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Income Tax Act 2007

Recharacterisation of certain transactions - Terminating provisions

FZ 7: Valuation of group assets: insurance proceeds from Canterbury earthquake

You could also call this:

“How to value group assets affected by Canterbury earthquake while awaiting insurance”

This law is about how you can value your group’s assets if they were damaged in the Canterbury earthquake and you’re waiting for insurance money. Here’s what you need to know:

If you have an asset that was damaged in the Canterbury earthquake, and you had to reduce its value or remove it from your books because of the damage, but you’re going to get insurance money for it later, you can choose to do something special.

You can include the amount of insurance money you’re going to get in the value of your group’s assets. You can do this from when the asset was damaged until you actually get the insurance money, or until the start of the 2019-2020 income year, whichever comes first.

If you decide to do this for your New Zealand group’s assets, you have to do the same for your worldwide group’s assets too.

If you choose to use this special rule, you need to tell the Commissioner of Inland Revenue. You need to give them some information, including how much income you would have without using this rule, and how much income you have after using it.

You need to give this information in the way the Commissioner asks for it, and you need to do it by 30 November 2012 or by the day you need to file your tax return, whichever is later.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4887821.

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FZ 6: Transitional valuation rule for estate property, or

“Special valuation rules for inherited property before October 2005”

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FZ 7B: Valuation of group assets: insurance proceeds from North Island flooding events, or

“How to value company assets after North Island floods for insurance payouts”

Part F Recharacterisation of certain transactions
Terminating provisions

FZ 7Valuation of group assets: insurance proceeds from Canterbury earthquake

  1. This section applies for the purposes of sections FE 16 (Total group assets) and FE 18 (Measurement of debts and assets of worldwide group) and a person if—

  2. an asset of the person's New Zealand group is damaged as a result of a Canterbury earthquake, as that term is defined in section 4 of the Canterbury Earthquake Recovery Act 2011; and
    1. the asset is impaired or derecognised, under generally accepted accounting practice as a result of the damage; and
      1. insurance for the damage is recognised at a later date under generally accepted accounting practice.

        1. The person may choose to include an amount of the insurance, corresponding to the amount of the impairment or the derecognised value of the asset, in the value of the total group assets of the person's New Zealand group during the period—

        2. beginning with the impairment or derecognition of the asset; and
          1. ending before the earlier of—
            1. the recognition of the amount of insurance:
              1. the beginning of the 2019–20 income year.

              2. If a person includes an amount under subsection (2) in the value of the total group assets of the person's New Zealand group for a period, the person must include the amount in the value of the total group assets of the person's worldwide group for the period.

              3. A person choosing to apply subsection (2) for an income year must give to the Commissioner—

              4. notice that the person has applied this section for the income year; and
                1. the amount of income that would arise under section CH 9 (Interest apportionment: excess debt entity) for the income year in the absence of this section; and
                  1. the amount of income that arises under section CH 9 for the income year after the application of this section; and
                    1. further information required by the Commissioner.

                      1. The information required by subsection (4) must be given—

                      2. in the form and by the means prescribed by the Commissioner; and
                        1. no later than the later of 30 November 2012 and the day by which the person is required to make a return of income for the corresponding tax year.

                          Notes
                          • Section FZ 7: replaced (with effect on 4 September 2010), on , by section 76 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                          • Section FZ 7 list of defined terms notice: inserted, on , by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).