Current Issues with Financial Transactions

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1 Current Issues with Financial Transactions Prepared & Presented by nsatax Limited Disclaimer This webinar is of a general nature only. Please obtain specific advice on client situations as minor changes in facts may result in significantly different outcomes. This webinar does not purport to cover all aspects of tax law relevant to the topics covered. Topics for Today Current areas of IRD focus Financial arrangements & excepted financial arrangements Application of the Financial Arrangements rules Cash basis persons Non-resident withholding tax/ail Case study example 1

2 Current Areas of IRD Focus UK Mortgages We have seen a number of recent IRD risk review letters targeting individuals who registered as Approved Issuers in respect of UK mortgages The letters note that foreign exchange movements between 1 April 2009 and 31 March 2013 have resulted in the taxpayers deriving foreign exchange gains which likely mean they are not cash basis persons IRD Letter Extract 2

3 IRD Letters The IRD letters ask whether the taxpayer applied the financial arrangement rules under the accrual or cash basis Requests details of all overseas rental income/loss since 1 April 2009 Details of all financial arrangement income returned since April 2009 Voluntary disclosure invited IRD Audit Activity IRD media release on 1 July 2009 Focusing attention on NZ residents with undeclared taxable offshore income Particularly targeting offshore bank a/c s, use of foreign credit/debit cards in NZ, overseas life insurance policies & superannuation funds Still seeing risk review letters in 2014 IRD Audit Activity IRD have obtained information on foreign investments held by NZ residents from treaty partners Also information on foreign credit/debit card use in NZ Letters sent to individuals requesting information on all overseas investments Recipients of letters are generally overseas migrants 3

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8 IRD Audit Activity IRD project so expect IRD to have reasonable knowledge of the tax rules applicable to foreign investments Traditionally IRD have not focused on foreign investments such as FIF and CFC interests or foreign currency denominated financial arrangements Risk reviews have been very lucrative IRD Audit Activity Some taxpayers under misapprehension that foreign sourced income not taxed in NZ if taxed offshore NZ residents taxed on worldwide income, subject to relief available under a double tax agreement Temporary exemption may be available for transitional residents Questions to Ask Does the client have any: Foreign bank accounts Overseas borrowings Shares or share options Offshore property An offshore trust Foreign pension schemes Foreign life insurance policies 4

9 FX Rates Date AUD USD GBP EUR 31/03/ /03/ /03/ /03/ /03/ /03/ /03/ /03/ /03/ FX Movements ,000 AUD/NZD USD/NZD GBP/NZD EUR/NZD 31/03/ , , , ,570 31/03/ , , , ,846 31/03/ , , , ,689 31/03/ , , , ,852 31/03/ , , , ,114 31/03/ , , , ,805 31/03/ , , , ,999 31/03/ , , , ,116 31/03/ , , , ,730 What are the Issues? Strengthening NZD against GBP, EUR, USD and recently AUD means foreign exchange gains if client has borrowed in those currencies If clients have UK/US rental properties or private GBP/USD borrowings then this is likely to be an issue Cumulative FX gains can mean clients are no longer cash basis persons 5

10 What are the Issues? If cease to be cash basis person, must account for unrealised fx gains Foreign currency borrowings used for private or domestic purposes now financial arrangements Cash basis adjustment required in the year person s status changes. Results in accrual income/expenditure being brought to account What are the Issues? Complete omission of income means that time bar unlikely to apply May be able to argue time bar where interest income returned but fx gain omitted as Determination G9A produces one figure which if positive, is income. FX gain not a separate item of income If no return filed, time bar does not apply What are the Issues? Conversely, clients holding UK/USD financial arrangements will likely have incurred fx losses over this period which are deductible if income is derived from the financial arrangement We have yet to see any letters from IRD checking to see if clients have deducted fx losses incurred in relation to UK financial arrangements held! 6

