60 (Expressed in Trinidad and Tobago Dollars) NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS 30th June 2017 23 Taxation The fund was established under the laws of Trinidad and Tobago and is not subject to income, capital gains or other corporate taxes. The fund’s operations do not subject it to taxation in any other jurisdictions, except for withholding taxes imposed by certain countries on investment income and capital gains for investments domiciled in those countries. 24 Financial risk management The NIBTT’s activities expose it to credit risk, liquidity risk and market risk. Its principal financial instruments comprise investment securities, mortgage advances, fixed deposits, cash and cash equivalents and borrowings. Income earned from investments, together with the excess of contributions after benefits are paid, are used to earn above average interest rate margins through the investing in high-quality, high-yielding assets with acceptable levels of risk. Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. NIBTT is mainly exposed to credit risk with respect to its mortgage portfolio, bonds and deposits. NIBTT limits its exposure with respect to its bond portfolio by investing in only bonds issued by the Government of Trinidad and Tobago or institutions with high credit worthiness. In respect to the Mortgage portfolio, constant monitoring is also employed. The necessary contact with mortgagors is maintained to ensure that payments are received in a timely manner, where necessary mortgage rescheduling is done, which considers the borrowers new financial position. In the event where recovery may seem doubtful, provisions are set aside to cover any potential losses. The carrying amount of loans and advances, investment securities, matured deposits and cash balances at banks represent the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: Loans and advances 2017 2016 Mortgage advances Gross amount 54,381 57,675 Impaired Gross amount 51,746 51,746 Allowance for impairment (51,746) (51,746) – – Past due but not impaired Gross amount 4,096 4,824 Past due comprises 30-60 days 3,063 3,289 61-90 days 566 443 91-180 days 127 288 Over 180 days 340 804 Carrying amount 4,096 4,824 Neither past due nor impaired Gross amount 2,365 4,494 NIBTT granted mortgages based on evaluations of the mortgagees’ financial situation, and reports monthly on the exposure of potential losses from mortgages.