FX 20/01
Issued
03 Jul 2020

Approval – foreign residential rental property amounts – currency conversion

If you own a foreign residential rental property, you must convert foreign currency amounts to New Zealand dollars to work out your New Zealand income tax liability. 

The default method requires you to convert each transaction on the day it occurred at the exchange rate on that date.  However, the Commissioner can approve other methods and rates to use to minimise compliance costs.   

This Approval lets you convert your foreign residential rental property income and expenses using either a monthly or an annual method instead of having to use a daily method.  This means you can add up your income and expenditure for each month and convert it to New Zealand dollars using a monthly average rate.  Alternatively, you could add up all your income and expenditure for the year and convert it to New Zealand dollars using an average annual rate.  The Approval also explains what exchange rates to use if you use either the monthly or annual methods.

You do not have to use this Approval.  You can use the default method of converting transactions to New Zealand dollars on the date they occur.  The methods in this Approval are intended to make things less complicated for you and to reduce your cost of returning your income from your foreign residential rental property.

Tax Information Bulletin Vol 32 No 7 - August 2020

Related items

Overview – Tax issues arising from owning foreign residential rental property

IS 20/06: Income tax - tax issues arising from owning foreign residential rental property 

IS 20/07: Application of the financial arrangements rules to foreign currency loans used to finance foreign residential rental property

Income Tax Act 2007: ss YA 1, YF 1