New Zealand changes tax accounting rules for financial instruments

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

New Zealand changes tax accounting rules for financial instruments

fotoflexer-photonzflag.jpg

The tax-related aspects of amendments to New Zealand’s financial reporting rules cover the accounting standard that deals with financial instruments.

In changes to NZ IAS 32 that will take effect on January 1 next year, distributions to holders of an equity instrument shall be recognised by the entity directly and not net of any income tax related benefit. The same change will apply to transaction costs of an equity transaction, which shall be accounted for as a deduction from equity.

The External Reporting Board has added a new paragraph 35A to the standard:

“Income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction shall be accounted for in accordance with NZ IAS 12 Income Taxes [Disclosure of Interests in Other Entities].”

Paragraph 39, which states that the transaction costs accounted for as a deduction from equity in the period is disclosed separately under in accordance with NZ IAS 1, will no longer include the sentence that states that the related amount of income taxes recognised directly in equity is included in the aggregate amount of current and deferred income tax credited or charged to equity that is disclosed under IAS 12 Income Taxes, which requires the disclosure of tax expense or income.

The amendments, part of the Annual Improvements to NZ IFRSs 2009 - 2011 Cycle came about as a result of the publication of the exposure draft of proposed amendments to IFRSs, published in June 2011. They are also reflected in NZ IFRIC [International Financial Reporting Interpretations Committee] 2 Members’ Shares in Co-operative Entities and Similar Instruments.

more across site & shared bottom lb ros

More from across our site

Countries which care about fair taxation of tech multinationals and equitable global distribution of wealth should back the UN’s tax framework, writes economist Abdelmalek Riad
The cuts disproportionately affected staff in certain positions, the report also found; in other news, MHA announced the €24m acquisition of Baker Tilly South East Europe
The plan aims to improve the efficiency, transparency, and effectiveness of direct tax administration in India
Meanwhile, South Africa’s finance minister has accepted a court decision on suspending a VAT increase and US President Donald Trump mulls a 100% tariff on foreign films
Jaime Carey speaks about the benefits of his tax background, DEI values, the use of AI for a smarter legal practice, and other priorities that will define his presidency
Historically low levels of attrition over consecutive years made a ‘difficult decision’ necessary, PwC has reportedly said
WTS Global is also vetting new potential member firms in Algeria, Cote D’Ivoire and Benin, Kelly Mgbor tells ITR in an exclusive interview
The scope of qualifying pillar two tax credits could reportedly be broadened; in other news, hundreds of IRS appeals staff are to resign
For many taxpayers, the prospect of long-term certainty that a bilateral APA offers can override concerns about time, cost and confidentiality
Levine, who served under the Joe Biden administration, led the US’s negotiations on the OECD’s two-pillar solution
Gift this article