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Income Tax Act 2007

Timing and quantifying rules - Terminating provisions - Definitions

EZ 32F: Applicable accounting standard for section EX 21E: former generally accepted accounting practice without IFRS

You could also call this:

“Using older accounting methods for overseas companies in specific situations”

This section explains when you can use an older accounting method called ‘former generally accepted accounting practice without IFRS’ for a company you have an interest in that’s based overseas (called a CFC).

You can use this older method if you or another New Zealand company meets certain conditions. These conditions include not having any income under specific old financial reporting standards, not being required to file accounts with the Companies Office, and not being a large company.

The company also can’t have accounts that use the newer accounting standards (IFRS), and it can’t be owned by a company that uses IFRS. The company’s accounts must include the overseas company’s accounts and follow the older accounting rules.

You can also use this older method for a group of related overseas companies if similar conditions are met.

The section then explains some terms used, like ‘former Financial Reporting Act’ and ‘former generally accepted accounting practice without IFRS’. These terms refer to older laws and accounting practices that were used before new laws came into effect.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6031269.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
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EZ 32E: Change in section EX 20B for income of CFC insurer: interest on terminal tax, or

“Interest waived on certain CFC insurer terminal tax debts from 2009 to 2012”

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EZ 32G: Person deriving pension from foreign superannuation scheme and returning as income before 1 April 2014, or

“Foreign pension payments reported as income before April 2014”

Part E Timing and quantifying rules
Terminating provisions: Definitions

EZ 32FApplicable accounting standard for section EX 21E: former generally accepted accounting practice without IFRS

  1. This section applies when—

  2. a person (the interest holder) with an interest in a CFC is applying section EX 21E (Non-attributing active CFC: Test based on accounting standard) for an accounting period to determine whether the CFC is a non-attributing active CFC for the person; and
    1. section GB 15C (Arrangements related to accounting test for non-attributing active CFC) does not apply.

      1. The interest holder may use former generally accepted accounting practice without IFRS for the CFC and the accounting period if the interest holder or another person is a company resident in New Zealand that—

      2. has no revenue under former Financial Reporting Standard 34 and former Financial Reporting Standard 35; and
        1. is an issuer under section 4 of the former Financial Reporting Act in neither of the current and preceding accounting periods; and
          1. is not required by section 19 of the former Financial Reporting Act to file its accounts with the Registrar of Companies; and
            1. is not a large company under section 19A(1)(b) of the former Financial Reporting Act; and
              1. does not have accounts that are prepared and audited under generally accepted accounting practice with IFRS; and
                1. is not a subsidiary of a company having accounts that—
                  1. include the accounts of the subsidiary; and
                    1. are prepared and audited, or required to be prepared, under generally accepted accounting practice with IFRS; and
                    2. has accounts that—
                      1. include the accounts of the CFC; and
                        1. comply with former generally accepted accounting practice without IFRS; and
                          1. meet the audit requirements of section EX 21C(8).

                          2. The interest holder may use former generally accepted accounting practice without IFRS for the CFC's test group under section EX 21D(1) (Non-attributing active CFC: default test) if the interest holder or another person is a company resident in New Zealand that—

                          3. has no revenue under former Financial Reporting Standard 34 and former Financial Reporting Standard 35; and
                            1. is an issuer under section 4 of the former Financial Reporting Act in neither of the current and preceding accounting periods; and
                              1. is not required by section 19 of the former Financial Reporting Act to file its accounts with the Registrar of Companies; and
                                1. is not a large company under section 19A(1)(b) of the former Financial Reporting Act; and
                                  1. does not have accounts that are prepared and audited under generally accepted accounting practice with IFRS; and
                                    1. is not a subsidiary of a company having accounts that—
                                      1. include the accounts of the subsidiary; and
                                        1. are prepared and audited, or required to be prepared, under generally accepted accounting practice with IFRS; and
                                        2. has accounts that—
                                          1. include the accounts of the members of the CFC's test group; and
                                            1. comply with former generally accepted accounting practice without IFRS; and
                                              1. meet the audit requirements of section EX 21C(8).

                                              2. In this section and section EX 21E,—

                                                former Financial Reporting Act means the Financial Reporting Act 1993—

                                                1. as it was before being repealed under the Financial Reporting Act 2013; and
                                                  1. treated as if it applied to resident companies for the purposes of this section and section EX 21E

                                                    former Financial Reporting Standard 34 means the Financial Reporting Standard 34 issued under the former Financial Reporting Act as the standard was before the repeal of the Financial Reporting Act 1993 under the Financial Reporting Act 2013

                                                      former Financial Reporting Standard 35 means the Financial Reporting Standard 35 issued under the former Financial Reporting Act as the standard was before the repeal of the Financial Reporting Act 1993 under the Financial Reporting Act 2013

                                                        former financial reporting standards without IFRS means the financial reporting standards, other than IFRSs, approved or issued under the former Financial Reporting Act 1993 as the standards were before the repeal of the Financial Reporting Act 1993 under the Financial Reporting Act 2013

                                                          former generally accepted accounting practice without IFRS means the generally accepted accounting practice in New Zealand,—

                                                          1. as the practice was before the repeal of the Financial Reporting Act 1993 under the Financial Reporting Act 2013; and
                                                            1. for persons who under the former Financial Reporting Act are not required to use IFRS but are required to comply with the former financial reporting standards without IFRS

                                                              generally accepted accounting practice with IFRS means the generally accepted accounting practice in New Zealand including IFRSs and the framework for differential reporting for entities applying the New Zealand equivalents to the international financial standards reporting regime.

                                                              Notes
                                                              • Section EZ 32F: inserted, on , by section 95 of the Financial Reporting (Amendments to Other Enactments) Act 2013 (2013 No 102).