you are:

an individual; or

a superannuation entity, managed investment scheme or an entity substantially similar to a managed investment scheme under foreign law with assets of less than $100 million; or

an ADI, securitisation vehicle or other financial sector entity with an aggregated turnover of less than $20 million; or

another entity with an aggregated turnover of less than $100 million, financial assets of less than $100 million and assets of less than $300 million;

the arrangement is to end not more than 12 months after you start to have it; or

the arrangement is not a qualifying security; or

the arrangement is a financial arrangement under section 230-50 (equity interests etc.) and neither a fair value election, a hedging financial arrangement election nor an election to rely on financial reports applies to the arrangement.

to minimise the extent to which the tax treatment of gains and losses from your *financial arrangements distorts, by providing inappropriate impediments and stimulation, your trading, financing and investment decisions and your risk taking and risk management; and

to do so by aligning more closely the tax and commercial recognition of gains and losses from your financial arrangements in the following ways:

by allocating the gains and losses to income years throughout the life of your financial arrangements on a reasonable basis;

by generally recognising gains and losses on revenue rather than capital account; and

to appropriately take account of, and minimise, your compliance costs.

you make it in gaining or producing your assessable income; or

you necessarily make it in carrying on a *business for the purpose of gaining or producing your assessable income.

you are an *Australian entity; and

you make the loss in deriving income from a foreign source; and

(c) the income is *non-assessable non-exempt income under Income Tax Assessment Act 1936; andsection 23AI, 23AJ or 23AK of the

the loss is, in whole or in part, a cost in relation to a *debt interest you issue that is covered by paragraph 820-40(1)(a).

one or more of the *financial benefits that are taken into account in working out the amount of the loss are *contingent on the economic performance (whether past, current or future) of:

you or a part of your activities; or

a *connected entity of yours or a part of the activities of a connected entity of yours;

one or more of the financial benefits that are taken into account in working out the amount of the loss secure a permanent or enduring benefit for you or a connected entity of yours.

regulations made for the purposes of subsection 25-85(6) provide that a specified number of basis points is to apply for the purposes of applying subsection 25-85(5) in particular circumstances; and

those circumstances exist in relation to the *debt interest;

a gain that is included in your assessable income for an income year under this Division;

a loss that is allowable as a deduction to you for an income year under this Division;

a gain or a loss that is dealt with in accordance with subsection 230-310(4) in relation to an income year.

included in your assessable income; or

allowable as a deduction to you; or

dealt with in accordance with subsection 230-310(4);

included in your assessable income; or

allowable as a deduction to you;

included in your assessable income; or

allowable as a deduction to you;

a *financial benefit has been included in your assessable income under a provision of this Act outside this Division; and

a bad debt deduction would have been allowed under section 25-35 in relation to the financial benefit;

to the extent that it reflects an amount that would be treated, or would reasonably expected to be treated, as *exempt income under a provision of this Act if this Division were disregarded—is exempt income; and

to the extent that it reflects an amount that would be treated or would reasonably expected to be treated, as *non-assessable non-exempt income under a provision of this Act if this Division were disregarded—is not assessable income and is not exempt income.

to the extent that, if it had been a loss, you would have made it in gaining or producing *exempt income—is exempt income; and

to the extent to which, if it had been a loss, you would have made it in gaining or producing *non-assessable non-exempt income—is not assessable income and is not exempt income.

*exempt income; or

*non-assessable non-exempt income.

a *borrowing is made by you, or credit is provided to you, under a *financial arrangement; and

you use some or all of the funds borrowed or the credit provided for a private or domestic purpose.

you are an individual; and

you make a gain or loss from a *derivative financial arrangement; and

the arrangement is held, wholly or in part, for a private or domestic purpose.

the accruals and realisation methods provided for in Subdivision 230-B; or

the fair value method provided for in Subdivision 230-C; or

the foreign exchange retranslation method provided for in Subdivision 230-D; or

the hedging financial arrangement method provided for in Subdivision 230-E; or

the method of relying on your financial reports provided for in Subdivision 230-F; or

a balancing adjustment provided for in Subdivision 230-G.

if Subdivision 230-C (fair value method) applies to the arrangement; or

to the extent that Subdivision 230-D (foreign exchange retranslation method) applies to the gain or loss; or

to the extent that Subdivision 230-E (hedging financial arrangements method) applies to the arrangement; or

if Subdivision 230-F (method of relying on financial reports) applies to the arrangement; or

if the arrangement is a financial arrangement under section 230-50 (equity interests etc.).

to the extent that Subdivision 230-E (hedging financial arrangements method) applies to the arrangement; or

if Subdivision 230-F (method of relying on financial reports) applies to the arrangement.

if Subdivision 230-C (fair value method) applies to the arrangement; or

to the extent that Subdivision 230-E (hedging financial arrangements method) applies to the arrangement; or

if Subdivision 230-F (method of relying on financial reports) applies to the arrangement.

a *cash settlable legal or equitable right to receive a *financial benefit; or

a cash settlable legal or equitable obligation to provide a financial benefit; or

a combination of one or more such rights and/or one or more such obligations;

you also have under the arrangement one or more legal or equitable rights to receive something and/or one or more legal or equitable obligations to provide something; and

for one or more of the rights and/or obligations covered by paragraph (d):

the thing that you have the right to receive, or the obligation to provide, is not a financial benefit; or

the right or obligation is not cash settlable; and

the one or more rights and/or obligations covered by paragraph (e) are not insignificant in comparison with the right, obligation or combination covered by paragraph (a), (b) or (c).

the benefit is money or a *money equivalent; or

in the case of a right—you intend to satisfy or settle it by receiving money or a money equivalent or by starting to have, or ceasing to have, another *financial arrangement; or

in the case of an obligation—you intend to satisfy or settle it by providing money or a money equivalent or by starting to have, or ceasing to have, another financial arrangement; or

you have a practice of satisfying or settling similar rights or obligations as mentioned in paragraph (b) or (c) (whether or not you intend to satisfy or settle the right or obligation in that way); or

you deal with the right or obligation, or with similar rights or obligations, in order to generate a profit from short-term fluctuations in price, from a dealer’s margin, or from both; or

none of paragraphs (a) to (e) applies but you satisfy subsection (3); or

you are able to settle the right or obligation as mentioned in paragraph (b) or (c) (whether or not you intend to satisfy or settle the right or obligation in that way) and you do not have, as your sole or dominant purpose for entering into the arrangement under which you are to receive or provide the financial benefit, the purpose of receiving or delivering the financial benefit as part of your expected purchase, sale or usage requirements.

dealing with the right or obligation, or similar rights or obligations, on a frequent basis, a short-term basis or on a frequent and short-term basis; and

acquiring the right or obligation, or similar rights or obligations, and managing the resulting risk by entering into offsetting arrangements that provide a profit margin.

the *financial benefit is readily convertible into money or a *money equivalent; and

there is a market for the financial benefit that has a high degree of liquidity; and

either:

the amount of the money or money equivalent referred to in paragraph (a) is not subject to a substantial risk of change in value; or

your purpose, or one of your purposes, for entering into the arrangement under which you are to receive or provide the financial benefit, is to receive or deliver the financial benefit so that it may be converted or liquidated into money or a money equivalent (other than in the ordinary course of business).

you have, under an *arrangement:

a legal or equitable right to receive something that is a financial arrangement under this section; or

a legal or equitable obligation to provide something that is a financial arrangement under this section; or

a combination of one or more such rights and/or obligations; and

the right, obligation or combination does not constitute, or form part of, a financial arrangement under subsection 230-45(1).

the nature of the rights and/or obligations;

their terms and conditions (including those relating to any payment or other consideration for them);

the circumstances surrounding their creation and their proposed exercise or performance (including what can reasonably be seen as the purposes of one or more of the entities involved);

whether they can be dealt with separately or must be dealt with together;

normal commercial understandings and practices in relation to them (including whether they are regarded commercially as separate things or as a group or series that forms a whole);

the objects of this Division.

you have (or had) an obligation to provide the financial benefit in relation to the arrangement; and

the financial benefit would not otherwise be treated as one that you have (or had) an obligation to provide under the arrangement; and

the financial benefit plays an integral role in determining:

whether you make a gain or loss from the arrangement; or

the amount of such a gain or loss.

you have (or had) a right to receive the financial benefit in relation to the arrangement; and

the financial benefit would not otherwise be treated as one that you have (or had) a right to receive under the arrangement; and

the financial benefit plays an integral role in determining:

whether you make a gain or loss from the arrangement; or

the amount of such a gain or loss.

a *financial benefit plays the integral role mentioned in paragraph 230-60(1)(c) or (2)(c) in relation to a *financial arrangement; and

either or both of the following apply:

the financial benefit plays that role in relation to one or more other financial arrangements;

(ii) the financial benefit is provided or received for one or more other things that are not financial arrangements.

that financial arrangement; and

each other financial arrangement (if any) in relation to which the benefit plays that role; and

each other thing (if any) mentioned in subparagraph (1)(b)(ii).

you receive a particular *financial benefit under a *financial arrangement; or

one of your rights under a financial arrangement *ceases.

the nature of the rights and obligations under the *financial arrangement; and

the risks associated with each *financial benefit, right and obligation under the arrangement; and

the time value of money.

you are working out the amount of a gain or loss for the purposes of Subdivision 230-B; and

the gain or loss is not an overall gain or loss from the arrangement (within the meaning of that Subdivision) at the time when you start to have the arrangement; and

the benefit or right referred to in paragraph (1)(a) or (b) is an amount that represents, or is a right to an amount that represents:

interest; or

a *return paid or provided on a *debt interest; or

something that is in the nature of interest; or

something that could reasonably be regarded as being a substitute for interest; or

something prescribed by the regulations for the purposes of this paragraph.

you provide a particular *financial benefit under the *financial arrangement; or

one of your obligations under a financial arrangement *ceases.

the nature of the rights and obligations under the *financial arrangement; and

the risks associated with each *financial benefit, right and obligation under the arrangement; and

the time value of money.

you are working out the amount of a gain or loss for the purposes of Subdivision 230-B; and

the gain or loss is not an overall gain or loss from the arrangement (within the meaning of that Subdivision) at the time when you start to have the arrangement; and

the benefit or obligation referred to in paragraph (1)(a) or (b) is an amount that represents, or is an obligation to provide an amount that represents:

interest; or

a *return paid or provided on a *debt interest; or

something that is in the nature of interest; or

something that could reasonably be regarded as being a substitute for interest; or

something prescribed by the regulations for the purposes of this paragraph.

