If eligible, an entity can use one or more of the elective tax-timing methods.
Although more than one elective tax-timing method can apply to a financial arrangement, the priority rules in section 230-40 determine which tax-timing method takes priority when calculating gains and losses.
The elective tax-timing methods can help reduce compliance costs. This is because the fair value, foreign exchange retranslation and reliance on financial reports methods allow entities to use their financial reports to work out the amount of gain or loss they made from their financial arrangements and how much is attributed to a particular income year for income tax purposes.
The four elective tax-timing methods are: