Income Tax Assessment Act 1997



Division 230 - Taxation of financial arrangements  

Subdivision 230-E - Hedging financial arrangements method  

SECTION 230-350   Derivative financial arrangement and foreign currency hedge  

Derivative financial arrangement

A derivative financial arrangement is a *financial arrangement that you have where:

(a) its value changes in response to changes in a specified variable or variables; and

(b) there is no requirement for a net investment, or there is such a requirement but the net investment is smaller than would be required for other types of financial arrangement that would be expected to have a similar response to changes in market factors.


Paragraph (a) - a specified variable includes an interest rate, foreign exchange rate, credit rating, index or commodity or financial instrument price.

Foreign currency hedge

A foreign currency hedge is a *financial arrangement that you have if:

(a) paragraph (1)(a) is satisfied but paragraph (1)(b) is not; and

(b) the arrangement hedges a risk in relation to movements in currency exchange rates.


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