Amounts the financial arrangement rules apply to

The financial arrangement rules can apply to amounts that might otherwise be treated as capital amounts. They can require income and expenses to be spread over the term of the arrangement.

At the end of the arrangement there is usually a wash-up calculation called a base price adjustment (BPA). This calculation is to make sure the right amount of income will be reported.

There are several methods for spreading income and expenses. Which one you can use depends on the circumstances.

You can read more about foreign arrangement rules in our Foreign income guide - IR1247 in the compliance focus for individuals' section.

Compliance Focus for Individuals

Tax advice

You may know if an amount you receive or pay is income or expenditure under one of the financial arrangement methods. If you're unsure, we recommend you speak to a tax professional.

Tax technical

Read more on our Tax Technical website about tax rules that may apply to financial arrangements.

IS 22/05: Cash basis persons under the financial arrangement rules

FS 22/05: Cash basis persons under the financial arrangement rules

IS 20/07: Application of the financial arrangement rules to foreign currency loans used to finance foreign residential rental property.

BR PUB 12/01 – 12/03: Deductibility of break fees paid by a landlord to exit early from, or vary the interest rate of, a fixed interest rate loan, or to exit early from a fixed interest rate loan on sale of a rental property.

BR PUB 14/07: Deductibility – Interest repayments required as a result of the early repayment of a financial arrangement.

Financial arrangement determinations

We issue these to clarify the calculation of income and expenditure under the financial arrangement rules, particularly for arrangements that are not in New Zealand dollars or with specific features.

Financial arrangement determinations