Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 775 - Foreign currency gains and losses  

Subdivision 775-B - Realisation of forex gains or losses  

SECTION 775-65   Only one forex realisation event to be counted  

Option to buy foreign currency

775-65(1)    
The following table applies to an option to buy a particular *foreign currency if the exercise price is payable in another foreign currency:

Option to buy foreign currency
Item	If you are …	and both of these events happen when the option is exercised …	this is the result …
1	the entity who is capable of exercising the option	(a) forex realisation event 1; (b) forex realisation event 4	ignore forex realisation event 4.
2	the entity who is capable of exercising the option	(a) forex realisation event 2; (b) forex realisation event 4	ignore forex realisation event 4.
3	the entity who granted the option	(a) forex realisation event 3; (b) forex realisation event 4	ignore forex realisation event 3.

Option to sell foreign currency

775-65(2)    
The following table applies to an option to sell a particular *foreign currency if the exercise price is payable in another foreign currency:

Option to sell foreign currency
Item	If you are …	and both of these events happen when the option is exercised …	this is the result …
1	the entity who is capable of exercising the option	(a) forex realisation event 3; (b) forex realisation event 5	ignore forex realisation event 3.
2	the entity who granted the option	(a) forex realisation event 3; (b) forex realisation event 4	ignore forex realisation event 3.

Forward contracts

775-65(3)    
The following table applies to a contract to buy a particular *foreign currency in return for another foreign currency:

Forward contracts
Item	If both of these events happen when the contract is carried out …	this is the result …
1	(a) forex realisation event 1;	ignore forex realisation event 4.
	(b) forex realisation event 4
2	(a) forex realisation event 2;	ignore forex realisation event 4.
	(b) forex realisation event 4

Residual rule

775-65(4)    
If:

(a) 2 or more of forex realisation events 1, 2, 3, 4 and 5 happen to you at the same time in relation to the same rights and/or obligations; and

(b) none of the above subsections applies;

apply the forex realisation event that is most appropriate, and ignore the remaining event or events.