148

NEW ZEALAND GAZETTE

No. 3

dollars (for example, Determinations G26, G9A and G6D).

(3) Example 3—Assigning a Swap

Background Information

The situation where a party assigns a swap can be considered by assuming that, in the example in sub-clause 7 (1), the corporate (“corporate A”) assigned the swap to another corporate (“corporate B”) for consideration of $250,000 on 31 December 1994.

Final Calculation for the Assignor

In such a case, corporate A would apply the base price adjustment in the 1995 income year.

Therefore, corporate A would bring into account the following items (assuming no exchange of principal on 15 September 1993)—

a = consideration paid or payable to the holder
= the NZ dollar equivalents of LIBOR payments made on 15 March 1994 and 15 September 1994

• $250,000

b = acquisition price
= value of all consideration provided by the holder
= NZ$1.25m × 2
= NZ$2.5m

c = amounts of income deemed to be derived less expenditure deemed to be incurred in the year ending 31 March 1994

The formula is a – (b + c) and if the result is positive it will be income derived by the corporate. If the result is negative the amount is an allowable deduction.

Deemed Cashflows for the Assignee

Under the swap, the cashflows for the assignee, corporate B, (for the purposes of applying this determination) are as follows:

where the bracket denotes payments by Corporate B to the swap counterparty. The assignment fee was allocated to the NZ dollar loan.

Accrual Calculations for the Assignee

Therefore, in determining its assessable income for the years ended 31 March 1995 and 1996, corporate B would, using a Yield to Maturity or other method acceptable under the Act and the determinations, calculate:

(i) expenditure under the fixed rate loan in New Zealand dollars (this could be done by Determination G3, or Determinations G10B and G11A, resulting in the spreading of the $250,000 assignment consideration over the remaining term of the swap); and

(ii) income under the floating rate loan in United States dollars (this could be done using Determinations G26, G9A and G6D).

Final Calculation for the Assignee

To calculate income or expenditure for the final year of the arrangement (ending 31 March 1997) the base price adjustment must be applied.

Corporate B would bring to account the following items:

a = consideration paid or payable to the holder
= NZ dollar equivalent of US$11.8m principal exchange on 15 September 1996

• NZ dollar equivalents of LIBOR payments made from 15 March 1995 to 15 September 1996 inclusive

b = acquisition price
= value of all consideration provided by the holder
= NZ$0.25m assignment fee + $20.0 m principal exchange on 15 September 1996 + NZ$1.25m × 4

c = amounts of income deemed to be derived less expenditure deemed to be incurred in the years ending 31 March 1995 and 1996 inclusive

Under the formula described in section 64F of the Act, the exchange variation on the principal sums included in the assignee’s base price adjustment will be the total movement from the initial date of the swap until maturity. That is, any exchange variation prior to the assignment is taken into account. It is assumed that the effect would be included in any assignment fee paid or received by the assignee.

This determination is signed by me on the 16th day of January in the year 1995.

SIMON SHERRY, Director (Rulings).

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Internal Affairs

Gaming and Lotteries Act 1977

Permission to Conduct Within New Zealand a Prize Competition Promoted Outside New Zealand

Pursuant to section 69 of the Gaming and Lotteries Act 1977, I, Warren Cooper, Minister of Internal Affairs, hereby permit Jones Lang Wootton TransAct Pty Limited, Australia, to conduct within New Zealand, subject to the conditions specified in the Schedule to this notice, a prize competition promoted outside New Zealand as a sales promotion scheme for that company’s hotel and motel brokerage service.

Schedule

Conditions

The permission given by this notice is subject to the following conditions, namely:

(1) The lottery shall not be conducted within New Zealand after 17 February 1995.

(2) The results of the prize competition shall be published in the Sunday Star Times in December 1995.

(3) New Zealand winners shall not be subject to any disadvantage as a result of winning a prize.

(4) A New Zealand participant shall have a chance of winning which is equivalent to that of an overseas participant.

Dated at Wellington this 16th day of January 1995.

WARREN COOPER, Minister of Internal Affairs.

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