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 230-185   Reassessment  

230-185(1)  
You must make a fresh assessment of which gains and losses from a *financial arrangement the accruals method should apply to, and which gains and losses from that arrangement the realisation method should apply to, if:


(a) the accruals method, or the realisation method, provided for in this Subdivision applies to gains and losses from the arrangement; and


(b) there is a material change to:


(i) the terms and conditions of the arrangement; or

(ii) circumstances that affect the arrangement.

230-185(2)  
Without limiting subsection (1), the following changes are material changes to the terms and conditions of, or circumstances that affect, the *financial arrangement:


(a) a change to the terms or conditions of the arrangement in a way that alters the essential nature of the arrangement (for example, by altering it from a *debt interest to an *equity interest or from an equity interest to a debt interest);


(b) a change to the terms or conditions of the arrangement in a way that materially affects the contingencies on which significant obligations and rights under the arrangement are dependent (for example, by introducing such a contingency or removing such a contingency);


(c) a change in circumstances that makes something that:


(i) materially affects significant obligations and rights under the arrangement; and

(ii) was previously dependent on a contingency;
no longer dependent on a contingency (because, for example, only one of a number of previously possible contingencies is realised);


(d) a change to:


(i) the terms on which credit is to be provided to an entity that is not a party to the arrangement; or

(ii) the credit rating of an entity that is not a party to the arrangement;
if a significant obligation or right under the arrangement is dependent on that credit being provided or that rating being maintained;


(e) if the arrangement is, or includes, a financial asset or financial liability and you prepare your financial reports 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;
a change to the terms or conditions of, or circumstances that affect, the arrangement that are sufficient for the financial asset or financial liability to be treated as impaired for the purposes of those principles or standards.

230-185(3)  
You do not need to make a reassessment under this section merely because of a change in the fair value of the *financial arrangement.


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