Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p24
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 24/55)
Character Range: 3857719–3860373

is to be spread in accordance with paragraph (2)(a).

Intervals to which parts of gain or loss allocated
 (4) The intervals to which parts of the gain or loss are allocated must:
 (a) not exceed 12 months; and
 (b) all be of the same length.
Paragraph (b) does not apply to the first and last intervals. These may be shorter than the other intervals.

Fixing of amount and rate for interval
 (5) For each interval:
 (a) determine a rate of return; and
 (b) determine an amount to which you apply the rate of return.
 (6) For the purposes of paragraph (5)(b), in determining the amount to which you apply the rate of return for an interval, have regard to:
 (a) the amount or value; and
 (b) the timing;
of *financial benefits that are to be taken into account in working out the amount of the gain or loss, and were provided or received by you during the interval.
 (6A) However, if there is only one *financial benefit that is to be taken into account in working out the amount of the gain or loss, then, for the purposes of paragraph (5)(b), in determining the amount to which you apply the rate of return, have regard to a notional principal:
 (a) by reference to which the financial benefit is calculated; or
 (b) which is reasonably related to the financial benefit.

Assumption of continuing to hold arrangement for rest of its life
 (7) The gain or loss is to be spread assuming that you will continue to have the *financial arrangement for the rest of its life.

Regard to be had to financial benefits provided or received in interval
 (8) In allocating the gain or loss to intervals, have regard to the *financial benefits to be provided or received in each of those intervals.

230‑140  Method of spreading gain or loss—effective interest method
 (1) This section clarifies that the method mentioned in subsection (2) of spreading gains and losses is a method covered by paragraph 230‑135(2)(b) (methods approximating compounding accruals).
 (2) The method is the effective interest method mentioned in *accounting standard AASB 139 (or another accounting standard prescribed by the regulations for the purposes of this subsection).
 (3) However, this section applies to a particular *financial arrangement you have only if:
 (a) in a case where there is a discount or premium under the arrangement—when you start to have the arrangement, the annually compounded rate of return applicable to the discount or premium does not exceed 1%; and
 (b) when you start to have the arrangement, neither the maximum life of the arrangement (as determined under the terms and conditions of the arrangement) nor the expected life of the arrangement exceeds: