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Edited version of private advice
Authorisation Number: 1051782544733
Date of advice: 19 November 2020
Ruling
Subject: Debt portfolios
Question 1
Is a relevant debt portfolio a financial arrangement under section 230-45 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
No
Question 2
Does the election to rely on financial reports made under subsection 230-395(1) of the ITAA 1997cease to apply to each of the individual debts within the relevant debt portfolios under subsection 230-425(3) of the ITAA 1997from the start of the income year commencing 1 July 2018?
Answer
Yes
Question 3
If the answer to Question 2 is yes, when the election to rely on financial reports made under section 230-395 of the ITAA 1997ceases to apply to each of the individual debts within the relevant debt portfolios, is a balancing adjustment required under subsection 230-430(3) of the ITAA 1997?
Answer
Yes
Question 4
Are the gains or losses made by the taxpayer in respect of each of the individual debts in the relevant debt portfolios not sufficiently certain and, therefore are subject to the realisation method under section 230-180 of the ITAA 1997 from the start of the income year commencing 1 July 2018?
Answer
Yes
Question 5
As a result of the introduction of accounting standard AASB 9 and the taxpayer adopting the Amortised Cost method for the financial statements in respect of the relevant debt portfolios for the income year ended 30 June 2019, will section 230-495 of the ITAA 1997 apply?
Answer
No
Relevant facts and circumstances
The taxpayer applied for a private ruling on the tax consequences pursuant to Division 230 of the Income Tax Assessment Act 1997 in respect of debt portfolios held by the taxpayer.