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-E - Retranslation for qualifying forex accounts  

Operative provisions

SECTION 775-285   Retranslation of gains and losses relating to a qualifying forex account - forex realisation event 8  

Forex realisation event 8

775-285(1)    
Forex realisation event 8 happens if:

(a) you have made a choice for retranslation for a *qualifying forex account held by you; and

(b) that choice was in effect throughout a continuous period (the retranslation period ) consisting of:

(i) an income year; or

(ii) a particular part of an income year; and

(c) either:

(i) there is a positive retranslation amount for the account for the retranslation period (worked out under subsection (2)); or

(ii) there is a negative retranslation amount for the account for the retranslation period (worked out under subsection (3)).

Retranslation amount

775-285(2)    
If the amount worked out using the formula in subsection (4) is a positive amount, that amount is a positive retranslation amount for the account for the retranslation period.

775-285(3)    
If the amount worked out using the formula in subsection (4) is a negative amount, that amount is a negative retranslation amount for the account for the retranslation period.

775-285(4)    
Work out an amount for the account for the retranslation period using the formula:

Closing balance of account for the retranslation period

−

Opening balance of account for the retranslation period

−

Total deposits made to account during the retranslation period

+

Total withdrawals made from account during the retranslation period

775-285(5)    
For the purposes of subsection (4), a debit balance is to be expressed as a negative amount (for example, a debit balance of $50,000 is to be expressed as − $50,000).

Forex realisation gain

775-285(6)    
You make a forex realisation gain if there is a positive retranslation amount for the account for the retranslation period. The amount of the forex realisation gain is the positive retranslation amount.

Forex realisation loss

775-285(7)    
You make a forex realisation loss if there is a negative retranslation amount for the account for the retranslation period. The amount of the forex realisation loss is the negative retranslation amount.

775-285(8)    
For the purposes of subsection (7), reverse a negative amount (for example, a negative retranslation amount of − $50,000 will become a forex realisation loss of $50,000).

Translation of foreign currency

775-285(9)    
For the purposes of the application of section 960-50 to this section:

(a) if a retranslation period for an account did not begin immediately after the end of another retranslation period for the account - the opening balance of the account for the first-mentioned retranslation period is to be translated to Australian currency at the exchange rate applicable at the start of the first-mentioned retranslation period; and

(b) if a retranslation period for an account began immediately after the end of another retranslation period for the account - the opening balance of the account for the first-mentioned retranslation period is to be translated to Australian currency at the exchange rate applicable at the end of the other retranslation period; and

(c) the closing balance of an account for a retranslation period is to be translated to Australian currency at the exchange rate applicable at the end of the retranslation period; and

(d) each deposit is to be translated to Australian currency at the exchange rate applicable at the time of the deposit; and

(e) each withdrawal is to be translated to Australian currency at the exchange rate applicable at the time of the withdrawal.

Deposits

775-285(10)    
For the purposes of this section, a deposit includes any amount paid or transferred into the account.

Withdrawals

775-285(11)    
For the purposes of this section, a withdrawal includes any amount paid, advanced, drawn or transferred out of the account.