Special translation rules

Item

In this case...

this is the result...

1

forex realisation event 4 happens when you cease to have an obligation, or a part of an obligation, to pay *foreign currency, and neither of subparagraphs 775-55(1)(b)(ii) and (iii) applies

for the purposes of section 775-55, the amount of the obligation, or the part of the obligation, at the tax recognition time (see subsection 775-55(7)) is to be translated to Australian currency at the exchange rate applicable at that time.

2

cost of a *depreciating asset

(a) if you incur an obligation in return for your starting to hold the asset, and the obligation is not satisfied before you begin to hold the asset (worked out under Division 40) - the cost of the asset is to be translated to Australian currency at the exchange rate applicable when you begin to hold the asset; or

(b) if you incur an obligation in return for your starting to hold the asset, and the obligation is satisfied before you begin to hold the asset (worked out under Division 40) - the cost of the asset is to be translated to Australian currency at the exchange rate applicable when the obligation is satisfied.

3

value of an item of *trading stock on hand at the end of an income year, where you have elected to use its *cost

the value is to be translated to Australian currency at the exchange rate applicable at the time when the item became on hand.

4

value of an item of *trading stock on hand at the end of an income year, where you have elected to use:

(a) its market selling value; or

(b) its replacement value

the value is to be translated to Australian currency at the exchange rate applicable at the end of the income year.

5

a transaction or event that:

(a) involves an amount of money or the *market value of other property; and

(b) is relevant for the purposes of Part 3-1 or 3-3;

to the extent to which the amount or value is relevant for the purposes of Part 3-1 or 3-3

the amount or value is to be translated, for the purposes of Part 3-1 or 3-3, to Australian currency at the exchange rate applicable at the time of the transaction or event.

6

an amount of *ordinary income

(a) if the amount is received at or before the time when it is derived - the amount is to be translated to Australian currency at the exchange rate applicable at the time of receipt; or

(b) in any other case - the amount is to be translated to Australian currency at the exchange rate applicable when it is derived.

7

an amount of *statutory income (other than an amount included in assessable income under Division 102)

(a) if the amount is received at or before the time when the requirement first arose to include it in your assessable income - the amount is to be translated to Australian currency at the exchange rate applicable at the time of receipt; or

(b) in any other case - the amount is to be translated to Australian currency at the exchange rate applicable at the time when the requirement first arose to include it in your assessable income.

8

an amount that you deduct (other than under Division 40)

(a) if the amount is paid at or before the time when it became deductible - the amount is to be translated to Australian currency at the exchange rate applicable at the time of payment; or

(b) in any other case - the amount is to be translated to Australian currency at the exchange rate applicable at the time when it became deductible.

9

an amount that is relevant for the purposes of quantifying:

(a) the total of all of a company's *production expenditure on a *film; or

(b) the total of the company's *qualifying Australian production expenditure on a film;

to the extent to which the amount is relevant for the purposes of Division 376

the amount is to be translated to Australian currency at the average of the exchange rates applicable from time to time during the period that:

(a) starts on the earliest day on which:

(i) principal photography takes place; or

(ii) the production of the animated image commences; and

(b) ends when the film is *completed.

10

an amount that Division 12 of Part 2-5 in Schedule 1 to the Taxation Administration Act 1953 requires to be withheld from a payment

the amount is to be translated to Australian currency at the exchange rate applicable at the time when the amount is required to be withheld under that Division.

11

an amount of a receipt or a payment, where none of the above items apply

the amount is to be translated to Australian currency at the exchange rate applicable at the time of the receipt or payment.

Choosing to use a functional currency

Item

If you are:

you may choose to use the * applicable functional currency to...

with effect from the start of...

1

an *Australian resident who is required to prepare financial reports under section 292 of the Corporations Act 2001

work out so much of your taxable income or tax loss as is not subject to a choice made by you under any of the other items of this table

(a) if the choice you make under this item is a backdated startup choice (see section 960-65) - the income year in which you make the choice; or

(b) in any other case - the income year following the one in which you make the choice.

2

(a) an *Australian resident carrying on an activity or business at or through an*overseas permanent establishment; or

(b) a *foreign resident carrying on an activity or business at or through an *Australian permanent establishment

work out the taxable income or tax loss derived from the activity or business carried on at or through the permanent establishment

(a) if the choice you make under this item is a backdated startup choice (see section 960-65) - the income year in which you make the choice; or

(b) in any other case - the income year following the one in which you make the choice.

3

an *offshore banking unit

work out your total assessable OB income (within the meaning of Division 9A of Part III of the Income Act Assessment Act 1936) and your total allowable OB deductions (within the meaning of that Division)

(a) if the choice you make under this item is a backdated startup choice (see section 960-65) - the income year in which you make the choice; or

(b) in any other case - the income year following the one in which you make the choice.

4

an attributable taxpayer (within the meaning of Part X of the Income Tax Assessment Act 1936) of a *controlled foreign company (CFC)

work out the *attributable income of the CFC

(a) if the choice you make under this item is a backdated startup choice (see section 960-65) - the CFC's statutory accounting period (within the meaning of Part X of the Income Act Assessment Act 1936) in which you make the choice; or

(b) in any other case - the CFC's statutory accounting period following the one in which you make the choice.

5

a *transferor trust

work out your attributable income (within the meaning of Division 6AAA of Part III of the Income Tax Assessment Act 1936)

(a) if the choice you make under this item is a backdated startup choice (see section 960-65) - the income year in which you make the choice; or

(b) in any other case - the income year following the one in which you make the choice.