this Division provides that a particular method applies to gains or losses you make from a *financial arrangement; and

that method allows you to choose the particular manner in which you apply that method;

this Division provides that a particular method applies to gains or losses you make from 2 or more *financial arrangements; and

that method allows you to choose the particular manner in which you apply that method;

a right is treated as a right for the purposes of this Division even it is subject to a contingency; and

an obligation is treated as an obligation for the purposes of this Division even if it is subject to a contingency.

to properly recognise gains and losses from *financial arrangements by allocating them to appropriate periods of time; and

to reduce compliance costs by reflecting commercial accounting concepts where appropriate; and

to minimise tax deferral.

the gain or loss is an overall gain or loss from the arrangement; and

the gain or loss is sufficiently certain at the time when you start to have the arrangement.

the gain or loss arises from a *financial benefit that you are to receive or are to provide under the arrangement; and

the gain or loss:

is sufficiently certain at the time when you start to have the arrangement and before you are to receive or provide the benefit; or

becomes sufficiently certain after the time when you start to have the arrangement and before you are to receive or provide the benefit; and

the benefit has not already been taken into account in applying:

the accruals method provided for in this Subdivision; or

the realisation method provided for in this Subdivision;

you are:

an individual; or

an entity (other than an individual) that satisfies subsection 230-455(2), (3) or (4) for the income year in which you start to have the arrangement; and

the arrangement is a *qualifying security; and

you have not made an election under subsection 230-455(7).

a particular amount; or

at least a particular amount.

assume that you will continue to have the *financial arrangement for the rest of its life; and

have regard to the extent of the risk that a *financial benefit that you are not sufficiently certain to provide or receive under the arrangement may reduce the amount of the gain or loss.

a particular amount; or

at least a particular amount;

you receive a particular *financial benefit under the arrangement or one of your rights under the arrangement *ceases;

you provide a particular financial benefit under the arrangement or one of your obligations under the arrangement ceases.

have regard to the extent of the risk that a *financial benefit that you are not sufficiently certain to provide or receive under the arrangement may reduce the amount of the gain or loss; and

disregard any financial benefit that has already been taken into account in working out the amount of a sufficiently certain overall gain or loss from the *financial arrangement under subsection 230-105(1) at the time when you started to have the arrangement; and

disregard any financial benefit (or that part of any financial benefit) that has already been taken into account in working out the amount of a sufficiently certain gain or loss from the *financial arrangement under subsection (1).

*financial benefits that you are sufficiently certain to receive; and

financial benefits that you are sufficiently certain to provide.

it is reasonably expected that you will receive or provide the financial benefit (assuming that you will continue to have the *financial arrangement for the rest of its life); and

at least some of the amount or value of the benefit is, at that time, fixed or determinable with reasonable accuracy.

you must have regard to:

the terms and conditions of the *financial arrangement; and

accepted pricing and valuation techniques; and

the economic or commercial substance and effect of the arrangement; and

the contingencies that attach to the other financial benefits that are to be provided or received under the arrangement; and

you must treat the financial benefit as if it were not contingent if it is appropriate to do so having regard to the contingencies that attach to the other financial benefits that are to be received or provided under the arrangement.

an interest rate; or

a rate that solely or primarily reflects the time value of money; or

a rate that solely or primarily reflects a consumer price index; or

a rate that solely or primarily reflects an index prescribed by the regulations for the purposes of this paragraph;

a rate that solely or primarily reflects a consumer price index; or

a rate that solely or primarily reflects an index prescribed by the regulations for the purposes of this paragraph;

a *financial benefit that you have already provided at a particular time is taken to be one that it is, at that time, a financial benefit that you are sufficiently certain to provide; and

a financial benefit that you have already received at a particular time is taken to be one that it is, at that time, a financial benefit that you are sufficiently certain to receive.

the arrangement consists of these things:

a leg, the *financial benefits to be provided or received in respect of which are calculated by reference to, or are reasonably related to, a notional principal;

another leg, the financial benefits to be provided or received in respect of which also are calculated by reference to, or are reasonably related to, a notional principal;

if the arrangement includes one or more other things—those things; and

when you start to have the arrangement, the value of the notional principal in relation to one leg is equal to the value of the notional principal in relation to the other leg; and

all or part of the notional principal in relation to each leg is provided or received at a time, regardless of whether that time is different in relation to each leg.

work out the *financial benefits from the arrangement as follows:

work out the financial benefits from each thing of which the arrangement consists separately from the financial benefits from each other thing of which the arrangement consists;

ensure that results under subparagraph (i) are consistent with the timing and amount of financial benefits to be actually provided or received under the arrangement; and

work out your gains and losses from the arrangement as follows:

work out the gains and losses from each thing of which the arrangement consists separately from the gains and losses from each other thing of which the arrangement consists;

treat the gains and losses mentioned in subparagraph (i) for all of those things as your gains and losses from the arrangement; and

in working out a gain or loss from a thing for the purposes of subparagraph (b)(i), and, if the accruals method applies to the gain or loss, how it is to be spread and allocated:

if the thing is a leg—take into account the amount of the notional principal at a time and in a manner that properly reflects the way in which the financial benefits in respect of that leg are calculated; and

(ii) if the thing is not a leg—take into account an amount relevant to the thing at a time and in a manner that properly reflects the way in which the financial benefits in respect of that thing are calculated.

you use section 230-130 to work out the period over which the gain or loss is to be spread; and

you use section 230-135 to work out how to allocate the gain or loss to particular intervals within the period over which the gain or loss is to be spread; and

if an interval to which part of the gain or loss is allocated straddles 2 income years, you use section 230-170 to work out how to allocate that part of the gain or loss allocated between those 2 income years.

starts when you start to have the arrangement; and

ends when you will cease to have the arrangement.

can be spread under subsection (3); and

when considered together, represent adequately the overall gain or loss mentioned in subsection (1);

not start earlier than the time when you start to have the *financial arrangement; and

not start earlier than the start of the income year during which it becomes sufficiently certain that you will make the gain or loss.

not end later than the time when you will cease to have the *financial arrangement; and

not end later than the end of the income year during which:

the *financial benefit that gives rise to the gain or loss is to be received or provided; or

the right or obligation whose *ceasing gives rise to the gain or loss is to cease.

compounding accruals; or

a method whose results approximate those obtained using the method referred to in paragraph (a) (having regard to the length of the period over which the gain or loss is to be spread).

not exceed 12 months; and

all be of the same length.

determine a rate of return; and

determine an amount to which you apply the rate of return.

the amount or value; and

the timing;

in a case where there is a discount or premium under the arrangement—when you start to have the arrangement, the annually compounded rate of return applicable to the discount or premium does not exceed 1%; and

when you start to have the arrangement, neither the maximum life of the arrangement (as determined under the terms and conditions of the arrangement) nor the expected life of the arrangement exceeds:

unless subparagraph (ii) applies—30 years; or

if the regulations prescribe a different period for the purposes of this subparagraph—that period; and

each *financial benefit that you have an obligation to provide or a right to receive under the arrangement, and that gives rise to a gain or loss from the arrangement (other than a gain or loss that is attributable to any discount or premium):

relates to a period not exceeding 12 months; and

will be provided or received in the period to which it relates; and

you prepare a financial report for the year in which you start to have the arrangement; and

that financial report is:

prepared in accordance with paragraph 230-210(2)(a); and

audited in accordance with paragraph 230-210(2)(b); and

all gains and losses from the arrangement to which the accrual method applies are spread in a way that is consistent with that financial report.

(a) you prepare a financial report for a year (the first year); and

(b) you prepare a financial report for the subsequent year (the second year); and

your income year starts in the first year and ends in the second year; and

both the financial report for the first year and the financial report for the second year are:

prepared in accordance with paragraph 230-210(2)(a); and

audited in accordance with paragraph 230-210(2)(b); and

the auditor’s reports are unqualified for both the financial report for the first year and the financial report for the second year.

firstly, work out the gain or loss you make from the arrangement for the first year in accordance with paragraph 230-140(3)(f) (treating the first year as an income year);

next, work out how much of the gain or loss mentioned in paragraph (a) is attributable to the income year in accordance with subsection (4);

next, work out the gain or loss you make from the arrangement for the second year in accordance with paragraph 230-140(3)(f) (treating the second year as an income year);

next, work out how much of the gain or loss mentioned in paragraph (c) is attributable to the income year in accordance with subsection (4);

next:

if the amounts worked out under paragraphs (b) and (d) are both gains—add them together to work out the gain from the arrangement for the income year; or

if the amounts worked out under paragraphs (b) and (d) are both losses—add them together to work out the loss from the arrangement for the income year; or

if one of the amounts worked out under paragraphs (b) and (d) is a loss and the other is a gain—subtract the loss from the gain. If the result is positive, this is the gain from the arrangement for the income year. If the result is negative, this is the loss from the arrangement for the income year.

using a methodology that is reasonable; and

using the same methodology for the first and second years.

you prepare a financial report for the income year in accordance with:

the *accounting standards; or

if those standards do not apply to the preparation of the financial report—comparable accounting standards made under a *foreign law that apply to the preparation of the financial report under a foreign law; and

the financial report is audited in accordance with:

the *auditing standards; or

if the auditing standards do not apply to the auditing of the financial report—comparable auditing standards made under a foreign law.

