INCOME TAX ASSESSMENT ACT 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 775 - Foreign currency gains and losses  

Subdivision 775-B - Realisation of forex gains or losses  

SECTION 775-65   Only one forex realisation event to be counted  

Option to buy foreign currency

775-65(1)  
The following table applies to an option to buy a particular *foreign currency if the exercise price is payable in another foreign currency:


Option to buy foreign currency
Item If you are ... and both of these events happen when the option is exercised ... this is the result ...
1 the entity who is capable of exercising the option (a) forex realisation event 1;

(b) forex realisation event 4
ignore forex realisation event 4.
2 the entity who is capable of exercising the option (a) forex realisation event 2;
(b) forex realisation event 4
ignore forex realisation event 4.
3 the entity who granted the option (a) forex realisation event 3;

(b) forex realisation event 4
ignore forex realisation event 3.

Option to sell foreign currency

775-65(2)  
The following table applies to an option to sell a particular *foreign currency if the exercise price is payable in another foreign currency:


Option to sell foreign currency
Item If you are ... and both of these events happen when the option is exercised ... this is the result ...
1 the entity who is capable of exercising the option (a) forex realisation event 3;
(b) forex realisation event 5
ignore forex realisation event 3.
2 the entity who granted the option (a) forex realisation event 3;
(b) forex realisation event 4
ignore forex realisation event 3.

Forward contracts

775-65(3)  
The following table applies to a contract to buy a particular *foreign currency in return for another foreign currency:


Forward contracts
Item If both of these events happen when the contract is carried out ... this is the result ...
1 (a) forex realisation event 1; ignore forex realisation event 4.
(b) forex realisation event 4
2 (a) forex realisation event 2; ignore forex realisation event 4.
(b) forex realisation event 4

Residual rule

775-65(4)  
If:


(a) 2 or more of forex realisation events 1, 2, 3, 4 and 5 happen to you at the same time in relation to the same rights and/or obligations; and


(b) none of the above subsections applies;

apply the forex realisation event that is most appropriate, and ignore the remaining event or events.


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