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EW 33: Consideration for hire purchase agreement or finance lease
or “Costs and payments for hire purchase or finance lease agreements”
You could also call this:

“Rules for foreign currency transactions with specific hedges in property or service arrangements”

This section talks about how to handle foreign currency exchanges in certain financial arrangements. If you have a financial arrangement that involves buying or selling property or services in a foreign currency, and you also have a special type of foreign exchange hedge, you need to follow these rules.

If your financial arrangement is for property that you can depreciate or sell for income, or for services that affect your taxable income, you might be able to use this section. You need to have a specific type of foreign exchange hedge that matches your financial arrangement.

If you want to use these rules, you might need to tell the Commissioner of Inland Revenue. You can do this when you file your tax return for the year you enter into the financial arrangement, or even for an earlier year.

When you’re working out the value of the property or services in your financial arrangement, you need to adjust it based on your foreign exchange hedge. The exact way you do this depends on the type of hedge you have.

When you’re spreading out the income or expenses from your foreign exchange hedge over time, or when you’re finishing up the arrangement, you don’t include the part that’s been used to adjust the value of your property or services.

There are some special rules for arrangements made before the 2014-15 income year. These rules override the ones in this section.

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Next up: EW 33C: Consideration in foreign currency: some agreements for sale and purchase

or “Rules for handling foreign currency in certain sales agreements”
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Part E Timing and quantifying rules
Financial arrangements rules: Consideration when financial arrangement involves property or services

EW 33BForeign ASAPs: designated FX hedges

  1. This section applies when, for a person's financial arrangement, section EW 32(2B) applies, and—

  2. the financial arrangement is a foreign ASAP that relates to:
    1. property that is or will be depreciable property or revenue account property; or
      1. services, the sale or purchase of which, as relevant for the person, gives rise to assessable income or deductions under this Act outside of the financial arrangements rules; and
      2. the person holds an IFRS designated FX hedge in relation to the financial arrangement.

        1. This section applies when, for a person's financial arrangement, section EW 32(2C), (2D), or (2E) applies, and—

        2. the financial arrangement is a foreign ASAP that relates to:
          1. property that is or will be depreciable property or revenue account property; or
            1. services, the sale or purchase of which, as relevant for the person, gives rise to assessable income or deductions under this Act outside of the financial arrangements rules; and
            2. the person notifies the Commissioner that they have made an irrevocable election to apply this section to all financial arrangements for property and services described in paragraph (a)(i) and (ii), at the time of—
              1. filing a return of income for the income year in which they enter into the financial arrangement; or
                1. filing a return of income for an earlier income year; and
                2. the person holds a non-IFRS designated FX hedge in relation to the financial arrangement.

                  1. For a financial arrangement described in subsection (1) the value under section EW 32 of the relevant property or services is modified by the amount attributed under IFRS rules to that value on account of the relevant IFRS designated FX hedge.

                  2. For a financial arrangement described in subsection (2) the value under section EW 32 of the relevant property or services is modified by the amount that would be the base price adjustment for the relevant non-IFRS designated FX hedge in the absence of this section.

                  3. When applying a spreading method to, or calculating a base price adjustment for, amounts under an IFRS designated FX hedge or a non-IFRS designated FX hedge, to the extent to which an amount is attributed to the value of the property or services under this section, that amount is excluded from the spreading method or base price adjustment.

                  4. Sections EZ 75 and EZ 76 (which relate to some ASAPs before the 2014–15 income year) override this section.

                  Notes
                  • Section EW 33B: inserted (with effect on 1 April 2011 and applying for a financial arrangement entered into by a person: (a) in the 2014–15 income year and later income years, unless paragraph (b) applies; (b) in an income year (the first income year) and later income years, if the person files a return of income for the first income year on the basis that this section applies to a financial arrangement entered into in the first income year, and the first income year is the 2011–12, 2012–13, 2013–14, or 2014–15 income year, and the person uses IFRSs to prepare financial statements or to report for financial arrangements for the first income year), on , by section 82(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                  • Section EW 33B(2)(b): replaced, on , by section 37(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
                  • Section EW 33B list of defined terms Commissioner: inserted, on , by section 37(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
                  • Section EW 33B list of defined terms notify: inserted, on , by section 37(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).