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 230-340   Generally whole arrangement must be hedging financial arrangement  

230-340(1)  
Subject to subsections (2), (3) and (4), the whole of a *financial arrangement must satisfy the requirements of subsection 230-335(1) or (3) for the arrangement to be a hedging financial arrangement . Partial hedges

230-340(2)  
If a *financial arrangement:


(a) is an options contract; and


(b) hedges risk only in part by reference to changes in the intrinsic value of the options contract;

the arrangement may be treated as a hedging financial arrangement to the extent to which the part of the arrangement referred to in paragraph (b) satisfies the requirements of subsection 230-335(1) or (3).

230-340(3)  
If a *financial arrangement:


(a) is a forward contract; and


(b) has a spot price element and an interest element;

the arrangement may be treated as a hedging financial arrangement to the extent to which the spot price element satisfies the requirements of subsection 230-335(1) or (3).

Proportionate hedges

230-340(4)  
A specified proportion of a *financial arrangement may be treated as a hedging financial arrangement to the extent to which that proportion of the arrangement satisfies the requirements of subsection 230-335(1) or (3). Separate financial arrangements if partial or proportionate hedge

230-340(5)  
If a part (or parts), or a proportion (or proportions), of a *financial arrangement is (or are) treated as a *hedging financial arrangement under subsection (2), (3) or (4):


(a) the part (or each of the parts), or the proportion (or each of the proportions), of the arrangement that is (or are) treated as a hedging financial arrangement is taken to be a separate financial arrangement for the purposes of this Division; and


(b) the remaining part or proportion (if any) of the arrangement is taken to be a separate financial arrangement for the purposes of this Division.

230-340(6)  
Subsection (5) has effect even if there would not be separate *arrangements under subsection 230-55(4).


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