Section EW 15E — Income Tax Act 2007: Determination alternatives

EW 15E Determination alternatives When this section applies (1) This section applies when— (a) a person chooses in a return of income to use a determination alternative to IFRS for a financial arrangement; and (b) the method is available under its terms for the person to use; and (c) the financial arrangement–– (i) is not treated under IFRSs by the person as a hedge; or (ii) is treated under IFRSs by the person as a hedge of other financial arrangements, for each of which the person does not use the fair value method; or (iii) is treated under IFRSs by the person as a hedge of something that is not a financial arrangement. General IFRS rules (2) The person must use 1 of the following methods modified, as applicable, under subsection (3) or (3B): (aa) Determination G3: Yield to maturity , but only if the financial arrangement is denominated in New Zealand currency and is not a derivative instrument. When applying Determination G3 , Determination G25: Variation in the terms of a financial arrangement must be used: (a) Determination G9C: Financial arrangements that are denominated in a currency other than New Zealand dollars: an expected value approach: (b) Determination G14B: Forward contracts for foreign exchange and commodities: an expected value approach: (c) Determination G27: Swaps: (d) a determination made by the Commissioner under section 90AC(1)(bb) of the Tax Administration Act 1994: (e) a method other than those set out in paragraphs (aa) to (d) if the alternative— (i) has regard to the purposes of the financial arrangements rules under section EW 1(3) ; and (ii) is for a financial arrangement similar to 1 to which the methods set out in paragraphs (aa) to (d) may apply; and (iii) results in the allocation to each income year of amounts that are not materially different from those that would have been allocated using 1 of the methods set out in paragraphs (aa) to (d). Modifications (3) For a determination alternative that is Determination G9C or G14B , the allocation is modified as follows: (a) the term forward contract is treated as including a conditional or unconditional agreement to pay or be paid an amount calculated by reference to the price of property or services, without the property being delivered or the services being performed: (b) a requirement that all companies in a group of companies to which the person belongs choose to use the determination alternative is treated as met if— (i) all companies in the group choose Determination G9C or G14B in writing on or before the 63rd day after the person enters into the financial arrangement, or a later time as the Commissioner allows; and (ii) the financial arrangement is the first financial arrangement of the group for which Determination G9C or G14B may be used. Modifications (3B) For a determination alternative that is Determination G27 , the allocation is modified as follows: (a) method C must be used, and not methods A, B, or D: (b) for method C, if relevant, Determination G9C and not Determination G9A must be used. Succeeding determinations (4) For the purposes of this section, the determinations set out in subsection (2)(a) to (c) include a determination that succeeds the determination. Defined in this Act: amount , company , derivative instrument , financial arrangement , financial arrangements rules , group of companies , IFRS , income year , New Zealand , pay , return of income Compare: 2004 No 35 s EW 15D Section EW 15E: inserted, on 1 April 2008, by section 366 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109). Section EW 15E(1)(c): substituted (with effect on 1 April 2008), on 6 October 2009, by section 136(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15E(1)(c)(ii): amended (with effect on 1 April 2008), on 7 September 2010, by section 36 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section EW 15E(1)(c)(iii): added (with effect on 1 April 2008), on 7 September 2010, by section 36 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section EW 15E(2): amended (with effect on 1 April 2009), on 6 October 2009, by section 136(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15E(2)(aa): inserted (with effect on 1 April 2008), on 6 October 2009, by section 136(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15E(2)(e): amended (with effect on 1 April 2009), on 7 December 2009, by section 19(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section EW 15E(2)(e)(ii): amended (with effect on 1 April 2009), on 7 December 2009, by section 19(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section EW 15E(2)(e)(iii): amended (with effect on 1 April 2009), on 7 December 2009, by section 19(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section EW 15E(3B) heading: inserted (with effect on 1 April 2009), on 6 October 2009, by section 136(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15E(3B): inserted (with effect on 1 April 2009), on 6 October 2009, by section 136(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15E list of defined terms derivative instrument : inserted (with effect on 1 April 2009), on 6 October 2009, by section 136(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15E list of defined terms New Zealand : inserted (with effect on 1 April 2009), on 6 October 2009, by section 136(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).