Wealth statement preparation

Whether the change in your net worth over the year can be explained by your declared income less your declared expenditure. If assets grew by more than income could fund, the difference is unexplained — and unexplained accretion is what section 111 exists to tax. It is the single most productive line of enquiry FBR runs, and it is arithmetic rather than judgement, which is why it is so hard to argue with after the fact.

It matters more than most people expect. An implausibly low personal expenditure figure is a standard flag, because it is the easiest way to make a reconciliation appear to balance when it does not. A figure that is honest and consistent with your declared lifestyle is far safer than one reverse-engineered to close a gap.

It has to be reconstructed, and that work is worth doing carefully because every future year is measured against it. We build the opening position from acquisition documents, bank history and ownership records. Setting it correctly once removes a recurring problem; setting it carelessly creates one that compounds.

For resident individuals, foreign assets and foreign income come within the declaration requirements, and Pakistan receives account information from other jurisdictions under international exchange arrangements. Whether a specific asset must be declared turns on your residency status for the year, which is why residency is settled first for anyone with a cross-border position.