Section FA 17 — Income Tax Act 2007: Treatment when agreement ends: when buyer is cash basis person

FA 17 Treatment when agreement ends: when buyer is cash basis person When this section applies (1) This section applies for the purposes of section FA 15 when the buyer is a cash basis person. Reduction (2) The amount treated as the buyer’s sale 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— prepaid expenditure − expenditure. Definition of items in formula (3) In the formula,— (a) prepaid expenditure is the amount of prepaid expenditure that would have been incurred under 1 of the spreading methods for payments under the hire purchase agreement if— (i) the buyer were not a cash basis person; and (ii) section EW 31 (Base price adjustment formula) did not apply to the buyer and the agreement in the income year when the agreement ends: (b) expenditure is the amount of expenditure incurred by the buyer and treated as interest under the hire purchase agreement. Defined in this Act: amount , cash basis person , hire purchase agreement , income year , interest , pay , prepaid expenditure , spreading method , Compare: 2004 No 35 s FC 10(4)