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INCOME TAX ASSESSMENT ACT 1997 - SECT 775.40

Disposal of foreign currency or right to receive foreign currency--forex realisation event 1

Forex realisation event 1

  (1)   Forex realisation event 1 is * CGT event A1 that happens if you dispose of:

  (a)   * foreign currency; or

  (b)   a right, or a part of a right, to receive foreign currency.

Note:   For extended meaning of right to receive foreign currency , see section   775 - 135.

Disposal

  (2)   For the purposes of this section, use subsection   104 - 10(2) to work out whether you have disposed of:

  (a)   * foreign currency; or

  (b)   a right, or a part of a right, to receive foreign currency.

Note:   Under subsection   104 - 10(2), a disposal requires a change of ownership.

Time of event

  (3)   For the purposes of this section, subsection   104 - 10(3) is modified so that the time of the event is when:

  (a)   the * foreign currency is disposed of; or

  (b)   the right, or the part of the right, is disposed of.

Forex realisation gain

  (4)   You make a forex realisation gain if:

  (a)   you make a * capital gain from the event; and

  (b)   some or all of the capital gain is attributable to a * currency exchange rate effect.

The amount of the forex realisation gain is so much of the capital gain as is attributable to a currency exchange rate effect.

Note:   For currency exchange rate effect , see section   775 - 105.

  (5)   For the purposes of paragraph   (4)(a), Part   3 - 1 is modified so that section   118 - 20 is disregarded in working out the * capital gain.

Note:   Section   118 - 20 deals with reducing capital gains if an amount is otherwise assessable.

Forex realisation loss

  (6)   You make a forex realisation loss if:

  (a)   you make a * capital loss from the event; and

  (b)   some or all of the capital loss is attributable to a * currency exchange rate effect.

The amount of the forex realisation loss is so much of the capital loss as is attributable to a currency exchange rate effect.

Note:   For currency exchange rate effect , see section   775 - 105.

No indexation of cost base

  (7)   For the purposes of this section, disregard Division   114.

Note:   Division   114 deals with indexation of the cost base.

Foreign currency hedging gains and losses

  (8)   For the purposes of this section, disregard section   118 - 55.

Note:   Section   118 - 55 deals with foreign currency hedging gains and losses.

Capital proceeds

  (9)   For the purposes of this section, if the * capital proceeds from the event are more or less than the * market value of:

  (a)   the * foreign currency; or

  (b)   the right, or the part of the right;

the capital proceeds from the event are taken to be the market value. (The market value is worked out as at the time of the event.)


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