Ring-fencing logic engine¶


ID	`MOD-095`
System	SD06
Repo	`bank-risk-platform`
Build status	Not started
Deployed	No

What it does¶

MOD-095 is the ring-fencing logic engine. It applies the NZ residential rental ring-fencing rules (Income Tax Act 2007, ss EE 1–8) to the property portfolio managed by MOD-094, maintaining the ring-fenced loss carry-forward register and computing the portfolio-level profit offset each period.

Ring-fencing mechanics¶

Under NZ residential ring-fencing rules, rental losses from residential properties cannot offset other income (salary, business income). MOD-095 enforces this by:

Receiving property-level net income/loss from MOD-094 at period end
For profitable properties: recording the profit as normal income
For loss-making properties: ring-fencing the loss into a carry-forward register; it is not available to offset other income
Applying portfolio-level offset: ring-fenced losses from Property A can offset profits from Property B in the same portfolio
Testing for the portfolio profitability exemption: if the combined portfolio is profitable, ring-fencing rules do not apply

Exemptions handled¶

Portfolio profitability test — if total rental portfolio income exceeds total rental losses, the ring-fencing rules do not apply for that year
Land business exemption — developers and dealers operating as a land business are not subject to residential ring-fencing; the module flags these cases for manual review
Mixed-use holiday homes — MOD-095 handles the bright-line/mixed-use apportionment rules for properties that are both personally used and rented

Ring-fenced loss register¶

Each ring-fenced loss is stored with the tax year, property, and amount. Carry-forwards are applied to future rental profits in chronological order (oldest losses first). The register is the output used by MOD-093 for tax summary outputs and accountant exports.

Design phase¶

This module is in design. Build begins in Phase 3 of the Expense Intelligence Platform. See the Expense Intelligence Platform summary for the full implementation roadmap.

Module dependencies¶

Depends on¶

Module	Title	Required?	Contract	Reason
MOD-094	Property attribution engine	Required	`contract/events/`	Property-level P&L from MOD-094 is the input to ring-fencing calculations; MOD-095 operates on the output of MOD-094, not raw transactions.
MOD-092	Tax logic engine	Required	`contract/events/`	Tax logic engine provides the deductibility classifications and GST treatment applied to property expenses before ring-fencing is assessed.

Required by¶

(No modules in this wiki currently declare a dependency on this module.)

Policies satisfied¶

Policy	Title	Mode	How
PRI-001	Privacy Policy	`LOG`	Ring-fenced loss carry-forward registers and property tax positions constitute personal financial data; computation inputs and register writes are logged for data minimisation audits.

Capabilities satisfied¶

Capability	Title	Mode	How
CAP-137	CAP-137	`CALC`	Calculates property-level net income and loss positions each period; applies NZ residential ring-fencing rules (Income Tax Act 2007 ss EE 1–8); maintains the ring-fenced loss carry-forward register; applies portfolio-level profit offset and exemption tests.

Part of SD06 — Snowflake Analytics & Risk Platform Compiled 2026-05-22 from source/entities/modules/MOD-095.yaml