10 JUNE 2004

NEW ZEALAND GAZETTE, No. 68

1617

To apply this method to a forward contract for the income year in which you enter the forward contract, you must:

• ignore any offsetting of payments between the parties, so that every amount that would be payable under the forward contract is taken into account under this determination; and
• choose one of the currencies under the forward contract as a base currency; and
• determine the expected component by taking into account all the base currency payments and payment dates in relation to the forward contract when you become a party to the contract, which consist of:
  (a) the base currency value of the payment or receipt, if any, made in consideration of entering into the contract;
  (b) the base currency value of the non-base currency payment to be made under the contract valued at the forward rate;
  (c) the base currency value of the non-base currency payment to be made under the contract valued at the contract rate; and
• convert the expected base currency payments, where the base currency is not NZD, into expected NZD payments on the basis of forward rates available at the time you become a party to the forward contract; and
• spread the expected NZD net amount over the term of the forward contract.

To apply this method for the first time to a forward contract for an income year after the income year in which you enter the forward contract, you must calculate the gross income or expenditure of the forward contract as set out above, except that you must:

• in determining the expected component of the gross income or expenditure, use actual NZD payments up to the income year for which you first use this determination for the forward contract and expected NZD payments for the remaining term of the forward contract; and
• in calculating the expected NZD payments, use the relevant forward rates as at the end of the income year for which you first use this determination for the forward contract.

You must perform the base price adjustment under whichever is appropriate of section EH 4 of the Act and section EH 47 of the Act when a forward contract you are a party to matures or is disposed of. This adjustment contains the unexpected component of the gross income or expenditure of the forward contract.

You must also calculate a transition allowance for a financial arrangement to which you apply the method for the first time for an income year that is after the income year in which you enter the financial arrangement.

How do I elect to use the method outlined in this determination?

Election for 2003-04 and subsequent income years

If you are not a member of a group of companies, you may elect to use this determination for the 2003-04 and subsequent income years by giving a notice of election to the Commissioner on or before the day that is the earlier of 31 July 2004 and the day that is the end of your accounting period for the 2003-04 income year. The notice must be in writing and elect:

• to use this determination; and
• to use Determination G9C: Financial arrangements that are denominated in a currency other than New Zealand dollars: an expected value approach.

If you are a member of a group of companies, you may elect to use this determination for the 2003-04 and subsequent income years by giving, together with all other members of the group, a notice of election to the Commissioner on or before the day that is the earlier of 31 July 2004 and the earliest day that is the end of an accounting period for the 2003-04 income year for a member of the group. The notice must be in writing and elect:

• to use this determination; and
• to use Determination G9C: Financial arrangements that are denominated in a currency other than New Zealand dollars: an expected value approach.

Election for 2004-05 and subsequent income years

If you are not a member of a group of companies, you may elect to use this determination for the 2004-05 and subsequent income years by giving a notice of election to the Commissioner on or before the day that is the later of 31 July 2004 and the day that is the 63rd day of your accounting period for the 2004-05 income year. The notice must be in writing and elect:

• to use this determination; and
• to use Determination G9C: Financial arrangements that are denominated in a currency other than New Zealand dollars: an expected value approach.

If you are a member of a group of companies, you may elect to use this determination for the 2004-05 and subsequent income years by giving, together with all other members of the group, a notice of election to the Commissioner on or before the day that is the later of 31 July 2004 and the earliest day that is the 63rd day of an accounting period for the 2004-05 income year for a member of the group. The notice must be in writing and elect:

• to use this determination; and
• to use Determination G9C: Financial arrangements that are denominated in a currency other than New Zealand dollars: an expected value approach.

Election for income years beginning after 2004-05 income year

If you are not a member of a group of companies, you may elect to use this determination for an income year beginning after the 2004-05 income year, and for subsequent income years, by giving a notice of election to the Commissioner on or before the day that is the 63rd day of your accounting period for the income year. The notice must be in writing and elect:

• to use this determination; and
• to use Determination G9C: Financial arrangements that are denominated in a currency other than New Zealand dollars: an expected value approach.

If you are a member of a group of companies, you may elect to use this determination for an income year after the 2004-05 income year, and for subsequent income years, by giving, together with all other members of the group, a notice of election to