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 775-70   Tax consequences of certain short-term forex realisation gains  

775-70(1)  
The following table has effect unless you have made a choice under section 775-80 :


Tax consequences of certain short-term forex realisation gains
Item In this case ... this is the result ...
1 you make a *forex realisation gain as a result of forex realisation event 2, and:

(a) the right to receive *foreign currency was created in return for the occurrence of a *realisation event in relation to a *CGT asset you own; and
(a) the forex realisation gain is not included in your assessable income under section 775-15; and

(b) CGT event K10 happens.
(b) item 6 of the table in subsection 775-45(7) applies; and
(c) the foreign currency became due for payment within 12 months after the occurrence of the realisation event
2 you make a *forex realisation gain as a result of forex realisation event 4, and:

(a) the obligation to pay *foreign currency was incurred:

    (i) in return for the acquisition of a *CGT asset; or
(a) the forex realisation gain is not included in your assessable income under section 775-15; and

(b) both the *cost base and the *reduced cost base of the CGT asset are reduced by an amount equal to the forex realisation gain.
  (ii) as the second, third, fourth or fifth element of the *cost base of a CGT asset; and
(b) item 9 of the table in subsection 775-55(7) applies; and
(c) the foreign currency became due for payment within 12 months after the time when:
  (i) if subparagraph (a)(i) applies - you acquired the CGT asset (worked out under Division 109); or
    (ii) if subparagraph (a)(ii) applies - you incurred the relevant expenditure
3 you make a *forex realisation gain as a result of forex realisation event 4, and:

(a) the obligation to pay *foreign currency was incurred:

    (i) in return for your starting to hold a *depreciating asset; or

  (ii) as the second element of the cost of a depreciating asset; and

(b) if subparagraph (a)(i) applies - the foreign currency became due for payment within the 24-month period that began 12 months before the time when you began to hold the depreciating asset (worked out under Division 40); and

(c) if subparagraph (a)(ii) applies - the foreign currency became due for payment within 12 months after the time when you incurred the relevant expenditure
(a) the forex realisation gain is not included in your assessable income under section 775-15; and

(b) if:

    (i) the forex realisation event happens in the income year in which the asset ' s *start time occurs; and

  (ii) the asset is not allocated to a pool under Subdivision 40-E or 328-D;

the asset ' s *cost is reduced (but not below zero) by an amount equal to the forex realisation gain; and

(c) if:

    (i) the forex realisation event happens in an income year that is later than the one in which the asset ' s *start time occurs; and

  (ii) the asset is not allocated to a pool under Subdivision 40-E or 328-D;

the depreciating asset ' s *opening adjustable value for the income year in which the forex realisation event happens is reduced (but not below zero) by an amount equal to the forex realisation gain; and

(d) if the asset is allocated to a pool under Subdivision 40-E or 328-D - the opening pool balance of the pool for the income year in which the forex realisation event happens is reduced (but not below zero) by an amount equal to the forex realisation gain.
4 you make a *forex realisation gain as a result of forex realisation event 4, and:

(a) the obligation to pay *foreign currency was incurred as a project amount; and

(b) the foreign currency became due for payment within 12 months after the time when you incurred the project amount; and

(c) the project amount is allocated to a project pool
(a) the forex realisation gain is not included in your assessable income under section 775-15; and

(b) the pool value of the project pool for the income year in which you incurred the project amount is reduced (but not below zero) by an amount equal to the forex realisation gain.

Additional result where forex realisation gain exceeds cost etc.

775-70(2)  
The following table has effect:


Additional result where forex realisation gain exceeds cost etc.
Item If ... and the following conditions are satisfied ... this is the result ...
1 item 3 of the table in subsection (1) applies in relation to a *depreciating asset (a) the forex realisation event happens in the income year in which the asset ' s *start time occurs; and the excess is included in your assessable income.
(b) the asset is not allocated to a pool under Subdivision 40-E or 328-D; and
(c) the forex realisation gain exceeds the asset ' s *cost
2 item 3 of the table in subsection (1) applies in relation to a *depreciating asset (a) the forex realisation event happens in an income year that is later than the one in which the asset ' s *start time occurs; and the excess is included in your assessable income.
(b) the asset is not allocated to a pool under Subdivision 40-E or 328-D; and
(c) the forex realisation gain exceeds the asset ' s *opening adjustable value for the income year in which the forex realisation event happens
3 item 3 of the table in subsection (1) applies in relation to a *depreciating asset (a) the asset is allocated to a pool under Subdivision 40-E or 328-D; and the excess is included in your assessable income.
(b) the forex realisation gain exceeds the opening pool balance of the pool for the income year in which the forex realisation event happens
4 item 4 of the table in subsection (1) applies in relation to a project amount the forex realisation gain exceeds the pool value of the project pool for the income year in which you incurred the project amount the excess is included in your assessable income.

775-70(3)  
To the extent that a *forex realisation gain:


(a) would have been included in your assessable income under section 775-15 if this section had not been enacted; and


(b) would, apart from this subsection, be included in your assessable income under another provision of this Act;

the gain is not included in your assessable income under that other provision.


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