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Edited version of private advice
Authorisation Number: 1052256386926
Date of advice: 28 May 2024
Ruling
Subject: Hedging financial arrangement
Question 1
Will the Fund's hedging process satisfy the recording requirements in Subsections 230- 355(1) and (4) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
Question 2
Will the Fund's basis for the allocation of hedging gains and losses from the forward foreign exchange contracts (FFX contracts) satisfy the requirements in subsection 230-360(2) of the ITAA 1997?
Answer
Yes.
This ruling applies for the following period:
1 July 20xx to 30 June 20xx
The scheme commences on:
1 July 20xx
Relevant facts and circumstances
Fund X uses FFX contracts to hedge the foreign currency risk arising from its unit holdings in Fund Y.
The FFX contracts are designated from inception as hedges for accounting purposes.
Fund X documents its hedging process and its basis for allocating hedging gains and losses.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subdivision 230-E