تعريف حساب فوريكس المؤهل

الخيارات الثنائية.
الشعبة 775 المؤهلة حساب الفوركس.
الفوركس: ارتفاع الدولار الأمريكي في خطر، تصحيح الجنيه البريطاني.
123 عكس نمط الفوركس بنيت الأمر، قسم 775 مؤهلة حساب فوريكس أعتقد من. أوكسانسكي الفوركس 101 تحديد باليد.
حساب التداول - إنفستوبيديا.
مجانا الفوركس الأبيض تسمية هو للأفراد المؤهلين والمؤسسات التي تكلف بشكل فعال أو إنشاء قسم الوساطة الفوركس الجديد. إلى عن على.
موهيت دواركاني | حساب إحترافي.
تداول الفوركس مخاطر السوق مجانا باستخدام فوركس مجانا ما هو "حساب التداول" يمكن فتح حسابات التداول بالتجزئة. يتم تأهيل الكيانات التجارية ك.
آخر أخبار الفوركس الهندي - مكعب الشعب.
كسب المال على الانترنت مع الخيارات الثنائية قيادة التداول سوف. إدارة النقد استراتيجية شبكة الفوركس تمكن الدفاع من. 4 ساعات مراقبة العملات الأجنبية ماكد فوركس. سياسات.
نتائج فوريكس باكتست - مكعب الشعب.
التقرير السنوي والحسابات متحف بنك انكلترا. بارثولوميو لين، لندن، EC2R 8AH. معلومات عنا . سهولة الوصول وسهولة الاستخدام؛ وظائف؛ التنوع والتضمين؛
لمي أساسيات - لونمين (لمي، LMI. L، لون: لمي) مونيام.
إسرائيل واسعة، والخيارات الثنائية أخلاقية احتيال يتعرض. FOREXFRAUD. بدلا من تقسيم منزلها في قبرص المدارة حسابات الفوركس. الروبوتات الفوركس.
اتصل بنا - لويدز بانكينغ غروب بلك.
إنفورما سعر السهم (إنف) 664.00-5.00 قسم المعلومات الأكاديمية ينشر الكتب والمجلات مع أكثر من 55،000 العناوين المتاحة 775.00: زيادة الوزن: 16.
الاثنين: 10 يوليو 2017 - شلالات النفط | فب ماركيتس.
إذا كنت ترغب في الاتصال لويدس المجموعة المصرفية، يرجى الاطلاع على التفاصيل أدناه لمواقع المكتب الرئيسي لدينا، خطوط التحقيق العملاء، فريق العلاقات الإعلامية المجموعة.
صفحة 3. ماركريفيست التاجر - أفكار التداول والرسوم البيانية.
يسلط الضوء على الضرائب 3 نوفمبر 2018 (القسم 815): إيداع ليس حساب الفوركس المؤهلة لأغراض الشعبة 775 من ضريبة الدخل.
الفوركس برنامج التسمية البيضاء - حل تسليم المفتاح وصفت.
حسابات الفوركس؛ الفوركس ينتشر. كفد 5 يونيو 2017 - الدولار الاسترالي مستبعد العودة. أغلق الذهب تسليم أغسطس بنسبة 0.8٪ عند 1280.20 $ للأونصة.
تعريف المحاسبة | Investopedia.
لأغراض قواعد الأرباح والخسائر بالعملة الأجنبية الواردة في الشعبة 775، أي أرباح أو خسائر متعلقة بتحويل العملات الأجنبية إذا كنت تمتلك حسابا في الفوركس.
بنك انكلترا - الموقع الرسمي.
البنوك المرخصة. ولا يجوز إلا للمصارف المرخصة أن تعمل الحسابات الجارية وحسابات التوفير، وأن تقبل الودائع من أي حجم واستحقاق من الجمهور، وأن تدفع أو تجمع الشيكات.
حساب الهامش - إنفستوبيديا.
تداول الفوركس - فكسوستبروكر وقد وضعت لدينا منصات التداول المتطورة من قبل فريق من قسم التداول الملكية فكسستبروكر المؤهلين هو.
الاثنين: 5 يونيو 2017 - الدولار الأسترالي مستبعد عودة | FP.
الحسابات التجريبية؛ مكافأة الفوركس. الوسطاء الهنود؛ وسطاء جنوب أفريقيا؛ الصفحة الرئيسية & غ؛ الوسطاء الاستراليين الفوركس. أعلى وسطاء الفوركس في أستراليا لشعبة الفوركس 775 و.
معلومات عن هلا المهندس & سلبيات (014790) - الاستثمار.
دويتشه بنك وشركته التابعة في المملكة المتحدة لدفع 775 $ مكتب الغرامة مكتب فكا الغرامات المقرر أن تراجع تحت الرقم القياسي على الرغم من ليبور وفوركس.
قائمة أفضل وسطاء الفوركس الاسترالية ومنصة التداول.
عرض شارون كونستان & # 231؛ على سدير ماجستير في إدارة الأعمال فسيس فسيبم عقد إدارة لحساب، أقامت بين البنوك ومكاتب التعامل مع النقد الاجنبى للشركات وتطوير قسم.
سيتي وظائف المملكة المتحدة - بانكينغ، أكونتينغ & أمب؛ وظائف المالية.
دورات تدريبية الفوركس المملكة المتحدة أمريكا: حول. حر برنامج تداول الخيارات الهند تحميل أنهم يشترون. شعبة 775 مؤهلة حساب الفوركس واضحة. الأشياء.
العملات الأجنبية & أمب؛ بيانات سوق المال | طومسون رويترز.
حسابي؛ التوظيف. التوظيف. تسجيل الدخول بوست a جوب. جزء أو مؤهل حديثا؛ محاسب إداري؛ المدير المالي؛ محاسب النظم؛ المراقب المالي.
إنفورما سعر السهم (إنف) - مونيام.
الشعبة 775 تصفيات مبادرات حساب الفوركس. من أسفل إلى أعلى. فوريسيارد تحميل الميزانيات، أسعار صرف العملات الأجنبية اليوم القضاء على آثار مجزأة.
إنفستك - الموقع الرسمي.
التسجيل والعضوية. الفوركس، خيارات خيارات السلع على العقود الآجلة أو مقايضات في أي سوق العقد لحساب الشخص نفسه. المالك.
قائمة البنوك في هونغ كونغ - ويكيبيديا.
هل أرباح تداول الفوركس خاضعة للضريبة أم أنها خصم مسموح به من قبل إجراءات الضرائب الأسترالية (الفوركس) التي تجلب عادة لحساب صفقات القسم 775.
التسجيل والعضوية | NFA.
حسابات الفوركس؛ الفوركس ينتشر. عقود الفروقات $ 1،209.70 دولار للأونصة في قسم كومكس من نصيحة نيويورك من شخص مؤهل بشكل مناسب قبل اتخاذ القرار.
الفوركس - بلوغسبوت.
والتنبؤات والأفكار التجارية من ماركريفيست التاجر على أفضل لديه خمسة تقسيم الفرقة الفرعية واضحة. الملف الشخصي الملف الشخصي إعدادات الملف الشخصي و.
بنك باركليز وظائف وظائف.
أساسيات الفوركس الدولار الأمريكي رالي في خطر، تصحيح الجنيه البريطاني على الحنفية. مدعيا أن هناك حاجة إلى "تقسيم صارم بين النقد.
استراتيجية التداول الاختلاف بدف - مقاطعة ماديسون ساعي.
• خبرة العمل 3.5 سنوات في قسم أناليتيكش من البنك الملكي من اسكتلندا المجموعة و 3 سنوات كما الفوركس التاجر & أمبير؛ أربيتراجر إيست سينيور أكونت.
دارين بولوك | حساب إحترافي.
سعر السهم الحقيقي / أساسيات الأسهم تستخرج عمليات التعدين في لينمين خام تنتج منه شعبة العمليات حساب علاوة الأسهم: 1،816: 1،448:
السوق الفورية - بنك ستاندرد.
بني ميلون يعين بريدجيت إ. إنغل كبير نواب الرئيس التنفيذي وكبير موظفي المعلومات. سوف تقود إنغل مجموعة حلول تقنية العملاء التابعة للشركة،
شعبة 775 مؤهلة حساب الفوركس - مقاطعة ماديسون ساعي.
السوق الفورية ما هو بقعة A تاجر الفوركس يقتبس لك السعر التالي: المؤسسات المؤهلة التي تعمل بصفتهم حاملي الائتمان.
بني ميلون | شركة الاستثمارات للعالم.
تقدم بيانات تومسون رويترز لتقلبات أسعار صرف العملات الأجنبية وصولا حصريا إلى فوريكس ليدينغ فوريكس & أمب؛ سوق المال يشمل قسم الفينيق،
إيم - بورصة لندن.
هنا في باركليز المملكة المتحدة، عليك أن تكون الانضمام إلى بيئة حيث الابتكار هو جزء من كل يوم. أنا عميل باركليز مع طلب بحث عن حسابي.
تداول الفوركس - السلع | الأسهم | FXStockBroker.
داكس بنسبة 0.2٪ من خلال الاستثمار توتف) قسم تكرير الخسارة في عام 2018، وطالب العقود الآجلة) وأسعار الفوركس لا توفرها البورصات ولكن.
هل أرباح تداول الفوركس خاضعة للضريبة أم أنها مسموح بها.
حسابي. خروج. مستخدم جديد؟ سجل هنا. تسجيل الدخول. تسجيل الدخول. كلمة سر منسية؟ قريب . الأسعار & أمب؛ الأسواق. مخازن؛ إيم هو سوق النمو الأكثر نجاحا في.
توتال ستوك نيوس (توتف) - الاستثمار.
مشاهدة ملف دارين بولوك الشخصي الكامل هل أنت عضو في لينكيدين بالفعل؟ مدير العمليات الوطنية قسم الأمن حساب مدارة & أمب؛ المستشارين الخبراء؛ الفوركس & أمب؛ قبعة صغيرة.
تنبيه العناوين الرئيسية تنبيه: الخيارات الثنائية الشاذة والخاطئة لإسرائيل.
يوفر تومسون رويترز إيكون سهولة الوصول إلى الأخبار الموثوقة والبيانات والتحليلات، وكلها تمت تصفيتها حسب أهميتها لاحتياجاتك بالضبط، وعرضها بطريقة مرئية للغاية.
دويتشه بنك وشركتها في المملكة المتحدة لدفع 775 مليون $.
ما هو "حساب الهامش" حساب الهامش هو حساب الوساطة التي يقوم الوسيط فيها بإقراض العميل نقدا لشراء الأوراق المالية. القرض في الحساب هو.
&نسخ؛ شعبة 775 مؤهلة حساب الفوركس الخيار الثنائي | شعبة 775 مؤهلة حساب الفوركس أفضل الخيارات الثنائية.

العمل في الشؤون المالية: 5 وظائف الفوركس.
أسواق الفوركس يمكن أن تكون سوقا مثيرة ومربحة للتجارة إذا كنت تفهم جيدا كيفية شراء وبيع العملات. إذا كنت رسمت إلى هذه المنطقة، قد ترغب حتى لجعله حياتك المهنية.
وظائف الفوركس هي سريعة الخطى ويمكن أن تعني ساعات عمل غريبة وأيام عمل طويلة منذ أسواق الفوركس مفتوحة على مدار 24 ساعة في اليوم، خمسة أيام في الأسبوع. وهي تتطلب معرفة بالقوانين واللوائح المنظمة للحسابات والمعاملات المالية والامتثال لها. تتطلب بعض الوظائف المرشحين لاجتياز امتحان واحد أو أكثر، مثل سلسلة 3، سلسلة 7، سلسلة 34 أو سلسلة 63 الامتحانات. إذا كنت مؤهلا للعمل في بلد أجنبي، مهنة في الفوركس يمكن أن يجلب الإثارة المضافة للعيش في الخارج. بغض النظر عن مكان عملك، فإن معرفة لغة أجنبية، لا سيما الألمانية أو الفرنسية أو العربية أو الروسية أو الإسبانية أو الكورية أو الماندرين أو الكانتونية أو البرتغالية أو اليابانية، مفيدة وقد تكون مطلوبة لبعض المواقف. (سوق الفوركس لديه الكثير من السمات الفريدة التي قد تأتي بمثابة مفاجأة للتجار الجدد، وتحقق من سوق الفوركس: من يتداول العملة ولماذا).
هذه المقالة سوف توفر لمحة عامة عن خمسة مجالات مهنية رئيسية في النقد الاجنبى. ضع في اعتبارك أن المواقف المحددة تميل إلى أن يكون لها أسماء مختلفة في شركات مختلفة.
1. محلل سوق الفوركس / باحث العملة / المحلل الإستراتيجي للعملات.
قد يقدم المحلل أيضا ندوات تعليمية وندوات عبر الإنترنت لمساعدة العملاء والعملاء المحتملين على الحصول على مزيد من الراحة في تداول العملات الأجنبية. يحاول المحللون أيضا إنشاء وجود إعلامي من أجل أن يصبح مصدرا موثوقا للمعلومات الفوركس وتعزيز الشركات التي يعملون من أجلها. وبالتالي، هناك عنصر تسويقي كبير ليكون محلل الفوركس. (هذا السوق يمكن أن يكون غادرة للمستثمرين غير المستعدين. تعلم كيفية تجنب الأخطاء التي تحافظ على التجار الفوركس من النجاح، وقراءة أهم الأسباب فشل التجار الفوركس.)
يجب أن يكون المحلل على درجة البكالوريوس في الاقتصاد أو التمويل أو مجال مماثل، ومن المتوقع أن يكون عاما على الأقل من الخبرة في العمل في الأسواق المالية كالتاجر و / أو المحلل ويكون تاجر الفوركس نشط. مهارات الاتصال والعرض مرغوبة في أي وظيفة، ولكنها ذات أهمية خاصة بالنسبة للمحلل. وينبغي أن يكون المحللون أيضا على دراية جيدة بالاقتصاد، والتمويل الدولي والسياسة الدولية.
2. مدير الحساب / تاجر المهنية / التاجر المؤسسي.
هذه المواقف لها حصص عالية جدا: مدراء الحسابات هي المسؤولة عن مبالغ كبيرة من المال، وسمعتهم المهنية وسمعة أصحاب العمل ركوب على مدى التعامل مع تلك الأموال. ومن المتوقع أن تحقق أهداف الربح مع العمل بمستوى مناسب من المخاطر. قد تتطلب هذه الوظائف خبرة مع منصات التداول محددة وكذلك الخبرة في العمل في مجال التمويل ودرجة البكالوريوس في التمويل والاقتصاد أو الأعمال التجارية. وقد يحتاج التجار المؤسسيون إلى أن يكونوا تجار فعالين ليسوا فقط من العملات الأجنبية، بل أيضا من السلع والخيارات والمشتقات وغيرها من الأدوات المالية.
