15 DECEMBER NEW ZEALAND GAZETTE 5361

3. Scope of Determination—This determination applies where it is necessary for the purposes of sections 64B to 64M of the Income Tax Act 1976 to ascertain the value in New Zealand currency of—

(a) A cashflow paid or received in a foreign currency under a financial arrangement; or

(b) A financial arrangement denominated in a foreign currency using a method that has regard to market valuation; and

(c) In any other circumstances, an amount expressed in foreign currency.

4. Principle—(1) Markets in foreign currencies are approved having regard to the following criteria—

(a) The number of participants in the market or having access to the market;

(b) Frequency of trading in the market;

(c) The nature of trading in the market—how the rate for the foreign currency is determined and how the foreign currency is traded on the market;

(d) The potential or demonstrated capacity of a person or group of persons to significantly influence the market;

(e) Significant barriers to entry;

(f) Discrimination on the basis of the quantity bought and sold unless based on the risks involved or the transaction costs or economies of scale.

(2) Sources of information for foreign currency rates are approved having regard to the following criteria—

(a) Reliance on the sources of information by participants in the market;

(b) The accessibility of the sources of information for participants in the market.

(3) Methods of obtaining a rate for foreign currency at the end of the income year for the purposes of valuing a financial arrangement are approved if—

(a) The rate is obtained at the cut-off time;

(b) The method for determining the cut-off time adopted by a person will be consistently applied in respect of each income year.

5. Interpretation—(1) In this determination, unless the context otherwise requires—

Expressions used, except the expression “income year”, have the same meanings as in sections 2 and 64A to 64M of the Income Tax Act 1976:

“Authorised foreign exchange dealer” means a person for the time being designated by the Reserve Bank, by notice in the Gazette, as an authorised foreign exchange dealer for the purposes of Exchange Control Regulations 1985;

“Contributor page” means a page of information that is displayed on a screen provided by Reuters New Zealand Limited or Telerate New Zealand Limited;

“Cut-off time”, in relation to a person and an income year, means the time at the end of the income year when all financial arrangements held or issued by the person are valued in order to determine the assessable income of the person for the income year;

“Forward contract” means a contract, other than a contract traded on any futures market or a spot contract, for the sale or purchase of a foreign currency for delivery at a specified future time;

“Futures contract” means a contract traded on the New Zealand Futures Exchange;

“Income year” means—

(a) Where a taxpayer furnishes a return of income under section 15 of the Income Tax Act 1976 for an accounting year ending with an annual balance date other than the 31st day of March, the period of 12 months ending on that balance date;

(b) In respect of the income of any other person, the year in which that income has been derived by that person;

“New Zealand foreign currency market” means the market in spot contracts and forward contracts;

“Spot contract” means a contract for the sale or purchase of a foreign currency for delivery in 2 days;

“Multicontributor page” means a multicontributor page of information that is displayed on a screen provided by Reuters New Zealand Limited or Telerate New Zealand Limited.

(2) Any reference in this determination to another determination made by the Commissioner shall be construed as referring to any fresh determination made by the Commissioner to vary, rescind, restrict, or extend that determination.

6. Method—(1) Determination G6: Foreign Currency Rates is hereby rescinded with effect from the day on which this determination is signed.

(2) Approved Markets—The New Zealand foreign currency market in European Currency Units and in the currencies of the following countries and territories are approved—

Japan
France Republic
The Territory of Hong Kong
Commonwealth of Australia
Republic of Singapore
The Swiss Confederation
Federal Republic of Germany
The United States of America
Kingdom of the Netherlands
United Kingdom of Great Britain and Northern Ireland
The Federation of Malaysia
Canada
The Independent State of Papua New Guinea
Republic of Ireland
Portuguese Republic
Republic of Austria
Kingdom of Sweden
Kingdom of Denmark
Republic of Italy
Kingdom of Norway
Kingdom of Spain
Republic of Turkey
The Hellenic Republic
Finland

(3) Sources of Information—The following sources of information for foreign currency rates are approved—

(a) In relation to spot contracts, a multicontributor page that quotes rates for spot contracts;

(b) In relation to forward contracts, a multicontributor page that quotes rates for forward contracts;

(c) Where a person does not have access to a multicontributor page or a contributor page or where the rates for a forward contract are not available from a multicontributor page, advice as to the buy and sell rates for a forward contract or spot contract given to that person by an authorised foreign exchange dealer, which rates shall be derived from an approved source and shall be the rates at which the authorised foreign exchange dealer would perform the foreign exchange transaction.

(4) Spot Contracts—(a) Where, for the purposes of determining the income or expenditure of a person in respect of a financial arrangement, it is necessary to determine the rate for a spot contract at the end of an income year, the rate for the spot contract shall be the midpoint between the buy and sell rates for that spot contract.

(b) Where, for the purposes of determining the income or expenditure of a person in respect of a financial arrangement, it is necessary to ascertain in New Zealand currency the value of a cashflow paid or received in a foreign currency, the rate of exchange to be applied shall be—

(i) Where the cashflow is not converted to New Zealand currency on the day it is paid or received, the midpoint between the buy and sell rates for a spot contract for that currency at any time on that day; or