INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-10 - FINANCIAL TRANSACTIONS  

Division 230 - Taxation of financial arrangements  

Subdivision 230-F - Reliance on financial reports  

SECTION 230-395   Election to rely on financial reports  

Election

230-395(1)  
You may make an election to rely on financial reports if you are eligible under subsection (2) to make the election for the income year in which you make the election. Eligibility to make election

230-395(2)  
You are eligible to make an election to rely on financial reports for an income year if:


(a) you prepare a financial report for that income year in accordance with:


(i) the *accounting principles; or

(ii) if the accounting principles do not apply to the preparation of the financial report - comparable standards for accounting made under a *foreign law that apply to the preparation of the financial report under a foreign law; and


(b) the financial report is audited in accordance with:


(i) the *auditing principles; or

(ii) if the auditing principles do not apply to the auditing of the financial report - comparable standards for auditing made under a foreign law; and


(c) your auditor has not qualified the auditor ' s report on your financial report for that income year or any of the last 4 financial years in a respect that is relevant to the taxation treatment of *financial arrangements; and


(d) your accounting systems and controls and your internal governance processes are reliable; and


(e) no report of an audit or review conducted in the income year, or any of the preceding 4 income years, has included an adverse assessment of your accounting systems in a respect that is relevant to the taxation treatment of financial arrangements.

Note 1:

Paragraph (b) - section 230-500 allows regulations to be made specifying particular foreign accounting and auditing standards as ones that are to be treated as comparable with Australian accounting and auditing principles for the purposes of this Division.

Note 2:

For the purposes of paragraphs (c) and (e), a qualification or assessment may be relevant to the taxation treatment of financial arrangements even though it does not deal with the amount or timing of recognition of gains or losses (but relates, for example, to the reliability of the accounting systems through which information about financial arrangements is recorded).

230-395(3)  
Paragraph (2)(e) does not apply to a report of:


(a) an internal audit or review that you conduct; or


(b) an audit or review of a kind prescribed by the regulations for the purposes of this paragraph. Election irrevocable

230-395(4)  
An election under subsection (1) is irrevocable.

Note:

The election may cease to apply under section 230-425 .


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