When calculating attributable income you must convert all amounts into Australian currency. This conversion is done using the conversion rules under the usual operation of the Act. For more information refer to the fact sheet Forex: The general translation rule, available on our website at www.ato.gov.au
You can choose to calculate attributable income in the sole or predominant currency in which the CFC keeps its accounts (ledgers, journals, statements of financial performance etc) provided you are not an Authorised Deposit taking Institution (ADI) or a non-ADI financial institution. This sole or predominant currency is called functional currency.
When calculating attributable income in functional currency, all amounts that are not in the functional currency (including Australian currency amounts) must be converted into the functional currency. This conversion is done using the conversion rules under the usual operation of the Act. However, when applying these rules, the functional currency is taken not to be foreign currency and all other amounts (including Australian currency) are taken to be foreign currency.
Once you have calculated your attributable income, you then convert that amount into Australian currency.
The choice of functional currency must be in writing but you are not required to notify the Commissioner. You must keep written evidence of the choice for as long as you are required to keep your tax records.
Generally, the choice will apply to the CFC's statutory accounting period immediately following the one in which you make the choice. However, it will apply to the statutory accounting period in which you make the choice where you make the choice within 90 days of the beginning of that statutory accounting period, or by 16 January 2004 (whichever is the later).
The choice to use the functional currency applies until you withdraw it. You can only withdraw a choice where the functional currency has ceased to be the sole or predominant currency in which the CFC keeps its accounts. The withdrawal has effect from immediately after the end of the CFC's statutory accounting period in which the choice is withdrawn. The withdrawal must be in writing and retained with your tax records. You may make a new choice applicable to subsequent statutory accounting periods.