Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-10 - FINANCIAL TRANSACTIONS  

Division 230 - Taxation of financial arrangements  

Subdivision 230-B - The accruals/realisation methods  

The accruals method

SECTION 230-165   Portfolio treatment of premiums and discounts for acquiring portfolio  

230-165(1)  
This section applies in relation to a *financial arrangement if:


(a) you have made an election under section 230-150 in an income year; and


(b) you start to have the financial arrangement in that income year or a later income year; and


(c) the financial arrangement is part of a portfolio of similar financial arrangements; and


(d) a gain or loss to which subsection 230-130(3) applies arises in part from a premium or discount in starting to have the portfolio; and


(e) the gain or loss is not expected to be significant relative to the amount of the gain or loss on the portfolio.

230-165(2)  
For the purposes of this Division, split the gain or loss mentioned in paragraph (1)(d) as follows:


(a) to the extent that it arises from the premium or discount, treat it as a gain or loss from the *financial arrangement (the premium/discount gain or loss ) to which subsection 230-130(3) applies;


(b) to the extent that it does not arise from the premium or discount, treat it as a separate gain or loss from the financial arrangement to which subsection 230-130(3) applies.

Note:

The separate gain or loss mentioned in paragraph (b) may itself be split under subsection 230-160(2) (portfolio fees gain or loss).

Determination of period for premium/discount gain or loss

230-165(3)  
The period over which the premium/discount gain or loss is to be spread is the period that you determine to be the expected life of the portfolio, if:


(a) the basis on which you determine the period accords with the spreading of the premium/discount gain or loss for the purposes of the profit or loss statement of the financial report mentioned in paragraph 230-150(1)(a) ; and


(b) the basis on which you determine the period is set and recorded before you start to have the *financial arrangement; and


(c) the period can be justified objectively; and


(d) the period is reasonable in the circumstances. Spreading the premium/discount gain or loss

230-165(4)  
The method by which the premium/discount gain or loss is to be spread is the method that you determine, if:


(a) the basis on which you determine the method accords with the spreading of the premium/discount gain or loss for the purposes of the profit or loss statement of the financial report mentioned in paragraph 230-150(1)(a) ; and


(b) the method is determined before you start to have the *financial arrangement; and


(c) the method can be justified objectively; and


(d) the method is reasonable in the circumstances.

230-165(5)  
To avoid doubt, subsections (3) and (4) apply despite sections 230-130 and 230-135 .


 

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