Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 775 - Foreign currency gains and losses  

Subdivision 775-B - Realisation of forex gains or losses  

SECTION 775-40   Disposal of foreign currency or right to receive foreign currency - forex realisation event 1  

Forex realisation event 1

775-40(1)    
Forex realisation event 1 is *CGT event A1 that happens if you dispose of:

(a) *foreign currency; or

(b) a right, or a part of a right, to receive foreign currency.

Note:

For extended meaning of right to receive foreign currency , see section 775-135 .

Disposal

775-40(2)    
For the purposes of this section, use subsection 104-10(2) to work out whether you have disposed of:

(a) *foreign currency; or

(b) a right, or a part of a right, to receive foreign currency.

Note:

Under subsection 104-10(2) , a disposal requires a change of ownership.

Time of event

775-40(3)    
For the purposes of this section, subsection 104-10(3) is modified so that the time of the event is when:

(a) the *foreign currency is disposed of; or

(b) the right, or the part of the right, is disposed of.

Forex realisation gain

775-40(4)    
You make a forex realisation gain if:

(a) you make a *capital gain from the event; and

(b) some or all of the capital gain is attributable to a *currency exchange rate effect.

The amount of the forex realisation gain is so much of the capital gain as is attributable to a currency exchange rate effect.

Note:

For currency exchange rate effect , see section 775-105 .

775-40(5)    
For the purposes of paragraph (4)(a), Part 3-1 is modified so that section 118-20 is disregarded in working out the *capital gain.

Note:

Section 118-20 deals with reducing capital gains if an amount is otherwise assessable.

Forex realisation loss

775-40(6)    
You make a forex realisation loss if:

(a) you make a *capital loss from the event; and

(b) some or all of the capital loss is attributable to a *currency exchange rate effect.

The amount of the forex realisation loss is so much of the capital loss as is attributable to a currency exchange rate effect.

Note:

For currency exchange rate effect , see section 775-105 .

No indexation of cost base

775-40(7)    
For the purposes of this section, disregard Division 114 .

Note:

Division 114 deals with indexation of the cost base.

Foreign currency hedging gains and losses

775-40(8)    
For the purposes of this section, disregard section 118-55 .

Note:

Section 118-55 deals with foreign currency hedging gains and losses.

Capital proceeds

775-40(9)    
For the purposes of this section, if the *capital proceeds from the event are more or less than the *market value of:

(a) the *foreign currency; or

(b) the right, or the part of the right;

the capital proceeds from the event are taken to be the market value. (The market value is worked out as at the time of the event.)