# Forensic Questions — Bounty #07

**Companion file to:** `01-brief.md`

## Q1 (easy) — Division 240 characterisation

Under s 240-25, what is the criteria for a hire-purchase agreement to be caught by Division 240?

## Q2 (easy) — Deductible interest

Under Division 240, is the notional interest deductible under s 8-1 to the hirer? What is the source of the deduction?

## Q3 (load-bearing) — Actuarial vs Rule-of-78 which is required?

Does Division 240 mandate the actuarial method, or does it permit Rule-of-78? What is the source authority?

_(The reviewer should trace this to s 240-40 and any relevant ATO Interpretive Decisions.)_

## Q4 (medium) — Balloon payment

Suppose the contract has a $10,000 balloon at month 60 (with the monthly instalments reduced accordingly). Does the balloon get its own interest apportionment, or is it treated as final principal?

## Q5 (medium) — Early termination

If PQR terminates the contract at month 36 by paying out the residual, how is the interest apportionment closed out? Does un-earned interest under Rule-of-78 get refunded, and how is it recognised for tax?

## Q6 (open) — What's not being tested?

Candidates:
- Interaction with Div 40 depreciation of the underlying asset
- GST on financed component
- Financier-side assessability recognition (matched or differed?)
- Contract in a foreign currency