Income Tax Assessment Act 1936

PART X - ATTRIBUTION OF INCOME IN RESPECT OF CONTROLLED FOREIGN COMPANIES  

Division 8 - Active income test  

Subdivision D - General interpretive provisions  

SECTION 439   WHEN CURRENCY EXCHANGE GAINS OR LOSSES RELATE TO ACTIVE INCOME TRANSACTIONS  

439(1)    
For the purposes of this Part, a currency exchange gain, or a currency exchange loss, of a company for a statutory accounting period is to be taken to relate to an active income transaction if, and only if:

(a) the gain or loss was realised under any of the following transactions:

(i) a transaction that:

(A) gives rise to income, gains or a loss of the company; and

(B) is not taken into account in determining the passive income, tainted sales income or tainted services income of the company;

(ii) a transaction for the purchase of goods from an entity that, at the time the gain or loss was realised, was not an associate of the company;

(iii) a transaction for the purchase of a unit of property where:

(A) if the company were a resident within the meaning of section 6 , depreciation would be allowable to the company under the former section 54 of this Act or the former Division 42 of the Income Tax Assessment Act 1997 , or the company could deduct an amount for the decline in value of a depreciating asset under Division 40 of that Act, in respect of any year of income; and

(B) the unit of property is for use by the company exclusively or principally for the purpose of producing income other than passive income, tainted sales income or tainted services income;

(iv) if the company is an AFI subsidiary that carried on financial intermediary business at the time the gain or loss was realised - a transaction under which money was lent to the company;

(v) a transaction that was entered into by the company for the sole purpose of eliminating or reducing the risk of adverse financial consequences that might result for the company, under a transaction covered by any of the preceding subparagraphs, from currency exchange rate fluctuations; or

(b) both of the following subparagraphs apply:

(i) the gain or loss was realised in the course of carrying on a business of currency dealing;

(ii) the gain or loss was realised under a transaction and, at the time the gain or loss was realised, no other party to the transaction was:

(A) an associate of the company; or

(B) a Part X Australian resident.

439(2)    
In determining whether an amount is passive income for the purposes of this section, paragraph 446(1)(n) is to be disregarded.