INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-10 - FINANCIAL TRANSACTIONS  

Division 230 - Taxation of financial arrangements  

Subdivision 230-B - The accruals/realisation methods  

The accruals method

SECTION 230-145   Application of effective interest method where differing income and accounting years  

230-145(1)  
This section applies if:


(a) you prepare a financial report for a year (the first year ); and


(b) you prepare a financial report for the subsequent year (the second year ); and


(c) your income year starts in the first year and ends in the second year; and


(d) both the financial report for the first year and the financial report for the second year are:


(i) prepared in accordance with paragraph 230-210(2)(a) ; and

(ii) audited in accordance with paragraph 230-210(2)(b) ; and


(e) the auditor ' s reports are unqualified for both the financial report for the first year and the financial report for the second year.

230-145(2)  
For the purposes of paragraph 230-140(3)(d) , treat yourself as having prepared a financial report for the income year in which you start to have the arrangement.

230-145(3)  
Work out the gain or loss you make from the arrangement for the income year as follows:


(a) firstly, work out the gain or loss you make from the arrangement for the first year in accordance with paragraph 230-140(3)(f) (treating the first year as an income year);


(b) next, work out how much of the gain or loss mentioned in paragraph (a) is attributable to the income year in accordance with subsection (4);


(c) next, work out the gain or loss you make from the arrangement for the second year in accordance with paragraph 230-140(3)(f) (treating the second year as an income year);


(d) next, work out how much of the gain or loss mentioned in paragraph (c) is attributable to the income year in accordance with subsection (4);


(e) next:


(i) if the amounts worked out under paragraphs (b) and (d) are both gains - add them together to work out the gain from the arrangement for the income year; or

(ii) if the amounts worked out under paragraphs (b) and (d) are both losses - add them together to work out the loss from the arrangement for the income year; or

(iii) if one of the amounts worked out under paragraphs (b) and (d) is a loss and the other is a gain - subtract the loss from the gain. If the result is positive, this is the gain from the arrangement for the income year. If the result is negative, this is the loss from the arrangement for the income year.

230-145(4)  
For the purposes of paragraphs (3)(b) and (d), work out how much of the gain or loss is attributable to the income year by:


(a) using a methodology that is reasonable; and


(b) using the same methodology for the first and second years.

230-145(5)  
(Repealed by No 136 of 2010 )


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