و كفتك يستأجر المحامين والمدققين والاقتصاديين والمتخصصين في التداول الآجلة / المحققين والمهنيين الإدارة. المدققون ضمان الامتثال للوائح كفتك ويجب أن يكون على الأقل على درجة البكالوريوس في المحاسبة، على الرغم من تفضيل الماجستير والمحاسب القانوني المعتمد (كبا) التعيين. يحلل الاقتصاديون الآثار الاقتصادية لقواعد كفتك ويجب أن يكون على الأقل على درجة البكالوريوس في الاقتصاد. يقوم أخصائيو تداول العقود الآجلة / المحققون بالمراقبة والتحقيق في الاحتيال المزعوم، والتلاعب في السوق وانتهاكات الممارسات التجارية، ويخضعون لخبرة العمل والمتطلبات التعليمية التي تختلف حسب الموضع.
وتقع وظائف كفتك في واشنطن، دس، شيكاغو، كانساس سيتي ونيويورك وتتطلب الجنسية الأمريكية وفحص الخلفية. كما يوفر مركز التجارة الحرة التثقيفية للمستهلكين وتنبيهات الغش للجمهور. وبما أن مركز التجارة الحرة يشرف على أسواق السلع الآجلة وخيارات السلع بأكملها في الولايات المتحدة، فمن الضروري فهم جميع جوانب هذه الأسواق، وليس مجرد النقد الأجنبي.
وتشبه هذه الاتفاقية أسواق السلع الآجلة والسلع الأساسية، ولكنها بدلا من كونها وكالة حكومية، فهي منظمة تنظيم ذاتي تابعة للقطاع الخاص يأذن بها الكونغرس. مهمتها هي الحفاظ على سلامة السوق، ومكافحة الغش وإساءة المعاملة وحل النزاعات من خلال التحكيم. كما أنها تحمي وتثقف المستثمرين وتمكنهم من البحث السماسرة، بما في ذلك وسطاء الفوركس، على شبكة الإنترنت. وتقع معظم وظائف نفا في نيويورك، ولكن عدد قليل منها في شيكاغو. (هل تعتقد أن هذه الوظيفة مناسبة لك؟ تعرف على مزيد من المعلومات حول كيفية الوصول إلى - وكيفية تحقيق النجاح، وقراءة أن تصبح محلل مالي.)
وعلى الصعيد الدولي، يمكن للمنظم أن يعمل في أي من الوكالات التالية:
هيئة الخدمات المالية (فسا) في وكالة الخدمات المالية في المملكة المتحدة في لجنة الأوراق المالية والعقود الآجلة اليابانية (سفك) في هونغ كونغ لجنة الأوراق المالية والاستثمارات الأسترالية (أسيك) في أستراليا.
.4 مسوؤول العمليات التبادلية / مسوؤول التدقيق التجاري / مدير عمليات السرافة.
وتشمل مسؤولیات العملیات المرتبطة بعملیات التبادل ما یلي: معالجة حسابات العملاء الجدیدة؛ والتحقق من هويات العملاء كما تقتضي اللوائح الاتحادية؛ معالجة عمليات سحب العملاء والتحويلات والودائع؛ وتوفير خدمة العملاء. الوظيفة عادة ما تتطلب درجة البكالوريوس في التمويل والمحاسبة أو الأعمال التجارية. وحل المشكلات والمهارات التحليلية؛ وفهم الأسواق المالية والأدوات المالية، وخاصة النقد الأجنبي. قد تتطلب أيضا خبرة الوساطة السابقة. (لمزيد من المعلومات، انظر الوسيط أو التاجر: ما هي مهنة الحق بالنسبة لك؟)
والموقف ذي الصلة هو شريك تدقيق تجاري. وتشمل هذه المهمة العمل مع العملاء لحل النزاعات المتعلقة بالتجارة. يجب أن يكون شركاء التدقيق التجاري جيدين مع الناس وقادرين على العمل بسرعة والتفكير على أقدامهم لحل المشاكل. كما يجب أن نفهم تماما تداول العملات الأجنبية ومنصة التداول للشركة من أجل مساعدة العملاء.
ويوجد لدى مدير عمليات الصرف خبرة أكبر ومسؤوليات أكبر من مسؤوليات عمليات الصرف. هؤلاء المهنيين تنفيذ وتمويل وتسوية ومطابقة المعاملات الفوركس. وقد تتطلب هذه الوظيفة الإلمام بالبرمجيات المرتبطة بفوركس، مثل جمعية الاتصالات المالية العالمية بين البنوك (سويفت) التي تستخدم على نطاق واسع. (إن الربط العالمي لنظم الدفع في الولايات المتحدة يجعل التحويلات التجارية والمالية ممكنة، وتحقق من داخل أنظمة الدفع الوطنية.)
5. البرمجيات المطور.
قد لا يطلب من مطوري البرامج أن يكون لديهم معرفة مالية أو تجارية أو فوركس للعمل في وساطة الفوركس، ولكن المعرفة في هذا المجال ستكون ميزة كبيرة. إذا كنت تاجر الفوركس نفسك، سيكون لديك فكرة أفضل بكثير عن ما يبحث عنه العملاء في برامج الفوركس. جودة البرمجيات هي عامل رئيسي يفرق بين وساطة الفوركس من جهة أخرى ومفتاح نجاح الشركة. تواجه الوساطة مشاكل خطيرة إذا كان عملائها لا يمكن تنفيذ الصفقات عندما يريدون أو الصفقات لا يتم تنفيذها في الوقت المحدد لأن البرنامج لا يعمل بشكل صحيح. كما تحتاج الوساطة إلى أن تكون قادرة على جذب العملاء مع ميزات البرمجيات الفريدة ومنصات التجارة الممارسة. (لمزيد من المعلومات في هذا المجال، هذا يجب أن تقرأ، فوركس أتمتة البرمجيات للتجارة حر اليدين.)
وتشمل المواقف الأخرى في الفوركس لأنواع الكمبيوتر مصممي تجربة المستخدم، ومطوري الويب، ومشرفي الشبكات والأنظمة وفنيي الدعم.

الصفحة غير موجودة.
عذرا، تعذر العثور على الملف الذي تبحث عنه.
ربما يكون العنوان قد تغير منذ آخر مرة دخلت فيها الصفحة. ننصحك بالذهاب إلى صفحتنا الرئيسية أو محاولة البحث في موقعنا للعثور على ما تبحث عنه. إذا كتبت العنوان، فتأكد من صحة الهجاء. يمكنك أيضا الانتقال إلى ملف سيتماب أو مؤشر A-Z للحصول على نظرة عامة على موقعنا الإلكتروني. إذا تلقيت هذا الخطأ بعد النقر على رابط من داخل موقعنا على الويب، أو إذا استمرت المشكلة، يرجى الإبلاغ عن خطأ نهاية مزيد من المعلومات.

تعريف حساب فوريكس المؤهل
وأحد أكبر الأوهام في العالم هو الأمل في أن شفاء شرور هذا العالم يمكن أن يعالجه التشريع. 1.
وقد كان للضرائب على العملات الأجنبية (الفوركس) المكاسب والخسائر في أستراليا الماضي المضطرب. وقد وضعت مجموعة من الحالات المخصصة في البداية مجموعة من الحالات التي يقال فيها أن مكاسب وخسائر الفوركس لها طبيعة إيرادات، وأن تكون قابلة للتقييم أو الاستقطاع على التوالي. 2 في وقت الإصلاحات الضريبية في منتصف الثمانينات، وجدت أرباح وخسائر الفوركس على حساب رأس المال طريقها إلى صافي الضرائب. وقد بدأ هذا الأمر بإدخال نظام ضريبة الأرباح الرأسمالية في عام 1985، الذي فرضت بموجبه أرباح وخسائر الفوركس من الأصول المحتفظ بها في حساب رأس المال على الضرائب.
في محاولة تشريعية لاستكمال الدائرة وتجنب أي نقاش حول الانقسام بين الإيرادات / رأس المال، تم في وقت لاحق إدخال القسم 3B السابق من الجزء الثالث من قانون تقييم ضريبة الدخل 1936 (إيتا 1936) في عام 1986 لضمان أن المعاملة الضريبية لمكاسب العملات الأجنبية والخسائر التي تحققت على حساب رأس المال (بما في ذلك الخصوم الرأسمالية) ستتماشى مع المعالجة العامة للأرباح والخسائر من حساب الإيرادات. (3) أوضح مكتب الضرائب في وقت لاحق تشغيل هذا التشريع القصير من خلال وضعه في (سحبه الآن) الضرائب الحكم تر 93/8.
ولوقت قصير كانت الصورة الضريبية لمكاسب وخسائر الفوركس واضحة وكاملة. بيد أنه في أول فرصة لإصدار حكم قضائي، لم تكن خطوط الشعبة 3 باء واضحة تماما - فقد تم محوها وظيفيا. ورأت المحكمة العليا في فكت ضد "موارد الطاقة في أستراليا المحدودة" (إيرا) أنه لا يمكن أن تكون هناك مكاسب وخسائر في الفوركس ما لم يكن من الممكن العثور على تحويل فعلي بموجب العقد الخاضع للشعبة 3B. (4) نصح السيد مايكل داسينزو، وهو كبير مستشاري الضرائب في مكتب الضرائب في أوائل عام 1997، الممارسين بأن المفوض لن يخل بالتقييمات التي تجلب المكاسب والخسائر في حساب العملات الأجنبية وفقا للحسابات (بعد ذلك سحبت) الضرائب الحاكمة تر 93 / 8. ومع ذلك، وبفضل الحماية المشكوك فيها التي قدمها، فإن رسالة السيد أسينزو لم تفعل شيئا يذكر لإخماد القلق المتزايد في السنوات التي تلت قرار المحكمة العليا. 6.
وفي عام 2002، أعلنت الحكومة أنها ستنشر تغييرات في هذا المجال، بما في ذلك تنفيذ التوصيات ذات الصلة الصادرة عن استعراض رالف لضرائب الأعمال التجارية في أواخر التسعينيات. (7) بعد إصدار مشروع القانون في كانون الأول / ديسمبر 2002، والتشاور الواسع النطاق مع أصحاب المصلحة، أدخل 8 تعديلات أدخلت شعبة 775 جديدة في قانون تقييم ضريبة الدخل لعام 1997 (إيتا 1997). وفي حين أن مشروع القانون لم يحصل على الموافقة الملكية حتى 17 كانون الأول / ديسمبر 2003، فإن أحكام النقد الأجنبي الواردة في الشعبة 775 لها أثر رجعي بالنسبة لمعظم دافعي الضرائب اعتبارا من 1 تموز / يوليه 2003. 10 -
الشعبة 775: أحكام الفوركس.
نظام الضرائب لدينا هو مثال بارز على التعقيد بناء على التعقيد. 11.
وقد أصبحت أحكام مكاسب وخسائر الفوركس الواردة في الشعبة 775 من الاتفاق الدولي لعام 1997 سارية المفعول منذ أكثر من أربع سنوات. وطوال السنة التي أعقبت طرحها، أجرى المجتمع الضريبي الكثير من الضجيج بشأن الصعوبات في تطبيق الأحكام، وعدم اليقين المحيط بكل من أثرها المقصود والفعلي، والقلق إزاء الافتقار العام إلى التوجيه فيما يتعلق بتشغيلها. 12- وبعد أقل من ستة أشهر من سنها، كانت الأحكام تسمى "معقدة وغير مؤكدة"، ودعي إلى تعديلها. (13) من المشكوك فيه ما إذا كانت الصعوبات التي وجدت في الامتثال لهذه الأحكام قد خففت كثيرا على مر الزمن منذ تقديمها.
مكاسب وخسائر تحقيق الفوركس.
وبوجه عام، فإن أحكام الفوركس تعمل فيما يتعلق بالمعاملات الضريبية المقومة في العملة الأجنبية (أو غير العاملة) أو التي يمكن الرجوع إليها (14). وتعمل هذه الشركات على تحديد المكاسب والخسائر الناجمة عن مثل هذه المعاملات (المشار إليها في التشريع على أنها مكاسب وخسائر "صرف العملات الأجنبية")، وتوفير المعاملة الضريبية لأي أرباح وخسائر من العملات الأجنبية (الفوركس). يتم تحديد أرباح وخسائر الفوركس في أي وقت يكون فيه الحق أو الالتزام باستلام أو توفير العملة الأجنبية يتوقف أو بالعملة الأجنبية أو الحق في استلام العملات الأجنبية هو في حد ذاته التخلص منها. 15 تنشأ أرباح أو خسائر الفوركس في الوقت الحالي إذا كان هناك ربح أو خسارة يعزى إلى تقلبات أسعار صرف العملات، وفرق بين سعر صرف العملة المتفق عليه والفعلي (الفوري)، أو مبلغ مدفوع أو مستلم لأحد الأجانب خيار العملة الذي انتهت صلاحيته. 16.
ويجوز لدافع الضرائب اختيار أن يكون توقيت وحساب مكاسب وخسائر الفوركس التي تم إجراؤها فيما يتعلق باتفاقات التسهيلات أو بعض الحسابات المصرفية المقومة بعملة أجنبية محددة بشكل مختلف، وفي بعض الحالات يتم تجاهلها. (17) يرد شرح مفصل للقواعد الخاصة فيما يتعلق بالحسابات المقومة بالعملات الأجنبية أدناه من الصفحة 3.
ما لم يكن التأخير بين الاعتراف الضريبي والتسوية قصير بشكل خاص، وتمكين التشريع من تحقيق المكاسب ذات الصلة في معاملة المعاملة الرأسمالية الأساسية (تحت ما يعرف باسم "القواعد قصيرة الأجل")، 18 فإن ربح أو خسارة النقد الأجنبي سوف يعطى العلاج الإيرادات. (19) أدرجت القواعد القصيرة الأجل في الشعبة 775 أثناء عملية التشاور، ولكنها لا تتفق مع المعاملة المحاسبية (التي تعترف عادة بهذه المكاسب أو الخسائر قصيرة الأجل).
