Financial Arrangements

Question 1

The main purpose of the financial arrangements rules are to require the parties to a financial arrangement to ____________, over the term of the arrangement, a fair and reasonable amount of income derived, or expenditure incurred under the arrangement, and so prevent the deferral of ___________ or the advancement of ______________.

Answer 1

accrue, income, expenditure.

Question 2

The concept of a financial arrangement is ________________, but is essentially about a ___________________ arrangement.

Answer 2

broad, debt

Question 3

The financial arrangement rules do not apply to:

Answer 3

the calculation of resident passive income.

Use of money interest paid to or by the IRD.

Question 4

The parties to a financial arrangement will have to account for the interest earned or deductible on the arrangement:

Answer 4

on an accrual basis.

Question 5

An excepted financial arrangement:

Answer 5

is not a financial arrangement.

Question 6

Which of the following are ‘excepted financial arrangements’?
A. Employment contract.
B. Loan.
C. Bet.
D. A and B
E. A and C

Answer 6

Employment contract.

Bet

Question 7

A cash basis person:

Answer 7

is not required to apply a spreading method.
may be a natural person (including a trustee) or company.
has income and expenditure under all financial arrangements, for the income year
that does not exceed $100,000, or the value of their financial arrangements does
not exceed $1M on every day of the income year.