11 What are the Issues? If client filed returns then reassessment results = fresh due date, no LPP Opportunity to use tax pooling to reduce UOMI If client non-filer, must file returns Original due date = LPP and UOMI Can apply to IRD under s.rp 17B(10) for approval to use tax pooling Voluntary Disclosure May need to consider making a voluntary disclosure IRD letters do not notify of an audit No shortfall penalties for lack of reasonable care or unacceptable tax position if preaudit voluntary disclosure Gross careless & evasion shortfall penalties reduced by 75% for pre-audit voluntary disclosure Voluntary Disclosure Post audit voluntary disclosures subject to a 40% reduction in shortfall penalties In most cases I have seen client didn t have an adviser or failed to disclose overseas investments to their adviser which is likely to breach the reasonable care standard Tax shortfall of more than $50,000 for unacceptable tax position penalty 7

12 Financial Arrangements and Excepted Financial Arrangements Financial Arrangements Offshore bank a/c s, loans etc are financial arrangements unless excepted financial arrangements Include call a/c s, savings a/c s, term deposits, mortgages, credit cards, shareholder current a/c s, family loans Excepted financial arrangements not subject to FA rules unless election made Excepted Financial Arrangements A loan in a foreign currency if the borrower is a cash basis person and uses the loan for a private or domestic purpose Interest free loan in NZD repayable on demand for the lender only Variable principal debt instrument if the total value of all VPDI s at all times during income year NZ$50,000 or less 8

13 Excepted Financial Arrangements Variable principal debt instrument is a financial arrangement that contemplates that 1 party may on demand or call advance further amounts or require the return of all amounts advanced to the other party Includes on demand loans, call accounts but excludes term deposits and fixed term loans Application of Financial Arrangements Rules Financial Arrangements Taxation of financial arrangements under the Financial Arrangements rules in subpart EW of the Income Tax Act Financial arrangements rules apply to: Residents (including resident trustees) Non-residents if party to FA for the purposes of a business carried on through a fixed establishment in NZ Non-resident trustees if settlor NZ resident 9

14 Financial Arrangements FA rules require the use of a spreading method to calculate income or expenditure from financial arrangements Exception for cash basis persons who recognise interest income and expenditure when paid Exchange Movements If financial arrangement denominated in a foreign currency, must use Determination G9A to calculate income/ expenditure. Convert using spot rates. G9A produces one amount; income if positive, if negative may be deductible Foreign exchange gains brought to account for tax purposes; timing of recognition depends on whether cash basis person or not Exchange Movements If not cash basis person then unrealised foreign exchange movements taxed each year under Determination G9A Cash basis person recognises under base price adjustment when financial arrangement disposed of FX movements relevant in determining whether cash basis person thresholds met 10

15 Exchange Movements Example: Sarah holds term deposit with UK bank of GBP300,000 earning 2% interest 1/4/12 NZD = GBP 31/3/13 NZD = GBP Opening value NZD $586,740 Closing value NZD $544,761 Exchange loss $41,979 Exchange Movements FX loss deductible under general permission as FA used to derive income But if FA was a loan, then loss only deductible if FA used in deriving income No deduction if loan used for private purpose unless available for negative BPA Gains always taxable even if FA used for private purposes New/Returning Residents On becoming resident deemed disposal and acquisition of all financial arrangements at market value If transitional resident, deemed disposal and acquisition on cessation of transitional residents exemption Sets NZD benchmark for fx movements going forward 11

16 New Residents Similar rules apply if excepted FA s become FA s eg. if person has foreign borrowings for a private or domestic purposes but ceases to be a cash basis person Example Adrian & Clare became resident 1 April 2006 Held loan of GBP 385,000 over UK home now a rental property Fx rate 1/4/06 NZD = FX rate 31/3/13 NZD = /4/06 loan in NZD $1,098,431 31/3/13 loan in NZD $699,110 Example FX gain from 1/4/06 to 31/3/13 is $399,320 or $199,660 each If transitional residents until 30/9/10 gains to that date not taxable in NZ; loan deemed to be reacquired at MV on 30/9/10 so only FX movements after that date taxable/deductible If not transitional residents, then gains taxable in YE 31/3/08 as no longer CBP 12

