ATO Interpretative Decision

ATO ID 2004/157

Income Tax

Can there be more than one retranslation period in an income year for a qualifying forex account?
FOI status: may be released

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

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This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Can there be more than one retranslation period under Subdivision 775E of the Income Tax Assessment Act 1997 (ITAA 1997) for a qualifying forex account in one income year?

Decision

Yes. There can be more than one retranslation period under Subdivision 775E of the ITAA 1997 in one income year for a qualifying forex account.

Facts

On 1 July 2004 an entity elects to have the retranslation rules in Subdivision 775-E of the ITAA 1997 apply to an account that is a Qualifying Forex Account (QFA), as defined at subsection 995-1(1) of the ITAA 1997. For accounting purposes the entity undertakes retranslation activities on a monthly basis and wishes to have the tax retranslation periods aligned with the accounting periods.

Reasons for Decision

In determining whether an entity can have multiple retranslation periods in a single income year it is necessary to consider the following:

•: Can a retranslation period be for part of an income year?
•: Can an entity revoke and remake an election in relation to the same account or accounts?

Paragraph 775-285(1)(b) of the ITAA 1997 defines a retranslation period to be a continuous period consisting of an income year or a particular part of an income year during which a choice to retranslate a QFA was in effect. So a retranslation period can be for a continuous part of an income year.

Subsection 775-270(3) of the ITAA 1997 provides that a taxpayer's choice continues in effect until:

(a): the taxpayer ceases to hold the account; or
(b): the account ceases to be a QFA; or
(c): the taxpayer's withdrawal of the choice takes effect.

Where a retranslation choice in relation to one or more QFAs is made and that choice remains in effect for successive retranslation periods, the retranslation period will cease at the end of each period (income year or particular part of income year) and a new retranslation period will commence immediately after the end of the previous period. The opening balance of the new period will be translated using the same exchange rate that is used to translate the closing balance of the previous period (paragraph 775-285(9)(b) of the ITAA 1997).

Where a taxpayer wishes to translate on a monthly basis, the taxpayer may do so provided the choice continues in effect under section 775-270(3). Accordingly, there can be more than one retranslation period in one income year for a qualifying forex account under Subdivision 775E of the ITAA 1997.

Therefore provided a taxpayer remains eligible for a retranslation choice and does not withdraw that choice it will continue to be in place.

Withdrawing an election and making a fresh election

Section 775-275 of the ITAA 1997 allows the withdrawal in writing of the retranslation choice.

Withdrawing a choice does not preclude the taxpayer from making a fresh choice in the future for retranslation treatment in relation to the same account or accounts.

Amendment History

Date of Amendment	Part	Comment
7 August 2015	Facts	Removed paragraph
	Reasons for Decision	Alterations to paragraphs
	Part year retranslation period	Removed heading
	Withdrawing an election and making a fresh election	Alterations to paragraphs
	Legislative reference	Include reference to subsection 775-270(3) and paragraphs 775-285(1)(b) and 775-285(9)(b) of the ITAA 1997.

Date of decision: 9 February 2004

Year of income: Year ended 30 June 2004

Legislative References:
Income Tax Assessment Act 1997
   subsection 995-1(1)
   Subdivision 775-E
   subsection 775-270(3)
   paragraph 775-270(3)(a)
   paragraph 775-270(3)(b)
   paragraph 775-270(3)(c)
   section 775-275
   section 775-285
   paragraph 775-285(1)(b)
   paragraph 775-285(9)(b)

Keywords
Retranslation period
Retranslation election
Qualifying forex account

Siebel/TDMS Reference Number: 3897002 / 1-5TXB6B7;1-D6ESMHW

Business Line: Private Groups and High Wealth Individuals

Date of publication: 20 February 2004
Date reviewed: 17 November 2017

ISSN: 1445-2782

history

	Date:	Version:
	9 February 2004	Original statement
You are here	7 August 2015	Updated statement

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