Section EW 15D — Income Tax Act 2007: IFRS financial reporting method

EW 15D IFRS financial reporting method General IFRS rules (1) Under the IFRS financial reporting method, a person must allocate an amount to an income year under IFRS rules modified, as applicable, under subsection (2). Modifications (2) The allocation is modified as follows: (a) if the financial arrangement is a financial asset, an amount arising from an impaired credit adjustment under IFRSs is not allocated to an income year. However, when the fair value method is used, adjustments for financial arrangements held by the person are excluded from this paragraph, if the financial arrangements are not derivative instruments and the person's business includes dealing in those financial arrangements: (ab) borrowing costs are not capitalised under NZIAS 23: (b) even though an amount arising from the use of the fair value method may be allocated to equity reserves under IFRSs, the amount must be allocated to an income year for tax purposes. Fair value method not used for certain financial arrangements (2B) A person must not use the fair value method for a financial arrangement if— (a) the financial arrangement is treated under IFRSs by the person as a hedge of another financial arrangement; and (b) the person uses for the other financial arrangement a method that is neither of the following: (i) the IFRS financial reporting method: (ii) the method required under Determination G29: Agreements for sale and purchase of property denominated in foreign currency: exchange rate to determine the acquisition price and method for spreading income and expenditure . Meaning of impaired credit adjustment (3) For the purposes of this section, impaired credit adjustment means— (a) for a financial arrangement accounted for under the fair value method, the movement in fair value through the decline in credit quality of the arrangement: (b) for a financial arrangement not accounted for under the fair value method, credit impairment adjustments made under IFRSs. Defined in this Act: amount , derivative instrument , fair value method , IFRS , impaired credit adjustment , income year , NZIAS 23 , tax Compare: 2004 No 35 s EW 15C Section EW 15D: inserted, on 1 April 2008, by section 366 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109). Section EW 15D(2)(a): amended (with effect on 1 April 2008), on 6 October 2009, by section 135(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15D(2)(ab): inserted (with effect on 1 April 2008), on 6 October 2009, by section 135(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15D(2B) heading: inserted (with effect on 1 April 2008), on 6 October 2009, by section 135(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15D(2B): inserted (with effect on 1 April 2008), on 6 October 2009, by section 135(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15D(2B)(b): substituted (with effect on 1 April 2008), on 29 August 2011, by section 32 of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section EW 15D list of defined terms derivative instrument : inserted (with effect on 1 April 2008), on 6 October 2009, by section 135(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15D list of defined terms NZIAS 23 : inserted (with effect on 1 April 2008), on 6 October 2009, by section 135(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).