Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

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PART 4-5 - GENERAL  

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Division 775 - Foreign currency gains and losses  

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Guide to Division 775  

SECTION 775-5   What this Division is about  

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Your assessable income includes a forex realisation gain you make as a result of a forex realisation event.

You can deduct a forex realisation loss that you make as a result of a forex realisation event.

There are 5 main types of forex realisation events:

  • (a) forex realisation event 1 happens if you dispose of foreign currency, or a right to receive foreign currency, to another entity;
  • (b) forex realisation event 2 happens if you cease to have a right to receive foreign currency (otherwise than because you disposed of the right to another entity);
  • (c) forex realisation event 3 happens if you cease to have an obligation to receive foreign currency;
  • (d) forex realisation event 4 happens if you cease to have an obligation to pay foreign currency;
  • (e) forex realisation event 5 happens if you cease to have a right to pay foreign currency.

    • There are special rules for certain short-term forex realisation gains and losses.

    You may choose roll-over relief for certain facility agreements.

    You may elect to receive concessional tax treatment for a qualifying forex account that passes the limited balance test.

    You may choose retranslation for a qualifying forex account.

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