(a) you prepare a financial report for a year (the first year); and

(b) you prepare a financial report for the subsequent year (the second year); and

your income year starts in the first year and ends in the second year; and

both the financial report for the first year and the financial report for the second year are:

prepared in accordance with paragraph 230-150(1)(a); and

audited in accordance with paragraph 230-150(1)(b); and

the auditor’s reports are unqualified for both the financial report for the first year and the financial report for the second year.

firstly, work out the gain or loss you make from the arrangement for the first year in accordance with subsections 230-160(3) and (4) or 230-165(3) and (4) (treating the first year as an income year);

next, work out how much of the gain or loss mentioned in paragraph (a) is attributable to the income year in accordance with subsection (4);

next, work out the gain or loss you make from the arrangement for the second year in accordance with subsections 230-160(3) and (4) or 230-165(3) and (4) (treating the second year as an income year);

next, work out how much of the gain or loss mentioned in paragraph (c) is attributable to the income year in accordance with subsection (4);

next:

if the amounts worked out under paragraphs (b) and (d) are both gains—add them together to work out the gain from the arrangement for the income year; or

if the amounts worked out under paragraphs (b) and (d) are both losses—add them together to work out the loss from the arrangement for the income year; or

if one of the amounts worked out under paragraphs (b) and (d) is a loss and the other is a gain—subtract the loss from the gain. If the result is positive, this is the gain from the arrangement for the income year. If the result is negative, this is the loss from the arrangement for the income year.

using a methodology that is reasonable; and

using the same methodology for the first and second years.

you have made an election under section 230-150 in an income year; and

you start to have the financial arrangement in that income year or a later income year; and

the financial arrangement is part of a portfolio of similar financial arrangements; and

a gain or loss to which subsection 230-130(3) applies arises in part from fees in respect of the *financial arrangement; and

the fees play an integral role in determining the amount of the gain or loss; and

(f) the net amount of the fees is not expected to be significant relative to an overall gain or loss from the arrangement.

(a) to the extent that it arises from the fees, treat it as a gain or loss from the *financial arrangement (the fees gain or loss) to which subsection 230-130(3) applies;

to the extent that it does not arise from the fees, treat it as a separate gain or loss from the financial arrangement to which subsection 230-130(3) applies.

the basis on which you determine the period accords with the spreading of the fees gain or loss for the purposes of the profit or loss statement of the financial report mentioned in paragraph 230-150(1)(a); and

the basis on which you determine the period is set and recorded before any fees in respect of the *financial arrangement fall due; and

the period can be justified objectively; and

the period is reasonable in the circumstances.

the basis on which you determine the method accords with the spreading of the fees gain or loss for the purposes of the profit or loss statement of the financial report mentioned in paragraph 230-150(1)(a); and

the method is determined before any fees in respect of the *financial arrangement fall due; and

the method can be justified objectively; and

the method is reasonable in the circumstances.

you have made an election under section 230-150 in an income year; and

you start to have the financial arrangement in that income year or a later income year; and

the financial arrangement is part of a portfolio of similar financial arrangements; and

a gain or loss to which subsection 230-130(3) applies arises in part from a premium or discount in starting to have the portfolio; and

(e) the gain or loss is not expected to be significant relative to the amount of the gain or loss on the portfolio.

(a) to the extent that it arises from the premium or discount, treat it as a gain or loss from the *financial arrangement (the premium/discount gain or loss) to which subsection 230-130(3) applies;

to the extent that it does not arise from the premium or discount, treat it as a separate gain or loss from the financial arrangement to which subsection 230-130(3) applies.

the basis on which you determine the period accords with the spreading of the premium/discount gain or loss for the purposes of the profit or loss statement of the financial report mentioned in paragraph 230-150(1)(a); and

(b) the basis on which you determine the period is set and recorded before you start to have the *financial arrangement; and

the period can be justified objectively; and

the period is reasonable in the circumstances.

the basis on which you determine the method accords with the spreading of the premium/discount gain or loss for the purposes of the profit or loss statement of the financial report mentioned in paragraph 230-150(1)(a); and

the method is determined before you start to have the *financial arrangement; and

the method can be justified objectively; and

the method is reasonable in the circumstances.

that part of the gain or loss is allocated to an interval under section 230-135; and

that interval falls wholly within that income year.

a part of a gain or loss is allocated to an interval under section 230-135; and

that interval straddles 2 income years;

a *head company of a *consolidated group or *MEC group has a *financial arrangement; and

(b) a subsidiary member of the group ceases to be a member of the group at a particular time (the leaving time); and

immediately after the leaving time, the head company no longer has the arrangement because the subsidiary member ceased to be a member of the group;

a provision of this Subdivision has applied on the basis that you were sufficiently certain, at a particular time, to receive a *financial benefit of, or of at least, a particular amount under the arrangement; and

when you receive the benefit (or the time comes for you to receive the benefit), the amount you receive (or are to receive) is nil or is less than the amount estimated.

a provision of this Subdivision has applied on the basis that you were sufficiently certain at a particular time to receive a *financial benefit of, or of at least, a particular amount under the arrangement; and

when you receive the benefit, or the time comes for you to receive the benefit, the amount you receive, or are to receive, is more than the amount estimated.

a provision of this Subdivision has applied on the basis that you were sufficiently certain at a particular time to provide a *financial benefit of, or of at least, a particular amount under the arrangement; and

when you provide the benefit, or the time comes for you to provide the benefit, the amount you provide, or are to provide, is nil or is less than the amount estimated.

a provision of this Subdivision has applied on the basis that you were sufficiently certain at a particular time to provide a *financial benefit of, or of at least, a particular amount under the arrangement; and

when you provide the benefit, or the time comes for you to provide the benefit, the amount you are to provide is more than the estimated amount referred to in paragraph (a).

is provided; or

if the financial benefit is not provided at the time when it is due to be provided under the arrangement and it is reasonable to expect that the financial benefit will be provided—is due to be provided.

the financial benefit was taken into account in working out the amount of a gain from the arrangement and the gain has been included in your assessable income under this Division; or

the right is one in respect of money that you lent in the ordinary course of your *business of lending money; or

the right is one that you bought in the ordinary course of your business of lending money.

if paragraph (3)(a) applies—so much of the gain referred to in that paragraph as is reasonably attributable to the *financial benefit (or the part of the financial benefit); or

if paragraph (3)(b) applies—the amount of the financial benefit (or the part of the financial benefit); or

if paragraph (3)(c) applies—the amount of the financial benefit (or the part of the financial benefit) but only up to the value of the financial benefit you provided to acquire the right to the financial benefit (or the part of the financial benefit).

the accruals method, or the realisation method, provided for in this Subdivision applies to gains and losses from the arrangement; and

there is a material change to:

the terms and conditions of the arrangement; or

circumstances that affect the arrangement.

a change to the terms or conditions of the arrangement in a way that alters the essential nature of the arrangement (for example, by altering it from a *debt interest to an *equity interest or from an equity interest to a debt interest);

a change to the terms or conditions of the arrangement in a way that materially affects the contingencies on which significant obligations and rights under the arrangement are dependent (for example, by introducing such a contingency or removing such a contingency);

a change in circumstances that makes something that:

materially affects significant obligations and rights under the arrangement; and

was previously dependent on a contingency;

a change to:

the terms on which credit is to be provided to an entity that is not a party to the arrangement; or

the credit rating of an entity that is not a party to the arrangement;

if the arrangement is, or includes, a financial asset or financial liability and you prepare your financial reports in accordance with:

the *accounting standards; or

if those standards do not apply to the preparation of the financial report—comparable accounting standards made under a *foreign law that apply to the preparation of the financial report under a foreign law;

the accruals method applies to the gain or loss; and

circumstances arise that materially affect:

the amount or value; or

the timing;

the circumstances do not give rise to a re-estimation under section 230-200; and

in a case where the gain or loss is spread using the method referred to in paragraph 230-135(2)(b) in accordance with section 230-140 (effective interest method)—the maximum life of the arrangement (as determined under the terms and conditions of the arrangement) is more than 12 months.

unless paragraph (b) applies—as soon as reasonably practicable after you become aware of the circumstances referred to in paragraph (1)(b); or

if paragraph (1)(d) is satisfied and the terms and conditions of the *financial arrangement provide for reset dates to occur no more than 12 months apart—at the relevant reset date.

a material change in market conditions that are relevant to the amount or value of the *financial benefits to be received or provided under the *financial arrangement;

cash flows that were previously estimated becoming known and the difference between the cash flows that become known and the cash flows that were previously estimates is not insignificant;

a right to, or a part of a right to, a financial benefit under the arrangement is written off as a bad debt;

you have made a reassessment under section 230-185 in relation to gains or losses under the arrangement and you have determined on the reassessment under that section that the accruals method should continue to apply to those gains or losses.

a fresh determination of the amount of the gain or loss; and

a reapplication of the accruals method to the redetermined gain or loss to make a fresh allocation of the part of the redetermined gain or loss that has not already been allocated to intervals ending before the re-estimation is made to intervals ending after the re-estimation is made.

if you satisfy subsection (7) in relation to the *financial arrangement—by maintaining the rate of return being used and adjusting the amount to which you apply the rate of return to the present value of the estimated future cash flows discounted at the maintained rate of return;

in any case—by adjusting the rate of return and maintaining the amount to which the adjusted rate of return is to be applied.

financial reports of the kind referred to in paragraph 230-395(2)(a) that are audited as referred to in paragraph 230-395(2)(b) (regardless of whether Subdivision 230-F (reliance on financial reports method) are to apply to a particular financial arrangement); and

*accounting standard AASB 139 (or another accounting standard prescribed by the regulations for the purposes of this paragraph).

the *financial arrangement; or

a financial asset or financial liability that forms part of the arrangement.

if you re-estimate a gain and the amount to which you apply the rate of return increases—you make a gain from the *financial arrangement, for the income year in which you make the re-estimation, equal to the amount of the increase;

if you re-estimate a gain and the amount to which you apply the rate of return decreases—you make a loss from the arrangement, for the income year in which you make the re-estimation, equal to the amount of the decrease;

if you re-estimate a loss and the amount to which you apply the rate of return increases—you make a loss from the arrangement, for the income year in which you make the re-estimation, equal to the amount of the increase;

if you re-estimate a loss and the amount to which you apply the rate of return decreases—you make a gain from the arrangement, for the income year in which you make the re-estimation, equal to the amount of the decrease.

the re-estimation is made wholly or partly on the basis that you have written off, as a bad debt, a right to receive a *financial benefit (or a part of a financial benefit); and

the right:

is not one in respect of money that you lent in the ordinary course of your *business of lending money; and

is not one that you bought in the ordinary course of your business of lending money.

has been assessed under this Division; and

is reasonably attributable to the *financial benefit (or the part of the financial benefit).

the re-estimation is made wholly or partly on the basis that you have written off, as a bad debt, a right to receive a *financial benefit; and

the right is one that you bought in the ordinary course of your *business of lending money.

the accruals method applies to the gain or loss; and

a balancing adjustment is made in relation to the arrangement under Subdivision 230-G because you transfer to another entity:

a proportionate share of all of your rights and/or obligations under the arrangement; or

a right or obligation that you have under the arrangement to a specifically identified *financial benefit; or

a proportionate share of a right or obligation that you have under the arrangement to a specifically identified financial benefit.

a fresh determination of the amount of the gain or loss disregarding:

*financial benefits; and

amounts of the gain or loss that have already been allocated to intervals ending before the re-estimation is made;

a reapplication of the accruals method to the redetermined gain or loss to make a fresh allocation of the part of that gain or loss that has not already been allocated to intervals ending before the re-estimation is made to intervals ending after the re-estimation is made.

to allow you to align the tax treatment of gains and losses from *financial arrangements with the accounting treatment that applies where assets and liabilities are classified or designated as at fair value through profit or loss; and

to facilitate efficient price-making; and

to achieve the above objects without allowing you to obtain an inappropriate tax benefit.

you prepare a financial report for that income year in accordance with:

the *accounting standards; or

if those standards do not apply to the preparation of the financial report—comparable accounting standards made under a *foreign law that apply to the preparation of the financial report under a foreign law; and

the financial report is audited in accordance with:

the *auditing standards; or

if the auditing standards do not apply to the auditing of the financial report—comparable auditing standards made under a foreign law.

