Section EW 40 — Income Tax Act 2007: Consideration when person exits from rules: accrued obligation

EW 40 Consideration when person exits from rules: accrued obligation When this section applies (1) This section applies when— (a) a person is a party to a financial arrangement; and (b) 1 of the following situations arises: (i) the person ceases to be resident in New Zealand and is not a party to the arrangement for the purpose of a business carried on by them through a fixed establishment in New Zealand; or (ii) the person, not resident in New Zealand, ceases to be a party to the arrangement for the purpose of a business carried on by them through a fixed establishment in New Zealand; or (iii) the person starts using the arrangement for a private or domestic purpose and so it becomes an excepted financial arrangement described in any of section EW 5(18) to (20) ; and (c) at the time the situation arises, the person has an accrued obligation to pay consideration under the arrangement. Relief and consideration (2) The person is treated as having been relieved of the accrued obligation immediately before the situation arose and as having paid the market value that a contract to assume the obligation had at that time. Defined in this Act: accrued obligation , business , consideration , excepted financial arrangement , financial arrangement , fixed establishment , New Zealand , pay , resident in New Zealand , Compare: 2004 No 35 s EW 41