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EM 8: Some definitions
or “Definitions for income tax timing and measurement rules”
You could also call this:

“This section summarises the financial arrangements rules and their purposes”

This part of the law explains what financial arrangements rules are and what they do. These rules are mostly found in this part of the law, but they also include some other sections.

Financial arrangements rules include the rules in this part, as well as other specific sections of the law. These other sections deal with things like financial arrangements, adjustments, and fixing errors.

The rules have three main purposes:

  1. They make sure that people involved in financial arrangements pay or receive a fair amount of money over time. This stops people from putting off paying income or getting money too early.

  2. They tell people to treat all money the same way, whether it’s capital or revenue.

  3. They require people to do a special calculation called a base price adjustment when their rights and obligations in a financial arrangement end.

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Next up: EW 2: Relationship of financial arrangements rules with other provisions

or “Financial arrangement rules take priority over other rules unless stated otherwise”
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Part E Timing and quantifying rules
Financial arrangements rules

EW 1What this subpart does

  1. This subpart contains most of the financial arrangements rules.

  2. Financial arrangements rules means—

  3. the sections in this subpart; and
    1. sections CC 3 (Financial arrangements), DB 11 to DB 15 (which relate to financial arrangements adjustments), EZ 51 (Transitional adjustment when changing to financial arrangements rules), FB 9 (Financial arrangements rules), GB 21 (Dealing that defeats intention of financial arrangements rules), RA 11 and RA 12 (which relate to adjustments to correct errors); and
      1. sections 90AA to 90AD of the Tax Administration Act 1994.

        1. The purposes of the financial arrangements rules are—

        2. to require the parties to a financial arrangement to accrue over the term of the arrangement a fair and reasonable amount of income derived or expenditure incurred under the arrangement, and so to prevent the deferral of income or the advancement of expenditure; and
          1. to require the parties to a financial arrangement to disregard any distinction between capital and revenue amounts; and
            1. to require a party to a financial arrangement to calculate a base price adjustment when the rights and obligations of the party under the arrangement cease.

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