(a) you prepare a financial report for a year (the first year); and

(b) you prepare a financial report for the subsequent year (the second year); and

your income year starts in the first year and ends in the second year; and

both the financial report for the first year and the financial report for the second year are:

prepared in accordance with paragraph 230-210(2)(a); and

audited in accordance with paragraph 230-210(2)(b); and

the auditor’s reports are unqualified for both the financial report for the first year and the financial report for the second year.

firstly, work out the gain or loss you make from the arrangement for the first year in accordance with section 230-230 (treating the first year as an income year);

next, work out how much of the gain or loss mentioned in paragraph (a) is attributable to the income year in accordance with subsection (4);

next, work out the gain or loss you make from the arrangement for the second year in accordance with section 230-230 (treating the second year as an income year);

next, work out how much of the gain or loss mentioned in paragraph (c) is attributable to the income year in accordance with subsection (4);

next:

if the amounts worked out under paragraphs (b) and (d) are both gains—add them together to work out the gain from the arrangement for the income year; or

if the amounts worked out under paragraphs (b) and (d) are both losses—add them together to work out the loss from the arrangement for the income year; or

if one of the amounts worked out under paragraphs (b) and (d) is a loss and the other is a gain—subtract the loss from the gain. If the result is positive, this is the gain from the arrangement for the income year. If the result is negative, this is the loss from the arrangement for the income year.

using a methodology that is reasonable; and

using the same methodology for the first and second years.

are *Division 230 financial arrangements; and

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

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

the *accounting standards; or

if those standards do not apply to the preparation of the financial report—comparable accounting standards that apply to the preparation of the financial report under a *foreign law;

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

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

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;

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

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

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

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

the *fair value election is made by:

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

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

the arrangement is an *equity interest; and

you are the issuer of the equity interest.

you are:

an individual; or

an entity (other than an individual) that satisfies subsection 230-455(2), (3) or (4) for the income year in which you start to have the arrangement; and

the arrangement is a *qualifying security; and

you have not made an election under subsection 230-455(7).

the election is made by the *head company of a *consolidated group or *MEC group; and

the election specifies that the election is not to apply to financial arrangements in relation to *life insurance business carried on by a member of the consolidated group or MEC group; and

the arrangement is one that relates to the life insurance business carried on by a member of the consolidated group or MEC group.

the gain or loss that the standards referred to in paragraph 230-210(2)(a) require you to recognise in profit or loss for the income year from the asset or liability mentioned in paragraph 230-220(1)(c); or

if subsection 230-220(2) applies to the arrangement—the gain or loss that the standards referred to in paragraph 230-220(1)(c) would have required you to recognise in profit or loss for the year from the asset or liability mentioned in paragraph 230-220(1)(c) if the arrangement had not been an intra-group transaction for the purposes of the standard referred to in paragraph 230-220(2)(b); or

if subsection 230-220(3) applies to the arrangement—the gain or loss that the standards referred to in paragraph 230-220(1)(c) would have required you to recognise in profit or loss for the year from the asset or liability mentioned in paragraph 230-220(1)(c) if the arrangement had been between 2 separate entities.

a *head company of a *consolidated group or *MEC group has a *financial arrangement; and

a *fair value election applies to the arrangement; and

(c) a subsidiary member of the group ceases to be a member of the group at a particular time (the leaving time); and

immediately after the leaving time, the head company no longer has the arrangement because the subsidiary member ceased to be a member of the group.

the circumstances that existed in relation to the arrangement (including its value) immediately before the leaving time had continued to exist until the end of the income year; and

any circumstances that arise in relation to the financial arrangement after the leaving time were disregarded.

a *financial arrangement is constituted only in part by an asset or liability mentioned in paragraph 230-220(1)(c); and

a *fair value election would apply to the arrangement if it were constituted solely by that asset or liability;

one consisting of the part referred to in paragraph (1)(a); and

one consisting of the remaining part.

to allow you to align the tax treatment of gains and losses from foreign exchange rate changes with the accounting treatment of profits and losses from such changes; and

to achieve this without allowing you to obtain an inappropriate tax benefit.

you prepare a financial report for that income year in accordance with:

the *accounting standards; or

if those standards do not apply to the preparation of the financial report—comparable accounting standards made under a *foreign law that apply to the preparation of the financial report under a foreign law; and

the financial report is audited in accordance with:

the *auditing standards; or

if the auditing standards do not apply to the auditing of the financial report—comparable auditing standards made under a foreign law.

the arrangement is a *qualifying forex account; and

you have not made a *foreign exchange retranslation election under subsection (1) that applies to the account.

from the time when you start to have the arrangement if the election is made before you start to have the arrangement; or

from the start of the income year in which the election is made if you make the election after you start to have the arrangement.

(a) you prepare a financial report for a year (the first year); and

(b) you prepare a financial report for the subsequent year (the second year); and

your income year starts in the first year and ends in the second year; and

both the financial report for the first year and the financial report for the second year are:

prepared in accordance with paragraph 230-255(2)(a); and

audited in accordance with paragraph 230-255(2)(b); and

the auditor’s reports are unqualified for both the financial report for the first year and the financial report for the second year.

firstly, work out the gain or loss you make from the arrangement for the first year in accordance with section 230-280 (treating the first year as an income year);

next, work out how much of the gain or loss mentioned in paragraph (a) is attributable to the income year in accordance with subsection (4);

next, work out the gain or loss you make from the arrangement for the second year in accordance with section 230-280 (treating the second year as an income year);

next, work out how much of the gain or loss mentioned in paragraph (c) is attributable to the income year in accordance with subsection (4);

next:

if the amounts worked out under paragraphs (b) and (d) are both gains—add them together to work out the gain from the arrangement for the income year; or

if the amounts worked out under paragraphs (b) and (d) are both losses—add them together to work out the loss from the arrangement for the income year; or

if one of the amounts worked out under paragraphs (b) and (d) is a loss and the other is a gain—subtract the loss from the gain. If the result is positive, this is the gain from the arrangement for the income year. If the result is negative, this is the loss from the arrangement for the income year.

using a methodology that is reasonable; and

using the same methodology for the first and second years.

that are *Division 230 financial arrangements; and

that are recognised in financial reports of a kind referred to in paragraph 230-255(2)(a) that are audited, or required to be audited, as referred to in paragraph 230-255(2)(b); and

in relation to which you are required by:

*accounting standard AASB 121 (or another accounting standard prescribed by the regulations for the purposes of this paragraph); or

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;

that you start to have in the income year in which you make the election or in a later income year.

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

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;

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

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

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

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

the *foreign exchange retranslation election under subsection 230-255(1) is made by:

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

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

you are:

an individual; or

an entity (other than an individual) that satisfies subsection 230-455(2), (3) or (4) for the income year in which you start to have the arrangement; and

the arrangement is a *qualifying security; and

you have not made an election under subsection 230-455(7).

the election is made by the *head company of a *consolidated group or *MEC group; and

the election specifies that the election is not to apply to financial arrangements in relation to *life insurance business carried on by a member of the consolidated group or MEC group; and

the arrangement is one that relates to the life insurance business carried on by a member of the consolidated group or MEC group.

the respects in which the arrangement does not meet those requirements; and

the extent to which it does not meet those requirements; and

the reasons why it does not meet those requirements; and

if the Commissioner is considering whether to impose conditions under subsection (3)—the likelihood that you will comply with those conditions; and

the objects of this Subdivision.

a *foreign exchange retranslation election under subsection 230-255(1) applies to the arrangement; and

any of the following subparagraphs apply:

the standard referred to in paragraph 230-265(1)(c) requires you to recognise a particular amount in profit or loss in relation to that arrangement for that income year;

if subsection 230-265(2) applies to the arrangement—the standard referred to in paragraph 230-265(1)(c) would have required you to recognise a particular amount in profit or loss in relation to that arrangement for that income year if the arrangement had not been an intra-group transaction for the purposes of the standard referred to in paragraph 230-265(2)(b);

if subsection 230-265(3) applies to the arrangement—the standard referred to in paragraph 230-265(1)(c) would have required you to recognise a particular amount in profit or loss for the year that is attributable to currency exchange rates mentioned in paragraph 230-265(1)(c) if the arrangement had been between 2 separate entities.

a *foreign exchange retranslation election under subsection 230-255(3) applies to the arrangement; and

the standard referred to in paragraph 230-265(1)(c):

requires you to recognise a particular amount in profit or loss in relation to that arrangement for that income year; or

would require you to recognise a particular amount in profit or loss in relation to that arrangement for that income year if that standard applied to the arrangement; or

would require you to recognise a particular amount in profit or loss in relation to that arrangement for that income year if the arrangement had not been an intra-group transaction for the purposes of the standard referred to in paragraph 230-265(2)(b); or

would require you to recognise a particular amount in profit or loss in relation to that arrangement for that income year if the arrangement had not been an intra-group transaction for the purposes of the standard referred to in paragraph 230-265(2)(b) and if that standard applied to the arrangement.

a *head company of a *consolidated group or *MEC group has a *financial arrangement; and

a *foreign exchange retranslation election under subsection 230-255(1) or (3) applies to the arrangement; and

(c) a subsidiary member of the group ceases to be a member of the group at a particular time (the leaving time); and

immediately after the leaving time, the head company no longer has the arrangement because the subsidiary member ceased to be a member of the group.

the circumstances that existed in relation to the arrangement (including its value) immediately before the leaving time had continued to exist until the end of the income year; and

any circumstances that arise in relation to the arrangement after the leaving time were disregarded.

to facilitate the efficient management of financial risk by reducing after-tax mismatches and better aligning tax treatment where hedging takes place; and

to minimise tax deferral and tax motivated practices (including tax deferral arising from such practices as tax advantaged selection from among possible hedges and inappropriate selection of tax treatment).

to the extent to which the gain or loss represents a *currency exchange rate effect attributable to the outstanding balance in relation to the debt interest, treat it as a separate gain or loss to which subsections (1) and (2) apply;

to the extent that it does not represent that effect, treat it as a separate gain or loss from the financial arrangement that is allocated under Subdivision 230-B, 230-F or 230-G.

the gain or loss you make from the *hedging financial arrangement is equal to any gain or loss that you would have made:

while the arrangement was hedging the *hedged item or items; and

on ceasing to have the arrangement;

this Division further applies as if, just after the event, you had acquired the arrangement for its fair value at the time of the event.

