Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p42
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 42/55)
Character Range: 3901131–3903891

arrangement for the income year. If the result is negative, this is the loss from the arrangement for the income year.
 (4) For the purposes of paragraphs (3)(b) and (d), work out how much of the gain or loss is attributable to the income year by:
 (a) using a methodology that is reasonable; and
 (b) using the same methodology for the first and second years.
 (5) For the purposes of paragraph (4)(a), treat a methodology that attributes the gain or loss on a pro‑rata basis as not being reasonable.

230‑220  Financial arrangements to which fair value election applies
 (1) A *fair value election applies in relation to *financial arrangements that:
 (a) are *Division 230 financial arrangements; and
 (b) are recognised in financial reports of the kind referred to in paragraph 230‑210(2)(a) that are audited, or required to be audited, as referred to in paragraph 230‑210(2)(b); and
 (c) are assets or liabilities that you are required (whether or not as a result of a choice you make) by:
 (i) the *accounting principles; or
 (ii) if the accounting principles do not apply to the preparation of the financial report—comparable standards for accounting that apply to the preparation of the financial report under a *foreign law;
  to classify, designate or (in whole or in part) otherwise treat, in the financial reports, as at fair value through profit or loss; and
 (d) you start to have in the income year in which you make the election or in a later income year.
This subsection has effect subject to section 230‑225.
 (2) If, but for this subsection, paragraphs (1)(b) and (c) would not be satisfied in relation to a *financial arrangement because the arrangement is an intra‑group transaction for the purposes of:
 (a) *accounting standard AASB 127 (or another accounting standard prescribed by the regulations for the purposes of this paragraph); or
 (b) if that standard does not apply to the preparation of the financial report—a comparable accounting standard that applies to the preparation of the financial report under a *foreign law;
paragraphs (1)(b) and (c) are taken to be satisfied in relation to the arrangement.
Note: Financial arrangements between members of a consolidated group or MEC group are not covered by this subsection because the single entity rule in subsection 701‑1(1) operates to treat them as not being financial arrangements for the purposes of this Division.
 (3) If:
 (a) the *financial arrangement would not be a financial arrangement if the following provisions were disregarded:
 (i) Division 9A of Part III of the Income Tax Assessment Act 1936 (which deals with offshore banking units);
 (ii) Part IIIB of that Act (which deals with Australian branches of foreign banks etc.); and
 (b) paragraphs (1)(b) and (c)