17 Calculating FA Income and Expenditure Consideration paid to the person less consideration paid by the person = financial arrangement income if positive or expenditure if negative Base price adjustment (BPA) performed in the year of disposal or maturity If FA opens and closes in same year, simply perform BPA Calculating FA Income and Expenditure If FA term spans 2 or more tax years, allocate income or expenditure over the term of the FA and perform BPA in year of disposal BPA formula: Consideration income + expenditure + amount remitted Positive amount = income, negative amount = expenditure Calculating FA Income and Expenditure Consideration = consideration paid to the person less consideration paid by the person Income = income derived from the FA in previous years Expenditure = expenditure incurred under the FA in previous years Amount remitted = amounts not included in the consideration paid to the person because they were remitted 13

18 Cash Basis Persons Cash Basis Persons Individuals and trustees meeting certain criteria can be cash basis persons Companies are excluded Cash basis persons do not apply a spreading method to calculate FA income or expenditure Must undertake calculations each year to ensure cash basis person criteria are satisfied for the income year Cash Basis Persons Cash basis persons The absolute value of the person s income and expenditure in the income year under all FA s to which the person is a party must be $100,000 or less or; On every day in the income year, the absolute value of all FA s to which the person is a party added together must be $1,000,000 or less; and 14

19 Cash Basis Persons In addition, the result of applying the formula below to each FA to which the person is a party at the end of the income year and adding the outcomes together is $40,000 or less This is based on the formula: (accrual income cash basis income) + (cash basis expenditure accrual expenditure) Cash Basis Persons The items cash basis income, accrual income, cash basis expenditure and accrual expenditure refer to amounts derived and incurred since the inception of the financial arrangement The amounts are cumulative and do not just relate to the income year concerned Cash Basis Persons Main differences between accrual and cash basis income/expenditure are accrued interest and unrealised FX movements Need to track these to ensure $40k threshold not breached If no longer cash basis person, will be taxed on unrealised FX gains & private loan no longer excepted FA 15

20 NRWT on Interest Payments to Overseas Lenders NRWT on Interest Paid to Overseas Lender If interest paid to non-resident lender potential NRWT liability if interest deemed to have a NZ source Interest on funds borrowed outside NZ by a resident deemed to have a NZ source unless funds used for the purposes of a business carried on through a fixed establishment situated outside NZ NRWT on Interest Paid to Overseas Lender Does rental activity amount to a business? Refer to QB 09/05 in TIB Vol.21 No.6 August 2009 for discussion on fixed establishment issue Rental business not carried on through the rental property Need other premises to satisfy fixed establishment test 16

21 NRWT on Interest Paid to Overseas Lender No liability for NRWT if lender carries on business in NZ through a fixed establishment i.e. branch not subsidiary List of exempt banks on RBNZ website Some DTA s (incl Australia, UK & USA) provide an exemption from NRWT if the rental property is managed by a dependent agent (creating a PE) in the overseas country by deeming the interest to have a source in the overseas country NRWT on Interest Paid to Overseas Lender Most loan agreements contain a gross up clause requiring interest payments to be made without deduction If local NRWT liability, borrower required to gross up interest payments Borrower bears NRWT cost Can reduce to 2% by registering as Approved Issuer and deducting AIL Approved Issuer Levy AIL is a levy not a tax therefore no foreign tax credit for lender in their home country Where AIL paid, NRWT zero rated Cannot use AIL where borrower and lender are associated persons Must register security when registering for AIL; copy of loan agreement to IRD 17

22 Approved Issuer Levy Cannot apply for AIL retrospectively If loan already in place, IRD may assess NRWT for prior periods upon registering for AIL No liability for NRWT/AIL while person is a transitional resident Case Study Example Questions 18

