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  

Reassessment and re-estimation

SECTION 230-200   Re-estimation if balancing adjustment on partial disposal  

Re-estimation if balancing adjustment on partial disposal

230-200(1)  
You also re-estimate a gain or loss from a *financial arrangement under subsection (2) if:


(a) the accruals method applies to the gain or loss; and


(b) a balancing adjustment is made in relation to the arrangement under Subdivision 230-G because you transfer to another entity:


(i) a proportionate share of all of your rights and/or obligations under the arrangement; or

(ii) a right or obligation that you have under the arrangement to a specifically identified *financial benefit; or

(iii) a proportionate share of a right or obligation that you have under the arrangement to a specifically identified financial benefit.

You must re-estimate the gain or loss as soon as reasonably practicable after the transfer occurs.

Nature of re-estimation

230-200(2)  


Making a re-estimation in relation to a gain or loss under this subsection involves:


(a) a fresh determination of the amount of the gain or loss disregarding:


(i) *financial benefits; and

(ii) amounts of the gain or loss that have already been allocated to intervals ending before the re-estimation is made;
to the extent to which they are reasonably attributable to the proportionate share, or the right or obligation, referred to in paragraph (1)(b); and


(b) a reapplication of the accruals method to the redetermined gain or loss to make a fresh allocation of the part of that gain or loss that has not already been allocated to intervals ending before the re-estimation is made to intervals ending after the re-estimation is made.

Basis for re-estimation

230-200(3)  
You make the fresh allocation of the gain or loss under subsection (2) by maintaining the rate of return being used and adjusting the amount to which you apply the rate of return to the present value of the estimated future cash flows discounted at the maintained rate of return. The object to be achieved by the fresh allocation is to allow you to bring the redetermined gain or loss properly to account over the remainder of the period over which you spread the gain or loss.


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