Individual income tax return guide 2011 - Inland Revenue Department

www.ird.govt.nz
35
There are special provisions for applying the spreading concessions for a
cash-basis person. You qualify as a cash-basis person if:
––
on every day in the income year the absolute value of all financial
arrangements added together is $1,000,000 or less, or
––
the absolute value of your income and expenditure in the income
year under all financial arrangements is $100,000 or less, and
––
the deferral of income or acceleration of expenditure using the cash
method rather than the accrual method is $40,000 or less.
Please note the “absolute value” is the value of an amount whether it’s
positive or negative.
Sale or maturity of financial arrangements
Whether or not the exemption from the spreading method applies, you
must do a “wash-up” calculation in certain circumstances. For example:
––
a financial arrangement matures, is sold, remitted or transferred
––
there is an absolute assignment of the financial arrangement
––
a party to a financial arrangement is released from making all
remaining payments under the Insolvency Act 1967, the Companies
Act 1993 or the laws of a country or territory other than New
Zealand
––
you cease to be a resident of New Zealand.
––
the calculation ensures that the total gains or losses from the
financial arrangement are brought to account. This applies in every
case—you don’t have to be in the business of buying or selling
financial arrangements, or have bought them for the purpose of
resale, as you would with shares.
When calculating the income or expenditure on sale, use our Sale or
disposal of financial arrangements (IR 3K) form.
Income from cash jobs, tips, “under the table” payments,
bartering or an illegal enterprise
If you received any other type of income that didn’t have tax deducted
from it, print it in Box 23.
Write the details of your income and any expenses on a piece of paper
and staple it to the top of page 3 of your return.