INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-10 - FINANCIAL TRANSACTIONS  

Division 230 - Taxation of financial arrangements  

Subdivision 230-A - Core rules  

Method to be applied to take account of gain or loss

SECTION 230-40   Methods for taking gain or loss into account  

Methods available

230-40(1)  
The methods that can be applied to take account of a gain or loss you make from a *financial arrangement are:


(a) the accruals and realisation methods provided for in Subdivision 230-B ; or


(b) the fair value method provided for in Subdivision 230-C ; or


(c) the foreign exchange retranslation method provided for in Subdivision 230-D ; or


(d) the hedging financial arrangement method provided for in Subdivision 230-E ; or


(e) the method of relying on your financial reports provided for in Subdivision 230-F ; or


(f) a balancing adjustment provided for in Subdivision 230-G .

Note:

The methods referred to in paragraphs (b) to (e) only apply if you make an election under the relevant Subdivision and you must meet certain requirements before you can make such an election.

230-40(2)  
A gain or loss is not taken into account under any of the methods referred to in paragraphs (1)(a), (b), (c) and (e) to the extent to which it is taken into account under the method referred to in paragraph (1)(f) (balancing adjustment).

230-40(3)  
A gain or loss is not taken into account under the method referred to in paragraph (1)(f) (balancing adjustment) to the extent to which it is taken into account under the method referred to in paragraph (1)(d) (hedging financial arrangement method).

Note:

The hedging financial arrangement method may take some account of the gain or loss by reference to the balancing adjustment method (see subsection 230-300(5) ).

Elections override accruals and realisation methods

230-40(4)  
Subdivision 230-B (accruals and realisation method) does not apply to a gain or loss you make from a *financial arrangement:


(a) to the extent that Subdivision 230-C (fair value method) applies to the gain or loss; or

Note:

See subsection (5) of this section and subsection 230-230(4) .


(b) to the extent that Subdivision 230-D (foreign exchange retranslation method) applies to the gain or loss; or


(c) to the extent that Subdivision 230-E (hedging financial arrangements method) applies to the arrangement; or


(d) if Subdivision 230-F (method of relying on financial reports) applies to the arrangement; or


(e) if the arrangement is a financial arrangement under section 230-50 (equity interests etc.).

Priorities among election methods

230-40(5)  
Subdivision 230-C (fair value method) does not apply to a gain or loss you make from a *financial arrangement:


(a) to the extent that Subdivision 230-E (hedging financial arrangements method) applies to the arrangement; or


(b) if Subdivision 230-F (method of relying on financial reports) applies to the arrangement.

230-40(6)  
Subdivision 230-D (foreign exchange retranslation method) does not apply to a gain or loss you make from a *financial arrangement:


(a) if Subdivision 230-C (fair value method) applies to the arrangement; or


(b) to the extent that Subdivision 230-E (hedging financial arrangements method) applies to the arrangement; or


(c) if Subdivision 230-F (method of relying on financial reports) applies to the arrangement.

230-40(7)  
Subdivision 230-F (method of relying on financial reports) does not apply to a gain or loss you make from a *financial arrangement to the extent that Subdivision 230-E (hedging financial arrangements method) applies to the arrangement.


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