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 230-410   Financial arrangements to which the election applies  

230-410(1)  
An *election to rely on financial reports applies in relation to a *financial arrangement that you have if:


(a) the arrangement is a *Division 230 financial arrangement; and


(b) you start to have the arrangement in the income year in which you make the election or in a later income year; and


(c) the arrangement is recognised in financial reports of the kind referred to in paragraph 230-395(2)(a) that are audited as referred to in paragraph 230-395(2)(b); and


(d) if the arrangement is a financial arrangement under section 230-50 - the arrangement is an asset or liability that you are required (whether or not as a result of a choice you make) by:


(i) the *accounting principles; or

(ii) if the accounting principles do not apply to the preparation of the financial report - comparable standards for accounting that apply to the preparation of the financial report under a *foreign law;
to classify or designate, in the financial reports, as at fair value through profit or loss; and


(e) it is reasonably expected that the following is, or will be, the same:


(i) the amount of the overall gain or loss you make from the arrangement (as determined in accordance with the financial reports);

(ii) the amount of the overall gain or loss you make from the arrangement (as determined in accordance with the provisions of this Division if the election under this subsection did not apply to the arrangement); and


(f) the differences between the results of the following methods would reasonably be expected not to be substantial:


(i) the method used in your financial reports to work out the amounts of the gain or loss you make from the arrangement for each income year;

(ii) the method that would be applied by this Division to work out the amounts of those gains or losses if the election did not apply to the arrangement.

This subsection has effect subject to section 230-415.

230-410(2)  


In applying paragraph (1)(f) at the time when you start to have the *financial arrangement, disregard any differences between the results of the methods referred to in subparagraphs (1)(f)(i) and (ii) that are attributable solely to the provision for the possible impairment of debts required by the principles or standards referred to in paragraph 230-395(2)(a).

230-410(3)  
Subsections (4), (5) and (6) apply if, but for this subsection, paragraphs (1)(c) and (d) would not be satisfied in relation to a *financial arrangement because the arrangement is an intra-group transaction for the purposes of:


(a) *accounting standard AASB 127 (or another accounting standard prescribed by the regulations for the purposes of this paragraph); or


(b) if that standard does not apply to the preparation of the financial report - a comparable accounting standard that applies to the preparation of the financial report under a *foreign law.

230-410(4)  
Paragraphs (1)(c) and (d) are taken to be satisfied in relation to the *financial arrangement.

230-410(5)  


Paragraph (1)(e) applies as if the reference in subparagraph (1)(e)(i) to the amount of the overall gain or loss you make from the *financial arrangement (as determined in accordance with the financial reports) were a reference to the amount of that overall gain or loss (as would be determined in accordance with the financial reports if the arrangement had not been an intra-group transaction for the purposes of the standard referred to in subsection (3)).

230-410(6)  


Paragraph (1)(f) applies as if the reference in subparagraph (1)(f)(i) to the method used in your financial reports to work out the amounts of the gain or loss you make from the arrangement for each income year were a reference to the method that would be used in your financial reports to work out those amounts if the arrangement had not been an intra-group transaction for the purposes of the standard referred to in subsection (3).

230-410(7)  
For the purposes of applying subparagraphs (1)(e)(ii) and (f)(ii) to a *financial arrangement, assume that you had made any election that:


(a) you could make under Subdivision 230-C or 230-D; and


(b) could apply to the arrangement.

230-410(8)  
If:


(a) the *financial arrangement would not be a financial arrangement if the following provisions were disregarded:


(i) Division 9A of Part III of the Income Tax Assessment Act 1936 (which deals with offshore banking units);

(ii) Part IIIB of that Act (which deals with Australian branches of foreign banks etc); and


(b) paragraphs (1)(c) and (d) would be satisfied in relation to the financial arrangement if the arrangement had been between 2 separate entities; and


(c) the *election to rely on financial reports is made by:


(i) if section 121EB of the Income Tax Assessment Act 1936 applies - the OBU mentioned in that section (disregarding the operation of that section); or

(ii) if section 160ZZW of that Act applies - the bank mentioned in that section (disregarding the operation of that section);

paragraphs (1)(c) and (d) are taken to be satisfied in relation to the arrangement.


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