Section FE 18 — Income Tax Act 2007: Measurement of debts and assets of worldwide group

FE 18 Measurement of debts and assets of worldwide group Standards applying (1) The amount of total group debt and the amount of total group assets of the worldwide group of an excess debt entity is calculated— (a) using a standard that is equivalent to generally accepted accounting practice for consistent and non-distorting financial reporting; and (b) in accordance with the financial reporting standards of the country where the worldwide group’s consolidated financial accounts are prepared. Date of measurement (2) The amount of total group debt and the amount of total group assets of the worldwide group of an excess debt entity for an income year are measured using— (a) the average amount at the end of each day of the income year; or (b) the average amount at the end of each 3-month period in the income year; or (c) the amount as at the worldwide group’s balance date that immediately precedes the income year. Measurement of amounts (3) Despite subsection (1), an excess debt entity must measure the amount of total group debt by applying section FE 15 as if it referred to a deduction that would be allowed if the entity, or another group member, were resident in New Zealand. Commissioner’s estimate (4) If an excess debt entity is unable to calculate the debt percentage of their worldwide group for an income year, they may ask the Commissioner to estimate the percentage under this subpart. The estimate is then treated as the percentage applying for the purposes of this subpart. Default percentage (5) The debt percentage of the worldwide group of an excess debt entity is treated as,–– (a) 54.5454%, if the excess debt entity is not a trustee and not an excess debt outbound company, or is a trustee who is not described in section FE 2(1)(g) , and–– (i) the entity is unable to calculate the percentage and does not ask the Commissioner to make an estimate under subsection (4): (ii) the Commissioner cannot reasonably estimate the debt percentage under subsection (4): (iii) no member of the entity's worldwide group, other than the entity, is not resident in New Zealand; or (b) 68.1818%, if the excess debt entity is an excess debt outbound company, or is a trustee who is described in section FE 2(1)(g) , and–– (i) the entity is unable to calculate the percentage and does not ask the Commissioner to make an estimate under subsection (4): (ii) the Commissioner cannot reasonably estimate the debt percentage under subsection (4): (iii) no member of the entity's worldwide group, other than the entity, is not resident in New Zealand. Defined in this Act: amount , Commissioner , deduction , excess debt entity , generally accepted accounting practice , income year , resident in New Zealand , total group assets , total group debt , Compare: 2004 No 35 s FG 5(2)–(5), (12), (13) Section FE 18(1): amended (with effect on 30 June 2009), on 6 October 2009, by section 217(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 18(2) heading: substituted (with effect on 30 June 2009), on 6 October 2009, by section 217(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 18(2): substituted (with effect on 30 June 2009), on 6 October 2009, by section 217(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 18(3) heading: substituted (with effect on 30 June 2009), on 6 October 2009, by section 217(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 18(3): substituted (with effect on 30 June 2009), on 6 October 2009, by section 217(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 18(4): amended (with effect on 30 June 2009), on 6 October 2009, by section 217(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section FE 18(5): substituted, on 1 April 2011 (applying for the 2011–12 and later income years), by section 90(1) of the Taxation (Budget Measures) Act 2010 (2010 No 27). Section FE 18 list of defined terms natural person : repealed (with effect on 30 June 2009), on 6 October 2009, by section 217(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).