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YE 1: References to balance dates and years
or “Explaining how tax years and income years are defined and referenced in the Act”
You could also call this:

“How to convert foreign money to NZ dollars for tax purposes”

This section explains how to change money from other countries into New Zealand dollars for tax purposes. You need to do this when you have money in a different currency, and the law says you must use New Zealand dollars.

Usually, you should use the exchange rate from the end of the trading day on the date you need to calculate the amount. But sometimes, you can use a different method.

If the Commissioner allows it, or if another part of the law says you can, you might be able to use an average exchange rate. This average would be based on the rates from the 15th day of each full month in the time period you’re looking at.

The Commissioner can also set a specific rate or method for everyone to use. If they do this, it becomes a rule that everyone has to follow.

In some cases, you might be able to use a different rate or method that the Commissioner has approved just for your situation.

Remember, these rules only apply when there isn’t already a specific way to change the currency mentioned in the part of the law you’re using.

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Next up: YF 2: Other rules for currency conversion: approved alternatives

or “ Using approved alternative rates for converting foreign currency to NZ dollars ”
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Part Y Definitions and related matters
Currency conversion

YF 1General rules for currency conversion

  1. This section applies when—

  2. an amount is paid or payable in a currency other than New Zealand currency; and
    1. a provision in this Act requires the amount to be taken into account in New Zealand currency, whether expressly or by necessary implication; and
      1. this Act does not contain a specific currency conversion rule that requires the conversion of the amount into New Zealand currency under a method other than those in this section.

        1. The amount must be converted into New Zealand currency by applying the close of trading spot exchange rate on the date at which the amount is required to be measured or calculated.

        2. Despite subsection (2), the amount may be converted into New Zealand currency by applying the average of the close of trading spot exchange rates for the 15th day of each complete month that falls in the relevant period if—

        3. the Commissioner allows it:
          1. a provision in this Act specifically allows it.

            1. Repealed

            2. Despite subsection (2), the amount may be converted into New Zealand currency by applying a rate—

            3. set by the Commissioner for general use for the purposes of this section:
              1. calculated using a method approved by the Commissioner for general use for the purposes of this section.

                1. An instrument that sets a rate, or sets out an approved method, for general use under subsection (5) is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).

                2. Despite subsection (2), a person may convert the amount into New Zealand currency by applying a rate—

                3. approved by the Commissioner for use in the circumstances of the person:
                  1. calculated using a method approved by the Commissioner for use in the circumstances of the person.

                    Notes
                    • Section YF 1(1)(c): substituted (with effect on 1 April 2008), on , by section 575(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section YF 1(3) heading: substituted (with effect on 1 April 2008), on , by section 575(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section YF 1(3)(b): substituted (with effect on 1 April 2008), on , by section 575(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section YF 1(4) heading: repealed (with effect on 1 April 2008), on , pursuant to section 575(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section YF 1(4): repealed (with effect on 1 April 2008), on , by section 575(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section YF 1(5) heading: added (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 118(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                    • Section YF 1(5): added (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 118(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                    • Section YF 1(5B) heading: inserted, on , by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
                    • Section YF 1(5B): inserted, on , by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
                    • Section YF 1(6) heading: added (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 118(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                    • Section YF 1(6): added (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 118(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).