وكانت هناك فرصة محدودة لانتخاب هذه القواعد القصيرة الأجل عندما بدأت أحكام الفوركس التي بدأت الآن (رهنا بتقدير المفوض) لجميع الكيانات. 20.
وستوفر التغييرات التي أعلن عنها في 5 آب / أغسطس 2004 أن الكيانات الجديدة ستكون قادرة على أن تنتخب أيضا من القواعد القصيرة الأجل. والأهم من ذلك أن الكيانات التي ظهرت إلى حيز الوجود بعد أكثر من 90 يوما من تاريخ بدء تطبيقها (وهي عادة الكيانات التي تأتي إلى حيز الوجود بعد 28 أيلول / سبتمبر 2003)، ولكن قبل الموافقة الملكية على التعديل المقترح سيكون بمقدورها أن تنتخب بأثر رجعي من القواعد القصيرة الأجل من تاريخ دخولها إلى حيز الوجود إذا قاموا بهذه الانتخابات في غضون 90 يوما من الموافقة الملكية على التغييرات المقترحة. [انظر الحكومة الأسترالية، والخزانة، والضرائب على الترتيبات المالية: تفاصيل التغييرات المقترحة التي أعلن عنها وزير الإيرادات ومساعد أمين الخزانة (5 آب / أغسطس 2004)، الصفحة 3 البند ألف - 4]
خلال الفترة المؤقتة (بانتظار سن التغييرات المعلنة) يمكن توقع هذا التغيير كما هو موضح أدناه في إعداد الإقرارات الضريبية للمنشأة.
التغييرات المعلنة على أحكام الفوركس.
الضرائب هي عمل سهل. أي جهاز عرض يمكن أن يحضر التراكيب الجديدة. أي البخاخ يمكن إضافة إلى القديم. 21.
وفي الخامس من أغسطس / آب 2004 أعلن وزير الإيرادات ومساعد أمين الصندوق، الأونرابل مال بروغ، أن أحكام الفوركس في القسم 775 ستعدل لكي "تمدد نطاق عدد من تدابير التوفير في تكاليف الامتثال في القانون، التعديالت الفنية للتأكد من أن األحكام تعمل على النحو المقصود ". 22.
وكان الإعلان اعترافا بأن بعض الأحكام لا تعمل على النحو المنشود، وأن تكلفة الامتثال لبعض جوانب القانون مرتفعة جدا أو يمكن تحسين الحد الأدنى منها. وقال إن اقتراح الحكومة بمعالجة بعض الشواغل المتزايدة بشأن أحكام النقد الأجنبي هو إعلان مرحب به. ولسوء الحظ، فإن هذه التغييرات المعلن عنها، باستثناء اللوائح التي توفر خيارات لدافعي الضرائب لاستخدام المتوسط ​​المرجح للتكلفة ومتوسط ​​المعدلات (التي نوقشت أدناه)، لم تتقدم بعد. وقد ترك ذلك كل من الممارسين والإداريين في موقف محرج من معرفة قانون النقد الاجنبى المطبق على المعاملات ذات الصلة يخضع للتعديل بأثر رجعي، ومع ذلك لا يعرفون مع أي يقين حقيقي ما قد ينص عليه هذا القانون بصيغته المعدلة.
وترد مناقشة الجوانب الرئيسية للتغييرات المقترحة التي تؤثر على الترتيبات المشتركة بمزيد من التفصيل أدناه من الصفحة 3.
الممارسة الإدارية لمكتب الضرائب.
اتفاق غير مبال، هو أفضل من حمل قضية في القانون 23.
وردا على عدم اليقين الذي أحدثته التغييرات الاستعادية المقترحة وغير المؤثرة على أحكام الفوركس، نشر مكتب الضرائب بيانا عن الكيفية التي سيتم بها إدارة التغييرات بأثر رجعي معلنة. 24 وبتطبيق هذه السياسة، أشار المكتب الضريبي إلى أنه سيسمح بتغييرات الفوركس المعلنة في إطار نظام التقييم الذاتي، وأن دافعي الضرائب الذين يتوقعون التغييرات استنادا إلى إعلان الحكومة لن يكونوا محرومين. 25.
وقد نصح مكتب الضرائب على وجه التحديد بأنه بمجرد أن تكون التغييرات المعلنة قانونا، فإن دافعي الضرائب الذين توقعوا التغيير بشكل صحيح سيحتاجون إلى عدم اتخاذ أي إجراء آخر. ويتعين على دافعي الضرائب الآخرين الذين يتوقعون التغيير بشكل غير صحيح أو يتبعون القانون القائم (إلى الحد الذي لا يبقى فيه خيارا متاحا) أن يسعوا إلى تعديل تقييماتهم ذات الصلة في غضون فترة معقولة من التغييرات المقترحة التي يجري سنها. طالما أنها تصرفت بشكل معقول في أي من الإجراءات المتوقعة، لن تكون هناك عقوبة العجز الضريبي وسيتم تحويل رسوم الفائدة العامة ذات الصلة بالتعديل بالكامل. 26.
ولم تكن هناك أية إشارة حديثة من الخزينة إلى أن هذه التعديلات يجري إحراز تقدم بشأنها وأن مكتب الضرائب قام مؤخرا بتحديث بياناته بشأن التغيرات المعلنة في العملات الأجنبية منذ أكثر من عامين. غير أن هذا التحديث نفسه جاء بعد عامين من الإعلان عن التغييرات المقترحة، مما يشير إلى قرار اتخذته مصلحة الضرائب لمواصلة السماح بمعاملتها الإدارية. وعلاوة على ذلك، ذكر المكتب الضريبي أنه إذا لم يصبح التغيير بأثر رجعي قانونا، فإنه سيقدم المشورة إلى دافعي الضرائب علنا ​​بأن القانون لم يتم تمريره أو إصداره؛ موضحا ملابسات القضايا املعينة، ويطلب أن يتم تقديم طلبات التعديل ذات الصلة إلى حد توقع دافعي الضرائب التغييرات املتبقية. 28 مرة أخرى، إذا تصرف دافعو الضرائب على هذه النصيحة في غضون فترة معقولة، سيتم تحويل أي عقوبات عن العجز ورسوم الفائدة العامة بالكامل. 29 - وبما أن مكتب الضرائب لم يصدر أي مشورة من هذا القبيل، يبدو من المعقول أن يستمر في الاعتماد على بياناته الحالية بأنه يسمح بالتغييرات المعلنة في سوق العملات الأجنبية في إطار نظام التقييم الذاتي.
ومن النقاط الواضحة التي يبدو أنها جديرة بالملاحظة أن مكتب الضرائب كان ثابتا تماما لأنه لا يعتبر التعديلات الرجعية المتبقية كافية لإزالة التزامات دافعي الضرائب بالامتثال للشعبة 775 كلية. أي أنه لا يوجد شيء في التغييرات المقترحة في الفوركس سيزيل الشرط الأساسي الذي يقضي بتحقيق مكاسب وخسائر الفوركس للضريبة عند تحقيقها. 30.
ولا يحق لضرائب دافعي الضرائب التنبؤ بالتغييرات التي لم تصبح بعد قانونا عند تطبيق الشعبة 775، فمن المفيد في كثير من الأحيان النظر في التغييرات المعلنة في 5 آب / أغسطس 2004. والتعديلات المقترحة، التي تهدف إلى جعل الأحكام تعمل على النحو المنشود وحفظ تكاليف الامتثال، لا يزال متوقعا بصورة معقولة اعتبارا من 1 تموز / يوليه 2003.
الفوركس: قضايا في الممارسة العملية.
تختلف المخاطر عكسيا مع المعرفة. 31.
ولن يكون لمعظم دافعي الضرائب معاملات كبيرة بالعملات الأجنبية. على أساس يومي لأولئك دافعي الضرائب مع التعاملات بالعملة الأجنبية محدودة، والقضايا النقد الاجنبى الرئيسية تميل إلى أن تنبع من تحديد سعر الصرف المناسب لاستخدام (قواعد الترجمة) والقضايا فيما يتعلق بالعملات الأجنبية أو حسابات القروض المقومة بالعملات الأجنبية. في حين أن قضايا أخرى سوف تنشأ من وقت لآخر، وبعض هذه القضايا كانت موضوع مناقشة سابقة (32)، والبعض الآخر ببساطة ليست سائدة لهذه الفئة من دافعي الضرائب.
عندما أصدقاء العملة الوحيدة هي البنوك المركزية، انها تتجه الى الانخفاض. 33.
وتتضمن قواعد الترجمة الواردة في القسم 960-50 من قانون التجارة الدولية لعام 1997 بصيغته المعدلة، لأغراض القانون، قواعد دقيقة جدا وغير مرنة لترجمة المبالغ المقومة بالعملة الأجنبية ذات الصلة بالضرائب إلى دولارات أسترالية. وكانت اللوائح التي وضعت في عام 2005 تطورا يلقى الترحيب، مما أدى إلى تخفيف بعض هذه الوصفة الصارمة. 34 وتجدر الإشارة إلى أن اللوائح تسمح بمعدل غير المعدل السائد في الأوقات المحددة في الجدول الفرعي 960-50 (6) من إتا 1997 لاستخدامها لترجمة المبالغ الضريبية ذات الصلة. وعلى وجه الخصوص، تنص اللوائح التنظيمية على ما يلي:
خيار استخدام أسعار الصرف المستخدمة في تقاريرها المالية المراجعة لترجمة نفس المبالغ لأغراض الضرائب (معدل التقارير المالية)؛ و.
خيار بديل لاستخدام معدل متوسط ​​خلال فترة ذات صلة لترجمة جميع المبالغ المناسبة في تلك الفترة (متوسط ​​السعر). 35.
وتناقش هذه الخيارات بمزيد من التفصيل أدناه في سياق الخيارات المتعلقة بالمعدلات المستخدمة في الحسابات المقومة بالعملات الأجنبية الواردة أدناه في الصفحة 3.
معدل التقارير المالية: عدم القدرة على استخدام معدل التحوط.
ومن المهم إدراك أن القدرة على استخدام المعدلات المطبقة المستخدمة في التقارير المالية لترجمة المبالغ المقابلة لأغراض ضريبية قد لا تعني دائما مجرد اعتماد الأرقام المحاسبية. ومن الضروري الاعتراف بالأمر ذي الصلة الذي يجري ترجمته لأغراض ضريبية لأول مرة في تلك الحسابات. 36 قد يبدو ذلك نقطة واضحة ولكنه يعني، على سبيل المثال، عندما يتم التحوط من معاملة ويتم تسجيل المعاملة ببساطة بمعدل التحوط، فمن المرجح أن لا يمكن استخدام هذا المعدل لأغراض ضريبية. ويرجع ذلك إلى أن الممارسة المحاسبية التي تقوم ببساطة بتبويب بند أساسي باستخدام معدل التحوط عادة ما تكون مختصرة لتقدير أداة التحوط نفسها بشكل منفصل) قد يكون ذلك شائعا، على سبيل المثال، للتحوطات قصيرة األجل (. ومع ذلك، ال تزال هناك حاجة إلثبات أداة التحوط ألغراض ضريبية كمعاملة منفصلة. 37.
إذا كان من الممكن استخدام معدل التحوط لترجمة البند الأساسي، بالإضافة إلى الاضطرار إلى الاعتراف بشكل منفصل بأداة التحوط للأغراض الضريبية (والتي، نظرا لأنها ليست مبلغا يظهر في التقارير المالية، يمكن القول أنه يجب ترجمتها باستخدام القواعد العادية في القسم الفرعي 960-50 (6) من إتا 1997)، سيؤدي حساب مزدوج لخسارة أو خسارة الفوركس المنسوبة إلى استخدام معدل التحوط. ولذلك قد يكون من غير املالئم استخدام هذا املعدل ألغراض ضريبية، وفي هذه احلالة يجب النظر في كل من جانبي املعاملة) كل من البند املغطى وأداة التحوط (بشكل منفصل. 38.
حسابات بالعملة الأجنبية.
يا ما شبكة متشابكة نحن نسج عندما نمارس لتخفيف. 39.
ولا تزال الحسابات الجارية والقروض الجارية بالعملات الأجنبية تشكل مصدرا لكثير من التوتر مع مخصصات النقد الأجنبي، على الرغم مما يلي:
وفرة هذه الحسابات؛
• التبسيط العام للعديد من المعاملات داخل هذه الحسابات وخارجها؛ و.
جهود الحكومة في استهداف خيارات التوفير في تكاليف الامتثال لهذه الترتيبات.
وفي غياب أي انتخابات، تطبق أحكام الفوركس على حساب المكاسب والخسائر من المعاملات على هذه الحسابات، وتكون قابلة للتبديل في طبيعتها، على أساس أول من يخرج أولا. (40) كان من المسلم به دائما أن مثل هذه الطريقة قد تتسبب في تكاليف كبيرة في الامتثال للحسابات الكبيرة الحجم، مع المذكرة التوضيحية المرفقة بمشروع القانون التي أدخلت أحكام النقد الأجنبي على النحو التالي:
"في حين أن مبدأ [أولا - في البداية أولا] يقدم قاعدة ترتيب معينة ومتسقة للأصول والخصوم القابلة للتبديل، وتطبيقه على الحسابات المصرفية مع ارتفاع حجم المعاملات قد يؤدي إلى تكاليف الامتثال الهامة لبعض دافعي الضرائب. في الحسابات ذات القيمة المنخفضة والمعاملات ذات الحجم المرتفع، تسجل القيمة A $ - المفترضة في وقت الاعتراف الضريبي [السحب أو التحويل من الحساب الجاري أو دفع حساب القرض] من جميع ديون الحسابات وتعقبها مرة أخرى إلى قيمة كل إيداع أو سحب هو ممارسة معقدة محتملة. وتستلزم هذه العملية تكاليف الامتثال التي قد تكون مرتفعة بشكل غير متناسب، مقارنة مع مبلغ الإيرادات الضريبية المعنية.
وفي محاولة لمعالجة هذه التكاليف الهامة للامتثال، هناك أربعة خيارات متاحة الآن لدافعي الضرائب فيما يتعلق بحساباتهم بالعملات الأجنبية، ويناقش كل منها أدناه.
