IR4 Question 23 Other income

Profits from the sale of shares and other property are taxable if the company:

• buys and sells shares or other property as a business, or

• buys shares or other property for the purpose of resale.

This does not apply if shares are FIFs.

List the details of income and expenses from these sales on a sheet of paper and staple it to the top of page 3 of the return. Include the total profit in Box 23B.

If the company has made a loss from the sale of an asset that was not an FIF and you can show that if it had made a profit it would have been taxable, you may be able to claim the loss as a deduction. If the property was purchased on or after 1 October 2015 with no intention to sell and it was sold/disposed of within two years, any excess deductions can't be claimed unless they can be offset against net income from other property sales. The Property sale information (IR833) form has more information on this.

For more information on property sales see the Inland Revenue guide Buying and selling residential property (IR313).

Show the loss at Box 23B.

A company must account for income from financial arrangements on an accrual basis. Financial arrangements include government stock, futures contracts and deferred property settlements, excluding short-term agreements for sale and purchase of property. Changes to the rules for the treatment of financial arrangements have split the rules into two sets. Generally, the first set applies to financial arrangements entered into before 20 May 1999 and the second applies to financial arrangements entered into on or after that date.

Both sets of rules require the income or expenditure to be spread over the term of the financial arrangement.

This applies in every case—the company doesn’t have to be in the business of buying or selling financial arrangements, or be intending to sell, as it would with shares. The company may, in certain cases, deduct any losses.

When a financial arrangement matures or is sold, remitted or transferred, a “wash-up” calculation, known as a base price adjustment, must be made. The calculation ensures that the total gains or losses from the financial arrangement are accounted for.

If you need any information on when losses can be deducted or how to calculate a base price adjustment, please call Inland Revenue on 0800 443 773.

Profits from any undertaking or scheme entered into for the purpose of making a profit are taxable. Describe the undertaking or scheme and list the details of income and expenses from them. Staple this information to the top of page 3 of the return and include the total profit in Box 23B.