Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 230.350

Derivative financial arrangement

  (1)   A derivative financial arrangement is a * financial arrangement that you have where:

  (a)   its value changes in response to changes in a specified variable or variables; and

  (b)   there is no requirement for a net investment, or there is such a requirement but the net investment is smaller than would be required for other types of financial arrangement that would be expected to have a similar response to changes in market factors.

Note:   Paragraph   (a)--a specified variable includes an interest rate, foreign exchange rate, credit rating, index or commodity or financial instrument price.

Foreign currency hedge

  (2)   A foreign currency hedge is a * financial arrangement that you have if:

  (a)   paragraph   (1)(a) is satisfied but paragraph   (1)(b) is not; and

  (b)   the arrangement hedges a risk in relation to movements in currency exchange rates.