وسيحتاج دافعو الضرائب الذين لا يستفيدون من أي من الخيارات الأربعة التي نوقشت أدناه، إلى تحديد مكاسبهم وخسائرهم على أساس أولا أولا، على النحو المبين أعلاه. إذا تم إعادة تحويل حساباتهم بالعملة األجنبية ألغراض محاسبية، يمكن تحقيق "قصري" لتحديد األرباح أو الخسائر األولية أوال باستخدام طريقة اإلعادة، مما يضيف فعليا المبالغ غير المحققة إلى إعادة التحويل ربح أوخسارة. ويرد شرح أكثر تفصيلا في المرفق جيم لمحضر اجتماع فريق عمل فوركس التابع للجنة المالية الوطنية المعنية بالاتصال الضريبي (نتلغ) في 18 فبراير / شباط 2004 [المقدم من جمعية الضرائب على الشركات].
وفي الاجتماع الرئيسي الذي عقده المكتب الوطني لنقل الأسلحة النووية في 15 آذار / مارس 2005، أفاد المكتب الضريبي بأنه يقبل بأن طريقة العد إلى الوراء أعطت نفس النتيجة كحساب أولي من البداية، وأبلغت موظفيها الميدانيين المعنيين بذلك.
متوسط ​​التكلفة المقدرة.
ويجوز لدافعي الضرائب أن يختاروا كتابة كتابة قيمة المبالغ التي يتم تداولها داخل الحساب وخارجه على المتوسط ​​المرجح، بدلا من أساس أول من يخرج أولا (إذا تم إجراؤه بعد 26 تموز / يوليه 2005، فإن هذا الانتخاب قد يعود تاريخه إلى 1 تموز / يوليه 2004، أو خلاف ذلك سوف تطبق بأثر رجعي). 42.
ومعظم انتخابات الفوركس وخياراته متاحة فقط على أساس مستقبلي) مع محدودية نطاق االنتخابات بأثر رجعي في الحاالت التي لم يتم فيها وضع القوانين نفسها مع الوقت الكافي لدافعي الضرائب إلجراء االنتخابات ذات الصلة (. ومع ذلك، يمكن لدافعي الضرائب اختيار إجراء انتخابات متوسط ​​مرجح اعتبارا من 1 يوليو 2004 في أي وقت. يجب توخي الحذر من أن االنتخابات جارية وحيث يحتفظ دافعي الضرائب بحسابات وفقا للمبادئ المحاسبية المقبولة عموما، ال يمكن سحبها إال في الظروف التي تغيرت فيها الممارسات المحاسبية للمنشأة. [انظر الفقرتين الفرعيتين 775-145.01 (4) و (6) من الجزء 4 من لوائح تقييم ضريبة الدخل لعام 1997].
ومن المهم أن نلاحظ أن طريقة المتوسط ​​المرجح للتكلفة تنطوي على حسابات تفصيلية تماما، ولذلك فهي ليست سوى خيارا جذابا بصفة خاصة بالنسبة لدافعي الضرائب الذين يحددون بالفعل المكاسب والخسائر من حساباتهم على أساس المتوسط ​​المرجح لأغراض أخرى (مثل لأغراض المحاسبة) .
الخيارات المتعلقة بمعدلات الاستخدام (اللوائح)
ويجوز لدافعي الضرائب أن يختاروا (كما هو مبين من خلال حساباتهم) لتحديد مكاسب وخسائر تحقيق الفوركس من حساباتهم (في إطار الأسلوب الأول من حيث التكلفة الأولى أو المتوسط ​​المرجح للتكلفة)، وذلك من خلال تحويل المبالغ الممنوحة / المودعة وسحب / نقل / مدفوعا 43 باستخدام معدل متوسط ​​ذي صلة في ذلك الوقت. 44 على سبيل المثال، عند إيداع وديعة في الحساب إما في المتوسط ​​المرجح أو الأسلوب الأول من الدرجة الأولى، يجوز لدافع الضرائب استخدام متوسط ​​سعر الصرف المطبق للشهر الذي تم فيه الإيداع، بدلا من ترجمة ذلك الإيداع في سعر الصرف الفوري المطبق في وقت ذلك الإيداع. 45.
وبدلا من ذلك، شريطة أن يتم في الواقع ترجمة المبلغ المعني إلى الدولار الأسترالي (أو العملة الوظيفية الأخرى) لأغراض المحاسبة، يمكن استخدام أسعار الصرف المستخدمة في التقارير المالية المدققة لدافعي الضرائب لترجمة المبالغ ذات الصلة لأغراض التغذية في المرحلة الأولى، في المتوسط ​​أو الحساب المرجح للأغراض الضريبية. 46 مرة أخرى، قد يتضح هذا الاختيار من خلال الحسابات المستخدمة، بدلا من القانون الذي يشترط إجراء انتخابات فعلية كتابة.
هذه الخيارات تعفي دافعي الضرائب من بعض الحسابات المضنية التي قد تكون مطلوبة إذا كانت جميع المبالغ ذات الصلة تترجم بأسعار الصرف الفوري. ومع ذلك، فإن اختيار المعدل لا يتغلب في حد ذاته على الحاجة إلى القيام أولا بأول أو حسابات متوسط ​​مرجح في الوقت الذي يتم فيه تحويل المبالغ من حساب جاري أو كل أو جزء من القرض يتم دفعه لأسفل.
محدودة الانتخابات التوازن.
يجوز لدافع الضرائب أن ينتخب كتابيا لحساب واحد أو أكثر من حساباته الحالية أو القروض التي هي "حساب فوريكس مؤهل" لتكون خاضعة لانتخابات محدودة الرصيد.
حساب فوريكس مؤهل.
حساب الفوركس المؤهل هو حساب بالعملة الأجنبية التي لها الغرض الأساسي لتسهيل المعاملات أو التي هي حساب بطاقة الائتمان. (47) يشترط الإبقاء على الحسابات المؤهلة لحساب الفوركس مع مصرف أو مؤسسة مالية أخرى على نطاق واسع. 48.
تأثير اجتياز اختبار التوازن المحدود.
سيختبر حساب فوريكس المؤهل اختبار الرصيد المحدود في الحالات التالية:
وهي خاضعة للانتخابات المحدودة المتعلقة بالميزانيات؛ و.
وبصفة عامة، فإن الأرصدة الإجمالية (الخصم و / أو الائتمان) لجميع الحسابات المؤهلة التي تخضع للانتخابات أقل من قيمة الدولار الاسترالي التي تبلغ 250،000 دولار. (49) يحدد المعدل المستخدم لتحديد هذا المعادل بالدولار الأسترالي للسنة بحيث لا يتم اجتياز الاختبار أو فشله طوال سنة دخل أخرى غير التحركات في رصيد العملة الأجنبية. 50 وتسمح قواعد التخزين المؤقت عموما بخرق هذه العتبة مرتين خلال سنة دخل إذا عاد الرصيد بسرعة إلى الحد الأقصى البالغ 000 250 دولار. 51.
إذا تم تمرير اختبار الرصيد المحدود، فإن أي مكاسب وخسائر تحقق من الفوركس، وكذلك أية أرباح وخسائر متعلقة بفروق العملة الأجنبية (غت) تعزى إلى تقلبات أسعار العملات في وقت السحب أو التحويل من الحساب (أو دفع حساب القرض) يتم تجاهلها.
بالنسبة لحسابات الفوركس المؤهلة على حساب رأس المال، فإن اجتياز اختبار الرصيد المحدود (والذي يتضمن خضوعه لانتخابات صالحة) له تأثير في أخذ أية مكاسب وخسائر ناتجة عن الحساب والتي تنسب إلى تحركات العملة خارج صافي الضريبة.
وكما هو مبين أدناه في مناقشة حسابات القروض المشتركة بين الشركات، هناك تغيير مقترح لتمكين إعادة تحويل حسابات الفوركس المؤهلة التي لا يتم الاحتفاظ بها لدى مصرف أو مؤسسة مالية (أي السماح لجميع الحسابات بالعملات الأجنبية التي يكون الغرض الرئيسي منها تسهيل المعاملات التي يتعين إعادة ترجمتها عند انتخاب دافعي الضرائب). [الحكومة الأسترالية، وزارة الخزانة، فرض الضرائب على الترتيبات المالية: تفاصيل التغييرات المقترحة التي أعلن عنها وزير الإيرادات ومساعد أمين الخزانة (5 آب / أغسطس 2004)، الصفحة 2 البند ألف - 2]
إذا تم تنفيذ هذا التغيير المعلن بالطريقة التي تمت صياغتها في البند 22 من الجزء الأول من الجدول 1 من قانون تعديل قانون الضرائب (فرض الضرائب على الترتيبات المالية) لعام 2007 (الذي تم إدخاله إلى مجلس النواب في 20 سبتمبر 2007)، فإن نطاق فإن الحسابات القادرة على الاستفادة من انتخابات محدودة الرصيد (وإلى الحد الذي يتسم فيه الحساب بطابع رأسمالي، وستحقق أرباحه وخسائره المستبعدة من صافي الضرائب)، ستوسع أيضا لتشمل أي حسابات يحتفظ بها لغرض تيسير المعاملات (تخضع بالطبع إلى مجموع جميع الحسابات الخاضعة للانتخابات التي تتجاوز عتبة ما يعادل 250،000 دولار أسترالي ذات الصلة.
يجوز لدافعي الضرائب أن ينتخبوا كتابيا لواحد أو أكثر من "حسابات الفوركس المؤهلة" (كما هو موضح أعلاه) ليتم إعادة ترجمتها. وكما هو الحال في انتخابات التوازن المحدود، فإن انتخابات إعادة التحويل تسمح أيضا "بتأهيل حسابات الفوركس" التي تخضع للانتخابات لكي تكون لها أرباح نقدية وفوركس وخسائر رأسمالية تعزى إلى تقلبات أسعار العملات (التي تؤخذ في الحسبان في إطار أحكام معاهدة قانون النقد الأجنبي). ومع ذلك، خلافا للانتخابات محدودة التوازن التي لا تفرض أي نقطة ضرائب أخرى على الحساب، فإن انتخابات إعادة التحويل تحل محل هذه المكاسب والخسائر المتجاهلة لتحقيق ربح أو خسارة تحقيق فوريكس جديدة محسوبة في إطار حدث تحقيق العملات الأجنبية 8 (ربح أو خسارة إعادة التحويل). 53.
A retranslation gain or loss is calculated by comparing the Australian dollar value of the account at the opening and closing dates (adjusted for any deposits and withdrawals made throughout the year). 54 In many cases this will mirror an entity’s accounting treatment and in so doing will save compliance costs. However, it is important to realise that by measuring fluctuations in account values, this method will, unlike the default rules, bring to tax forex gains and losses that are not yet realised.
The burden of choice.
Whilst the default rules for calculating gains and losses from foreign currency denominated accounts can be cumbersome to apply, 55 ironically much of the complexities associated with traversing this area of the forex provisions has been created by the need to consider, and where relevant comply with the particular (typically prescriptive) rules associated with these ‘compliance cost saving’ elections and options designed for such accounts.
In particular, some of the main practical difficulties being faced today are set out in the following paragraphs:
Accounts opened prior to the commencement of the forex provisions.
Gains and losses from foreign currency denominated accounts.
The legal nature of a bank account is that of a contract (a debt agreement) between the bank and the customer, constituting a single chose in action in respect of the customer’s right to be repaid monies previously deposited. 56 While deposits over time may add to the value of this right, in the typical case the right itself stems from the single banking contract, rather than from a series of contracts. 57.
Where the account is denominated in a foreign currency, the customer’s right to receive the outstanding balance will be a right that, when it ceases, will result in a forex realisation event 2 happening (the ending of a right to receive foreign currency). 58 It is said that when an amount is withdrawn or transferred out of such an account the customer’s rights are extinguished or satisfied to the extent of that transferred sum. 59 A forex realisation gain or loss may therefore be made upon such a withdrawal or transfer (as it is said that part of the customer’s right to receive foreign currency ceases at this time). 60.
In addition, a capital gain or loss may also arise under the CGT provisions (subject to the application of any relevant anti-overlap rules). 61.
With the exception of the application of CGT, the same principles apply to a foreign currency denominated loan (liability) account. 62.
Date account opened critical.
To determine the tax treatment of gains or losses from foreign currency accounts, it is critical to know the date the relevant account was opened. As a general rule, the forex provisions apply prospectively from a taxpayer’s applicable commencement date (generally 1 July 2003). 63.
Unless an entity has elected to have all forex gains and losses made after their applicable commencement date 64 – including those in respect of transactions entered into before that time (pre-forex transactions) – subject to taxation, as a general proposition forex gains and losses from these pre-forex transactions should be disregarded. However, there are particular quirks to the rules in relation to pre-forex transactions, and this general rule does not always hold true. Relevantly, gains and losses from foreign currency denominated accounts will only disregarded under the pre-forex transaction rules to the extent that the relevant right (to receive money from the bank or similar) or obligation (to repay the foreign currency loan):
arose under an eligible contract (within the meaning of the former Division 3B of Part III of the ITAA 1936) that was entered into before the entity’s applicable commencement date; 65 or.
was acquired (in a CGT sense) or incurred before the applicable commencement date. 66.
Rights/obligations arising under a pre-forex account that is an eligible contract.
Under Division 3B of Part III of the ITAA 1936, an eligible contract is defined as a contract or related hedging arrangement entered into on or after 19 February 1986. 67 A current account or loan account will therefore be an eligible contract if it was entered into (opened or established) on or after this date.
Any deposits made after the time of initial acquisition of such a current account, or any subsequent draw-downs from such a loan account, are said to respectively add to an entity’s rights or obligations under the account. 68 The source of the right to withdraw the additional funds contributed, and the obligation to repay the additional funds advanced, is the relevant current account or loan account contract. 69 As such, if the relevant account was opened between 19 February 1986 and the entity’s applicable commencement date (say 1 July 2003), its balance will be a right or obligation arising under an eligible contract entered into before 1 July 2003, even if the entity added to this balance after that date.
Accordingly, subject to any relevant elections being made, all forex gains and losses arising on a withdrawal or transfer from a current account, or repayment of all or part of a loan account, will be disregarded where that account was entered into between 19 February 1986 and the entity’s applicable commencement date.
Note that while current and loan accounts opened between 19 February 1986 and the relevant applicable commencement date will have forex gains and losses from them disregarded under Division 775, capital gains and losses will still be recognised in respect of any currency fluctuations when funds are withdrawn or transferred from a current account [See ATO ID 2003/551]. To determine the cost base of such a gain or loss, see ATO ID 2003/803]. Forex gains and losses made on repayment of an obligation under such a capital loan account, not being a CGT asset, will typically be outside the tax net.
Rights/obligations acquired pre-forex.
