Foreign currency balances and transactions - your tax position

If you conduct any business transactions in foreign currency, hold foreign assets or receive income from overseas, you need to be aware of the tax consequences. For foreign currency transactions, you must prepare calculations and accounts of the income (or expenses) stated in New Zealand dollars (NZD) to determine the tax payable on that taxable income.

There are specific tax rules for converting foreign currency balances and amounts to New Zealand dollars.

Different sets of rules may apply depending on the size of transactions or income. Depending on what rules apply, some concessionary methods may be available, and you may be able to use certain conversion methods but not others.

You also need to be aware that there are specific requirements for disclosures involving foreign currency balances and transactions and for calculating withholding or approved issuer levies on interest or royalty payments paid in foreign currency.

As you can tell, this is an area fraught with traps for young players. Ask us for advice about on your tax position if any of these apply to you:

• Transactions or balances in foreign currency
• Foreign shares
• Foreign life insurance/superannuation
• Overseas branch operations
• Distributions from foreign trusts

Talk to us about your assets and income, so we can help you clarify your tax liabilities and identify where we need to prepare accounts with foreign currency conversions.

For more details, download the Guide to Foreign Currency and Tax.

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