting bank’s corresponding income year:
4. interest deductions is the financial value not included in paragraph (a) of a financial arrangement in relation to which the group has a deduction for interest to which any of sections DB 6 to DB 8 (which relate to interest expenditure) applies, other than as a consequence of a fluctuation in the value of a currency of a country relative to the value of a currency of another country:
5. shares is the financial value of shares included in paragraph (a), measured on the last day of a quarter in the reporting bank’s corresponding income year:
6. mismatch is the same proportion of the financial value of a debt or financial arrangement included in paragraph (a) or (b) as the proportion of the total interest expenditure under the debt or financial arrangement in the income year that is denied as a deduction in the income year under section FH 3 (Payments under financial instruments producing deduction without income) as an unrecognised amount under section FH 3(2) or under section FH 7 or FH 11 (which provide for the matching of deductions and income from multi-jurisdictional arrangements):
7. days in quarter is the number of days in a quarter in the reporting bank’s corresponding income year.

Compare

• 2004 No 35 s FG 8B(3)

Notes

• Section FE 23(1) formula: amended, on 1 July 2018, by section 34(1) (and see section 34(3) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
• Section FE 23(2)(cb): inserted, on 1 July 2018, by section 34(2) (and see section 34(3) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).