Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-10 - FINANCIAL TRANSACTIONS  

Division 230 - Taxation of financial arrangements  

Subdivision 230-G - Balancing adjustment on ceasing to have a financial arrangement  

SECTION 230-440   Exceptions  

Equity interests etc.

230-440(1)  
A balancing adjustment is not made under this Subdivision in relation to a *financial arrangement at a time if:


(a) the arrangement is a financial arrangement under section 230-50 (equity interests etc); and


(b) neither Subdivision 230-C nor Subdivision 230-F apply to the arrangement immediately before that time. Financial arrangements to which hedging financial arrangement elections apply

230-440(2)  
Balancing adjustments are not made under this Subdivision in relation to a *financial arrangement in relation to which a *hedging financial arrangement election applies. Bad debts, margining and conversion into, or exchange for, ordinary shares

230-440(3)  
A balancing adjustment is not made under this Subdivision in relation to the following events:


(a) a *financial arrangement being written off in whole or part as a bad debt;


(b) a financial arrangement that is a *derivative financial arrangement being settled or closed out for margining purposes;


(c) the ceasing of obligations or rights under a financial arrangement that is a *traditional security if:


(i) the ceasing occurs because the traditional security is converted into ordinary shares in, or transferred to, a company that is the issuer of the traditional security or a *connected entity; and

(ii) the traditional security was issued on the basis that it will or may convert into ordinary shares in, or be transferred to, the issuer of the traditional security or the connected entity;


(d) the ceasing of obligations or rights under a financial arrangement that is a traditional security if:


(i) the ceasing occurs because the traditional security is exchanged for ordinary shares in a company that is neither the issuer of the traditional security nor a connected entity; and

(ii) if the ceasing of the obligations or rights occurs because of a disposal - the disposal is to the issuer of the traditional security or a connected entity; and

(iii) the traditional security was issued on the basis that it will or may be exchanged for ordinary shares in the company.
Note:

Paragraph (a) - for the treatment of bad debts, see paragraph 230-190(3)(c) .

Subsidiary member leaving consolidated group or MEC group

230-440(4)  
A balancing adjustment is not made under this Subdivision in relation to a subsidiary member of a *consolidated group or *MEC group that has a *financial arrangement ceasing to be a member of the group.


 

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