Section EW 27 — Income Tax Act 2007: Spreading method adjustment formula

EW 27 Spreading method adjustment formula Calculation of spreading method adjustment (1) A person calculates a spreading method adjustment using the formula in subsection (3). What formula applies to (2) The person must apply the formula to each financial arrangement to which they— (a) are a party at the end of the income year in which they change their spreading method; and (b) were a party at the end of the previous income year. Formula (3) The formula is— income (new method) − expenditure (new method) − income (old method) + expenditure (old method). Definition of items in formula (4) The items in the formula are defined in subsections (5) to (8). Income (new method) (5) Income (new method) is the amount that would have been income derived by the person under the financial arrangement if the new method had been used for the arrangement in the period starting on the date on which the person became a party to the arrangement and ending on the last day of the income year for which the calculation is made. Expenditure (new method) (6) Expenditure (new method) is the amount that would have been expenditure incurred by the person under the financial arrangement if the new method had been used for the arrangement in the period starting on the date on which the person became a party to the arrangement and ending on the last day of the income year for which the calculation is made. Income (old method) (7) Income (old method) is income, under section CC 3 (Financial arrangements), derived by the person under the financial arrangement in earlier income years. Expenditure (old method) (8) Expenditure (old method) is expenditure incurred by the person under the financial arrangement in earlier income years. Modification (9) Section EZ 52C (Change of spreading method: Determination G22 to Determination G22A ) modifies this section. Defined in this Act: amount , financial arrangement , income , income year , spreading method , Compare: 2004 No 35 s EW 27 Section EW 27(9) heading: added, on 26 September 2010, by section 40 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section EW 27(9): added, on 26 September 2010, by section 40 of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).