New Zealand Gazette – 2004 – No. 68

Page 1613

✨ Financial Arrangement Analysis



10 JUNE 2004

NEW ZEALAND GAZETTE, No. 68

1613

On 1 October 2004 the corporate borrower received GBP 36,000,000, which is equivalent to NZD $109,090,909. On 1 February 2005, the interest payment in arrears for the 4 months from the initial drawn down date amounts to GBP $1,320,000, which is equivalent to NZD $3,961,905 (valued at the relevant forward rate of 0.3332 at the initial drawn down date). The subsequent interest payments were also converted to NZD in the same way. Overall NZD net amount of $88,488,316 represents an expected yield of approximately 8% per annum. The expected yield is spread according to Determination G3 (See column (c)).

The actual NZD payments will deviate from the expected NZD payments due to fluctuations in the exchange rates. For instance, the actual NZD payment on 1 February 2005 was NZD $3,946,188 instead of NZD $3,961,905 anticipated at the initial drawn down date. This created an unexpected component of NZD $15,716 for the gross income or expenditure in respect of the financial arrangement. The following table presents the unexpected component of the gross income or expenditure over the term of the financial arrangement.

Date Expected Cash NZD Actual Cash NZD Unexpected Income/Expenditure
1-Oct-04 109,090,909 109,090,909
1-Feb-05 -3,961,905 -3,946,188 -15,716
1-Aug-05 -5,886,259 -5,928,144 41,885
1-Feb-06 -5,830,199 -5,981,873 151,674
1-Aug-06 -5,774,673 -6,218,593 443,920
1-Feb-07 -5,719,676 -6,500,328 780,652
1-Aug-07 -5,665,203 -5,845,881 180,678
1-Feb-08 -5,611,249 -6,547,619 936,370
1-Aug-08 -5,557,808 -6,998,940 1,441,131
1-Feb-09 -5,504,877 -5,652,298 147,421
1-Aug-09 -5,452,450 -5,299,786 -152,664
1-Feb-10 -5,400,521 -5,247,813 -152,708
1-Aug-10 -5,349,088 -5,110,996 -238,091
1-Feb-11 -5,298,144 -4,908,280 -389,865
1-Aug-11 -5,247,686 -4,686,391 -561,295
1-Feb-12 -5,197,708 -4,464,487 -733,221
1-Aug-12 -5,148,206 -4,485,727 -662,479
1-Feb-13 -5,099,175 -4,608,939 -490,237
1-Aug-13 -5,050,612 -5,006,321 -44,291
1-Feb-14 -5,002,511 -5,008,854 6,343
1-Aug-14 -4,954,868 -5,008,854 53,986
1-Oct-14 -90,866,409 -92,739,691 1,873,282
Total -88,488,316 2,616,778

At the first balance date – 31 March 2005

Expected component = 4,646,006 + (4,675,141 × 59/181) = $6,169,947.
Unexpected component = $15,716.
Total gross expenditure = $6,169,947 - $15,716 = $6,154,231.

At the second balance date – 31 March 2006

Expected component = (122/181 × 4,675,141) + 4,623,561 + (4,572,173 × 59/181) = $9,265,138.
Unexpected component = $41,885 + $151,674 = $193,559.
Total gross expenditure = $9,265,138 + $193,559 = $9,458,697.

On 1 June 2006, the corporate borrower decides to switch out of GBP and borrow more USD. For the purpose of calculating the corporate’s gross income or expenditure, the GBP tranche is deemed to be repaid and is subject to the base price adjustment in this income year. The spot rate GBP to NZD was 0.3200 on the date of repayment.

The base price adjustment is given in section EH 47 of the Income Tax Act 1994. It calculates an amount by application of the formula:

consideration – income + expenditure + amount remitted

where:

consideration is the consideration paid or payable to the company less the consideration paid or payable by the company. This is equal to the amount of GBP drawn down less the sum of the interest payments made and the deemed principal repayment amount
= 36m/.3300 – (1.32m/.3345 + 1.98m/.3340 + 1.98m/.3310 + 36m/.3200)
= NZD $109,090,909 – NZD $128,356,205
= –NZD $19,265,296

income is all the amounts of gross income derived in previous income years
= 0



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VUW Te Waharoa — PDF NZ Gazette 2004, No 68


Gazette.govt.nz — PDF NZ Gazette 2004, No 68




✨ LLM interpretation of page content

💰 Multi-currency loan facility with early repayment (continued from previous page)

💰 Finance & Revenue
Loan Facility, Multi-currency, Early Repayment, Interest Rates, USD, GBP, DM