INCOME TAX ASSESSMENT ACT 1997 - SECT 230.220 Financial arrangements to which fair value election applies

INCOME TAX ASSESSMENT ACT 1997 - SECT 230.220

  (1)   A * fair value election applies in relation to * financial arrangements that:

  (a)   are * Division   230 financial arrangements; and

  (b)   are recognised in financial reports of the kind referred to in paragraph   230 - 210(2)(a) that are audited, or required to be audited, as referred to in paragraph   230 - 210(2)(b); and

  (c)   are assets or liabilities that you are required (whether or not as a result of a choice you make) by:

  (i)   the * accounting principles; or

  (ii)   if the accounting principles do not apply to the preparation of the financial report--comparable standards for accounting that apply to the preparation of the financial report under a * foreign law;

    to classify, designate or (in whole or in part) otherwise treat, in the financial reports, as at fair value through profit or loss; and

  (d)   you start to have in the income year in which you make the election or in a later income year.

This subsection has effect subject to section   230 - 225.

  (2)   If, but for this subsection, paragraphs   (1)(b) and (c) would not be satisfied in relation to a * financial arrangement because the arrangement is an intra - group transaction for the purposes of:

  (a)   * accounting standard AASB 127 (or another accounting standard prescribed by the regulations for the purposes of this paragraph); or

  (b)   if that standard does not apply to the preparation of the financial report--a comparable accounting standard that applies to the preparation of the financial report under a * foreign law;

paragraphs   (1)(b) and (c) are taken to be satisfied in relation to the arrangement.

Note:   Financial arrangements between members of a consolidated group or MEC group are not covered by this subsection because the single entity rule in subsection   701 - 1(1) operates to treat them as not being financial arrangements for the purposes of this Division.

  (3)   If:

  (a)   the * financial arrangement would not be a financial arrangement if the following provisions were disregarded:

  (i)   Division   9A of Part   III of the Income Tax Assessment Act 1936 (which deals with offshore banking units);

  (ii)   Part   IIIB of that Act (which deals with Australian branches of foreign banks etc.); and

  (b)   paragraphs   (1)(b) and (c) would be satisfied in relation to the financial arrangement if the arrangement had been between 2 separate entities; and

  (c)   the * fair value election is made by:

  (i)   if section   121EB of the Income Tax Assessment Act 1936 applies--the OBU mentioned in that section (disregarding the operation of that section); or

  (ii)   if section   160ZZW of that Act applies--the bank mentioned in that section (disregarding the operation of that section);

paragraphs   (1)(b) and (c) are taken to be satisfied in relation to the arrangement.