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Income Tax Act 2007

Timing and quantifying rules - Financial arrangements rules

EW 15B: Applying IFRSs to financial arrangements

You could also call this:

“Using special accounting rules for financial arrangements”

When you use special accounting rules called IFRSs to report on your money deals, you need to follow some extra rules. These rules are in Sections EW 15C to EW 15I.

These sections tell you how to figure out your income and spending for your money deals. They also say when you have to use certain ways to do this.

Even if you usually use a different money type in your accounting, you must use New Zealand dollars when following these rules.

When the rules talk about IFRSs, they mean the IFRS rules you use for your money reports, unless it says otherwise.

If you’re an insurance company dealing with life insurance contracts, there’s a special rule. If you make a deal with the tax office before 1 January 2023, you might have to use a different way to spread out your income or spending. This is only for certain types of insurance contracts and only applies in some cases.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1629848.

Topics:
Money and consumer rights > Taxes
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EW 15: What is included when spreading methods used, or

“Explanation of what to include when using spreading methods for financial arrangements”

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EW 15C: Preparing and reporting methods, or

“How to choose a method for preparing financial statements and reporting on financial arrangements”

Part E Timing and quantifying rules
Financial arrangements rules

EW 15BApplying IFRSs to financial arrangements

  1. Sections EW 15C to EW 15I apply when a person who is a party to a financial arrangement uses IFRSs to prepare financial statements and to report for financial arrangements.

  2. Sections EW 15C to EW 15I set out—

  3. the methods available to the person to use for calculating and allocating income and expenditure under a financial arrangement:
    1. the circumstances in which a person must use certain other methods.

      1. Even if another currency may be used as the functional currency under IFRSs, the methods must be applied using New Zealand dollars.

      2. Unless the context otherwise requires, references to IFRSs in sections EW 15D to EW 15I are references to IFRS rules used to prepare the person's financial statements.

      3. A life insurer who, in an income year, is a party to a life financial reinsurance contract (the reinsurance contract) and to a deed of settlement under section 6A of the Tax Administration Act 1994 with the Commissioner that meets the requirements of subsection (6), must use the agreed spreading method referred to in subsection (6)(b) for the reinsurance contract and the income year.

      4. The deed of settlement must—

      5. be entered into by the life insurer and the Commissioner before 1 January 2023; and
        1. require the life insurer to use for the income year a method (the agreed spreading method) for spreading the income or expenditure under life financial reinsurance that differs from the treatment of life financial reinsurance that would otherwise be required under the IFRS used by the life insurer for the income year.

          Compare
          Notes
          • Section EW 15B: inserted, on , by section 366 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
          • Section EW 15B(3) heading: added (with effect on 1 April 2008), on , by section 134 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
          • Section EW 15B(3): added (with effect on 1 April 2008), on , by section 134 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
          • Section EW 15B(4) heading: added (with effect on 1 April 2008), on , by section 134 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
          • Section EW 15B(4): added (with effect on 1 April 2008), on , by section 134 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
          • Section EW 15B(5) heading: inserted (with effect on 1 January 2023), on , by section 53(1) (and see section 53(3) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
          • Section EW 15B(5): inserted (with effect on 1 January 2023), on , by section 53(1) (and see section 53(3) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
          • Section EW 15B(6) heading: inserted (with effect on 1 January 2023), on , by section 53(1) (and see section 53(3) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
          • Section EW 15B(6): inserted (with effect on 1 January 2023), on , by section 53(1) (and see section 53(3) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
          • Section EW 15B list of defined terms Commissioner: inserted (with effect on 1 January 2023), on , by section 53(2) (and see section 53(3) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
          • Section EW 15B list of defined terms expenditure: inserted (with effect on 1 January 2023), on , by section 53(2) (and see section 53(3) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
          • Section EW 15B list of defined terms income year: inserted (with effect on 1 January 2023), on , by section 53(2) (and see section 53(3) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
          • Section EW 15B list of defined terms life financial reinsurance: inserted (with effect on 1 January 2023), on , by section 53(2) (and see section 53(3) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
          • Section EW 15B list of defined terms life insurer: inserted (with effect on 1 January 2023), on , by section 53(2) (and see section 53(3) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
          • Section EW 15B list of defined terms reinsurance contract: inserted (with effect on 1 January 2023), on , by section 53(2) (and see section 53(3) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).