Section EX 21C — Income Tax Act 2007: Applicable accounting standards for section EX 21E

EX 21C Applicable accounting standards for section EX 21E Applicable accounting standards (1) In applying EX 21E to determine whether a CFC is a non-attributing active CFC for a person (the interest holder ) with an interest in the CFC, the interest holder may use as an accounting standard (the applicable accounting standard ) 1 of the standards given by subsections (2) to (7) if section GB 15C (Arrangements related to accounting test for non-attributing active CFC) does not apply. Generally accepted accounting practice with IFRS for CFC (2) The interest holder may use generally accepted accounting practice in New Zealand including IFRSs and the framework for differential reporting for entities applying the New Zealand equivalents to the international financial standards reporting regime (the generally accepted accounting practice with IFRS ) for the CFC, if the interest holder or another person has accounts that— (a) include the accounts of the CFC; and (b) comply with generally accepted accounting practice with IFRS; and (c) meet the audit requirements of subsection (8). Generally accepted accounting practice with IFRS for test group (3) The interest holder may use generally accepted accounting practice with IFRS for the CFC's test group under section EX 21E(2) , if the interest holder or another person has accounts that— (a) include the accounts of the members of the test group; and (b) comply with generally accepted accounting practice with IFRS; and (c) meet the audit requirements of subsection (8). IFRSEs for CFC (4) The interest holder may use IFRSEs for the CFC, if the interest holder or another person has accounts that— (a) include the accounts of the CFC; and (b) comply with the relevant IFRSEs; and (c) meet the audit requirements of subsection (8). IFRSEs for test group (5) The interest holder may use IFRSEs for the CFC's test group under section EX 21E(2) , if the interest holder or another person has accounts that— (a) include the accounts of the members of the test group; and (b) comply with the relevant IFRSEs; and (c) meet the audit requirements of subsection (8). Generally accepted accounting practice without IFRS for CFC (6) The interest holder may use generally accepted accounting practice in New Zealand for persons not required to use IFRS but required to comply with standards, other than IFRSs, approved or issued under the Financial Reporting Act 1993 (the generally accepted accounting practice without IFRS ) for the CFC, if the interest holder or another person is a company resident in New Zealand that— (a) has no revenue under Financial Reporting Standard 34 and Financial Reporting Standard 35; and (b) is an issuer under section 4 of the Financial Reporting Act 1993 in neither of the current and preceding accounting periods; and (c) is not required by section 19 of the Financial Reporting Act 1993 to file its accounts with the Registrar of Companies; and (d) is not a large company under section 19A(1)(b) of the Financial Reporting Act 1993; and (e) does not have accounts that are prepared and audited under generally accepted accounting practice with IFRS; and (f) is not a subsidiary of a company having accounts that— (i) include the accounts of the subsidiary; and (ii) are prepared and audited, or required to be prepared, under generally accepted accounting practice with IFRS; and (g) has accounts that— (i) include the accounts of the CFC; and (ii) comply with generally accepted accounting practice without IFRS; and (iii) meet the audit requirements of subsection (8). Generally accepted accounting practice without IFRS for CFC's test group (7) The interest holder may use generally accepted accounting practice without IFRS for the CFC's test group under section EX 21D(1) , if the interest holder or another person is a company resident in New Zealand that— (a) has no revenue under Financial Reporting Standard 34 and Financial Reporting Standard 35; and (b) is an issuer under section 4 of the Financial Reporting Act 1993 in neither of the current and preceding accounting periods; and (c) is not required by section 19 of the Financial Reporting Act 1993 to file its accounts with the Registrar of Companies; and (d) is not a large company under section 19A(1)(b) of the Financial Reporting Act 1993; and (e) does not have accounts that are prepared and audited under generally accepted accounting practice with IFRS; and (f) is not a subsidiary of a company having accounts that— (i) include the accounts of the subsidiary; and (ii) are prepared and audited, or required to be prepared, under generally accepted accounting practice with IFRS; and (g) has accounts that— (i) include the accounts of the members of the CFC's test group; and (ii) comply with generally accepted accounting practice without IFRS; and (iii) meet the audit requirements of subsection (8). Audit requirements (8) Accounts meet the audit requirements of this subsection if they— (a) are audited by an accountant who is— (i) a chartered accountant or an accountant of equivalent professional standard in the country in which the accounts are prepared; and (ii) independent of the CFC and the person; and (b) are given an unqualified opinion or an opinion of equivalent standard in the country in which the accounts are prepared. Compliance with accounting standards (9) For the purposes of subsections (2) to (7), accounts are treated as complying with the accounting standard relevant to the subsection if— (a) the accounts state that they comply with the accounting standard; and (b) the accounts meet the audit requirements of subsection (8); and (c) the Commissioner does not have reasonable grounds to suspect— (i) fraudulent activity by the interest holder, the CFC, a company in the CFC's test group, or the auditor: (ii) preparation of the accounts with an intent to mislead: (iii) incompetence of the auditor. Defined in this Act: accounting period , annual gross income , associated , attributable CFC amount , CFC , company , generally accepted accounting practice , IFRS , IFRSE , insurer , New Zealand resident , non-attributing active CFC , rent , royalty Section EX 21C: inserted (with effect on 30 June 2009), on 6 October 2009, by section 162(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EX 21C(6): amended, on 1 July 2011, by section 12 of the Financial Reporting Amendment Act 2011 (2011 No 22). Section EX 21C(9)(c)(i): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 25(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 21C list of defined terms company : inserted (with effect on 1 July 2011), on 7 May 2012, by section 25(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).