Current and loan accounts entered into prior to 19 February 1986 are not eligible contracts, however, will still have forex gains and losses made from them disregarded to the extent to which the gain or loss relates to a right or obligation acquired before an entity’s applicable commencement date. 70 Based on the views of the Commissioner, deposits and draw-downs are said to respectively add to the rights and obligations under current and loan accounts, while withdrawals and repayments are said to respectively decrease them. At the time of an entity’s applicable commencement date, the net balance standing to the credit of any current account, and the net amount outstanding of any loan account, will therefore represent the total outstanding rights and obligations acquired before the applicable commencement date in respect of these accounts. Forex gains and losses made on cessation of these rights and obligations will be disregarded under Division 775 of the ITAA 1997. 71.
However, the Commissioner is of the view that forex gains and losses made on the cessation of any subsequent rights and obligations (that is, those acquired or incurred after the applicable commencement date) will not be disregarded, and will be brought to tax under Division 775 when eventually realised. 72.
Generally, any existing current or loan account that was opened prior to 19 February 1986 may arguably become subject to Division 775 once its balance as at 1 July 2003 has been depleted. This means that an entity should keep track, on a first-in first-out basis (or weighted average basis if so chosen), of when the opening balance at its applicable commencement date of such accounts has been exhausted, after which time forex realisation gains and losses made from such an account will be subject to tax treatment under Division 775 of the ITAA 1997.
Current accounts opened prior to 19 February 1986 may also be subject to the capital gains regime at the time funds are withdrawn or transferred from the account, but only where the account is not a pre-CGT asset (that is, only where the account was opened between 20 September 1985 and 18 February 1986). 73 In these limited circumstances, the capital gains tax regime will apply to bring to tax forex gains and losses made on the withdrawal of the balance standing to the credit of the account as at the applicable commencement date, while forex gains and losses on any subsequent balances will be accounted for under Division 775.
Based on the current law and the interpretative positions taken by the Tax Office, the following table summarises the tax treatment of foreign currency denominated bank or loan accounts, assuming:
the account holder has not made any elections under Division 775 of the ITAA 1997;
the account is held on capital account;
gains and losses from the account are not of a private or domestic nature, or incurred (or would be incurred) in gaining or producing exempt income or non-assessable non-exempt income; و.
the account is such that, following the decision in ERA, no foreign exchange gains or losses will be realised absent a specific translation rule such as that in section 960-50 or the former section 103-20 of the of the ITAA 1997.
For the purposes of the table, an applicable commencement date of 1 July 2003 has also been assumed.
TIMELINE FOR TAX TREATMENT OF FOEIGN CURRENCY DENOMINATED ACCOUNTS.
Date Account Established.
Tax Treatment of Forex gains and losses.
Tax treatment of forex gains and losses.
Prior to 20 September 1985.
To extent made on cessation (withdrawal) of balance as at 1 July 2003:
Outside tax net.
To extent made on cessation (repayment) of balance as at 1 July 2003:
Outside tax net.
To extent made on cessation (withdrawal) of any balance acquired after 1 July 2003 (on FIFO basis):
Gains assessable and losses deductible under Division 775.
To extent made on cessation (repayment) of balance incurred after 1 July 2003 (on FIFO basis):
Gains assessable and losses deductible under Division 775.
Between 20 September 1985 and 18 February 1986.
To extent made on cessation (withdrawal) of balance as at 1 July 2003:
Gains and losses subject to capital gains tax treatment.
To extent made on cessation (repayment) of balance as at 1 July 2003:
Outside tax net.
To extent made on cessation (withdrawal) of any balance acquired after 1 July 2003 (on FIFO basis):
Gains assessable and losses deductible under Division 775.
To extent made on cessation (repayment) of balance incurred after 1 July 2003 (on FIFO basis):
Gains assessable and losses deductible under Division 775.
Between 19 February 1986 and 30 June 2003.
Gains and losses subject to capital gains tax treatment.
Outside tax net.
On or after 1 July 2003.
Gains assessable and losses deductible under Division 775.
Gains assessable and losses deductible under Division 775.
It is obvious from the above that the date a foreign currency denominated account is opening will in many instances determine its tax treatment. Notably, some foreign currency denominated accounts opened more than 17 years prior to the commencement of Division 775 may eventually have gains and losses subject to that Division, whilst younger accounts opened prior to the commencement of the Division will not. This is something to be wary of.
It is evident from the above, that transactions on foreign currency denominated accounts opened between 19 February 1986 and the taxpayer’s applicable commencement date will not be subject to the forex provisions without election. That is, without a relevant election, such accounts will remain subject to the law as it stood prior to the commencement of Division 775 of the ITAA 1997. For current accounts held on capital account, this means being subject to the capital gains tax provisions.
Entities with such accounts that are qualifying forex accounts may instead wish to avail themselves of either the limited balance election (to take foreign exchange gains and losses made in respect of the account outside the tax net) or the retranslation election (to account for forex gains and losses on a retranslation, rather than a realised basis), both discussed above. Technically, this seems available on the face of the law. Nothing in the definition of a qualifying forex account confines it to accounts opened on or after 1 July 2003. 74.
As discussed above, the effect of making a valid limited balance election in respect of an account and passing the limited balance test is to disregard both forex gains and losses, as well as capital gains and losses attributable to currency fluctuations, from that account. 75.
Likewise, a taxpayer making a retranslation election for such an account will also have these gains and losses disregarded, and substituted for gains and losses made on a retranslation basis under forex realisation event 8. 76 Nothing in section 775-165 of the ITAA 1997 (which deals with forex gains and losses made in respect of rights acquired and obligations incurred prior to the applicable commencement date, or otherwise arising under eligible contracts entered into prior to the applicable commencement date) operates to disregard a retranslation gain or loss 77 from Division 775. This is irrespective of the date on which the entity opened or acquired the relevant account from which that retranslation gain or loss was made.
However, at the Forex Working Party of the National Taxation Liaison Group (NTLG) the Tax Office expressed the view that to make a limited balance election or a retranslation election in respect of a pre-forex account would be inconsistent with the policy behind the elections (which is to reduce the cost of complying with Division 775). Given that these elections can also be withdrawn and then remade, the Tax Office also expressed concern that it would be unintended for taxpayers to be able to jump in and out of Division 775 as it suited them. 78.
From a practitioner viewpoint the issue is that these elections, whilst arguably aimed towards reducing Division 775 compliance costs, could also be utilised so as to reduce the cost of complying with the tax law more generally in respect of affected accounts. In an effort towards alleviating this uncertainty, in August 2004 the Government announced that taxpayers would, with effect from 1 July 2003, be able to bring pre-forex accounts within the scope of Division 775 (and then presumably be able to make the relevant elections), but if they did so they would remain subject to Division 775. 79.
This announced change offers some protection to entities who have already made relevant elections in respect of their pre-commencement date accounts. The stated 1 July 2003 date of effect, together with the Tax Office’s administrative treatment allowing taxpayers to anticipate the announced changes, provides some comfort.
However, other changes announced include new entry/exit rules on moving in and out of retranslation (see table item A3.7 of Taxation of Financial Arrangements: Details of proposed changes announced by the Minister for Revenue and Assistant Treasurer accompanying Minister for Revenue and Assistant Treasurer Mal Brough Press Release No. 002, 5 August 2004). This suggests that on enactment of this change, the law will provide (also with effect from 1 July 2003) that on entry of a pre-commencement account into retranslation, entities should have calculated a balancing charge. Amendments may thus be required once this change is enacted.
Retranslation of inter-company loan accounts.
Many taxpayers retranslate their inter-company accounts between foreign group entities in accordance with Australian Accounting Standard AASB 121. However, retranslation under Subdivision 775-E of the ITAA 1997, which replicates this retranslation in a rudimentary sense, is only available for qualifying forex accounts. As outlined above, qualifying forex accounts are accounts maintained with (broadly), banks and similar financial institutions, for the purpose of facilitating transactions. Although inter-company accounts are transactional, they are maintained in the accounts of the relevant entities, and not with a bank or similar financial institution (except in the often uncommon case where the relevant group entity happens to be such a financial institution). As such, under Division 775 of the ITAA 1997 as it stands, entities with foreign currency denominated inter‑company accounts are unable to avail themselves of this compliance cost saving measure.
However, the outstanding announced forex changes include a proposed change to enable all transactional accounts, and not just those maintained with banks or similar financial institutions, to take advantage of the retranslation election with retrospective effect from 1 July 2003. 80 Unlike the other proposed forex amendments announced on 5 August 2004, this announced change, being included in the recently introduced TOFA 3&4 legislative package, has had draft legislation tabled in respect of it. 81.
Coupled with the changes already discussed above enabling pre-forex accounts to take advantage of the Division 775 elections, following the enactment of the announced changes the retranslation election should be available for inter-company loan accounts irrespective of when they were opened. 82 As also detailed above, these changes are all part of the Tax Office’s published administrative practice enabling them to be anticipated by entities without fear of penalty.
Taxpayers who will be subject to the proposed TOFA rules contained in the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2007 (generally, entities with a turn-over of greater than $100 million or those electing in), can choose to retranslate one or more of their qualifying forex accounts by using their accounting figures direct from AASB 121. This will help to reduce compliance costs.
This choice is an additional option available for taxpayers subject to TOFA, separate to the irrevocable option available to all taxpayers who prepare relevant audited accounts to retranslate all relevant foreign currency denominated arrangements using AASB 121 (discussed in more detail below)
Uncertainty with low-balance accounts deemed to be outside tax net.
In a further effort to reduce the costs of complying with forex obligations, the Minister for Revenue and Assistant Treasurer also announced changes specifically concerning low-value foreign currency denominated bank accounts of individuals. The accompanying documentation explained that, with effect from 1 July 2003 the limited balance election would be amended ‘so that individual taxpayers with appropriate small foreign currency holdings will be able to benefit from the limited balance account election even though the taxpayer has not made an election’. 83 Given the growing level of concern about the ability for individuals to cope with the heavy cost of complying with Division 775 as it would otherwise apply in default to these accounts, 84 this was another welcome proposal.
Like the other changes announced on the 5th August 2004, this is included within the Tax Office’s administrative treatment of enabling taxpayers to reasonably anticipate this change without risk of penalty.
However, the extreme difficulty now faced is how to go about reasonably anticipating this change, when there is so much left unanswered in the 5th August 2004 details of this announcement. Broadly, some of the questions that arise include:
Who are the individuals with ‘appropriate small foreign currency holdings’?
Will it only be available to those taxpayers whose combined qualifying forex account balances total the Australian dollar equivalent of $250,000 or less? If so, certain individuals with foreign house and land holdings (and associated mortgages) may not qualify, even if they hold other low value accounts.
Instead, will the change when enacted have sufficient flexibility to enable only a select number of an individual’s accounts (to the extent that their balances do not exceed the Australian dollar equivalent of $250,000) to benefit from the limited balance election, in situations where looking at all of that individual’s accounts would breach the $250,000 threshold? If so, how would the relevant accounts be selected?
Will the relevant accounts considered be limited to those maintained with banks and other financial institutions, despite the drafted amendments which propose to expand the concept of a qualifying forex account to any account that facilitates transactions? 85.
Will it be a requirement that the individual ‘benefit from the limited balance account election’ in the sense of their tax position before this change will apply to them? If so, what about individuals that would have otherwise been entitled to deduct a forex realisation loss in respect of their appropriate small value holdings? Alternatively, is the benefit seen to be provided though the compliance cost savings this proposal will presumably bring?
Will this change also take account of the proposal that ‘taxpayers can bring bank accounts that existed prior to the commencement of the foreign currency provisions within the scope of Division 775’, 86 so that pre-forex accounts may also benefit from the limited balance election without having to make the election? If not, individuals would still be under an obligation to recognise capital gains and losses on these accounts as is relevant.
Will individuals otherwise subject to the ‘benefit’ of the limited balance account election otherwise be able to elect back into being dealt with under the primary provisions of Division 775 if they wish to bring their forex gains and losses to account for tax purposes? Whilst the forex provisions, with the general requirement for upfront, prospective elections, has gone to pains to avoid any prospect of cherry picking, one feels that upfront from the commencement of this amendment individuals should be able to ‘elect’ to have their otherwise deemed limited balance accounts not subject to these rules.
Whilst the objective behind this announced change seems well intended, it is a difficult law to anticipate, even in light of the Tax Office’s announced administrative treatment that this may be done. 87 Moreover, the Tax Office is constrained by it’s practice statements from elaborating any further on the limited public information available, 88 so taxpayers and practitioners seem left to wander this maze unaided.
In light of this uncertainty, a reasonable approach that gives effect to the compliance cost saving aims of the proposed change and takes appropriate consideration of the context in which it was made (including by giving appropriate weight to other changes announced at the same time) would seem to be one (of a few potential options) that may be anticipated without risk of penalty. It is the author’s view it is probably unlikely (albeit not unreasonable) for the benefit of this change to extend to taxpayers with accounts with a total combined account balance in excess of the Australian dollar equivalent of $250,000, but with one or more low-balance accounts. It would be advisable for one taking the opposite view to as a minimum select those accounts they will take as being subject to this proposed change based on their small size or high compliance costs (perhaps indicated by high turnover) rather than in preference to say one currency over another, or with the benefit of hindsight as to the currency movements. Such alternatives would seem unlikely to be considered to be a reasonable means of anticipating the announced changes.
When I hear any man talk of an unalterable law, the only effect it produces on me is to convince me that he is an unalterable fool. 89.
Stages 3 and 4 of the Taxation of Financial Arrangements regime were introduced into Parliament on 20th September 2007. 90 Under the Bill as introduced (‘the TOFA Bill’), proposed Division 230 of the ITAA 1997 will not generally apply to the gains and losses from financial arrangements of individuals and businesses with an aggregated annual turnover of $100 million or less ($20 million for financial institutions) other than their securities otherwise subject to Division 16E of Part III of the ITAA 1936, or unless they so elect. 91.
However, for these taxpayers thought not to be impacted by the TOFA changes, it is important not to overlook the impact the TOFA Bill will have on Division 775 of the ITAA 1997. Such taxpayers can (subject to the TOFA Bill being enacted and commencing) make a general foreign exchange retranslation election if they prepare audited financial reports in accordance with the accounting standards. 92 Notwithstanding the fact that these taxpayers will not be subject to proposed Division 230 in respect of their gains and losses from their financial arrangements, making a general foreign exchange retranslation election under proposed Division 230 enables the retranslation method under the accounting standards to be used to determine all foreign exchange gains and losses from relevant arrangements. 93 That is, the method can be applied for purposes other than determining Division 230 gains and losses, and to arrangements other than financial arrangements.
