INCOME TAX ASSESSMENT ACT 1997 - SECT 230.485 Effect of change of residence--rules for particular methods

INCOME TAX ASSESSMENT ACT 1997 - SECT 230.485

  (1)   The object of this section is to deal with your gains and losses for an income year in which you change residence by:

  (a)   allocating the gains and losses to your periods of Australian and foreign residence in that income year; and

  (b)   determining the assessability of the gains and the deductibility of the losses according to:

  (i)   your residency in each period; and

  (ii)   the sources of the gains and the connection of the losses with your assessable income.

  (2)   This section applies if:

  (a)   you are a foreign resident for part of an income year (the foreign residency period ) and an Australian resident for the other part of the income year (the Australian residency period ); and

  (b)   section   230 - 490 does not apply in respect of the change of residence.

Note:   See section   230 - 490 if you change residence, and after the change the gains and losses you make from the arrangement are not assessable or deductible under this Division.

Realisation method

  (3)   Subsection   (4) applies if:

  (a)   you have a * financial arrangement at the time (the residence change time ):

  (i)   you cease to be an Australian resident; or

  (ii)   you become an Australian resident; and

  (b)   you apply the realisation method to determine the amount of a gain or loss you make from the arrangement.

  (4)   You are taken for the purposes of this Division:

  (a)   to have disposed of the arrangement just before the residence change time for its fair value just before that time; and

  (b)   to have acquired the arrangement again at the residence change time for its fair value at that time.

Accruals and hedging financial arrangement methods

  (5)   Subsection   (6) applies if:

  (a)   assuming that you disregarded this section and subsection   230 - 40(2), you would apply the accruals or hedging financial arrangement method to determine the amount of:

  (i)   a gain included in your assessable income under section   230 - 15 for the income year; or

  (ii)   a loss you can deduct under section   230 - 15 for the income year; and

  (b)   subsection   (4) does not apply in relation to any gain or loss under the arrangement.

  (6)   Apply that method by apportioning the gain or loss on a reasonable basis between those periods so as to work out:

  (a)   a gain or loss from the arrangement for the foreign residency period; and

  (b)   a gain or loss from the arrangement for the Australian residency period.

Fair value, foreign exchange retranslation and financial reports methods

  (7)   Subsection   (8) applies if:

  (a)   assuming that you disregarded this section and subsection   230 - 40(2), you would apply the fair value or foreign exchange retranslation method or the method of relying on your financial reports to determine the amount of:

  (i)   a gain included in your assessable income under section   230 - 15 for the income year; or

  (ii)   a loss you can deduct under section   230 - 15 for the income year; and

  (b)   subsection   (4) does not apply in relation to any gain or loss under the arrangement.

  (8)   Apply that method to work out:

  (a)   a gain or loss from the arrangement for the foreign residency period; and

  (b)   a gain or loss from the arrangement for the Australian residency period.