23 Current Issues with Financial Transactions Case Study Tania and David emigrated from England to New Zealand on 1 February 2006 and acquired a permanent place of abode from that date. They retained their home in England and rented it for 1,500 per month from 1 April Tania and David had an interest only mortgage over the rental property of 200,000 with a UK lender First Direct Bank. In addition to meeting the monthly interest costs, principal repayments were made of 50,000 on 31 October 2006 and 20,000 on 30 September The balance of the mortgage at 31 March 2013 was 130,000. Tania and David held a joint account with First Direct. The rental was paid into this account and then used to meet the interest payments on the mortgage. Tania and David also held individual savings accounts with First Direct in their personal names. The combined balances in these accounts have not exceeded 10,000 at any time during the period. Tania and David have filed UK tax returns including the following: Net Rents Interest Interest Expense Income 5/4/07 6,800 9, /4/08 6,700 9, /4/09 6,300 9, /4/10 6,800 5, /4/11 7,000 3, /4/12 6,900 3, /4/13 7,000 3, No tax was paid in the UK as the income fell below their annual personal allowance. Tania and David have a mortgage over their family home in New Zealand of $500,000. Interest expense on this mortgage is $30,000 per annum. They also have a joint bank account with ASB Bank. The balance in this account has not exceeded $20,000 at any time during the period. Tania is employed and earned $80,000 per annum with PAYE deducted. Tania has not filed any New Zealand tax returns as she considered herself to be a non-filing taxpayer. David has PAYE income of $150,000 but he filed tax returns in each year as he was advised to do so by his employer as he derived income of $10,000 per annum from an employer share purchase scheme. He did not include any UK income as he thought that the income was only taxable in the UK. Tania and David received a risk review letter from Inland Revenue as a result of using a UK credit card in NZ. The letter requests information about any foreign investments for the period 1 April 2009 to 31 March 2013 and invites a voluntary disclosure. Tania and David come to you after receiving the letter and ask for your advice.

24 Current Issues with Financial Transactions Case Study Suggested Answer As Tania and David satisfied New Zealand tax residency requirements before 1 April 2006 they do not qualify for the transitional residents exemption. They are taxable on their worldwide income in New Zealand from 1 November The Double Tax Agreement with the United Kingdom does not prevent the United Kingdom from taxing United Kingdom rents and interest, however, the rate of United Kingdom tax on interest income derived by New Zealand residents is limited to 10%. As Tania has derived income from overseas sources she does not meet the definition of a non-filing taxpayer in section 33A of the Tax Administration Act She is therefore liable to file returns for the 2006 to 2013 years. She has not filed tax returns therefore she cannot rely on the time bar contained in section 108 of the Tax Administration Act 1994 ( the TAA ). David has filed returns of income for each year and as such, his returns for the 2006 to 2009 years are prima facie time barred as more than 4 years has passed from the end of the tax year in which the returns were filed (section 108(1) of the TAA). However, as those returns omitted all mention of income derived from a particular source for which a tax return is required to be provided the exclusion in section 108(2)(b) allows the Commissioner to reassess those returns outside the time bar period. The United Kingdom rental income and interest is earned jointly therefore Tania and David must each return 50% of this income. No depreciation has been claimed for United Kingdom tax purposes in respect of the rental property. Provided the cost of the building can be separately identified, building depreciation may be claimed in New Zealand for the 2006 to 2010 years. This may be subject to a recovery when the property is sold. The rental income and expenses can be converted to NZD using the 12 month average of the midmonth rates published by Inland Revenue. The United Kingdom tax year ends on the 5 th April. I have assumed that income and expenses to 31 March not materially different. As the net foreign income is less than $100,000, could elect to calculate foreign income to the foreign balance date under section EG 1 of the Income Tax Act This requires the foreign income to be included in the NZ return in which the foreign balance date falls eg. income for the UK year ended 5 April 2007 would be included in the NZ return for the year ended 31 March Note that section EG 1 does not apply to Financial Arrangement income or expenditure. Can apply to Inland Revenue for permission to apply EG 1 to financial arrangement income and expenditure if the taxpayer would otherwise incur significant compliance costs.

