INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-10 - FINANCIAL TRANSACTIONS  

Division 230 - Taxation of financial arrangements  

Subdivision 230-E - Hedging financial arrangements method  

SECTION 230-300   Applying hedging financial arrangement method to gains and losses  

230-300(1)  
If you have a *hedging financial arrangement to which a *hedging financial arrangement election applies, the gain or loss you make for an income year from the arrangement is worked out under this section and section 230-310 instead of under Subdivision 230-B, 230-C, 230-D, 230-F or 230-G.

230-300(2)  
Except where subsection (5) applies, the gain or loss you make from the *hedging financial arrangement is equal to the overall gain or loss you make from the arrangement.

230-300(3)  
The gain or loss you make from the *hedging financial arrangement is allocated over income years according to the determination referred to in subsection 230-360(1).

230-300(4)  
If the *hedging financial arrangement is a *foreign currency hedge and is a *debt interest, split a gain or loss you make from the arrangement as follows:


(a) to the extent to which the gain or loss represents a *currency exchange rate effect attributable to the outstanding balance in relation to the debt interest, treat it as a separate gain or loss to which subsections (1) and (2) apply;


(b) to the extent that it does not represent that effect, treat it as a separate gain or loss from the financial arrangement that is allocated under Subdivision 230-B, 230-F or 230-G.

230-300(5)  
If an event listed in the table in subsection 230-305(1) occurs:


(a) the gain or loss you make from the *hedging financial arrangement is equal to any gain or loss that you would have made:


(i) while the arrangement was hedging the *hedged item or items; and

(ii) on ceasing to have the arrangement;
if you ceased to have the arrangement for its fair value at the time of the event; and


(b) this Division further applies as if, just after the event, you had acquired the arrangement for its fair value at the time of the event.

Despite subsection (3), the gain or loss referred to in paragraph (a) is allocated over income years according to the table.

230-300(6)  
(Repealed by No 136 of 2010)

230-300(7)  
Subsection (8) applies if the *hedging financial arrangement:


(a) is a *financial arrangement under section 230-50 (equity interests etc); and


(b) is a *foreign currency hedge; and


(c) is one that you issue.

230-300(8)  
Split a gain or loss you make from the arrangement as follows:


(a) to the extent to which the gain or loss represents a *currency exchange rate effect, treat it as a separate gain or loss to which subsections (1) and (2) apply;


(b) to the extent that it does not represent that effect, treat it as a separate gain or loss from the financial arrangement to which this Division does not apply.

230-300(9)  
Subsections (10) and (11) apply if:


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


(b) a *hedging financial arrangement election 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:


(i) the head company no longer has the arrangement because the subsidiary member ceased to be a member of the group; and

(ii) the head company no longer has the *hedged item (or all of the hedged items) because the subsidiary member ceased to be a member of the group.

230-300(10)  
The gain or loss the group makes from the arrangement for the income year in which the leaving time occurs is taken to be the gain or loss that would be allocated to the group in accordance with this section (disregarding subsection (5)) 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 *financial arrangement after the leaving time were disregarded.

230-300(11)  


For the purposes of applying paragraph (5)(a) to the *head company of the group at the leaving time, disregard item 2 of the table in subsection 230-305(1).

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