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Income Tax Act 2007

Recharacterisation of certain transactions - Terminating provisions

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

You could also call this:

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

This section of the law applies to you if your company’s asset in New Zealand was damaged by a North Island flooding event, the asset was impaired or removed from your books due to the damage, and insurance for the damage was recognised later.

If this happens, you can choose to include some of the insurance money in the value of your company’s total assets in New Zealand. You can do this for the time between when the asset was impaired or removed from your books and when the insurance was recognised, or until the start of the 2027-28 income year, whichever comes first.

If you decide to include this insurance money in your New Zealand assets, you must also include it in your worldwide assets.

If you choose to do this for a year, you need to tell the Commissioner about it. You must tell them that you’ve used this rule, give an estimate of how much income you would have under section CH 9 without using this rule, tell them how much income you actually have under section CH 9 after using this rule, and provide any other information the Commissioner asks for.

You need to give this information in the way the Commissioner tells you to, and by the time you need to file your tax return for that year. If there are special circumstances, the Commissioner might let you give the information 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=LMS953801.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
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Part F Recharacterisation of certain transactions
Terminating provisions

FZ 7BValuation of group assets: insurance proceeds from North Island flooding events

  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 North Island flooding 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.

        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 2027–28 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 notice to the Commissioner of the following:

              4. that the person has applied this section for the income year; and
                1. a reasonable estimate of 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. any 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 day by which the person is required to make a return of income for the corresponding tax year, or at a later time if the Commissioner considers there are exceptional circumstances.

                          Notes
                          • Section FZ 7B: inserted (with effect on 1 April 2022), on , by section 78(1) (and see section 78(2) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).