Specifically, a taxpayer making such an election under proposed Division 230, that is not otherwise subject to that Division in any practical sense, will have its forex realisation gains and losses on all arrangements that it retranslates through profit and loss under the relevant accounting standards, 94 by simply picking up the accounting gain or loss. 95.
These gains and losses will be picked up in Division 775 under proposed forex realisation event 9, which in respect of arrangements subject to the relevant accounting standard, will apply to the exclusion of all other forex realisation events (unless roll-over relief for a facility agreement has been chosen), and to the exclusion of CGT events C1 and C2. 96.
If enacted as introduced, proposed Division 230 (and the changes to Division 775 discussed under this heading above) will commence from 1 July 2009 for most taxpayers, with an option to elect in early for income years commencing on or after 1 July 2008. 97 Whilst the TOFA Bill grandfathers the ‘old law’ of existing financial arrangements unless the taxpayer elects them in, 98 it is silent as to the treatment under new forex realisation event 9 of existing arrangements other than financial arrangements. Absent a specific grandfathering rule, it would seem that they would automatically become subject to the provisions if the relevant election is made.
For taxpayers happy to rely on their accounting forex figures for tax purposes, this election seems to overcome much of the angst associated with determining the tax treatment of forex gains and losses.
While the proposed forex changes contained within the TOFA Bill offers a welcome relief from the rigors of Division 775 for those entities happy to rely on their accounts, electing into this new way of thinking about forex gains and losses should not be embraced lightly. The election, once made, is both widespread (applying to all arrangements retranslated through profit and loss for accounting purposes) and irrevocable (unless the entity stops preparing audited financial accounts in accordance with the accounting standards, or the particular arrangement is either no longer recognised in such reports or subject to the relevant foreign exchange accounting standard).
Lessons for the Future.
Like the TOFA Bill, the forex provisions were from their inception developed with ‘extensive industry consultation’. 99 After this consultation, and following introduction, several changes (mostly of a technical nature) were able to be made during the parliamentary process. 100 However, it was not until the provisions started to be applied to actual transactions that many of the compliance and technical difficulties were revealed. Whilst Treasury has responded to these difficulties through announced law changes, they are yet to be forthcoming. If they do eventuate in accordance with the announced changes, they will be at least four years retrospective.
The proposed changes to Division 775 contained in the TOFA Bill are an opportunity to avoid some of the technical problems with the forex provisions. However, the benefit of this opportunity will be quickly undermined if the TOFA forex proposals, like their predecessors, are found to be defunct in one or more areas. If these provisions are considered, analysed and tested now, with appropriate recommendations being made to Treasury as needs be, some of the pitfalls experienced on the road to date can hopefully be avoided in the future.
Thomas B Reed (1839-1902), attributed, as quoted in James S and Parker R, Collins Dictionary of business quotations (1990, HarperCollins Publishers, Glasgow) p73.
See for example Moreau v. F. C. of T. (1926) 39 C. L.R. 65; Texas Company ( Australasia ) Ltd. v. F. C. of T. (1940) 63 C. L.R. 382; International Nickel Australia Ltd v. FCT (1977) 137 CLR 347; Avco Financial Services Ltd. v FC of T ; (1981-1982) 150 CLR 510; FC of T v Hunter Douglas Ltd. (1983) 78 FLR 182.
Mouritz, D, ‘Foreign currency exchange gains and losses’ (1991) 2 Revenue L J 33-45 at p43.
(1996) 185 CLR 66; 33 ATR 52 at ATR 60.
“Implications of the ERA case – ATO views – by Michael D’Ascenzo’ (Australian Tax Practice, 7 April 1997) 16(7) Weekly Tax Bulletin.
Frost, T, ‘Foreign Currency gains and Losses’ Taxation Institute of Australia: 2002 National Tax Intensive Retreat, paper delivered Saturday 31 st August 2002, at page 15-17.
Minister for Revenue and Assistant Treasurer Senator Helen Coonan Release No. C057, 14 May 2002.
Minister for Revenue and Assistant Treasurer Senator Helen Coonan Release No. C132/2, 17 December 2002.
New Business Tax System (Taxation of Financial Arrangements) Bill (No. 1) 2003.
See section 775-155 of the ITAA 1997.
E. E. Ray, speech at Swansea, 4 February 1983, as quoted in James S and Parker R, Collins Dictionary of business quotations (1990, HarperCollins Publishers, Glasgow) p130.
See for example relevant item 7 of the Minutes of the National Tax Liaison Group (NTLG) Meetings 24 March 2004;17 June 2004; and in particular of the meeting of 3 December 2004; in addition to Minutes of the Meetings of the Forex Working Party to the NTLG Finance and Investment Subcommittee over this period.
Frost, T, “Trading stock lost in a forex maze’ (April 2004) 7(4) The Tax Specialist 189-196 at p189.
See subsections 775-135(1) and (3) and subsections 775-140(1) and (3) of the ITAA 1997.
See sections 775-40 (Forex realisation event 1), 775-45 (Forex realisation event 2), 775-50 (Forex realisation event 3), 775‑55 (Forex realisation event 4) and 775-60 (Forex realisation event 5) of the ITAA 1997.
See section 775-105 of the ITAA 1997, paragraphs 775-40(4)(b) and (6)(b) of the ITAA 1997, and subsections 775-45(3), (4) and (5), 775‑50(3), (4) and (5), 775‑55(3), (4) and (5), 775-60(3), (4) and (5) of the ITAA 1997.
See Subdivision 775-C (Roll-over relief for facility agreements), Subdivision 775-D (Qualifying forex accounts that pass the limited balance test) and Subdivision 775-E (Retranslation for qualifying forex accounts).
See sections 775-70 and 775-80 of the ITAA 1997.
See sections 775-15 to 775-35 of the ITAA 1997.
See section 775-80 (in particular subsection 775-80(3)), but note announced changes (as described in the Tip box above) will expand the ability to elect out of the short term rules for newer entities.
Edmund Burke (1729-1797), House of Commons, 11 February 1780, as quoted in James S and Parker R, Collins Dictionary of business quotations (1990, HarperCollins Publishers, Glasgow) p127.
Minister for Revenue and Assistant Treasurer Mal Brough Press Release No. 002, 5 August 2004.
Thomas Fuller Gnomologia (1732) No. 347, as quoted in James S and Parker R, Collins Dictionary of business quotations (1990, HarperCollins Publishers, Glasgow) p77.
See the ATO webpage ‘Administrative treatment of retrospective legislation’ <ato. gov. au/taxprofessionals/content. asp? doc=/content/45130.htm>. These concepts and principles are now also contained in Practice Statement PS LA 2007/11.
See the ATO webpage ‘Foreign exchange’ <ato. gov. au/taxprofessionals/content. asp? doc=/content/58275.htm>, and Practice Statement PS LA 2007/11 at paragraph 31.
At the time of writing, the Foreign exchange webpage indicated that it was last updated in August 2005 (following the registration of the Income Tax Assessment Regulations 2005 (No. 2) .
See the Practice Statement PS LA 2007/11 at paragraph 48, and the ATO webpage ‘Administrative treatment of retrospective legislation’ <ato. gov. au/taxprofessionals/content. asp? doc=/content/45130.htm>.
See the ATO webpage ‘Foreign exchange’ <ato. gov. au/taxprofessionals/content. asp? doc=/content/58275.htm>, and Practice Statement PS LA 2007/11 at paragraph 49.
Minutes of the National Tax Liaison Group (NTLG) Meeting 3 December 2004.
Irving Fisher, The Theory of Interest, 1930, Ch. IX, p 221, as quoted in James S and Parker R, Collins Dictionary of business quotations (1990, HarperCollins Publishers, Glasgow) p117.
Frost, T, “Trading stock lost in a forex maze’ (April 2004) 7(4) The Tax Specialist 189-196.
Economist, 5 December 1987, as quoted in James S and Parker R, Collins Dictionary of business quotations (1990, HarperCollins Publishers, Glasgow) p86.
Refer to the Income Tax Assessment Regulations 2005 (No. 2) .
See item 12 of the table to subsection 960-50(6) and clauses 1.1 and 1.3 of Part 1 of Schedule 2 to the Income Tax Assessment Regulations 1997.
See subclause 1.1(b) of Part 1 of Schedule 2 to the Income Tax Assessment Regulations 1997.
Subject to any future application of the proposed TOFA rules contained in the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2007 .
Subject to any future application of the proposed TOFA rules contained in the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2007 .
Sir Hermann Black, Sydney Morning Herald ‘Sayings of the Week’, 6 July 1985, as quoted in James S and Parker R, Collins Dictionary of business quotations (1990, HarperCollins Publishers, Glasgow) p127.
See section 775-145 of the ITAA 1997. For more information on the first-in first-out basis, refer to the Tax Office fact sheet, Foreign exchange (forex): use of first-in first-out method for fungible assets, rights and obligations <ato. gov. au/large/content. asp? doc=/content/59218.htm>
Paragraph 2.289 of the Explanatory Memorandum accompanying the New Business Tax System (Taxation of Financial Arrangements) Bill (No.1) 2003.
See regulation 775-145.01 (in particular, subregulation (4)(a)) of Part 4 of the Income Tax Assessment Regulations 1997.
Note that a bank account is a single chose in action, and therefore arguably does not cease in whole or in part until the entire balance is extinguished: Hart (Inspector of Taxes) v Sangster [1957] 1 Ch 329; [1957] 2 All ER 208 . See also the joint submission of the Taxation Institute of Australia , Institute of Chartered Accountants in Australia , the National Institute of Accountants and Taxpayer’s Association on the Draft Taxation Determination TD 2005/D49, dated 18 November 2005.
However, the bank account elections in Subdivisions 775-D and 775-E presuppose that a forex realisation event 2 (cessation of a right to receive foreign currency) is otherwise applicable to bank accounts (see sections 775‑250 and 775-280 of the ITAA 1997). The Explanatory Memorandum accompanying the New Business Tax System (Taxation of Financial Arrangements) Bill (No.1) 2003 states:
‘a gain or loss can arise under forex realisation evetn 2 where an entity withdraws an amount froma foreign currency denominated bank account with a credit balance. This is becuae the entity’s right against the bank, represented by the account balance, ends to the extent that a withdrawal is made.’
Accordingly, it seems that Government’s intention is for a forex event to happen upon a withdrawal from a foreign currency denominated bank account. The Commissioner takes this view: See for example Taxation Determination TD 2006/16 (issued in draft form as TD 2005/D49 to which the abovementioned submission related) and ATO ID 2004/855 and ATO ID 2006/320.
Notwithstanding the technical objections which may be mounted against this approach, this paper proceeds on the basis that a forex realisation event 2 will happen upon the complete or partial transfer from a foreign currency denominated bank account. This is consistent with the approach taken by certain other commentators (see for example Barkoczy, S “ Australia ’s new forex regime” (2004) 7(1) Journal of Australian Taxation 6-55 at 50, and various Taxation Institute of Australia (TIA) papers such as Frost, T “Foreign Currency Gains and Losses” TIA NSW Division: International Masterclass (22 July 2003, Radisson Plaza Hotel Sydney); Christie, G “TOFA for the SME sector” TIA Tasmanian State Convention (14 October 2005, Doherty Resort, St Helens).
See item 12 of the table to subsection 960-50(6) and clause 1.3 of Part 1 of Schedule 2 to the Income Tax Assessment Regulations 1997.
See items 11 and 12 of the table to subsection 960-50(6) of the ITAA 1997 and clause 1.3 of Part 1 of Schedule 2 to the Income Tax Assessment Regulations 1997.
See clause 1.1 of Part 1 of Schedule 2 to the Income Tax Assessment Regulations 1997.
See subsection 995-1(1) of the ITAA 1997.
See subsection 995-1(1) of the ITAA 1997. Note also that it is proposed that this requirement for qualifying forex accounts to be maintained with, broadly, banks and similar financial institutions be retrospectively removed with effect from 1 July 2003: See table item 3 of section 2 and item 22 of Part 1 of Schedule 1, of the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2007.
See sections 775-245 and 775-250 of the ITAA 1997.
Subsection 775-245(4) of the ITAA 1997 sets the rate at the average exchange rate for the third month preceding the income year. For most taxpayers, this will mean that for the purpose of the limited balance test, the balance on their qualifying forex accounts is determined using the average exchange rate for the April preceding their income year.
See subsections 775-245(2) and (3) of the ITAA 1997.
See section 775-280 of the ITAA 1997.
See section 775-285 of the ITAA 1997.
See section 775-280 of the ITAA 1997.
As acknowledged in Paragraph 2.289 of the Explanatory Memorandum accompanying the New Business Tax System (Taxation of Financial Arrangements) Bill (No.1) 2003, set out on page 8 above.
Foley v Hill and Ors (1848) 2 HL Cas 28; [1843-60] All ER Rep 16; Hart (Inspector of Taxes) v Sangster [1957] 1 Ch 329; [1957] 2 All ER 208; Alcom v. Republic of Colombia [1984] AC 580.
See N. Joachimson v. Swiss Bank Corporation [1921] All ER 92; [1921] 3 KB 110 per Atkin LJ at All ER 100; KB 127.
See section 775-45 of the ITAA 1997 and ATO ID 2004/855.
See ATO ID 2003/551 and ATO ID 2004/855. However, note the observations made above in footnote 43 .
See ATO ID 2004/855.
See ATO ID 2003/551. To determine the cost base of such a gain or loss, see ATO ID 2003/803.
A complete or partial repayment of a foreign currency denominated loan will give rise to a forex realisation event 4 under section 775-55 (ceasing to have an obligation to pay foreign currency). Not being an asset, it will not give rise to capital gains tax consequences. See also ATO ID 2004/857.
See sections 775-155 and 775-160 of the ITAA 1997.
See section 775-155 of the ITAA 1997.
See subparagraphs 775-165(2)(a)(ii) and 775-165(4)(a)(ii) of the ITAA 1997.
See subparagraphs 775-165(2)(a)(i) and 775-165(4)(a)(i) of the ITAA 1997.
See subsection 82V(1) of the ITAA 1936.
See ATO ID 2006/320.
Hart (Inspector of Taxes) v. Sangster [1957] 1 Ch 329; [1957] 2 All ER 208; [1984] AC 580.
See ATO ID 2006/320.
See subparagraphs 775-165(2)(a)(i) and 775-165(4)(a)(i) of the ITAA 1997.
