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Income Tax Act 2007

Recharacterisation of certain transactions - Tax relief for emergencies - Optional rule for valuation of group assets

FP 19: Optional rules for valuation of group assets

You could also call this:

“Special rules for valuing group assets after damage or loss”

When you have assets in a group and one of them gets damaged in an emergency, you can choose to follow some special rules. You can do this if the asset is damaged, then impaired or taken out of your accounts, and you get insurance money later for the damage. You need to tell the Commissioner that you want to follow these rules, as set out in section 226I of the Tax Administration Act 1994.

If you choose to follow these rules, you can add the insurance money to the value of your group’s assets for a certain period. This period starts when the asset is impaired or taken out of your accounts and ends when you get the insurance money or the emergency period finishes, whichever is earlier. You can find more information about the emergency event period in other parts of the law.

When you add the insurance money to the value of your New Zealand group’s assets, you must also add it to the value of your worldwide group’s assets for the same period. This means you need to keep track of the assets in both your New Zealand group and your worldwide group. You should follow the same rules for both groups to make sure your accounts are accurate.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS1432212.

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Part F Recharacterisation of certain transactions
Tax relief for emergencies: Optional rule for valuation of group assets

FP 19Optional rules for valuation of group assets

  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 when—

  2. an asset of the person’s New Zealand group is damaged as a result of an emergency event; 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; and
        1. the person has notified the Commissioner in the manner provided by section 226I of the Tax Administration Act 1994 that they have chosen to apply this section.

          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 compensation; and
                1. the beginning of the final income year in the emergency event period.

                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, they must include the amount in the value of the total group assets of their worldwide group for the period.

                Notes
                • Section FP 19: inserted, on , by section 65 of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).