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EW 33B: Foreign ASAPs: designated FX hedges
or “Rules for foreign currency transactions with specific hedges in property or service arrangements”
You could also call this:

“Rules for handling foreign currency in certain sales agreements”

If you’re involved in a financial arrangement where you have to pay or receive money in a foreign currency, this law tells you how to handle it. This applies to certain agreements for buying and selling things.

When you need to change foreign money into New Zealand dollars, you should use the exchange rate on the day you pay or receive the money. This exchange rate is called the ‘spot rate’.

Sometimes, you might not know the spot rate because the payment is happening in the future, after you need to file your tax return. In this case, you have two choices:

  1. You can use the spot rate at the end of your current tax year.
  2. Or, if you’re paying or receiving the money within 93 days after your tax year ends, you can use the spot rate on that day.

Remember, this only applies to specific types of financial arrangements mentioned in section EW 32(2C), (2D), or (2E).

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Next up: EW 33D: Foreign ASAPs: contingencies for business combinations

or “How to handle extra payments when buying or selling a business using foreign agreements”
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Part E Timing and quantifying rules
Financial arrangements rules: Consideration when financial arrangement involves property or services

EW 33CConsideration in foreign currency: some agreements for sale and purchase

  1. This section applies when the consideration paid or payable under a financial arrangement to which section EW 32(2C), (2D), or (2E) applies is in a foreign currency.

  2. The spot rate on the date an amount of consideration is paid or payable is used to convert to New Zealand dollars for consideration in a foreign currency.

  3. If no spot rate is available for an amount under the financial arrangement, because the amount is deferred into an income year after a person's current income year and that deferral is for a day after the person is required to file a return of income for the current income year, then the person may use for the amount—

  4. the spot rate at the end of the current income year; or
    1. the spot rate on the date an amount of consideration is paid or payable, if it is paid or payable within 93 days of the end of the current income year.

      Notes
      • Section EW 33C: 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 33C(3) heading: inserted (with effect on 1 April 2011), on , by section 134 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).