See ATO ID 2006/320.
See ATO ID 2003/551.
See subsection 995-1(1) of the ITAA 1997.
See section 775-250 of the ITAA 1997.
See sections 775-280 and 775-285 of the ITAA 1997.
That is, a forex realisation gain or loss made under forex realisation event 8: See section 775-285 of the ITAA 1997.
, Minutes of the meeting of the Forex Working Party of the Finance & Investment Subcommittee of the NTLG, 18 February 2004.
See table item A2.6 of Taxation of Financial Arrangements: Details of proposed changes announced by the Minister for Revenue and Assistant Treasurer accompanying Minister for Revenue and Assistant Treasurer Mal Brough Press Release No. 002, 5 August 2004.
See table item A1.2 of Taxation of Financial Arrangements: Details of proposed changes announced by the Minister for Revenue and Assistant Treasurer accompanying Minister for Revenue and Assistant Treasurer Mal Brough Press Release No. 002, 5 August 2004.
See item 22 of Part 1 of Schedule 1, of the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2007 (introduced into the House of Representatives on 20 September 2007).
See table items A1.2 and A2.6 of Taxation of Financial Arrangements: Details of proposed changes announced by the Minister for Revenue and Assistant Treasurer accompanying Minister for Revenue and Assistant Treasurer Mal Brough Press Release No. 002, 5 August 2004. However, note as outlined in the tip/trap box above, elections made in respect of an account entered into prior to the election taking effect may be subject to a balancing charge: See table item A3.7 of Taxation of Financial Arrangements: Details of proposed changes announced by the Minister for Revenue and Assistant Treasurer accompanying Minister for Revenue and Assistant Treasurer Mal Brough Press Release No. 002, 5 August 2004.
See table item A1.5 of Taxation of Financial Arrangements: Details of proposed changes announced by the Minister for Revenue and Assistant Treasurer accompanying Minister for Revenue and Assistant Treasurer Mal Brough Press Release No. 002, 5 August 2004.
See for example Minutes of the meeting of the NTLG, 24 March 2004.
See item 22 of Part 1 of Schedule 1, of the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2007 (introduced into the House of Representatives on 20 September 2007).
See table item A2.6 of Taxation of Financial Arrangements: Details of proposed changes announced by the Minister for Revenue and Assistant Treasurer accompanying Minister for Revenue and Assistant Treasurer Mal Brough Press Release No. 002, 5 August 2004.
See the ATO webpage ‘Foreign exchange’ <ato. gov. au/taxprofessionals/content. asp? doc=/content/58275.htm>. Notably, the last bullet-point at paragraph 31 of Practice Statement PS LA 2007/11 notes that generally the Tax Office will not advise taxpayers to anticipate a proposed measure unless ‘the information available on the proposed measure provides a clear basis on how they might lodge’. Unfortunately, this does not seem to have been the case with this proposed change.
Paragraph 2 of Practice Statement PS LA 2004/6 instructs Tax Office staff that ‘any advice or information should be limited to the public announcement and other publicly released information in the source documents that announced the proposed law change (eg, Press Release, Explanatory Memorandum, draft legislation).
Sydney Smith, The Peter Plymley Letters (1852) IV, as quoted in James S and Parker R, Collins Dictionary of business quotations (1990, HarperCollins Publishers, Glasgow) p73.
Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2007.
See section 230-405 of item 1 of Schedule 1 to the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2007.
See subsections 230-220(1) and (2) of item 1 of Schedule 1 to the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2007.
Specifically, under AASB 121 The Effects of Changes in Foreign Exchange Rates or a foreign equivalent .
See subsection 775-295(1) of item 6 of Schedule 1 to the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2007. For taxpayers preparing accounts in accordance with Australian Accounting standards, the relevant Australian Account Standard is AASB 121 The Effects of Changes in Foreign Exchange Rates.
Specifically, for taxpayers preparing accounts in accordance with Australian Accounting standards, the relevant gain or loss will be the amount AASB 121 The Effects of Changes in Foreign Exchange Rates, requires be recognised in profit or loss: See subsections 775-305(2) and (3) of item 6 of Schedule 1 to the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2007.
See sections 775-305 and 775-300 of item 6 of Schedule 1 to the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2007.
See item 98 of Schedule 1 to the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2007.
See subitem 99(2) of Schedule 1 to the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2007.
Minister for Revenue and Assistant Treasurer Mal Brough Press Release No. 002, 5 August 2004.
Bill as amended passed Senate 1 December 2003, and was referred back to the House of Representatives. (Enacted 17 December 2003).

Journal of Australian Taxation.
Barkoczy, Stephen --- "Australia's New Forex Regime" [2004] JlATax 2; (2004) 7(1) Journal of Australian Taxation 6.
AUSTRALIA’S NEW FOREX REGIME.
By Stephen Barkoczy [*]
Australia has recently adopted a revolutionary new codified regime for dealing with the taxation treatment of transactions that occur in foreign currency. The new “forex regime” largely replaces various ad hoc statutory and common law rules that had been developed over the years for dealing with foreign currency transactions. Leaving aside a limited number of exceptions, the new rules will generally be relevant whenever transactions take place in foreign currency and are, therefore, clearly of great importance to all tax practitioners and tax scholars.
The new forex regime comprises a set of rules for translating foreign currency into Australian currency and a set of rules for dealing with foreign currency exchange gains and losses. The new legislation introduces many new concepts and special terms, including the important notion of a “forex realisation event”.
This article provides a conceptual and theoretical framework for analysing the new legislation. It examines the operation of the key provisions in the statute and it provides a number of illustrations of how some of the main rules work in a practical context. It also touches on various underlying policy issues relating to the scheme.
1. INTRODUCTION.
Without doubt, one of the most significant tax reforms that occurred in Australia last year was the introduction of the revolutionary new “forex regime”. [1] The forex regime consists of two separate, although inter-related, sets of provisions. The first set of provisions, located in Div 775 of the Income Tax Assessment Act 1997 (Cth) (“ITAA97”), deal with the tax treatment of foreign currency exchange gains and losses. The second set of provisions, located in Subdivs 960-C and 960-D of the ITAA97, contain rules for translating foreign currency into Australian currency. Together, these provisions represent a substantial body of new law and are of fundamental importance to the way in which transactions that occur in foreign currency are treated under the Australian income tax law.
1.1 The TOFA Reforms.
By way of background, the forex regime represents the second stage in the federal government’s important taxation of financial arrangements (“TOFA”) reforms. These reforms were first mooted in the early 1990s. Since that time there has been an on-going consultative process between Treasury and the private sector with a view to developing an appropriate and consistent set of rules for taxing financial arrangements in Australia. Specific recommendations for reforming the way in which financial arrangements should be taxed were made in 1999 by the Review of Business Taxation in the “Ralph Report”. [2] These recommendations were accepted “in principle” by the government shortly after the report was handed down [3] and an agenda was then set for their implementation in four stages. The first stage of the TOFA reforms generally took effect from 1 July 2001, with the introduction of the controversial “debt and equity regime”. [4] The second stage of the reforms, namely the new forex rules, generally operate in relation to transactions entered into from 1 July 2003. The third and fourth stages of the reforms are now proposed to operate from no earlier than 1 July 2004. The third stage relates to the taxation of commodity hedges while the fourth stage relates to various tax timing issues and synthetic arrangements.
1.2 Aims of This Article.
This article focuses exclusively on the new forex rules. These rules are extremely technical in nature and introduce many new concepts, including eight different “forex realisation events”. As the forex regime is still new and many practitioners and scholars are therefore only just coming to grips with the way in which it operates, the main aim of this article is to provide readers with a general “roadmap” for navigating the complex web of provisions that make up the regime. In this regard, the article examines the operation of the key sections within the legislation (including the many important and lengthy tables that reside within these sections) and it provides a number of practical illustrations of how some of the main rules operate. The article also considers some of the policy aspects that underpin these rules and concludes with some broad observations about the regime.
The remainder of this article is divided into the following parts:
& # 8226؛ Part 2 examines the new foreign currency translation rules, which consist of a “general translation rule” and a “functional currency translation rule”;
& # 8226؛ Part 3 discusses the general nature of foreign currency exchange gains and losses and the circumstances in which they arise;
& # 8226؛ Part 4 explains the way in which exchange gains and losses have been dealt with in the past under the income tax law;
& # 8226؛ Part 5 outlines the general operation of the new foreign currency exchange gain and loss rules;
& # 8226؛ Part 6 focuses on the eight different forex realisation events that arise under these rules; و.
& # 8226؛ Part 7 contains the writer’s concluding comments on the new regime.
2. FOREIGN CURRENCY TRANSLATION RULES.
A fundamental principle that underpins the Australian income tax system is that a taxpayer’s tax liability is required to be determined by reference to a constant unit of account. Not surprisingly, this unit of account is the Australian dollar (“A$”). Accordingly, for transactions that occur in foreign currencies, it is necessary to have mechanisms for translating relevant amounts into equivalent A$ amounts. One of the main roles of the new forex regime is to provide the necessary legislative framework for doing this.
Under the forex regime, the principal mechanism for translating foreign currency into A$ is contained in the “general translation rule” located in Subdiv 960-C ITAA97 (see 2.1). The general translation rule operates subject to special “functional currency rules” in Subdiv 960-D (see 2.2). These rules are superimposed upon the general provisions in the legislation and they work in conjunction with the specific foreign currency exchange gain and loss provisions located in Div 775 of the ITAA97 (see 5).
Subject to various exceptions and transitional arrangements, Subdivs 960-C and 960-D generally apply to transactions entered into from the beginning of the 2003/04 income year. However, where a taxpayer has a substituted accounting period and the first day of its 2003/04 income year is earlier than 1 July 2003, the relevant commencement date is the first day of its 2004/05 income year. [5]
The rules in Subdivs 960-C and 960-D replace a range of ad hoc currency translation rules that were previously scattered throughout the tax legislation. [6] The”former rules”, however, generally continue to operate in those circumstances where the new rules do not apply. Consequently, these rules will continue to operate in relation to transactions entered into before the commencement date of the forex regime. In addition, the “former rules” will also continue to be relevant to “ADIs” (eg banks) and “non-ADI financial institutions” (eg finance companies). [7] This is because Subdiv 960-C and 960-D expressly do not apply to these entities by virtue of ss 960-55(3) and 960-60(5).
2.1 The General Translation Rule.
The general translation rule is contained in s 960-50(1). [8] This provision simply states that an “amount” in a foreign currency must be translated into Australian currency. [9]
2.1.1 Application to “Amounts”
Section 960-50(1) applies to “amounts” generally – in other words, it applies to all amounts that are relevant for any income tax calculation purpose. [10] For example, it applies to an amount of “ordinary income”, an “expense”, an “obligation”, a “liability”, a “receipt”, a “payment”, “consideration” or a “value”. [11] Furthermore, it applies irrespective of whether such an amount is on revenue, capital or other account. [12] Amounts which are elements in the calculation of another amount are generally required to be translated prior to calculating the other amount. [13]
2.1.2 Specific Translation Rules.
The most important feature of the general translation rule is that it contains a set of specific rules for determining the time at which particular amounts are translated into Australian currency. These rules are located in the table in s 960-50(6). The table sets out eleven specific translation rules, which operate subject to any modifications that may be made by the regulations. [14] The eleven rules may be conveniently summarised as follows:
1. The amount of certain obligations to pay foreign currency that have ceased in circumstances where “forex realisation event 4” happens are translated at the exchange rate applicable at the”tax recognition time” under s 775-55(7) (see 6.4).
2. The cost of a depreciating asset is translated at the exchange rate applicable when the taxpayer began to hold the asset, or satisfied the liability to pay for it (whichever occurs first).
3. The value of trading stock on hand at the end of an income year which is valued at “cost” is translated at the exchange rate applicable at the time when the item became on hand.
4. The value of trading stock on hand at the end of an income year which is valued at “market selling value” or “replacement value” is translated at the exchange rate applicable at the end of the income year.
5. The amount of money, or the market value of property, relating to transactions or events under the CGT rules is translated at the exchange rate applicable at the time of the transaction or event.
6. The amount of ordinary income is translated at the exchange rate applicable at the time of its derivation or receipt (whichever occurs first).
7. The amount of statutory income (other than an amount included in assessable income under the CGT rules in Div 102 of the ITAA97) is translated at the exchange rate applicable at the time of receipt or at the time when the requirement first arose to include it in assessable income (whichever occurs first).
8. The amount of a deduction (other than a deduction arising under the capital allowance rules in Div 40 of the ITAA97) is translated at the exchange rate applicable at the time of payment or the time the amount becomes deductible (whichever occurs first).
9. The amount of something that is relevant to quantifying a company’s expenditure on a film for the purposes of Div 376 of the ITAA97 is translated at the average exchange rate applicable to the period that starts at the earliest day on which principal photography or production of the animated images commenced and ends when the film is completed.
10. The amount required to be withheld from a payment under the PAYG provisions is translated at the exchange rate applicable at the time when the amount is required to be withheld.
11. The amount of any other payment or receipt is translated at the exchange rate applicable at the time of the receipt or payment.
The following examples illustrate some of the above rules:
X Co became the owner of a depreciating asset when it entered into a contract to purchase the asset from a United States company for US$1m on 1 July 2004 (when the exchange rate was A$1:US$0.50). X Co, however, only paid for the depreciating asset on 1 August 2004 (when the exchange rate was A$1:US$0.80).
Pursuant to the table in s 40-185(1)(b) of the ITAA97, the “cost” of the depreciating asset is determined by reference to the amount paid for the asset (US$1m). Applying the special translation rule in s960-50(6) (item 2) to that amount, the cost of the asset for the purposes of Div 40 would be A$2m (US$1m x 1.00/0.50), rather than A$1.25m (US$1m x 1.00/0.80). Accordingly, any capital allowance that X Co claims in respect of the depreciating asset would need to be based on a cost of A$2m.
Y Co sells machinery to retailers in Europe and is ordinarily paid in Euro within three months of entering the contracts. On 1 June 2004, Y Co sold machinery to a German retailer for €6,000 (assume that at the time the exchange rate is A$1.00: €0.60). Y Co received payment on 1 September 2004 (assume that at the time the exchange rate is A$1.00: €0.90).
As Y Co accounts for its income on an earnings basis, it derives income of €6,000 in the 2003/2004 income year. As the income is derived prior to payment being received, Y Co is required to translate the foreign currency denominated income into Australian dollars at the exchange rate applicable at the time of derivation. Y Co’s income for the 2003/04 income year is therefore A$10,000 (€6,000 x $1.00/0.60).
