Section EW 34 — Income Tax Act 2007: Consideration in foreign currency

EW 34 Consideration in foreign currency When this section applies (1) This section applies when the consideration payable under a financial arrangement to which section EW 32(3) applies is in a foreign currency. Lowest price (2) The lowest price referred to in section EW 32(3) is the lowest price the parties would have agreed on in the foreign currency, converted into New Zealand dollars using the rate that the original party applying section EW 32(3) selects from the rates in subsection (4). The party may select the rate in subsection (4)(b) only if the period between the date on which the first right in the property is to be transferred and the date on which final payment is to be made is 5 years or less. Consistent application of rate (3) The party must apply the selected rate to the financial arrangement for every income year over its term. Rates (4) The rates are— (a) the rate, on the date on which the parties enter into the financial arrangement, available to the party from a New Zealand registered bank for the exchange of New Zealand dollars for the foreign currency for 1 of the following dates: (i) the date on which the first right in the property is to be transferred; or (ii) if that date is uncertain on the date on which the parties enter into the financial arrangement, the date on which the parties reasonably expect, when entering into the arrangement, that the first right in the property will be transferred; or (b) the rate, on the date on which the parties enter into the financial arrangement, available to the party from a New Zealand registered bank for the exchange of New Zealand dollars for the foreign currency for 1 of the following dates: (i) the date on which final payment is to be made; or (ii) if that date is uncertain on the date on which the parties enter into the financial arrangement, the date on which the parties reasonably expect, when entering into the arrangement, that final payment will be made; or (c) an exchange rate approved by the Commissioner for this subsection in the circumstances applicable to the party in a determination under section 90AC(1)(k) of the Tax Administration Act 1994. Defined in this Act: Commissioner , consideration , financial arrangement , income year , New Zealand , pay , property , registered bank , right , year , Compare: 2004 No 35 s EW 34