Section CZ 3 — Income Tax Act 2007: Exchange variations on 8 August 1975

CZ 3 Exchange variations on 8 August 1975 When this section applies (1) This section applies when— (a) a person carrying on a business in New Zealand— (i) receives a loan in 2 or more instalments for the purposes of the business; or (ii) makes a loan in 2 or more instalments in the course of carrying on the business; and (b) an exchange variation arises in relation to the whole or partial repayment of the loan; and (c) the person derives an amount or incurs a loss through the exchange variation. Income or deduction (2) The amount derived is income of the person and the loss incurred is a deduction that they are allowed. Instalments and repayments (3) For the purposes of this section, unless the terms of the loan expressly provide otherwise,— (a) each instalment is treated as a separate loan; and (b) repayments are applied so that the separate loans are repaid in the order in which they were received. Exclusion (4) This section does not apply to a financial arrangement to which the financial arrangements rules apply. Some definitions (5) In this section,— exchange variation , for the repayment of some or all of the loan, excluding interest, means a variation by virtue of a fluctuation in the value of the currency or currencies of 1 or more countries other than New Zealand in relation to New Zealand currency, that occurs between— (a) the amount of the repayment expressed in New Zealand currency at the time at which the repayment was made; and (b) the amount expressed in New Zealand currency that would have been required to make that repayment on or at the later of 8 August 1975 and the time at which the loan was first made loan means,— (a) for money lent, to a person, on or after 1 January 1974 and on or before 22 January 1985, money that— (i) was lent with the consent of the Minister under the Capital Issues (Overseas) Regulations 1965 or the Overseas Investment Regulations 1974 or with the consent of the Reserve Bank under the Exchange Control Regulations 1978, as applicable; and (ii) was lent in a currency other than New Zealand currency; and (iii) was expressed to be repayable in a currency other than New Zealand currency: (b) for money lent, by a person, on or after 1 January 1974 and on or before 22 January 1985, money that— (i) was lent with the consent of the Reserve Bank under the Exchange Control Regulations 1978 if required; and (ii) was expressed to be repayable in a currency other than New Zealand currency: (c) for money lent, to a person, on or after 23 January 1985, money that— (i) is lent in a currency other than New Zealand currency; and (ii) is expressed to be repayable in a currency other than New Zealand currency: (d) in relation to money lent, by a person, on or after 23 January 1985, money that is expressed to be repayable in a currency other than New Zealand currency. Defined in this Act: amount , business , deduction , exchange variation , financial arrangement , financial arrangements rules , income , loan , money lent , New Zealand , pay , Compare: 2004 No 35 s CZ 3