Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-10 - FINANCIAL TRANSACTIONS  

Division 230 - Taxation of financial arrangements  

Subdivision 230-D - Foreign exchange retranslation method  

SECTION 230-265   Financial arrangements to which general election applies  

230-265(1)    
A *foreign exchange retranslation election under subsection 230-255(1) applies to each of your *financial arrangements:


(a) that are Division 230 financial arrangements; and


(b) that are recognised in financial reports of a kind referred to in paragraph 230-255(2)(a) that are audited, or required to be audited, as referred to in paragraph 230-255(2)(b) ; and


(c) in relation to which you are required by:


(i) *accounting standard AASB 121 (or another accounting standard prescribed by the regulations for the purposes of this paragraph); or

(ii) if that standard does not apply to the preparation of the financial report - a comparable accounting standard that applies to the preparation of the financial report under a *foreign law;
to recognise, in the financial reports, amounts in profit or loss (if any) that are attributable to changes in currency exchange rates; and


(d) that you start to have in the income year in which you make the election or in a later income year.

This subsection has effect subject to section 230-270 .

Note:

The election also has consequences under Subdivision 775-F for arrangements that are not Division 230 financial arrangements.


230-265(2)    
If, but for this subsection, paragraphs (1)(b) and (c) would not be satisfied in relation to a *financial arrangement because the arrangement is an intra-group transaction for the purposes of:


(a) *accounting standard AASB 127 (or another accounting standard prescribed by the regulations for the purposes of this paragraph); or


(b) if that standard does not apply to the preparation of the financial report - a comparable accounting standard that applies to the preparation of the financial report under a *foreign law;

paragraphs (1)(b) and (c) are taken to be satisfied in relation to the arrangement.

Note:

Financial arrangements between members of a consolidated group or MEC group are not covered by this subsection because the single entity rule in subsection 701-1(1) operates to treat them as not being financial arrangements for the purposes of this Division.


230-265(3)    
If:


(a) the *financial arrangement would not be a financial arrangement if the following provisions were disregarded:


(i) Division 9A of Part III of the Income Tax Assessment Act 1936 (which deals with offshore banking units);

(ii) Part IIIB of that Act (which deals with Australian branches of foreign banks etc); and


(b) paragraphs (1)(b) and (c) would be satisfied in relation to the financial arrangement if the arrangement had been between 2 separate entities; and


(c) the *foreign exchange retranslation election under subsection 230-255(1) is made by:


(i) if section 121EB of the Income Tax Assessment Act 1936 applies - the OBU mentioned in that section (disregarding the operation of that section); or

(ii) if section 160ZZW of that Act applies - the bank mentioned in that section (disregarding the operation of that section);

paragraphs (1)(b) and (c) are taken to be satisfied in relation to the arrangement.



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