Section HM 35B — Income Tax Act 2007: Treatment of certain provisions made by multi-rate PIEs

HM 35B Treatment of certain provisions made by multi-rate PIEs When this section applies (1) This section applies for the purposes of section HM 35 when— (a) a multi-rate PIE— (i) is likely to have future income: (ii) makes a provision for future expenditure or loss; and (b) the amount— (i) is reflected in the PIE's valuation of investor interests; or (ii) if subparagraph (i) does not apply, is shown in its financial statements. Future amounts (2) For the purposes of determining a net amount under section HM 35(2) for an attribution period, a multi-rate PIE may take account of an amount of future income or future expenditure or loss that is— (a) for future income, an amount that, when derived, would be assessable income under section HM 35(3)(a) : (b) for future expenditure or loss,— (i) an expense likely to be incurred by the PIE in the tax year in which the attribution period falls, or within 93 days after the end of the tax year; and (ii) an amount that, when incurred, would be a deduction under section HM 35(3)(b) . Reasonable estimation (3) For the purposes of subsection (2), the PIE must make a reasonable estimate of the amount and must be able to demonstrate, if required, the reasonableness of the estimation by— (a) explaining why and when the income is likely to be derived or the expense is likely to be incurred, as applicable; and (b) providing the calculation method and actual calculations used to determine the amount, with details showing why the method is appropriate. Credit impairment provisions (4) A multi-rate PIE may take account of a credit impairment provision under this section but only if the provision is counted as a credit impairment provision under NZIAS 39. However, the time limit set out in subsection (2)(b)(i) does not apply in relation to a credit impairment provision. Defined in this Act: amount , attribution period , deduction , income , investor interest , multi-rate PIE , NZIAS 39 , tax year Section HM 35B: inserted (with effect on 1 April 2010), on 21 December 2010, by section 95(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130). Section HM 35B(1)(b)(i): amended (with effect on 1 April 2010), on 2 November 2012, by section 100 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).