INCOME TAX ASSESSMENT ACT 1997 - SECT 230.420 Effect of election to rely on financial reports

INCOME TAX ASSESSMENT ACT 1997 - SECT 230.420

  (1)   If an * election to rely on financial reports applies to a * financial arrangement, the gain or loss you make from the arrangement for an income year is:

  (a)   the gain or loss that the principles or standards referred to in paragraph   230 - 395(2)(a) require you to recognise in profit or loss from that arrangement for that income year; or

  (b)   if subsection   230 - 410(3) applies to the arrangement--the gain or loss that the principles or standards referred to in paragraph   230 - 395(2)(a) would have required you to recognise in profit or loss from 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 - 410(3)(b); or

  (c)   if subsection   230 - 410(8) applies to the arrangement--the gain or loss that the principles or standards referred to in paragraph   230 - 410(1)(d) would have required you to recognise in profit or loss for the year from the asset or liability mentioned in paragraph   230 - 410(1)(d) if the arrangement had been between 2 separate entities.

Note:   Subsection   230 - 40(7) provides that this Subdivision does not apply to a gain or loss from a financial arrangement to the extent to which Subdivision   230 - E (hedging financial arrangements method) applies to the arrangement.

  (2)   Subsection   (3) applies if:

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

  (b)   an * election to rely on financial reports 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 subsidiary member has the arrangement.

  (3)   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 principles or standards referred to in paragraph   230 - 395(2)(a) would require the group to recognise in profit or loss from 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.