Tax and Superannuation Laws Amendment (2013 Measures No. 2) Act 2013 (85 of 2013)

Schedule 8   Taxation of financial arrangements

Part 3   Fair value method

Income Tax Assessment Act 1997

36   Subsection 230-230(1)

Repeal the subsection, substitute:

(1) You make a gain or loss for an income year from a *financial arrangement to which a *fair value election applies if:

(a) the principles or standards mentioned in paragraph 230-210(2)(a) require you to recognise a gain or loss in profit or loss for the income year from the asset or liability mentioned in paragraph 230-220(1)(c); or

(b) in the case of an arrangement to which subsection 230-220(2) applies - the principles or standards referred to in paragraph 230-220(1)(c) would have required you to recognise a gain or loss in profit or loss for the year from the asset or liability mentioned in paragraph 230-220(1)(c) if the arrangement had not been an intra-group transaction for the purposes of the standard referred to in paragraph 230-220(2)(b); or

(c) in the case of an arrangement to which subsection 230-220(3) applies - the principles or standards referred to in paragraph 230-220(1)(c) would have required you to recognise a gain or loss in profit or loss for the year from the asset or liability mentioned in paragraph 230-220(1)(c) if the arrangement had been between 2 separate entities.

Note: Subsection 230-40(7) provides that an election under Subdivision 230-E (hedging financial arrangements method) or Subdivision 230-F (method of relying on financial reports) may override a fair value election.

(1A) The gain or loss you make is the gain or loss the principles or standards require, or would have required, you to recognise in profit or loss as mentioned in subsection (1).