Income Tax Assessment Act 1997

CHAPTER 6 - THE DICTIONARY  

PART 6-1 - CONCEPTS AND TOPICS  

Division 960 - General  

Subdivision 960-D - Functional currency  

Operative provisions

SECTION 960-80   Translation rules  

960-80(1)    

The table has effect:

Translation rules
Item	In this case...	these rules apply...
1	(a)	you are an Australian resident required to prepare financial reports under section 292 of the Corporations Act 2001 ; and	(a)	first, for the purpose of working out, for the income year, so much of your taxable income or tax loss as is not the subject of a choice made by you under any other item of that table:
	(b)	you have made a choice under item 1 of the table in subsection 960-60(1) , and that choice is in effect for an income year		(i)	an amount that is not in the *applicable functional currency is to be translated into the applicable functional currency; and
					(ii)	the definition of foreign currency in subsection 995-1(1) does not apply; and
					(iii)	the applicable functional currency is taken not to be a foreign currency; and
					(iv)	Australian currency and any other currency (except the applicable functional currency) are taken to be foreign currencies; and
			(b)	second, so much of your taxable income as is not the subject of a choice made by you under any other item of that table is to be translated into Australian currency.
2	(a)	you are:	(a)	first, for the purpose of working out, for the income year, the taxable income or tax loss derived from the activity or business carried on at or through the permanent establishment:
		(i)	an Australian resident carrying on an activity or business at or through an *overseas permanent establishment; or		(i)	an amount that is not in the *applicable functional currency is to be translated into the applicable functional currency; and
		(ii)	a foreign resident carrying on an activity or business at or through an *Australian permanent establishment; and		(ii)	the definition of foreign currency in subsection 995-1(1) does not apply; and
	(b)	you have made a choice under item 2 of the table in subsection 960-60(1) in relation to the permanent establishment, and that choice is in effect for an income year		(iii)	the applicable functional currency is taken not to be a foreign currency; and
					(iv)	Australian currency and any other currency (except the applicable functional currency) are taken to be foreign currencies; and
			(b)	second, the taxable income derived from the activity or business carried on at or through the permanent establishment is to be translated into Australian currency.
3	(a) (b)	you are an *offshore banking unit (OBU); and you have made a choice under item 3 of the table in subsection 960-60(1) in relation to the OBU, and that choice is in effect for an income year	(a)	first, for the purpose of working out, for the income year, your total assessable OB income (within the meaning of Division 9A of Part III of the Income Tax Assessment Act 1936 ) and your total OB deductions (within the meaning of that Division):
				(i)	an amount that is not in the *applicable functional currency is to be translated into the applicable functional currency; and
					(ii)	the definition of foreign currency in subsection 995-1(1) does not apply; and
					(iii)	the applicable functional currency is taken not to be a foreign currency; and
					(iv)	Australian currency and any other currency (except the applicable functional currency) are taken to be foreign currencies; and
			(b)	second, the total assessable OB income and the total allowable OB deductions are to be translated into Australian currency.
4	(a)	you are an attributable taxpayer (within the meaning of Part X of the Income Tax Assessment Act 1936 ) of a *controlled foreign company (CFC); and	(a)	first, for the purpose of working out, for the statutory accounting period, the *attributable income of the CFC:
	(b)	you have made a choice under item 4 of the table in subsection 960-60(1) in relation to the CFC, and that choice is in effect for a *statutory accounting period of the CFC		(i)	an amount that is not in the *applicable functional currency is to be translated into the applicable functional currency; and
					(ii)	the definition of foreign currency in subsection 995-1(1) does not apply; and
					(iii)	the applicable functional currency is taken not to be a foreign currency; and
					(iv)	Australian currency and any other currency (except the applicable functional currency) are taken to be foreign currencies; and
			(b)	second, the attributable income is to be translated into Australian currency.
5	(a) (b)	you are a *transferor trust; and you have made a choice under item 5 of the table in subsection 960-60(1) in relation to the trust, and that choice is in effect for an income year	(a)	first, for the purpose of working out, for the income year, your attributable income (within the meaning of Division 6AAA of Part III of the Income Tax Assessment Act 1936 ):
					(i)	an amount that is not in the *applicable functional currency is to be translated into the applicable functional currency; and
					(ii)	the definition of foreign currency in subsection 995-1(1) does not apply; and
					(iii)	the applicable functional currency is taken not to be a foreign currency; and
					(iv)	Australian currency and any other currency (except the applicable functional currency) are taken to be foreign currencies; and
			(b)	second, the attributable income is to be translated into Australian currency.
6	(a)	you are a *foreign resident who makes a *capital gain or *capital loss from a *CGT event in relation to an asset that is an *indirect Australian real property interest; and	(a)	first, for the purpose of working out, for the income year, the amount of your capital gain or capital loss from the CGT event, an amount that is not in the applicable functional currency is to be translated into the applicable functional currency; and
	(b)	you are required by subsection 960-61(2) to work out the amount of your capital gain or capital loss in the *applicable functional currency	(b)	second, the amount of the capital gain or capital loss is to be translated into Australian currency.

Note:

The attributable income of a controlled foreign company is calculated separately for each attributable taxpayer - see section 381 of the Income Tax Assessment Act 1936 .

Examples of an amount

960-80(2)    
The following are examples of an amount:

(a) an amount of *ordinary income;

(b) an amount of an expense;

(c) an amount of an obligation;

(d) an amount of a liability;

(e) an amount of a receipt;

(f) an amount of a payment;

(g) an amount of consideration;

(h) a value;

(i) a monetary limit or other amount set out in this Act or any other law of the Commonwealth.

960-80(3)    
The amounts set out in paragraphs (2)(b) to (i) may be amounts on revenue account, capital account or otherwise.

Amounts that are elements in the calculation of other amounts

960-80(4)    
In applying this section:

(a) first, translate any amounts that are elements in the calculation of other amounts (except *special accrual amounts); and

(b) then, calculate the other amounts.

Special accrual amounts

960-80(5)    
In applying this section:

(a) calculate a *special accrual amount without translation and without applying the first rule set out in the relevant item of the table in subsection (1); and

(b) then, translate the special accrual amount to Australian currency for the purposes of applying the second rule set out in the relevant item of the table in subsection (1).

Special translation rules

960-80(6)    
Subsection 960-50(6) has effect, in relation to the translation of an amount into the *applicable functional currency, as if each reference in that subsection to Australian currency were a reference to the applicable functional currency.

Regulations about translation

960-80(7)    
An entity must comply with the regulations (if any) in translating an amount into:

(a) the *applicable functional currency; or

(b) Australian currency.

Note:

For example, the regulations could require the use of a particular translation method and require consistency in the use of the translation method.

960-80(8)    
Regulations made for the purposes of subsection (7) may make provision in relation to a matter by applying, adopting or incorporating (with or without modifications) matter contained in any of the *accounting standards:

(a) as in force or existing at a particular time; or

(b) as in force or existing from time to time.