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

is a *foreign currency hedge; and

is one that you issue.

to the extent to which the gain or loss represents a *currency exchange rate effect, treat it as a separate gain or loss to which subsections (1) and (2) apply;

to the extent that it does not represent that effect, treat it as a separate gain or loss from the financial arrangement to which this Division does not apply.

a *head company of a *consolidated group or *MEC group has a *hedging financial arrangement; and

a *hedging financial arrangement election applies to the arrangement; and

(c) a subsidiary member of the group ceases to be a member of the group at a particular time (the leaving time); and

immediately after the leaving time:

the head company no longer has the arrangement because the subsidiary member ceased to be a member of the group; and

the head company no longer has the *hedged item (or all of the hedged items) because the subsidiary member ceased to be a member of the group.

the circumstances that existed in relation to the arrangement (including its value) immediately before the leaving time had continued to exist until the end of the income year; and

any circumstances that arise in relation to the *financial arrangement after the leaving time were disregarded.

you make a gain or loss from a *hedging financial arrangement for an income year; and

a *hedging financial arrangement election applies to the arrangement.

if you make a gain from the arrangement—your assessable income includes the gain in accordance with subsection 230-15(1); and

if you make a loss from the arrangement—you may deduct the loss in accordance with subsections 230-15(2) and (3).

a *hedged item is your net investment in a foreign operation (within the meaning of the *accounting standards); and

the foreign operation is carried on through:

a company in which you hold shares; or

(ii) a company that is a subsidiary of yours (within the meaning of the Corporations Act 2001);

you prepare a financial report for that income year in accordance with:

the *accounting standards; or

if those standards do not apply to the preparation of the financial report—comparable accounting standards made under a *foreign law that apply to the preparation of the financial report under a foreign law; and

the financial report is audited in accordance with:

the *auditing standards; or

if the auditing standards do not apply to the auditing of the financial report—comparable auditing standards made under a foreign law.

(a) you prepare a financial report for a year (the first year); and

(b) you prepare a financial report for the subsequent year (the second year); and

your income year starts in the first year and ends in the second year; and

both the financial report for the first year and the financial report for the second year are:

prepared in accordance with paragraph 230-315(2)(a); and

audited in accordance with paragraph 230-315(2)(b); and

the auditor’s reports are unqualified for both the financial report for the first year and the financial report for the second year.

you start to have the arrangement in the income year in which you make the election or in a later income year; and

the requirements in sections 230-355 to 230-365 are met in relation to the arrangement.

the hedging financial arrangement is a *foreign currency hedge; and

you issue the hedging financial arrangement.

you are:

an individual; or

an entity (other than an individual) that satisfies subsection 230-455(2), (3) or (4) for the income year in which you start to have the arrangement; and

the arrangement is a *qualifying security; and

you have not made an election under subsection 230-455(7).

the election is made by the *head company of a *consolidated group or *MEC group; and

the election specifies that the election is not to apply to financial arrangements in relation to *life insurance business carried on by a member of the consolidated group or MEC group; and

the arrangement is one that relates to the life insurance business carried on by a member of the consolidated group or MEC group.

you create, acquire or apply the arrangement for the purpose of hedging a risk or risks in relation to a *hedged item; and

at the time you create, acquire or apply the arrangement, the arrangement satisfies the requirements of the standards referred to in paragraph 230-315(2)(a) to be a hedging instrument; and

the arrangement is recorded as a hedging instrument in:

your financial report (including documents and records on which the report is based); or

if the arrangement hedges a risk in relation to foreign currency—the financial report of a consolidated entity in which you are included (including documents and records on which the report is based);

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

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

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

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

you create, acquire or apply the arrangement for the purpose of hedging a risk or risks in relation to something; and

one or more of subsections (4), (5), (6) or (7) is satisfied; and

the requirements of paragraphs (1)(b) or (c) are not able to be satisfied:

because of the requirements of the standards referred to in paragraph 230-315(2)(a); and

not because of any act or omission on your part to deliberately fail to satisfy those requirements; and

you satisfy the additional recording requirements of subsection 230-355(5); and

you satisfy the requirements (if any) prescribed by the regulations for the purposes of this paragraph.

the *financial arrangement hedges a foreign currency risk in relation to an anticipated dividend from a *connected entity; and

(b) the dividend is *non-assessable non-exempt income under Income Tax Assessment Act 1936.section 23AJ of the

you enter into a *financial arrangement with a *connected entity; and

the standards referred to in paragraph 230-315(2)(a) require that a consolidated financial report be prepared that deals with both your affairs and the affairs of the connected entity; and

the report properly reflects your affairs; and

the arrangement satisfies the requirements of paragraph (1)(a); and

the arrangement would satisfy the requirements of paragraph (1)(b) or (c) but for the fact that the consolidated report disregards the arrangement.

the period for which the risk or risks are hedged does not straddle 2 or more income years; and

the *financial arrangement satisfies the requirements of paragraph (1)(a); and

the arrangement would satisfy the requirements of paragraph (1)(c) if the period for which the risk or risks that are hedged did straddle 2 or more income years.

an asset or a part of an asset; or

a liability or a part of a liability; or

a firm commitment (within the meaning of the *accounting standards) or a part of such a commitment; or

a highly probable forecast transaction (within the meaning of the accounting standards) or a part of such a transaction; or

a net investment in a foreign operation (within the meaning of the accounting standards) or a part of such an investment; or

something prescribed by the regulations for the purposes of this paragraph;

is an options contract; and

hedges risk only in part by reference to changes in the intrinsic value of the options contract;

is a forward contract; and

has a spot price element and an interest element;

the part (or each of the parts), or the proportion (or each of the proportions), of the arrangement that is (or are) treated as a hedging financial arrangement is taken to be a separate financial arrangement for the purposes of this Division; and

the remaining part or proportion (if any) of the arrangement is taken to be a separate financial arrangement for the purposes of this Division.

your documented risk management practices and policies; and

your record keeping practices; and

your accounting systems and controls; and

your internal governance processes; and

the circumstances surrounding the mistake or inadvertence (including the steps (if any) taken to correct or address the mistake or inadvertence and the steps (if any) taken to prevent a recurrence); and

the extent to which the requirements of paragraphs 230-335(1)(b) and (c) have been met; and

the objects of this Subdivision.

its value changes in response to changes in a specified variable or variables; and

there is no requirement for a net investment, or there is such a requirement but the net investment is smaller than would be required for other types of financial arrangement that would be expected to have a similar response to changes in market factors.

paragraph (1)(a) is satisfied but paragraph (1)(b) is not; and

the arrangement hedges a risk in relation to movements in currency exchange rates.

contains a description of the following:

the *hedging financial arrangement in relation to which the election is made;

the nature of the risk or risks being hedged;

the *hedged item or items;

how you will assess the effectiveness of hedging the risk in reducing your exposure to changes in the fair value of the hedged item or items or cash flows or foreign currency exposure attributable to them;

the risk management objective for, and the risk management strategy to be followed in, acquiring, creating or applying the arrangement; and

contains any further details that the *accounting standards require, by way of documentation, for an arrangement to be recorded in a financial report as a hedging instrument; and

sets out the terms of the determinations you make under section 230-360.

at, or soon after, the time when you create, acquire or apply the *hedging financial arrangement; or

at such other time as is provided for in the regulations for the purposes of this paragraph.

that the risk in respect of the particular *hedged item or items was the one hedged by the *hedging financial arrangement;

the extent to which the risk was hedged;

that the rights and/or obligations comprising the hedging financial arrangement were in fact those created, acquired or applied for the purpose of hedging the risk.

you must make or have in place, at, or soon before or soon after, the time when you create, acquire or apply the arrangement, a record that sets out:

a statement of why, and the way in which, the arrangement operates commercially or economically as a hedge of the *hedged item or items; and

the reasons why the arrangement does not satisfy the requirements of the standards referred to in paragraph 230-315(2)(a) to be a hedging instrument;

you must, at the end of each income year during which you have the arrangement, make a record of the accumulated gains and/or losses (whether realised or unrealised) as at the end of that income year from the arrangement or arrangements relating to the hedged item or items that are yet to be included in your assessable income or allowed to you as deductions;

you must have, at the time when you create, acquire or apply the arrangement, a record that sets out your risk management policies and practices;

you must have in place, at the time when you create, acquire or apply the arrangement, internal risk management systems and controls that record the arrangement and the hedged item or items.

all the gains from the *financial arrangement would be assessable income; and

all the losses from the financial arrangement would be allowed to you as deductions.

fairly and reasonably correspond with the basis on which gains, losses or other amounts in relation to the *hedged item or items are recognised or allocated under this Act; and

be objective; and

be sufficiently precise and detailed that, when your gain, loss or other amount from the *hedged item or items is taken into account for the purposes of this Act, the following will be clear from the record made under section 230-355:

the time at which the gain or loss from the *hedging financial arrangement is to be taken into account for the purposes of this Division;

the way in which that gain or loss will be dealt with under section 230-310.

hedging the risk must be expected to be highly effective (within the meaning of the standards referred to in paragraph 230-315(2)(a)), for the period for which you expect to have the *hedging financial arrangement, in reducing your exposure to changes in the fair value of the *hedged item or items or cash flows attributable to your hedged risk; and

the fair value of the hedged item or items or cash flows relating to them and the fair value of the arrangement must be able to be reliably measured; and

you must assess the hedging of the risk by the arrangement:

on a regular basis in accordance with the *accounting standards; and

at least once in each 12 month period;

disposed of each *hedging financial arrangement to which the election applies for its fair value immediately before the election ceases to have effect; and

reacquired the arrangement at its fair value immediately after the election ceases to have effect.

