Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 775 - Foreign currency gains and losses  

Subdivision 775-D - Qualifying forex accounts that pass the limited balance test  

Operative provisions

SECTION 775-255   Notional realisation when qualifying forex account starts to pass the limited balance test  

Credit balance

775-255(1)    
For the purposes of this Division, if:

(a) you hold a *qualifying forex account; and

(b) at a particular time:

(i) the account starts to pass the limited balance test; and

(ii) the account has a credit balance; and

(iii) you have one or more rights to receive a total amount of *foreign currency represented by the credit balance of the account;

you are treated as:

(c) having ceased to have those rights at that time; and

(d) having re-acquired those rights immediately after that time.

Note:

This means that forex realisation event 2 will happen when the account starts to pass the limited balance test.

Debit balance

775-255(2)    
For the purposes of this Division, if:

(a) you hold a *qualifying forex account; and

(b) at a particular time:

(i) the account starts to pass the limited balance test; and

(ii) the account has a debit balance; and

(iii) you have one or more obligations to pay a total amount of *foreign currency represented by the debit balance of the account;

you are treated as:

(c) having ceased to have those obligations at that time; and

(d) having started to again owe those obligations immediately after that time.

Note:

This means that forex realisation event 4 will happen when the account starts to pass the limited balance test.