Backdated startup choice

Item

In this case:

the choice is a backdated startup choice if...

1

you make a choice under item 1 of the table in subsection 960-60(1)

(a) both:

(i) you were in existence at the start of the income year in which you made the choice; and

(ii) you make the choice within 90 days after the beginning of that income year or within 30 days after the commencement of this section; or

(b) both:

(i) you came into existence during the income year in which you made the choice; and

(ii) you make the choice within 90 days after you came into existence or within 30 days after the commencement of this section.

2

you make a choice under item 2 of the table in subsection 960-60(1)

(a) both:

(i) the permanent establishment was in existence at the start of the income year in which you made the choice; and

(ii) you make the choice within 90 days after the beginning of that income year; or

(b) both:

(i) the permanent establishment came into existence during the income year in which you made the choice; and

(ii) you make the choice within 90 days after the permanent establishment came into existence.

3

you make a choice under item 3 of the table in subsection 960-60(1)

(a) both:

(i) the *offshore banking unit was in existence at the start of the income year in which you made the choice; and

(ii) you make the choice within 90 days after the beginning of that income year or within 30 days after the commencement of this section; or

(b) both:

(i) the offshore banking unit came into existence during the income year in which you made the choice; and

(ii) you make the choice within 90 days after the offshore banking unit came into existence or within 30 days after the commencement of this section.

4

you make a choice under item 4 of the table in subsection 960-60(1)

(a) both:

(i) you are an attributable taxpayer of the CFC at the beginning of the CFC's statutory accounting period (within the meaning of Part X of the Income Tax Assessment Act 1936) in which you made the choice; and

(ii) you make the choice within 90 days after the beginning of the CFC's statutory accounting period or within 30 days after the commencement of this section; or

(b) both:

(i) you became an attributable taxpayer in relation to the CFC during the CFC's statutory accounting period (within the meaning of Part X of the Income Tax Assessment Act 1936) during which you made the choice; and

(ii) you make the choice within 90 days after the beginning of the CFC's statutory accounting period or within 30 days after the commencement of this section.

5

you make a choice under item 5 of the table in subsection 960-60(1)

you make the choice within 90 days after the beginning of an income year or within 30 days after the commencement of this section.

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

(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

(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:

(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:

(i) an *Australian resident carrying on an activity or business at or through an*overseas permanent establishment; or

(ii) a *foreign resident carrying on an activity or business at or through an *Australian permanent establishment; 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

(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 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 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) you are an *offshore banking unit (OBU); and

(b) 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

(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 (within the meaning of Part X of the Income Tax Assessment Act 1936) of the CFC

(a) first, for the purpose of working out, for the statutory accounting period, the *attributable income 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) you are a *transferor trust; and

(b) 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.

Special rule about translation

Item

In this case...

this is the result...

1

at the event time, no previous choice made by you under item 1 of the table in subsection 960-60(1) was in effect

the amount is to be translated first to Australian currency at the exchange rate applicable at the event time, and then to the *applicable functional currency at the exchange rate applicable when the current choice took effect.

2

at the event time, a previous choice made by you under item 1 of the table in subsection 960-60(1) was in effect

the amount is to be translated first to the previous *applicable functional currency at the exchange rate applicable at the event time, and then to the current applicable functional currency at the exchange rate applicable when the current choice took effect.

Special rule about translation

Item

In this case...

this is the result...

1

at the event time, no previous choice made by you under section 960-60 in relation to the establishment, unit, CFC or trust was in effect

the amount is to be translated first to Australian currency at the exchange rate applicable at the event time, and then to the *applicable functional currency at the exchange rate applicable when the current choice took effect.

2

at the event time, a previous choice made by you under section 960-60 in relation to the establishment, unit, CFC or trust was in effect

the amount is to be translated first to the previous *applicable functional currency at the exchange rate applicable at the event time, and then to the current applicable functional currency at the exchange rate applicable when the current choice took effect.

Withdrawal

Item

In this case:

you may withdraw your choice with effect from immediately after the end of...

1

(a) you are an *Australian resident who is required to prepare financial reports under section 292 of the Corporations Act 2001; and

(b) your *applicable functional currency has ceased to be the sole or predominant currency in which you keep your accounts (within the meaning of section 960-70)

the income year in which you withdraw your choice.

2

(a) you are an *Australian resident carrying on an activity or business at or through an*overseas permanent establishment or a *foreign resident carrying on an activity or business at or through an *Australian permanent establishment; and

(b) the *applicable functional currency of the permanent establishment has ceased to be the sole or predominant currency in which the establishment keeps its accounts (within the meaning of section 960-70)

the income year in which you withdraw your choice.

3

(a) you are an *offshore banking unit (OBU); and

(b) the *applicable functional currency of the OBU has ceased to be the sole or predominant currency in which the OBU keeps its accounts (within the meaning of section 960-70)

the income year in which you withdraw your choice.

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

(b) you have made a choice under item 4 of the table in subsection 960-60(1) in relation to the CFC; and

(c) the *applicable functional currency of the CFC has ceased to be the sole or predominant currency in which the CFC keeps its accounts (within the meaning of section 960-70)

the CFC's statutory accounting period (within the meaning of Part X of the Income Tax Assessment Act 1936) in which you withdraw your choice.

5

(a) you are a *transferor trust; and

(b) the *applicable functional currency of the trust has ceased to be the sole or predominant currency in which the trust keeps its accounts (within the meaning of section 960-70)

the income year in which you withdraw your choice.