the respects in which it would not do so; and

the extent to which it would not do so; and

the reasons why it would not do so; and

if the Commissioner is considering whether to impose conditions under subsection (2)—the likelihood that you will comply with those conditions; and

the objects of this Subdivision.

your record keeping practices; and

your compliance history; and

any changes that have been made to:

your accounting systems and controls; and

your internal governance processes;

any other relevant matter.

the Commissioner makes a determination under subsection (1) in relation to a *hedging financial arrangement; and

either or both of the following applies:

you fail to determine a matter in relation to the arrangement under section 230-360;

you determine a matter in relation to the arrangement under section 230-360 but the determination does not satisfy the requirements of subsection 230-360(2);

you start to have a *hedging financial arrangement to which your *hedging financial arrangement election applies; and

you do not meet a requirement of section 230-355 or 230-360 in relation to the arrangement; and

you deliberately fail to meet that requirement in order to have this Subdivision not apply to the arrangement.

your record keeping practices; and

your compliance history; and

any changes that have been made to:

your accounting systems and controls; and

your internal governance processes;

any other relevant matter.

to reduce administration and compliance costs by allowing you to align the tax treatment of your gains and losses from a *financial arrangement with the accounting treatment that applies to the arrangement; and

to achieve those objects without your obtaining inappropriate tax benefits.

you prepare a financial report for that income year in accordance with:

the *accounting standards; or

if those standards do not apply to the preparation of the financial report—comparable accounting standards made under a *foreign law that apply to the preparation of the financial report under a foreign law; and

the financial report is audited in accordance with:

the *auditing standards; or

if the auditing standards do not apply to the auditing of the financial report—comparable auditing standards made under a foreign law; and

your auditor has not qualified the auditor’s report on your financial report for that income year or any of the last 4 financial years in a respect that is relevant to the taxation treatment of *financial arrangements; and

your accounting systems and controls and your internal governance processes are reliable; and

no report of an audit or review conducted in the income year, or any of the preceding 4 income years, has included an adverse assessment of your accounting systems in a respect that is relevant to the taxation treatment of financial arrangements.

an internal audit or review that you conduct; or

an audit or review of a kind prescribed by the regulations for the purposes of this paragraph.

(a) you prepare a financial report for a year (the first year); and

(b) you prepare a financial report for the subsequent year (the second year); and

your income year starts in the first year and ends in the second year; and

both the financial report for the first year and the financial report for the second year are:

prepared in accordance with paragraph 230-395(2)(a); and

audited in accordance with paragraph 230-395(2)(b); and

the auditor’s reports are unqualified for both the financial report for the first year and the financial report for the second year.

firstly, work out the gain or loss you make from the arrangement for the first year in accordance with section 230-420 (treating the first year as an income year);

next, work out how much of the gain or loss mentioned in paragraph (a) is attributable to the income year in accordance with subsection (4);

next, work out the gain or loss you make from the arrangement for the second year in accordance with section 230-420 (treating the second year as an income year);

next, work out how much of the gain or loss mentioned in paragraph (c) is attributable to the income year in accordance with subsection (4);

next:

if the amounts worked out under paragraphs (b) and (d) are both gains—add them together to work out the gain from the arrangement for the income year; or

if the amounts worked out under paragraphs (b) and (d) are both losses—add them together to work out the loss from the arrangement for the income year; or

if one of the amounts worked out under paragraphs (b) and (d) is a loss and the other is a gain—subtract the loss from the gain. If the result is positive, this is the gain from the arrangement for the income year. If the result is negative, this is the loss from the arrangement for the income year.

using a methodology that is reasonable; and

using the same methodology for the first and second years.

the reasons for the non-compliance with the standards concerned; and

the remedial action (if any) that you have undertaken to ensure that non-compliance with those standards does not occur in future (such as changes to your accounting systems and controls or to your internal governance structures); and

if you, or your activities, are subject to regulatory oversight or review—any opinions expressed by the regulator about the adequacy of remedial action of the kind referred to in paragraph (b); and

any other relevant matter.

the arrangement is a *Division 230 financial arrangement; and

you start to have the arrangement in the income year in which you make the election or in a later income year; and

the arrangement is recognised in financial reports of the kind referred to in paragraph 230-395(2)(a) that are audited as referred to in paragraph 230-395(2)(b); and

if the arrangement is a financial arrangement under section 230-50—the arrangement is an asset or liability that you are required (whether or not as a result of a choice you make) by:

the *accounting standards; or

if those standards do not apply to the preparation of the financial report—comparable accounting standards that apply to the preparation of the financial report under a *foreign law;

it is reasonably expected that the following is, or will be, the same:

the amount of the overall gain or loss you make from the arrangement (as determined in accordance with the financial reports);

the amount of the overall gain or loss you make from the arrangement (as determined in accordance with the provisions of this Division if the election under subsection (1) did not apply to the arrangement); and

the differences between the results of the following methods would reasonably be expected not to be substantial:

the method used in your financial reports to work out the amounts of the gain or loss you make from the arrangement for each income year;

the method that would be applied by this Division to work out the amounts of those gains or losses if the election did not apply to the arrangement.

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

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.

you could make under Subdivision 230-C or 230-D; and

could apply to the arrangement.

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

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

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

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

the *election to rely on financial reports is made by:

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

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

the arrangement is an *equity interest; and

you are the issuer of the equity interest.

you are:

an individual; or

an entity (other than an individual) that satisfies subsection 230-455(2), (3) or (4) for the income year in which you start to have the arrangement; and

the arrangement is a *qualifying security; and

you have not made an election under subsection 230-455(7).

the election is made by the *head company of a *consolidated group or *MEC group; and

the election specifies that the election is not to apply to financial arrangements in relation to *life insurance business carried on by a member of the consolidated group or MEC group; and

the arrangement is one that relates to the life insurance business carried on by a member of the consolidated group or MEC group.

the gain or loss that the standards referred to in paragraph 230-395(2)(a) require you to recognise in profit or loss from that arrangement for that income year; or

if subsection 230-410(3) applies to the arrangement—the gain or loss that the standards referred to in paragraph 230-395(2)(a) would have required you to recognise in profit or loss from that arrangement for that income year if the arrangement had not been an intra-group transaction for the purposes of the standard referred to in paragraph 230-410(3)(b); or

if subsection 230-410(8) applies to the arrangement—the gain or loss that the standards referred to in paragraph 230-410(1)(d) would have required you to recognise in profit or loss for the year from the asset or liability mentioned in paragraph 230-410(1)(d) if the arrangement had been between 2 separate entities.

a *head company of a *consolidated group or *MEC group has a *financial arrangement; and

an *election to rely on financial reports applies to the arrangement; and

(c) a subsidiary member of the group ceases to be a member of the group at a particular time (the leaving time); and

immediately after the leaving time, the subsidiary member has the arrangement.

the circumstances that existed in relation to the arrangement (including its value) immediately before the leaving time had continued to exist until the end of the income year; and

any circumstances that arise in relation to the arrangement after the leaving time were disregarded.

the arrangement is not one that you are required (whether or not as a result of a choice you make) by the standards referred to in paragraph 230-395(2)(a) to classify or designate, in your financial reports, as at fair value through profit or loss; and

the election under subsection 230-395(1) ceases to apply to the arrangement because the arrangement fails to satisfy the requirements of paragraph 230-410(1)(e) or (f); and

the arrangement ceases to satisfy the requirements of that paragraph because the arrangement becomes impaired for the purposes of those standards.

you transfer to another entity all of your rights and/or obligations under a *financial arrangement; or

all of your rights and/or obligations under a financial arrangement otherwise cease; or

you transfer to another entity:

a proportionate share of all of your rights and/or obligations under a financial arrangement; or

a right or obligation that you have under a financial arrangement to a specifically identified *financial benefit; or

a proportionate share of a right or obligation that you have under a financial arrangement to a specifically identified financial benefit; or

an *arrangement that is a *Division 230 financial arrangement ceases to be a financial arrangement.

you retain the right but assume a new obligation; and

your assumption of the new obligation has the same effect, in substance, as transferring the right to another entity; and

the new obligation arises only to the extent to which the right to *financial benefits under the arrangement is satisfied; and

you cannot sell or pledge the right (other than as security in relation to the new obligation); and

you must, under the new obligation, provide financial benefits you receive in relation to the right to the entity to which you owe the new obligation without delay.

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

neither Subdivision 230-C nor Subdivision 230-F apply to the arrangement immediately before that time.

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

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

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

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

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;

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

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

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

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

the total of all the *financial benefits you have received under the *financial arrangement;

the total of the amounts that have been allowed to you as deductions, because of circumstances that have occurred before the transfer or cessation, for losses from the arrangement;

the total of the other amounts that would have been allowed to you as deductions, because of circumstances that have occurred before the transfer or cessation, for losses from the arrangement if all your losses from the arrangement were allowable as deductions;

(d) the total of the amounts that will be allowed to you as deductions after the transfer or cessation because of a balancing adjustment under subitems 104(12) to (18) of the Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009 to the extent to which those amounts are attributable to the arrangement;

(e) the total of the amounts that will be allowed to you as deductions after the transfer or cessation because of sections 230-160 and 230-165 to the extent to which those amounts are attributable to the arrangement.

the total of all the *financial benefits you have provided under the *financial arrangement;

the total of the amounts that have been included in your assessable income, because of circumstances that have occurred before the transfer or cessation, as gains from the arrangement;

the total of the other amounts that would have been included in your assessable income, because of circumstances that have occurred before the transfer or cessation, as gains from the arrangement if all your gains from the arrangement were assessable;

(d) the total of the amounts that will be included in your assessable income after the transfer or cessation because of a balancing adjustment under subitems 104(12) to (18) of the Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009 to the extent to which those amounts are attributable to the arrangement.

