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EW 15H: Mandatory use of some determinations
or “You must use specific methods for certain financial arrangements”
You could also call this:

“Special calculation method required for certain financial arrangements”

You need to use a special way to figure out how much money you get or spend in a year for certain types of financial deals. This rule applies when:

  1. You don’t have to use a different method that’s mentioned in another part of the law.

  2. Your financial deal includes one of these:

    • Part of it is a special kind of financial arrangement
    • You or the person who issued it treats it like it’s partly owned by someone (like a share in a company)
    • It’s treated like you’re renting something in your financial records
    • It’s a special kind of deal with a life insurance company in another country
    • It’s an agreement to buy or sell things that isn’t a deal with someone in another country

If your financial deal fits one of these descriptions, you have to use one of these methods to figure out how much money to count for each year:

  1. The yield to maturity method
  2. A special rule called Determination G26 about financial arrangements with changing interest rates
  3. A method that the Commissioner of Inland Revenue says you can use
  4. Another method that’s similar to these and gives almost the same result

When this law talks about an “equity instrument”, it means the same thing as in a rule called NZIAS 32.

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Next up: EW 16: Yield to maturity method or alternative

or “Calculating income for financial arrangements using yield to maturity or a similar method”
Next

Part E Timing and quantifying rules
Financial arrangements rules

EW 15IMandatory use of yield to maturity method for some arrangements

  1. This section applies and section EW 15C(1) does not apply when—

  2. a person is not required to use a method under section EW 15H for a financial arrangement; and
    1. the financial arrangement—
      1. includes in part an excepted financial arrangement; or
        1. is treated by the person or its issuer, all or in part, as an equity instrument under IFRSs; or
          1. is, under NZ IFRS 16 and in the person's financial statements, classified as an operating lease; or
            1. is a foreign ASAP that is life financial reinsurance; or
              1. is an agreement for the sale and purchase of property or services that is not a foreign ASAP.

              2. The person must use 1 of the following methods to allocate an amount to an income year if the method is available under its terms for the person to use:

              3. the yield to maturity method:
                1. Determination G26: Variable rate financial arrangements or a determination that succeeds it:
                  1. a determination made by the Commissioner under section 90AC(1)(bb) of the Tax Administration Act 1994 or a binding ruling made under section 91CC(1)(b) of that Act:
                    1. a method other than those set out in paragraphs (a) to (c) if the alternative—
                      1. has regard to the purposes of the financial arrangements rules under section EW 1(3); and
                        1. is for a financial arrangement similar to 1 to which the methods set out in paragraphs (a) to (c) may apply; and
                          1. results in the allocation to each income year of amounts that are not materially different from those that would have been allocated using 1 of the methods set out in paragraphs (a) to (c).

                          2. For the purposes of this section, equity instrument has the same meaning as in NZIAS 32.

                          Compare
                          Notes
                          • Section EW 15I: inserted, on , by section 366 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                          • Section EW 15I(1)(b)(iib): inserted (with effect on 1 April 2008), on , by section 140(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                          • Section EW 15I(1)(b)(iib): amended (with effect on 1 January 2019), on , by section 49(1) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                          • Section EW 15I(1)(b)(iii): replaced (with effect on 1 April 2011 and applying for a financial arrangement entered into by a person: (a) in the 2014–15 income year and later income years, unless paragraph (b) applies; (b) in an income year (the first income year) and later income years, if the person files a return of income for the first income year on the basis that this section applies to a financial arrangement entered into in the first income year, and the first income year is the 2011–12, 2012–13, 2013–14, or 2014–15 income year, and the person uses IFRSs to prepare financial statements or to report for financial arrangements for the first income year), on , by section 80(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                          • Section EW 15I(1)(b)(iv): inserted (with effect on 1 April 2011 and applying for a financial arrangement entered into by a person: (a) in the 2014–15 income year and later income years, unless paragraph (b) applies; (b) in an income year (the first income year) and later income years, if the person files a return of income for the first income year on the basis that this section applies to a financial arrangement entered into in the first income year, and the first income year is the 2011–12, 2012–13, 2013–14, or 2014–15 income year, and the person uses IFRSs to prepare financial statements or to report for financial arrangements for the first income year), on , by section 80(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                          • Section EW 15I(2)(c): replaced, on , by section 178(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                          • Section EW 15I list of defined terms binding ruling: inserted, on , by section 178(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                          • Section EW 15I list of defined terms foreign ASAP: inserted (with effect on 1 April 2011 and applying for a financial arrangement entered into by a person: (a) in the 2014–15 income year and later income years, unless paragraph (b) applies; (b) in an income year (the first income year) and later income years, if the person files a return of income for the first income year on the basis that this section applies to a financial arrangement entered into in the first income year, and the first income year is the 2011–12, 2012–13, 2013–14, or 2014–15 income year, and the person uses IFRSs to prepare financial statements or to report for financial arrangements for the first income year), on , by section 80(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                          • Section EW 15I list of defined terms life financial reinsurance: inserted (with effect on 1 April 2011 and applying for a financial arrangement entered into by a person: (a) in the 2014–15 income year and later income years, unless paragraph (b) applies; (b) in an income year (the first income year) and later income years, if the person files a return of income for the first income year on the basis that this section applies to a financial arrangement entered into in the first income year, and the first income year is the 2011–12, 2012–13, 2013–14, or 2014–15 income year, and the person uses IFRSs to prepare financial statements or to report for financial arrangements for the first income year), on , by section 80(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                          • Section EW 15I list of defined terms NZ IFRS 16: inserted (with effect on 1 January 2019), on , by section 49(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                          • Section EW 15I list of defined terms NZIAS 17: repealed (with effect on 1 January 2019), on , by section 49(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                          • Section EW 15I list of defined terms NZIAS 32: added (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 140(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).