25 You calculate the following income from the UK rents (ignoring mortgage interest) and UK interest: Year Income FX Rate NZD Tania David (GBP) , ,868 22,434 22, , ,983 20,972 20, , ,468 20,734 20, , ,100 14,050 14, , ,162 11,581 11, , ,284 10,142 10, , ,110 10,055 10, , ,968 You determine that the UK bank accounts and the NZ joint account are variable principal debt instruments. Throughout the period, the total value of all variable principal debt instruments for both Tania and David is less than $50,000 therefore you choose to treat these as excepted financial arrangements. Note that Tania and David could elect to treat the UK bank accounts as financial arrangements under section EW 8 of the Income Tax Act 2007 in order to deduct any foreign exchange losses. The losses would be deductible as the bank accounts derive interest income. You calculate the following income and expenditure from the UK mortgage using Determination G9A: Year Expenditure Tania (Income) David ,273 13,137 13, ,947 11,974 11, ,422 12,211 12, (128,670) (64,335) (64,335) ,089 1,545 1, (12,833) (6,417) (6,417) 2013 (11,822) (5,911) (5,911) You determine that Tania and David qualify as cash basis persons for the 2006 to 2009 years and claim interest expenditure on a cash basis for those years. However, the cumulative foreign exchange gains on the UK mortgage exceed $40,000 each as at 31 March This means that Tania and David must return income on an accrual basis for that year and calculate a cash basis adjustment which brings to account the deferred foreign exchange gains.

26 Interest income and expenditure continues to be calculated on an accrual basis for the 2011, 2012 and 2013 years. Due to the strengthening NZD, foreign exchange gains exceed the interest expenditure in these years. This produces the following overall result: Omitted Income Tax Payable Foreign Tax Year Tania David Tania David Credit ,297 9,297 3,626 3, ,998 8,998 3,509 3, ,523 8,523 3,324 3, ,385 78,385 29,786 29, ,492 8,492 3,015 3, ,559 16,559 5,464 5, ,966 15,966 5,269 5, , ,220 53,993 53,993 As no tax was paid in the UK, there are no foreign tax credits available. Note that if UK tax was paid, application for a foreign tax credit must be made within 4 years of the end of the income year in which the tax liability arose. The Commissioner can extend the 4 year period by a further 2 years on application. You advise Tania and David to make a voluntary disclosure in order to receive a reduction in any shortfall penalties imposed. By failing to obtain advice, they are likely to be guilty of not taking reasonable care. However, a pre-notification voluntary disclosure will result in a 100% reduction in any shortfall penalty for lack of reasonable care or unacceptable tax position under section 141G of the TAA. As David s returns will be reassessed by Inland Revenue he will receive a fresh due date which means no late payment penalties if the tax is paid by the due date. He will be subject to use of money interest which may be able to be reduced by purchasing a tax payment from a Tax Pooling intermediary. As Tania has not filed returns, she will not receive a fresh due date which means that she will be liable for late payment penalties (5% then 1% per month) and use of money interest. She could apply to Inland Revenue under section RP 17B(10) for approval to use tax pooling. If approval is granted, she may be able to eliminate any late payment penalties and reduce her use of money interest though making a tax purchase. If approval is not granted, she may apply for remission of late payment penalties under section 183D of the TAA. Tania and David may also be liable to pay non-resident withholding tax on the interest payments to the UK lender. From the information supplied, the interest is likely to have a source in New Zealand under section YD 4(11) of the Income Tax Act You recommend that they register as Approved Issuers going forward in order to reduce their liability from 10% NRWT to 2% Approved Issuer Levy.

