Section FE 7 — Income Tax Act 2007: Apportionment of interest by reporting bank

FE 7 Apportionment of interest by reporting bank When this section applies (1) This section applies to a reporting bank if, at the relevant measurement date referred to in section FE 8(3) ,— (a) the New Zealand net equity of its New Zealand banking group for an income year is less than its equity threshold under section FE 19 ; and (b) its group funding debt for the corresponding tax year is more than zero. Income (2) The reporting bank is treated as deriving an amount of income under section CH 10 (Interest apportionment: reporting bank) calculated using the formula— amount of threshold × interest expenditure × days in period group funding debt days in year. Definition of items in formula (3) In the formula,— (a) amount below threshold is the amount by which the New Zealand net equity for the New Zealand banking group is less than the equity threshold under section FE 19 : (b) interest expenditure is the financial value for the New Zealand banking group of interest expenditure measured under generally accepted accounting practice that is incurred— (i) by a member of the New Zealand banking group in the income year; and (ii) other than in relation to a share that contributes to the item total interest in the formula in section FE 23 , or is a deduction referred to in the definition of the item interest deductions in that section: (c) days in period is the number of days in the relevant measurement period: (d) group funding debt is the group funding debt for the New Zealand banking group for the corresponding tax year: (e) days in year is the number of days in the income year. Apportionment of income to part-years (4) If an amount of income described in subsection (2) must be apportioned under this Act to a part of an income year, the amount of income for a measurement period is attributed to the part of the income year in which the measurement period falls. Defined in this Act: amount , deduction , financial value , generally accepted accounting practice , group funding debt , income , income year , interest , measurement period , New Zealand , New Zealand banking group , New Zealand net equity , reporting bank , share , tax year , Compare: 2004 No 35 s FG 8B