(e) the total of the amounts that will be included in your assessable income after the transfer or cessation because of sections 230-160 and 230-165 to the extent to which those amounts are attributable to the arrangement.

the amounts referred to in step 1; and

the amounts referred to in step 2;

the amounts referred to in step 1; and

the amounts referred to in step 2;

as if the references to:

the amounts referred to in step 1; and

the amounts referred to in step 2;

by reducing those amounts by applying the proportion referred to in subparagraph 230-435(1)(c)(iii) to them.

the nature of the rights and obligations under the *financial arrangement; and

the risks associated with each *financial benefit, right and obligation under the arrangement; and

the time value of money.

the arrangement is a financial arrangement under section 230-45; and

either:

you acquired goods or other property (other than goods that are, or property that is, money or a *money equivalent) or services (other than services that are a money equivalent) from another entity and the *financial benefits you are to provide under the arrangement are consideration for those goods, that property or those services; or

you provided goods or other property (other than goods that are, or other property that is, money or a money equivalent) or services (other than services that are a money equivalent) to another entity and the financial benefits you are to receive under the arrangement are consideration for those goods, that property or those services; and

the period between the following is not more than 12 months:

the time when you are to provide or receive the consideration (or a substantial proportion of it);

the time when you acquired or provided the property, goods or services (or a substantial proportion of them); and

the arrangement is not a *derivative financial arrangement for any income year; and

a *fair value election does not apply to the arrangement.

you are:

an individual; or

(ii) a superannuation entity (Superannuation Industry (Supervision) Act 1993), a managed investment scheme (within the meaning of the Corporations Act 2001) or an entity with a similar status to such a scheme under a *foreign law relating to corporate regulation; orwithin the meaning of section 10 of the

(iii) an *ADI, a *securitisation vehicle, an entity that is required to register under the Financial Sector (Collection of Data) Act 2001 or an entity that would be required to register under that Act if it were a corporation; or

an entity other than an entity of a kind mentioned in subparagraph (i), (ii) or (iii); and

where subparagraph (a)(ii) applies—you satisfy subsection (2) for the income year in which you start to have the arrangement; and

where subparagraph (a)(iii) applies—you satisfy subsection (3) for the income year in which you start to have the arrangement; and

where subparagraph (iv) applies—you satisfy subsection (4) for the income year in which you start to have the arrangement; and

either:

the arrangement is to end not more than 12 months after you start to have it; or

the arrangement is not a *qualifying security.

(a) the value of the entity’s assets (see subsection (5)) for the income year (worked out at the end of the income year) is less than $100 million if the income year is the one in which the entity comes into existence; or

the value of the entity’s assets for the immediately preceding income year (worked out at the end of that immediately preceding income year) is less than $100 million if the income year is an income year after the one in which the entity comes into existence.

the entity’s *aggregated turnover for the income year (worked out at the end of the income year) is less than $20 million if the income year is the one in which the entity comes into existence; or

the entity’s aggregated turnover for the immediately preceding income year (worked out at the end of that immediately preceding income year) is less than $20 million if the income year is an income year after the one in which the entity comes into existence.

either:

the entity’s *aggregated turnover for the income year (worked out at the end of the income year) is less than $100 million if the income year is the one in which the entity comes into existence; or

the entity’s aggregated turnover for the immediately preceding income year (worked out at the end of that immediately preceding income year) is less than $100 million if the income year is an income year after the one in which the entity comes into existence; and

either:

(i) the value of the entity’s financial assets (see subsection (5)) for the income year (worked out at the end of the income year) is less than $100 million if the income year is the one in which the entity comes into existence; or

the value of the entity’s financial assets for the immediately preceding income year (worked out at the end of that immediately preceding income year) is less than $100 million if the income year is an income year after the one in which the entity comes into existence; and

either:

(i) the value of the entity’s assets (see subsection (5)) for the income year (worked out at the end of the income year) is less than $300 million if the income year is the one in which the entity comes into existence; or

the value of the entity’s assets for the immediately preceding income year (worked out at the end of that immediately preceding income year) is less than $300 million if the income year is an income year after the one in which the entity comes into existence.

if the entity applies *accounting standard AAS 25 in preparation of its financial reports—that accounting standard or another accounting standard prescribed by the regulations for the purposes of this paragraph; or

if paragraph (a) does not apply and the entity prepares its financial reports in accordance with the accounting standards—the entity’s financial reports; or

if paragraphs (a) and (b) do not apply and the entity prepares its financial reports in accordance with an accounting standard comparable to accounting standard AAS 25 under a *foreign law—that comparable standard; or

if paragraphs (a), (b) and (c) do not apply—commercially accepted valuation principles.

you have made an election under subsection (7) in that income year or an earlier income year; and

you start to have the arrangement after the beginning of the income year in which you make the election.

(a) an *arrangement to which Income Tax Assessment Act 1936 applies; orDivision 42A (about leases of luxury cars) of Schedule 2E to the

an arrangement to which Division 240 of this Act (about arrangements treated as a sale and loan) applies; or

an arrangement that relates to an asset to which Division 250 of this Act (about assets put to tax preferred use) applies; or

an arrangement that, in substance or effect, depends on the use of a specific asset that is:

real property; or

goods or a personal chattel (other than money or a *money equivalent); or

intellectual property;

an arrangement that is a licence to use:

real property; or

goods or a personal chattel (other than money or a money equivalent); or

intellectual property;

there is only one class of interest in the partnership or trust; or

the interest is an *equity interest in the partnership or trust; or

(c) for a right or obligation relating to a trust—the trust is managed by a funds manager or custodian, or a responsible entity (as defined in the Corporations Act 2001) of a registered scheme (as so defined).

you are not a *life insurance company that is the insurer under the policy; and

the policy is an annuity that is a *qualifying security.

you are not a *general insurance company; and

the policy is a *derivative financial arrangement.

the *financial arrangement is the subject of a *fair value election or an *election to rely on financial reports; or

the financial arrangement is a *derivative financial arrangement; or

the guarantee or indemnity is given in relation to a financial arrangement.

a right to receive, or an obligation to provide, consideration for providing personal services;

a right, or obligation, arising from the administration of a deceased person’s estate;

a right to receive, or an obligation to provide, a gift under a deed;

a right to receive, or an obligation to provide, a *financial benefit by way of maintenance:

to an individual who is or has been the *spouse of the person liable to provide the benefit; or

to or for the benefit of an individual who is or has been a child of the person liable to provide the benefit; or

to or for the benefit of an individual who is or has been a child of an individual who is or has been a spouse of the person liable to provide the benefit;

a right to receive, or an obligation to provide, a financial benefit in relation to personal injury to an individual;

a right to receive, or an obligation to provide, a financial benefit in relation to an injury to an individual’s reputation.

even if the person to whom the *financial benefit is to be provided is not the individual who was injured; and

even if the personal injury to the individual takes the form of:

a wrong to the individual; or

illness of the individual.

a right of a dependant of a member to receive financial benefits or an obligation to provide financial benefits to a dependant of a member; and

a right or obligation arising from an interest in:

a *complying superannuation fund or *non-complying superannuation fund; or

a *pooled superannuation trust; or

an *approved deposit fund; or

an *RSA.

a business; or

shares in a company that operates a business; or

interests in a trust that operates a business;

you cease to have a *financial arrangement (or part of a financial arrangement); and

you make a loss from ceasing to have the arrangement (or that part of the arrangement); and

(c) if the arrangement is a marketable security (Income Tax Assessment Act 1936):within the meaning of section 70B of the

you did not acquire the arrangement in the ordinary course of trading on a securities market (within the meaning of that section); and

at the time you acquired the arrangement, it was not open to you to acquire an identical financial arrangement in the ordinary course of trading on a securities market; and

if the arrangement is a marketable security—you did not dispose of the arrangement in the course of trading on a securities market; and

it would be concluded that you ceased to have the arrangement wholly or partly because there was an apprehension or belief that the other party or other parties to the arrangement were, or would be likely to be, unable or unwilling to discharge all their liabilities to pay amounts under the arrangement.

the financial position of the other party or parties to the *financial arrangement; and

the perceptions of the financial position of the other party or parties to the arrangement; and

other relevant matters.

if section 245-90 (about agreements to forgo capital losses or revenue reductions) of that Schedule does not apply—the debt’s net forgiven amount as defined in paragraph 245-85(2)(a) of that Schedule; or

if that section does apply—the debt’s provisional net forgiven amount as defined in paragraph 245-85(2)(b) of that Schedule.

a right or obligation arising under a *retirement village residence contract;

a right or obligation arising under a *retirement village services contract;

a right or obligation arising under an *arrangement under which *residential care or *flexible care is provided.

(a) a retirement village residence contract is a contract that gives rise to a right to occupy *residential premises in a *retirement village; and

(b) a retirement village services contract is a contract under which a resident of a retirement village is provided with general or personal services in the retirement village.

a *franked distribution (including a franked distribution that *flows indirectly to you); or

a right to receive a franked distribution (including a franked distribution that will flow indirectly to you).

allocating the gains and losses to your periods of Australian and foreign residence in that income year; and

determining the assessability of the gains and the deductibility of the losses according to:

your residency in each period; and

the sources of the gains and the connection of the losses with your assessable income.

(a) you are a foreign resident for part of an income year (the foreign residency period) and an Australian resident for the other part of the income year (the Australian residency period); and

section 230-490 does not apply in respect of the change of residence.

(a) you have a *financial arrangement at the time (the residence change time):

you cease to be an Australian resident; or

you become an Australian resident; and

you apply the realisation method to determine the amount of a gain or loss you make from the arrangement.

to have disposed of the arrangement just before the residence change time for its fair value just before that time; and

to have acquired the arrangement again at the residence change time for its fair value at that time.

assuming that you disregarded this section and subsection 230-40(2), you would apply the accruals or hedging financial arrangement method to determine the amount of:

a gain included in your assessable income under section 230-15 for the income year; or

a loss you can deduct under section 230-15 for the income year; and

subsection (4) does not apply in relation to any gain or loss under the arrangement.

a gain or loss from the arrangement for the foreign residency period; and

a gain or loss from the arrangement for the Australian residency period.

assuming that you disregarded this section and subsection 230-40(2), you would apply the fair value or foreign exchange retranslation method or the method of relying on your financial reports to determine the amount of:

a gain included in your assessable income under section 230-15 for the income year; or

a loss you can deduct under section 230-15 for the income year; and

subsection (4) does not apply in relation to any gain or loss under the arrangement.

a gain or loss from the arrangement for the foreign residency period; and

a gain or loss from the arrangement for the Australian residency period.