27 UK Mortgage (Jointly Held) Repayment (GBP) Interest (GBP) Closing Balance (GBP) Exchange Rate Repayment (NZD) Interest (NZD) Closing Balance (NZD) - 200, , /04/ , , , , /05/ , , , , /06/ , , , , /07/ , , , , /08/ , , , , /09/ , , , , /10/ , , , , /11/ , , , , /12/ , , , , /01/ , , , , /02/ , , , , /03/ , , , , /03/ , , , , , , Closing Balance Calculation (e + f + g - h - i) Period Ended 31 March 2007 UK Loans G9A Calculation (a + b - c - d) e Financial arrangement at beginning of year f Consideration given by the person a NZD Closing TBV g Base currency income b Consideration paid to the Person h Consideration given to the person c Opening TBV i Base currency expenditure d Consideration paid by the Person e - 200, f 9, a - 200, , g - b - - h - c - 200, , i 9, d 9, , CTBV - 200, G9A Income (Expenditure) - 5, Repayment (GBP) Interest (GBP) Closing Balance (GBP) Exchange Rate Repayment (NZD) Interest (NZD) Closing Balance (NZD) - 200, , /04/ , , , , /05/ , , , , /06/ , , , , /07/ , , , , /08/ , , , , /09/ , , , , /10/ , , , , /11/ , , , , /12/ , , , , /01/ , , , , /02/ , , , , /03/ , , , , /03/ , , , , , , Closing Balance Calculation (e + f + g - h - i) Period Ended 31 March 2008 UK Loans G9A Calculation (a + b - c - d) e Financial arrangement at beginning of year f Consideration given by the person a NZD Closing TBV g Base currency income b Consideration paid to the Person h Consideration given to the person c Opening TBV i Base currency expenditure d Consideration paid by the Person e - 200, f 9, a - 200, , g - b - - h - c - 200, , i 9, d 9, , CTBV - 200, G9A Income (Expenditure) 23,545.29

28 Repayment (GBP) Interest (GBP) Closing Balance (GBP) Exchange Rate Repayment (NZD) Interest (NZD) Closing Balance (NZD) - 200, , /04/ , , , , /05/ , , , , /06/ , , , , /07/ , , , , /08/ , , , , /09/ , , , , /10/ , , , , /11/ , , , , /12/ , , , , /01/ , , , , /02/ , , , , /03/ , , , , /03/ , , , , , , Closing Balance Calculation (e + f + g - h - i) Period Ended 31 March 2009 UK Loans G9A Calculation (a + b - c - d) e Financial arrangement at beginning of year f Consideration given by the person a NZD Closing TBV g Base currency income b Consideration paid to the Person h Consideration given to the person c Opening TBV i Base currency expenditure d Consideration paid by the Person e - 200, f 9, a - 200, , g - b - - h - c - 200, , i 9, d 9, , CTBV - 200, G9A Income (Expenditure) - 29, Repayment (GBP) Interest (GBP) Closing Balance (GBP) Exchange Rate Repayment (NZD) Interest (NZD) Closing Balance (NZD) - 200, , /04/ , , , , /05/ , , , , /06/ , , , , /07/ , , , , /08/ , , , , /09/ , , /10/ , , , , /11/ , , /12/ , , /01/ , , /02/ , , /03/ , , /03/ , , , , , , Closing Balance Calculation (e + f + g - h - i) Period Ended 31 March 2010 UK Loans G9A Calculation (a + b - c - d) e Financial arrangement at beginning of year f Consideration given by the person a NZD Closing TBV g Base currency income b Consideration paid to the Person h Consideration given to the person c Opening TBV i Base currency expenditure d Consideration paid by the Person e - 200, f 55, a - 150, , g - b - - h - c - 200, , i 5, d 55, , CTBV - 150, G9A Income (Expenditure) 65,027.89

