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FE 35: Persons who may be excluded from banking groups
or “Who can be left out of a banking group”
You could also call this:

“How banks and related entities form a New Zealand banking group”

The New Zealand banking group of a registered bank includes certain entities. If you are a registered bank living in New Zealand, you are part of this group. If you are a registered bank not living in New Zealand, your fixed establishment in New Zealand is part of the group.

You can be included in the banking group if you live in New Zealand and are part of the same group of companies as the registered bank. You also need to meet some accounting rules. These rules say that you should be included in the same financial reports as the bank.

If you are part of the same group of companies as a non-resident ultimate parent, you can be included in the banking group. This is if the accounting rules would include you and the ultimate parent in the same financial reports, assuming the parent lived in New Zealand.

A fixed establishment in New Zealand of a non-resident can be part of the banking group separately from the non-resident. This happens if it’s part of the same group of companies as a non-resident registered bank or a non-resident ultimate parent. The accounting rules must also show that they would be included in the same financial reports if the bank or parent lived in New Zealand.

For all these cases, the accounting rules only apply if the entities are big enough to be included in the financial reports.

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Next up: FE 36B: Identifying members of New Zealand banking group: Crown-owned, no interest apportionment

or “Identifying members of government-owned banks without interest division requirements”
Next

Part F Recharacterisation of certain transactions
Interest apportionment on thin capitalisation: New Zealand banking group

FE 36Identifying members of New Zealand banking group in usual case

  1. The New Zealand banking group of a registered bank to which section FE 36B does not apply includes the entities described in subsection (2), and may also include the entities described in subsections (3) to (6) if the conditions set out in those subsections are met.

  2. The banking group includes—

  3. the registered bank, if resident in New Zealand:
    1. the registered bank’s fixed establishment, if the registered bank is not resident in New Zealand.

      1. A resident person is included in the banking group if—

      2. the person is part of the same group of companies as the registered bank:
        1. the following conditions under generally accepted accounting practice are met:
          1. for a resident registered bank with no non-resident ultimate parent, the consolidated group accounts include both the person and the registered bank, or would include both but for relevant materiality thresholds; or
            1. for a non-resident registered bank with no non-resident ultimate parent, the consolidated group accounts would include the person and the registered bank if the bank were resident in New Zealand and the relevant materiality thresholds were met.

            2. A resident is included in the banking group if—

            3. the person is part of the same group of companies as a non-resident ultimate parent:
              1. under generally accepted accounting practice, the consolidated group accounts would include the person and the ultimate parent if the ultimate parent were resident in New Zealand and the relevant materiality thresholds were met.

                1. A fixed establishment in New Zealand of a non-resident is included in the banking group separately from the non-resident if—

                2. the fixed establishment is part of the same group of companies as a non-resident registered bank with no non-resident ultimate parent:
                  1. under generally accepted accounting practice, the consolidated group accounts would include the fixed establishment and the registered bank if the registered bank were resident in New Zealand and the relevant materiality thresholds were met.

                    1. A fixed establishment in New Zealand of a non-resident is included in the banking group separately from the non-resident if—

                    2. the fixed establishment is part of the same group of companies as a non-resident ultimate parent:
                      1. under generally accepted accounting practice, the consolidated group accounts would include the fixed establishment and the ultimate parent if the ultimate parent were resident in New Zealand and the relevant materiality thresholds were met.

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                        Notes
                        • Section FE 36 heading: amended (with effect on 1 July 2009 and applying for income years beginning on or after that date), on , by section 64(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
                        • Section FE 36(1): amended (with effect on 1 July 2009 and applying for income years beginning on or after that date), on , by section 64(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
                        • Section FE 36(3): substituted (with effect on 1 April 2008), on , by section 227(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                        • Section FE 36(4)(a): amended (with effect on 1 April 2008), on , by section 227(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                        • Section FE 36(5)(a): amended (with effect on 1 April 2008), on , by section 227(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                        • Section FE 36(6)(a): amended (with effect on 1 April 2008), on , by section 227(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).