Section EX 62 — Income Tax Act 2007: Limits on changes of method

EX 62 Limits on changes of method No change unless allowed (1) Once a person uses a particular calculation method to calculate FIF income or loss for an attributing interest in a FIF for a particular period, they must use the same method for interests in the FIF for the next period unless they are allowed to change under subsections (2) to (9). Change on practical grounds (2) The person may change if it is not practical to continue with the same method because— (a) in the case of the accounting profits method,— (i) section EX 46(2) is repealed: (ii) before the date of the repeal of section EX 46(2) , that section prevents its continued use or it is impossible to obtain enough information to continue to use it: (b) in the case of the attributable FIF income method, section EX 46(3)(a) and (b) prevent its continued use or it is impossible to obtain enough information to continue to use it: (c) in the case of the comparative value method,— (i) section EX 46(6) prevents its continued use: (ii) it is impossible to find out the end-of-year market value of the interest: (d) [Repealed] (e) in the case of the deemed rate of return method, the person is required by section EX 47 to use the comparative value method: (f) in the case of the fair dividend rate method, it is impossible to find out the start-of-year market value of the interest except by an independent valuation: (g) in the case of the cost method, section EX 46(9) prevents its continued use. Choosing to change (3) The person may also change by notice to the Commissioner if— (a) the notice complies with subsection (4); and (b) either— (i) the person is a natural person and the $250,000 threshold in subsection (5) is not exceeded; or (ii) the change is to, or from, the attributable FIF income method and within subsections (6) and (7). Notice of election (4) The notice of an election to change under subsection (3) must— (a) give the reasons for the change; and (b) comply with the Commissioner’s notice requirements; and (c) be given before the end of the first income year or accounting period for which the change is to take effect, unless the Commissioner agrees to a retrospective notice; and (d) in the case of a natural person relying on the $250,000 threshold test in subsection (3)(b)(i), be given before the end of the year or period that is before the one from the end of which the change takes effect. Natural person: $250,000 threshold (5) A natural person may make an election under subsection (3) if the total market value of their attributing interests in FIFs is $250,000 or less at the end of the income year or accounting period before the year or period from the end of which the change takes effect. Changing to or from the attributable FIF income method (6) A person may make an election under subsection (3) to change to or from the attributable FIF income method if— (a) they are changing from the branch equivalent method: (b) this is the first time they have chosen to change to or from the attributable FIF income method for an attributing interest in the FIF, other than under paragraph (a): (c) subsection (7) allows them to make another election. Repeated changes to or from attributable FIF income method (7) A person may change more than once to, or from, the attributable FIF income method if— (a) there has been a change in circumstances, such as a significant change in shareholding, that significantly changes their ability to obtain enough information to use the attributable FIF income method; and (b) altering their income tax liability is not the principal purpose or effect of the change. Repeated changes between fair dividend rate method and comparative value method (8) A person may change more than once from the fair dividend rate method to the comparative value method and from the comparative value method to the fair dividend rate method if the person is a natural person or the trustee of a trust that— (a) has no gifting settlor who is not a natural person or deceased person; and (b) at all times in the income year, is a complying trust for a distribution made at the time; and (c) is— (i) at all times in the income year, mainly for the benefit of a natural person for whom the gifting settlors of the trust have natural love and affection, or had natural love and affection when alive: (ii) mainly for the benefit of an organisation or trust with income that is exempt income under section CW 41 or CW 42 (which relate to the income of charities); and (d) is not a superannuation scheme. Change to fair dividend rate method in return for 2008–09, 2009–10 tax year (9) A person may change to the fair dividend rate method from the branch equivalent method or the accounting profits method in the person's return of income for— (a) the 2008–09 tax year, if the person has not furnished a return for that tax year before the date on which the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 receives the Royal assent; or (b) the 2009–10 tax year, if the person has furnished a return for the 2008–09 tax year before the date on which that Act receives the Royal assent. Change to fair dividend rate method for first income year beginning on or after 1 July 2011 (10) A person may change to the fair dividend rate method from the accounting profits method, the branch equivalent method, or the deemed rate of return method in the person's return of income for the first income year beginning on or after 1 July 2011. Defined in this Act: accounting period , accounting profits method , attributable FIF income method , attributing interest , calculation method , Commissioner , comparative value method , complying trust , cost method , deemed rate of return method , exempt income , fair dividend rate method , FIF , FIF income , income tax liability , income year , loss , market value , notice , return , return of income , settlor , superannuation scheme , tax year , trustee Compare: 2004 No 35 s EX 50 Section EX 62(1): amended (with effect on 1 April 2008), on 6 October 2009, by section 182(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EX 62(2)(a): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 41(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 62(2)(b): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 41(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 62(2)(b): amended (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 2 November 2012, by section 50(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88). Section EX 62(2)(c): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 41(3) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 62(2)(d): repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 41(4) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 62(2)(e): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 41(5) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 62(2)(g): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 41(6) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 62(3)(b)(ii): amended (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 41(7) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 62(6) heading: replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 41(8) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 62(6): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 41(8) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 62(7) heading: amended (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 41(9) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 62(7): amended (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 41(9) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 62(7)(a): amended (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 41(9) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 62(8)(a): substituted, on 1 April 2008, by section 398 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109). Section EX 62(8)(b): substituted, on 1 April 2008, by section 398 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109). Section EX 62(8)(c): substituted, on 1 April 2008, by section 398 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109). Section EX 62(8)(d): substituted, on 1 April 2008, by section 398 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109). Section EX 62(9) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 182(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EX 62(9): added (with effect on 1 April 2008), on 6 October 2009, by section 182(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EX 62(10) heading: inserted (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 41(10) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 62(10): inserted (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 41(10) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 65 list of defined terms attributable FIF income method : inserted (with effect on 1 July 2011), on 7 May 2012, by section 41(11)(b) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 65 list of defined terms branch equivalent method : repealed (with effect on 1 July 2011), on 7 May 2012, by section 41(11)(a) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section EX 62 list of defined terms return : inserted (with effect on 1 April 2008), on 6 October 2009, by section 182(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EX 62 list of defined terms return of income : inserted (with effect on 1 April 2008), on 6 October 2009, by section 182(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EX 62 list of defined terms tax year : inserted (with effect on 1 April 2008), on 6 October 2009, by section 182(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).