29 Repayment (GBP) Interest (GBP) Closing Balance (GBP) Exchange Rate Repayment (NZD) Interest (NZD) Closing Balance (NZD) - 150, , /04/ , , /05/ , , /06/ , , /07/ , , /08/ , , /09/ , , , , /10/ , , /11/ , , /12/ , , /01/ , , /02/ , , /03/ , , /03/ , , , , , , Closing Balance Calculation (e + f + g - h - i) Period Ended 31 March 2011 UK Loans G9A Calculation (a + b - c - d) e Financial arrangement at beginning of year f Consideration given by the person a NZD Closing TBV g Base currency income b Consideration paid to the Person h Consideration given to the person c Opening TBV i Base currency expenditure d Consideration paid by the Person e - 150, f 23, a - 130, , g - b - - h - c - 150, , i 3, d 23, , CTBV - 130, G9A Income (Expenditure) - 3, Repayment (GBP) Interest (GBP) Closing Balance (GBP) Exchange Rate Repayment (NZD) Interest (NZD) Closing Balance (NZD) - 130, , /04/ , , /05/ , , /06/ , , /07/ , , /08/ , , /09/ , , /10/ , , /11/ , , /12/ , , /01/ , , /02/ , , /03/ , , /03/ , , , , , , Closing Balance Calculation (e + f + g - h - i) Period Ended 31 March 2012 UK Loans G9A Calculation (a + b - c - d) e Financial arrangement at beginning of year f Consideration given by the person a NZD Closing TBV g Base currency income b Consideration paid to the Person h Consideration given to the person c Opening TBV i Base currency expenditure d Consideration paid by the Person e - 130, f 3, a - 130, , g - b - - h - c - 130, , i 3, d 3, , CTBV - 130, G9A Income (Expenditure) 12,832.80

30 Repayment (GBP) Interest (GBP) Closing Balance (GBP) Exchange Rate Repayment (NZD) Interest (NZD) Closing Balance (NZD) - 130, , /04/ , , /05/ , , /06/ , , /07/ , , /08/ , , /09/ , , /10/ , , /11/ , , /12/ , , /01/ , , /02/ , , /03/ , , /03/ , , , , , , Closing Balance Calculation (e + f + g - h - i) Period Ended 31 March 2013 UK Loans G9A Calculation (a + b - c - d) e Financial arrangement at beginning of year f Consideration given by the person a NZD Closing TBV g Base currency income b Consideration paid to the Person h Consideration given to the person c Opening TBV i Base currency expenditure d Consideration paid by the Person e - 130, f 3, a - 130, , g - b - - h - c - 130, , i 3, d 3, , CTBV - 130, G9A Income (Expenditure) 11,822.43

31 Cash Basis Person Criteria Absolute value of income and expenditure < $100,000; or Absolute value of financial arrangements < $1,000,000; and The result of the following formula for all financial arrangements party to at year end < $40,000 (Accrual Income - Cash Basis Income) + (Cash Basis Expenditure - Accrual Expenditure) Financial Arrangements UK Mortgage 570, , , , , , ,254 NZ Mortgage 500, , , , , , ,000 1,070,613 1,049,753 1,002,260 1,006, , , ,254 Tania 535, , , , , , ,127 David 535, , , , , , ,127 All bank accounts are excepted FA's and excluded from the Cash Basis Person calculations (Accrual Income - Cash Basis Income) + (Cash Basis Expenditure - Accrual Expenditure) UK Mortgage Accrual Income Cash Basis Income Cash Basis Expenditure Accrual Expenditure Deferral Amount , , , , , , , , , , , , , , , , , , , , , NZ Mortgage Accrual Income Cash Basis Income Cash Basis Expenditure Accrual Expenditure Deferral Amount , , , , , , , , , , , , , , Cash Basis Persons Threshold UK Mortgage NZ Mortgage Deferral Amount Tania David , , , , , , , , , , , , , , , , Breach $40,000 threshold , , , , , , , , , , , ,279.28