Cash-basis persons generally return income from a financial arrangement when they receive it and claim deductions for expenses when they pay them.
Foreign amounts earned
An example of foreign income earned is interest from a foreign bank account. You will return the interest as you receive it, converted into New Zealand dollars. When you close the bank account, you will need to do a base price adjustment (BPA) to account for exchange rate movements.
You can read more about cash basis persons under the financial arrangement rules on our tax technical website.
IS 22/05: Cash basis persons under the financial arrangements rules
Cash basis test
Cash basis status is tested each income year. From the 2025-26 and later income years, you are a cash basis person if 1 of the following applies.
- your total income and expenditure from all financial arrangements on an accrual basis is $200,000 or less
- your total financial assets and liabilities are $2 million or less.
Total means you add assets and debts together. For example, if you have assets of $1.5 million and debts of $600,000, your total is $2.1 million and you are over the threshold.