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Income Tax Act 2007

Timing and quantifying rules - Spreading of specific expenditure - Definitions

EJ 25: Allocation of expenditure on aircraft engine overhauls: election by IFRS user

You could also call this:

“Choosing how to claim expenses for fixing aircraft engines if you use special accounting rules.”

You can choose to allocate expenses for aircraft engine overhauls in a certain way if you are a New Zealand resident or have a valid certificate of registration for the aircraft from the Director of Civil Aviation under the Civil Aviation Act 2023. You must use IFRS rules to prepare financial statements and the aircraft must be treated as owned by you or leased by you under a finance lease.

You must use the figures from your financial statements and agree with the Commissioner on the methods and adjustments to quantify and allocate deductions under section DW 5 or section DW 6.

Your choice applies to each assessment made after you reach an agreement with the Commissioner, notify them of your choice, and they accept it, if necessary. It also applies before your return for an income year when you do not meet the requirements, before you revoke your choice, and before the Commissioner decides not to accept assessments based on your choice. The Commissioner can give you a notice or refuse to give you a notice if they think you have departed significantly from an agreement or the IFRS rules.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7281504.

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EJ 24: Allocation of expenditure on aircraft engine overhauls, or

"How to spread out deductions for aircraft engine costs over time"

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EJ 26: Allocation of expenditure on aircraft engine overhauls: election by operator of single aircraft, or

"How to allocate costs for aircraft engine overhauls if you operate only one aircraft"

Part E Timing and quantifying rules
Spreading of specific expenditure: Definitions

EJ 25Allocation of expenditure on aircraft engine overhauls: election by IFRS user

  1. A person may elect to quantify and allocate under this section the amount of a deduction allowed by section DW 5 or DW 6 (which relate to the acquisition, overhaul, and leasing of aircraft engines) in relation to an aircraft or aircraft engine and an income year if—

  2. the person is a New Zealand resident or holds a valid certificate of registration for the aircraft from the Director of Civil Aviation under the Civil Aviation Act 2023; and
    1. the person uses IFRS rules to prepare financial statements; and
      1. the aircraft is treated under the IFRS rules as being owned by the person or is leased by the person under a finance lease.

        1. A person who elects to rely on this subsection must quantify and allocate deductions under section DW 5 or DW 6 for an assessment to which the election applies by using the figures relating to aircraft and aircraft engines used in the person’s financial statements and using methods and adjustments agreed with the Commissioner.

        2. An election under this section applies for each assessment that is made by the person—

        3. after the person—
          1. reaches any necessary agreement under subsection (2) with the Commissioner; and
            1. notifies the Commissioner of the election when or before making a return based on the elected approach; and
              1. is notified that the Commissioner accepts the election, if the Commissioner has previously notified the person under paragraph (d); and
              2. before the person’s return for an income year for which the person does not meet the requirements of subsection (1); and
                1. before the person notifies the Commissioner, when or before making a return based on an approach other than the elected approach, that the election is revoked; and
                  1. before the person is notified that the Commissioner will not accept assessments based on the elected approach.

                    1. The Commissioner may give to the person a notice referred to in subsection (3)(d), or may refuse to give to the person a notice referred to in subsection (3)(a)(iii), if the Commissioner considers that the person has, in making an assessment, departed significantly from an agreement with the Commissioner or from the requirements of the IFRS rules.

                    Notes
                    • Section EJ 25: inserted, on (applying for the 2017–18 and later income years), by section 69(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                    • Section EJ 25(1)(a): amended, on , by section 486 of the Civil Aviation Act 2023 (2023 No 10).