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Edited version of your written advice
Authorisation Number: 1051459776429
Date of advice: 11 December 2018
Ruling
Subject: Taxation of financial arrangements (TOFA) – hedging financial arrangement
Question 1
Will Fund X’s hedging process satisfy the recording requirements in subsections 230-355(1) and (4) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
Question 2
Will Fund X’s basis for the allocation of hedging gains and losses from the forward foreign exchange contracts (FFX contracts) satisfy the requirements in subsection 230-360(2) of the ITAA 1997?
Answer
Yes.
This ruling applies for the following period:
1 July 2018 to 30 June 2021
The scheme commences on:
1 July 2018
Relevant facts and circumstances
Fund X uses FFX contracts to hedge the foreign currency risk arising from its unit holdings in Fund Y.
The FFX contracts are designated from inception as hedges for accounting purposes.
Fund X documents its hedging process and its basis for allocating hedging gains and losses.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subdivision 230-E
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