INCOME TAX ASSESSMENT ACT 1997 - SECT 230.280 Applying foreign exchange retranslation method to gains and losses

INCOME TAX ASSESSMENT ACT 1997 - SECT 230.280

General election

  (1)   You make a gain or loss from a * financial arrangement for an income year if:

  (a)   a * foreign exchange retranslation election under subsection   230 - 255(1) applies to the arrangement; and

  (b)   any of the following subparagraphs apply:

  (i)   the standard referred to in paragraph   230 - 265(1)(c) requires you to recognise a particular amount in profit or loss in relation to that arrangement for that income year;

  (ii)   if subsection   230 - 265(2) applies to the arrangement--the standard referred to in paragraph   230 - 265(1)(c) would have required you to recognise a particular amount in profit or loss in relation to that arrangement for that income year if the arrangement had not been an intra - group transaction for the purposes of the standard referred to in paragraph   230 - 265(2)(b);

  (iii)   if subsection   230 - 265(3) applies to the arrangement--the standard referred to in paragraph   230 - 265(1)(c) would have required you to recognise a particular amount in profit or loss for the year that is attributable to currency exchange rates mentioned in paragraph   230 - 265(1)(c) if the arrangement had been between 2 separate entities.

The amount of the gain or loss is the amount the standard requires, or would have required, you to recognise.

Note:   See subsection   230 - 40(6).

Election in relation to qualifying forex accounts

  (2)   You make a gain or loss from a * financial arrangement for an income year if:

  (a)   a * foreign exchange retranslation election under subsection   230 - 255(3) applies to the arrangement; and

  (b)   the standard referred to in paragraph   230 - 265(1)(c):

  (i)   requires you to recognise a particular amount in profit or loss in relation to that arrangement for that income year; or

  (ii)   would require you to recognise a particular amount in profit or loss in relation to that arrangement for that income year if that standard applied to the arrangement; or

  (iii)   would require you to recognise a particular amount in profit or loss in relation to that arrangement for that income year if the arrangement had not been an intra - group transaction for the purposes of the standard referred to in paragraph   230 - 265(2)(b); or

  (iv)   would require you to recognise a particular amount in profit or loss in relation to that arrangement for that income year if the arrangement had not been an intra - group transaction for the purposes of the standard referred to in paragraph   230 - 265(2)(b) and if that standard applied to the arrangement.

The amount of the gain or loss is the amount the standard requires, or would require, you to recognise.

Subsidiary leaving group

  (3)   Subsection   (4) applies if:

  (a)   a * head company of a * consolidated group or * MEC group has a * financial arrangement; and

  (b)   a * foreign exchange retranslation election under subsection   230 - 255(1) or (3) applies to the arrangement; and

  (c)   a subsidiary member of the group ceases to be a member of the group at a particular time (the leaving time ); and

  (d)   immediately after the leaving time, the head company no longer has the arrangement because the subsidiary member ceased to be a member of the group.

  (4)   The gain or loss the group makes from the * financial arrangement for the income year in which the leaving time occurs is taken to be the gain or loss that the standard referred to in paragraph   230 - 265(1)(c) would require the group to recognise in profit or loss in relation to the arrangement for that income year if:

  (a)   the circumstances that existed in relation to the arrangement (including its value) immediately before the leaving time had continued to exist until the end of the income year; and

  (b)   any circumstances that arise in relation to the arrangement after the leaving time were disregarded.