Section FA 16 — Income Tax Act 2007: Treatment when agreement ends: when seller is cash basis person

FA 16 Treatment when agreement ends: when seller is cash basis person When this section applies (1) This section applies for the purposes of section FA 15 when the seller is a cash basis person. Reduction (2) The amount treated as the seller’s purchase price in section FA 15(2) is reduced by an amount for accrued but unpaid interest on the hire purchase agreement calculated using the formula— accrual income − income. Definition of items in formula (3) In the formula,— (a) accrual income is the amount of income that would have been derived under 1 of the spreading methods for payments under the hire purchase agreement if— (i) the seller were not a cash basis person; and (ii) section EW 31 (Base price adjustment formula) did not apply to the seller and the agreement in the income year when the agreement ends: (b) income is the amount of the seller’s income from payments received under the hire purchase agreement. Defined in this Act: amount , cash basis person , hire purchase agreement , income , income year , interest , pay , spreading method , Compare: 2004 No 35 s FC 10(3)