(a) you cease to be an Australian resident at a particular time (the residence change time); and

you have a *financial arrangement at the residence change time; and

at the residence change time you expect that any gains and losses you make from the arrangement after that time will not be assessable or deductible under this Division.

to have disposed of the arrangement just before that time for its fair value just before that time; and

to have acquired the arrangement again at the residence change time for its fair value at that time.

one of these methods apply to take account of a gain or loss you make from a *financial arrangement:

the fair value method provided for in Subdivision 230-C; or

the foreign exchange retranslation method provided for in Subdivision 230-D; or

the method of relying on your financial reports provided for in Subdivision 230-F; and

there is a change in, or in the application of, the relevant standards (as mentioned in section 230-230 (fair value method), 230-280 (foreign exchange retranslation method) or 230-420 (method of relying on financial reports)) that apply in relation to the arrangement; and

that change applies to a particular income year and later years; and

(d) as a result of the change, those standards require you to recognise in your statement of financial position an amount (the equity amount), in order to avoid the need to increase or decrease gains or losses recognised in profit or loss from the financial arrangement in respect of previous income years.

specify that particular standards that apply under a *foreign law are to be taken for the purposes of this Division to be comparable to the *accounting standards; and

specify that particular standards that apply under a foreign law are to be taken for the purposes of this Division to be comparable to the *auditing standards.

you obtain for providing the thing; or

you provide for acquiring the thing;

the market value of the thing will be, or form part of, those financial benefits for the purposes of section 230-445; and

in the case of a non arm’s length transaction, the amount of those financial benefits may be affected by section 230-510.

(a) you start or cease to have the *financial arrangement as mentioned in subsection (1) under an arrangement (the starting or ceasing arrangement); and

the thing is itself a *Division 230 financial arrangement; and

(c) the starting or ceasing arrangement is not itself a Division 230 financial arrangement.

treat yourself as providing a thing to another entity if:

you have provided, or are to provide, the thing to the other entity; or

you cease to have, have ceased to have or are to cease to have, the thing; or

the other entity starts to have, has started having or is to start to have, the thing; and

treat yourself as acquiring a thing if:

another entity has provided, or is to provide, the thing to you; or

another entity ceases to have, has ceased to have or is to cease to have, the thing; or

you start to have, have started to have or are to start to have, the thing.

a balancing adjustment is made under Subdivision 230-G in relation to a *Division 230 financial arrangement you have; and

if the balancing adjustment was made because of paragraph 230-435(1)(b) or (d) (cessations without transfer)—the arrangement is not a *debt interest or loan.

disregard the amount of the *financial benefit (if any) that you provided or received in relation to you starting to have the arrangement; and

(b) instead, treat yourself as having provided or received a financial benefit in relation to you starting to have the arrangement that is equal to the amount of the financial benefit that you would have provided or received if the parties to the dealing mentioned in subsection (2) were dealing at *arm’s length in relation to the dealing.

disregard the amount of the *financial benefit (if any) that you provide or receive under the *financial arrangement as a result of the dealing; and

instead, treat yourself as providing or receiving a financial benefit under the financial arrangement as a result of the dealing that is equal to the amount of the financial benefit that you would have provided or received if the parties to the dealing were dealing at *arm’s length in relation to the dealing.

disregard the amount of the *financial benefit (if any) that you provide or receive in relation to the balancing adjustment; and

(b) instead, treat yourself as providing or receiving a financial benefit in relation to the balancing adjustment that is equal to the amount of the financial benefit that you would have provided or received if the parties to the dealing mentioned in subsection (6) were dealing at *arm’s length in relation to the dealing.

(a) disregarding this Division, a provision mentioned in subsection (2) makes an adjustment to an amount (including a nil amount) (the relevant amount); and

the relevant amount is relevant in determining the amount of a gain or loss you make from a *Division 230 financial arrangement.

(a) Income Tax Assessment Act 1936;section 52A of the

(b) Income Tax Assessment Act 1936;section 73B of the

(c) Income Tax Assessment Act 1936;Division 16J of Part III of the

(d) Income Tax Assessment Act 1936;Division 16K of Part III of the

(e) subsection 245-65(2) in Schedule 2C to the Income Tax Assessment Act 1936;

(f) Income Tax Assessment Act 1997.section 775-40 of the

a shifting of value that has consequences under Division 723; or

a *value shift that has consequences under Division 725; or

an *indirect value shift that has consequences under Division 727; or

(d) a shifting of value that has consequences analogous to those under Income Tax Assessment Act 1936.Division 723, 725 or 727 under a repealed provision of this Act or of the

the other entity is a *connected entity of yours; and

the report is a consolidated financial report that deals with both your affairs and the affairs of the connected entity; and

the report properly reflects your affairs.

you are an entity that trades or deals both in:

that commodity; and

financial arrangements whose values change in response to changes in the price or value of that commodity; and

you hold that commodity for the purposes of dealing in the commodity; and

a *fair value election or an *election to rely on financial reports applies to financial arrangements that you start to have when you start to have the commodity; and

the commodity is an asset that you are required (whether or not as a result of a choice you make) by:

the *accounting standards; or

if those standards do not apply to the preparation of the financial report—comparable accounting standards that apply to the preparation of the financial report under a *foreign law;

you have a right to receive or an obligation to provide a commodity under the contract; and

you have a practice of dealing in the commodity through the performance of offsetting contracts to receive and provide the commodity; and

you do not have, as your sole or dominant purpose for entering into the contract, the purpose of receiving or delivering the commodity as part of your expected purchase, sale or usage requirements; and

a *fair value election or an *election to rely on financial reports applies to financial arrangements that you start to have when you enter into the contract; and

(e) the contract is an asset or liability that you are required (whether or not as a result of a choice you make) by:

the *accounting standards; or

if those standards do not apply to the preparation of the financial report—comparable accounting standards that apply to the preparation of the financial report under a *foreign law;

a forex realisation gain or a forex realisation loss you make in relation to an arrangement that is not a Division 230 financial arrangement as a result of forex realisation event 1 to 5 or 8 is disregarded; and

forex realisation event 9 enables any gains or losses to be worked out on a retranslation basis.

you start to have the arrangement after the start of the income year in which the election is made; and

the arrangement is recognised in financial reports of a kind referred to in paragraph 230-255(2)(a) that are audited, or required to be audited, as referred to in paragraph 230-255(2)(b); and

the arrangement is one in relation to which you are required by:

*accounting standard AASB 121 (or another accounting standard prescribed for the purposes of paragraph 230-265(1)(c)); or

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;

the election is made by the *head company of a *consolidated group or *MEC group; and

the election specifies that the election is not to apply to *financial arrangements in relation to *life insurance business carried on by a member of the consolidated group or MEC group; and

the arrangement is one that relates to the life insurance business carried on by a member of the consolidated group or MEC group.

the event happens in relation to an *arrangement that you hold; and

you have made a *foreign exchange retranslation election that applies to the arrangement; and

the election is in effect when the event happens.

CGT event C1 or C2 happens in relation to an *arrangement that you hold at the time of the event; and

you have made a *foreign exchange retranslation election that applies to the arrangement; and

the election is in effect when the event happens;

you have made a *foreign exchange retranslation election that applies to the arrangement; and

you are required by:

*accounting standard AASB 121 (or another accounting standard prescribed for the purposes of paragraph 230-265(1)(c)); or

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;

you make a *foreign exchange retranslation election; and

the election ceases to have effect or ceases to apply to an *arrangement.

disposed of the *arrangement for its fair value immediately before the election ceases to have effect or ceases to apply to the arrangement; and

reacquired the arrangement at its fair value immediately after the election ceases to have effect or ceases to apply to the arrangement.

a right to receive money or something that is a *money equivalent under this definition; or

a *financial arrangement (within the meaning of section 230-45).

Subdivision 230-A of this Act (which deals with gains and losses from financial arrangements) if:

the accruals method provided for in Subdivision 230-B of this Act is applied to take account of the gain or loss concerned; and

all the *financial benefits provided and received under the *financial arrangement concerned are denominated in a particular foreign currency;

(a) a Income Tax Assessment Act 1997); orDivision 230 financial arrangement (within the meaning of the

(aa) Income Tax Assessment Act 1997; andDivision 230 of the

in the case of a qualifying security—the sum of all amounts (if any) included in the assessable income of the taxpayer of any years of income in relation to the qualifying security, attributable agreement payment or payment of interest under section 159GQ; or

(b) in the case of a Income Tax Assessment Act 1997;Division 230 financial arrangement—the sum of all amounts (if any) included in the assessable income of the taxpayer of any years of income in relation to the arrangement under Division 230 of the

in the case of a qualifying security—the sum of all amounts (if any) allowable as deductions from the assessable income of the taxpayer of any years of income in relation to the security or the payment, as the case may be, under that section; or

in the case of a Division 230 financial arrangement—the sum of:

(i) all amounts (if any) allowable as deductions from the assessable income of the taxpayer of any years of income in relation to the arrangement under Income Tax Assessment Act 1997; andDivision 230 of the

all amounts (if any) of interest paid under the arrangement before the interest mentioned in paragraph (1)(a) is paid;

(a) if Income Tax Assessment Act 1997 applies in relation to a year of income:section 230-485 of the

treat the foreign residency period mentioned in that section as a year of income in which the taxpayer was not an Australian resident; and

treat the Australian residency period mentioned in that section as a year of income in which the taxpayer was an Australian resident; and

if section 230-490 of that Act applies in relation to a year of income:

treat the period during that year in which the taxpayer was not an Australian resident as a year of income in which the taxpayer was not an Australian resident; and

treat the period during that year in which the taxpayer was an Australian resident as a year of income in which the taxpayer was an Australian resident.

the end of the year of income in which the person ceases to have the arrangement; or

if:

(i) the person applies the hedging financial arrangement method in Subdivision 230-E of the Income Tax Assessment Act 1997 to determine the amount of one or more gains or losses the person makes from the arrangement; and

determining the way in which those gains or losses are dealt with in accordance with subsection 230-310(4) of that Act is possible only at a time after the end of the income year mentioned in paragraph (a);

(ca) for records required to be kept under Income Tax Assessment Act 1997—comply with the applicable provisions of that section; andsection 230-355 of the

(ba) Income Tax Assessment Act 1997;Division 230 of the

anything produced, manufactured or acquired that is held for purposes of manufacture, sale or exchange in the ordinary course of a *business; and

*live stock;