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 230-420   Effect of election to rely on financial reports  

230-420(1)  
If an *election to rely on financial reports applies to a *financial arrangement, the gain or loss you make from the arrangement for an income year is:


(a) the gain or loss that the principles or standards referred to in paragraph 230-395(2)(a) require you to recognise in profit or loss from that arrangement for that income year; or


(b) if subsection 230-410(3) applies to the arrangement - the gain or loss that the principles or standards referred to in paragraph 230-395(2)(a) would have required you to recognise in profit or loss from that arrangement for that income year if the arrangement had not been an intra-group transaction for the purposes of the standard referred to in paragraph 230-410(3)(b) ; or


(c) if subsection 230-410(8) applies to the arrangement - the gain or loss that the principles or standards referred to in paragraph 230-410(1)(d) would have required you to recognise in profit or loss for the year from the asset or liability mentioned in paragraph 230-410(1)(d) if the arrangement had been between 2 separate entities.

Note:

Subsection 230-40(7) provides that this Subdivision does not apply to a gain or loss from a financial arrangement to the extent to which Subdivision 230-E (hedging financial arrangements method) applies to the arrangement.

230-420(2)  
Subsection (3) applies if:


(a) a *head company of a *consolidated group or *MEC group has a *financial arrangement; and


(b) an *election to rely on financial reports applies to the arrangement; and


(c) a subsidiary member of the group ceases to be a member of the group at a particular time (the leaving time ); and


(d) immediately after the leaving time, the subsidiary member has the arrangement.

230-420(3)  


The gain or loss the group makes from the *financial arrangement for the income year in which the leaving time occurs is taken to be the gain or loss that the principles or standards referred to in paragraph 230-395(2)(a) would require the group to recognise in profit or loss from the arrangement for that income year if:


(a) the circumstances that existed in relation to the arrangement (including its value) immediately before the leaving time had continued to exist until the end of the income year; and


(b) any circumstances that arise in relation to the arrangement after the leaving time were disregarded.


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