Section EW 15F — Income Tax Act 2007: Expected value method

EW 15F Expected value method When this section applies (1) This section applies when— (a) a person has entered into a financial arrangement in the ordinary course of their business and the person is not in the business of dealing in relation to the financial arrangement; and (b) the financial arrangement is denominated in a currency other than New Zealand dollars or is a derivative instrument; 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; and (d) the person and all companies in a group of companies to which the person belongs have chosen to use the expected value method and have notified the Commissioner at the time of filing a return of income. Exception for some group members and financial arrangements (1B) A person who is a member of a group of companies and has notified an election under subsection (1)(d) is not required under this section to use the expected value method for a financial arrangement if— (a) the person does not have a business of a substantially similar nature to a business of another company in the group; and (b) the financial arrangement is with other parties, of which— (i) none are associated with the person or a member of the group; or (ii) all are associated with the person and use the method used by the person for the arrangement. Method chosen (2) The person must use a method that— (a) has the features of an expected value approach described in Determinations G9C and G14B ; and (b) allocates a reasonable amount for each income year of the term of the financial arrangement, having regard to the purposes of the financial arrangements rules under section EW 1(3) . Meaning of derivative instrument [Repealed] (3) [Repealed] Defined in this Act: amount , associated person , business , Commissioner , company , derivative instrument , financial arrangement , financial arrangements rules , group of companies , IFRS , notify , NZIAS 39 , return of income Compare: 2004 No 35 s EW 15E(1), (2) Section EW 15F: inserted, on 1 April 2008, by section 366 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109). Section EW 15F(1)(c): substituted (with effect on 1 April 2008), on 6 October 2009, by section 137(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15F(1)(c)(ii): amended (with effect on 1 April 2008), on 7 September 2010, by section 37 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section EW 15F(1)(c)(iii): added (with effect on 1 April 2008), on 7 September 2010, by section 37 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section EW 15F(1)(d): substituted (with effect on 1 April 2008), on 6 October 2009, by section 137(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15F(1B) heading: inserted (with effect on 1 April 2008), on 6 October 2009, by section 137(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15F(1B): inserted (with effect on 1 April 2008), on 6 October 2009, by section 137(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15F(3) heading: repealed (with effect on 1 October 2008), on 6 October 2009, pursuant to section 137(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15F(3): repealed (with effect on 1 October 2008), on 6 October 2009, by section 137(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15F list of defined terms associated person : inserted (with effect on 1 April 2008), on 6 October 2009, by section 137(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EW 15F list of defined terms NZIAS 39 : inserted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 140(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).