It is important to be aware that the above transactions will also result in “forex realisation events” occurring under Div 775. These events and their consequences are discussed in detail below (see 5 and 6).
2.2 The Functional Currency Rules.
To reduce compliance costs associated with the general translation rule in Subdiv 960-C and to reflect commercial practice, Subdiv 960-D allows certain entities that keep their accounts solely or predominantly in a particular foreign currency to choose to work out their relevant tax calculations in that currency (the “functional currency”) and then to simply translate the net figure into Australian dollars. [15] This overcomes the need to separately translate into A$ every single amount relevant to each transaction that is denominated in a foreign currency.
2.2.1 Entities That Can Choose to Use the Functional Currency Rules.
The particular entities that are able to choose to use the functional currency rules and the particular amounts that these rules apply to are set out in the table in s 960-60(1). There are five situations covered by the table:
1. An Australian resident required to prepare financial reports under s 292 of the Corporations Act 2001 (eg a public company under that Act) can choose to work out so much of its taxable income or tax loss as is not covered by any of the other choices outlined below according to the “applicable functional currency”.
2. An Australian resident carrying on an activity or business through an overseas permanent establishment and a foreign resident carrying on an activity or business through an Australian permanent establishment can choose to work out the taxable income or tax loss derived from the activity or business carried on through the permanent establishment according to the “applicable functional currency”.
3. An offshore banking unit can work out its total “assessable OB income” and its total “allowable OB deductions” using the “applicable functional currency”.
4. An attributable taxpayer of a CFC can choose to work out the CFC’s total “attributable income” using the “applicable functional currency”.
5. A transferor trust can choose to work out its “attributable income” using the “applicable functional currency”.
2.2.2 Applicable Functional Currency.
The “applicable functional currency” is the “sole or predominant” currency in which the “accounts” of the relevant entity, permanent establishment, offshore banking unit, CFC or transferor trust (as the case requires) are kept. [16]
2.2.3 Choosing to Use the Applicable Functional Currency.
A choice to use the applicable functional currency must be made by the relevant entity in writing. [17] The fourth column in the table in s 960-60(1) specifies when the choice has effect from. Broadly, a choice generally has effect from the commencement of the following income year (or statutory accounting period) unless the choice is a “backdated startup choice” [18] in which case it generally has effect from the beginning of the income year (or statutory accounting period) in which the choice is made. A choice will continue to have effect until a withdrawal of the choice (which must also be made in writing) takes effect as determined in accordance with the table in s 960-90. [19]
2.2.4 Translating Amounts Using an Applicable Functional Currency.
The way in which amounts are translated using the applicable functional currency is set out in the table in s 960-80. Different translation rules apply depending on the entity involved and the particular kind of tax calculation undertaken (eg calculation of taxable income, tax losses, attributable income etc). In general terms, the translation rules require all relevant amounts that are not in the applicable functional currency (including A$ amounts) to be translated into the applicable functional currency. The relevant tax liability is then calculated in the applicable functional currency. This amount is then finally translated into A$.
2.2.5 Special Translation Rules for Amounts Attributable to Events That Straddle the Choice.
Special two-stage translation rules, contained in s 960-85, operate where:
& # 8226؛ as a result of a choice (the “current choice”) an entity is required to convert an amount to the applicable functional currency; و.
& # 8226؛ the amount is attributable to an event that happened, or a state of affairs that arose, at a time (the “event time”) before the choice took effect.
For example, these rules would operate to calculate the amount of a capital gain or capital loss in circumstances where an entity sells an asset after it has made a choice to use an applicable functional currency and the asset was acquired before that choice was made (eg when its cost was accounted for in A$ rather than foreign currency).
According to the tables in s 960-85, where no previous choice was in effect at the event time, the amount is first translated into A$ at the exchange rate applicable at the event time and secondly to the applicable functional currency at the exchange rate applicable when the current choice took effect. The same process operates where a previous choice has been made, except the previously applicable functional currency is substituted for Australian currency. The double translation is designed to ensure that any unrealised gain or loss that exists at the time of the choice does not escape taxation simply because the choice is made. [20]
3. NATURE OF FOREIGN CURRENCY EXCHANGE GAINS AND LOSSES.
The new currency translation rules discussed above operate in conjunction with the new foreign currency exchange gain and loss rules discussed below (see 5). However, before turning to examine these rules, it is appropriate to first discuss the general nature of foreign currency exchange gains and losses (3.1 to 3.2) and to outline the various regimes that have dealt with such gains and losses in the past (see 4).
3.1 Circumstances in Which Foreign Currency Exchange Gains and Losses Arise.
Foreign currency exchange gains and losses typically arise where taxpayers enter into contracts and the price is expressed in a foreign currency. If the exchange rate between the A$ and foreign currency fluctuates between the time the contract is entered into and the time the consideration is paid or received, the taxpayer will be required to pay, or will be entitled to receive, a different amount of A$ than the amount of A$ originally brought to account as assessable income or as a deduction under the currency translation rules. The difference in these amounts is the amount of the respective exchange gain or loss made by the taxpayer.
Fred is a furniture exporter. On 1 June 2004 (when the exchange rate was A$1:US$0.80), Fred entered into a contract to supply furniture to a customer in the United States for US$100. Under the general translation rule (see 2.1), the US$100 is required to be translated into A$ at the time of derivation (ie on 1 June 2004). This results in Fred having to include A$125 (US$100 x 1.00/0.80) in his assessable income in the 2003/04 income year.
Fred only received payment of the US$100 on 30 August 2004 (when the exchange rate was A$1:US$0.50). The value of the US$100 receipt at such time is therefore A$200 (US$100 x 1.00/0.50).
In these circumstances, Fred has made a foreign currency exchange gain of A$75. The exchange gain has arisen because, while Fred only included an amount of A$125 in assessable income in the 2003/04 income year, he actually received an amount equivalent to A$200 in the 2004/05 income year. Accordingly, he is better off by A$75.
3.2 The Energy Resources Conversion Principle.
Under the common law, exchange gains and losses could only arise where amounts in one currency were actually converted into another currency. This principle is vividly illustrated by the decision in FC of T v Energy Resources of Australia Ltd . [21] This case concerned a taxpayer that had issued discounted euro notes in US dollars which it subsequently paid out in US dollars at face value. The High Court held that the taxpayer had not made any exchange gains or losses from the relevant transactions as only one currency was involved. In a joint judgment, Dawson, Toohey, Gaudron, McHugh and Kirby JJ stated:
This case has nothing to do with currency gains and losses, for the simple reason that the taxpayer dealt only in US dollars. The taxpayer made no currency gains or losses because it never converted any of the proceeds of the notes into Australian dollars. For Australian tax purposes, the only relevant conversion was the cost in Australian dollars of the loss made in US dollars when the taxpayer incurred its liability to pay the face value of the notes. [22]
Their Honours then went on to state:
The taxpayer received US dollars, paid in US dollars, and did not convert the US dollars into Australian dollars. Where a taxpayer borrows money on capital account in US dollars and repays the loan in US dollars, it makes no revenue profit or loss from the borrowing even though the exchange rate may be different at each date. [23]
As a consequence of the introduction of the new currency translation rules, amounts relevant to tax calculations must now generally be translated into A$ irrespective of whether any actual conversion takes place. Accordingly, where these translation rules operate, exchange gains and losses can now arise even though no foreign currency has actually been converted into A$. In effect, this means that the outcome of Energy Resources would be different under the new rules.
It is clear that in drafting the forex rules, the legislature specifically sought to address the Energy Resources principle. This policy intent is clearly expressed in the Explanatory Memorandum to the Bill which introduced the forex regime where it is stated:
The forex provisions provide a statutory framework under which the gain or loss arising from these disparities is brought to account when it has been ‘realised’. This is the case even if the monetary elements of the transaction are not converted to A$.
Without such a framework, foreign currency gains and losses arising out of ‘business’ transactions may fall outside the income tax net. This possibility is illustrated by FC of T v Energy Resources of Australia Ltd .
The realisation rules, in conjunction with the core translation rule . confirm the policy intent behind the tax treatment of foreign currency denominated transactions. These rules ensure that foreign currency gains and losses, whether on revenue or capital account, are brought to account, regardless of whether there is an actual conversion to A$. This will generally occur when the gains and losses are realised. [24]
4. PRE-FOREX REGIMES FOR DEALING WITH EXCHANGE GAINS AND LOSSES.
Prior to the introduction of the forex regime, foreign currency exchange gains and losses were dealt with under a number of different tax regimes. For the purposes of this article, these regimes may be conveniently referred to as the “pre-forex regimes” and they are briefly outlined at 4.1 to 4.3 below.
4.1 General Taxation Regime.
Initially, the only provisions that dealt with foreign currency exchange gains and losses under the Australian income tax law were the ordinary income and general deduction provisions contained in former s 25(1) and s 51(1) of the ITAA36 (now ss 6-5 and 8-1 of the ITAA97). To fall within these provisions it was necessary that the exchange gains and losses could be characterised as being of an income or revenue nature (as opposed to being of a capital nature).
More specifically, the cases dealing with the former ss 25(1) and 51(1) established that exchange gains are assessable and exchange losses are deductible in so far as they are referable to discharging or providing for liabilities on revenue account (eg the purchase or sale of trading stock): Texas Co (Australasia) Ltd v FC of T; [25]5 International Nickel Australia Ltd v FC of T; [26] Armco (Australia) Pty Ltd v FC of T; [27] Caltex Ltd v FC of T, [28] Thiess Toyota Pty Ltd v FC of T, [29] and AVCO Financial Services Ltd v FC of T. [30]
On the other hand, the cases also established that exchange gains and losses are capital in nature, and they were therefore not assessable or deductible under the ordinary income and general deduction provisions, where they are referable to expenditure incurred in strengthening a taxpayer’s business structure or capital base: Commercial & General Acceptance Ltd v FC of T , [31] FC of T v Hunter Douglas Ltd. [32]
4.2 Division 3B.
Division 3B of Pt III of the ITAA36 (s 82U to 82ZB) was introduced in the mid-1980s in order to bring certain exchange gains and losses that were of a capital nature (and which therefore did not fall within the ordinary income or general deduction provisions) within the tax system.
Division 3B applied to “currency exchange gains” and “currency exchange losses” that arose under an “eligible contract” (ie basically a contract entered into after 18 February 1986 or a “hedging contract” in respect of such a contract). [33] The Division only applied to the extent to which the currency exchange gains and losses were of a “capital nature” [34] and only to the extent to which:
& # 8226؛ the currency exchange losses, assuming they were not of a capital nature, would have been deductible to the taxpayer under s 8-1; [35] and.
the currency exchange gains, assuming they were losses instead of gains and assuming they were not of a capital nature, would have been deductible to the taxpayer under s 8-1. [36]
In other words, the Division was focused on currency exchange gains and losses that were of an income producing or business character, but which did not fall within the ordinary income and general deduction provisions simply because they were of a capital nature. The Division did not apply to currency exchange gains and losses that were of a private character.
Where Div 3B applied, the following consequences flowed:
& # 8226؛ the taxpayer was required to include in assessable income the amount of any currency exchange gain made during the year of income; [37] and.
the taxpayer was (subject to certain limitations) entitled to a deduction for the amount of any currency exchange loss incurred during the year of income. [38]
4.3 CGT Regime.
Since foreign currency and rights in respect of foreign currency constitute “CGT assets”, [39] exchange gains and losses made under contracts entered into after 19 September 1985 also potentially fell within the CGT regime. In practice, however, the CGT regime did not usually bring such gains and losses to account, since the gains and losses were usually already brought to account under either the general taxation rules or the special rules in Div 3B. The CGT regime ordinarily provided relief against double taxation or double benefit in these circumstances. [40]
5. GENERAL OPERATION OF DIVISION 775.
The rules for dealing with currency exchange gains and losses under the new forex regime are contained in Div 775 of the ITAA97 (s 775-5 to s 775-285). The following discussion examines the general operation of this Division, which spans almost 50 pages of legislation. As mentioned previously, the rules in Div 775 work in conjunction with the foreign currency translation rules discussed above.
5.1 Application.
The forex regime generally applies to gains and losses on rights and obligations acquired or assumed under transactions entered into from the beginning of the 2003/04 income year. However, if the taxpayer has a substituted accounting period and the first day of its 2003/04 income year is earlier than 1 July 2003, the relevant commencement date is the first day of its 2004/05 income year. [41]
While the forex regime generally applies prospectively (ie to gains and losses on transactions entered into from the commencement date), a transitional rule allows taxpayers to elect to have the forex rules apply to gains and losses made on transactions entered into before the commencement date, but realised after that date. [42] There is also a special rule which provides that the forex rules apply to rights and obligations relating to loans entered into before the commencement date that are extended after that date. [43]
The forex regime has been designed to largely replace the former regimes dealing with exchange gains and losses. To the extent that any gains or losses fall within the forex regime, they are not also assessable or deductible under other provisions in the legislation (eg they do not fall within the ordinary income or general deduction provisions). [44] This ensures that the forex regime operates as the exclusive regime for dealing with exchange gains and losses and that no double taxation or double benefit arises.
In addition, Div 3B of Pt III of the ITAA36 has been repealed from the commencement of the forex regime. A special transitional rule, however, maintains the operation of the Division (ie it is treated as if it had not been repealed) in relation to eligible contracts entered into before the commencement date. [45] The operation of the Division is also expressly maintained in relation to ADIs (eg banks) and non-ADI financial institutions (eg finance companies), which are expressly excluded from the forex regime pursuant to s 775-170. [46]
Accordingly, while the forex regime now contains the principal rules for dealing with exchange gains and losses, it does not apply in all cases. In those circumstances where the forex regime does not apply, the pre-forex regimes (see 4) will generally continue to operate.
5.2 Aim of Div 775.
Division 775 has been designed as a comprehensive taxation framework for dealing with currency exchange gains and losses. The principal aim of the Division is to include “forex realisation gains” in assessable income and to allow deductions for “forex realisation losses”.
5.3 Forex Realisation Events.
Forex realisation gains and forex realisation losses arise as a result of the happening of “forex realisation events”. There are five main kinds of forex realisation events:
& # 8226؛ forex realisation event 1 (“FRE 1”) happens when an entity disposes of foreign currency or a right to foreign currency to another entity (see 6.1);
& # 8226؛ forex realisation event 2 (“FRE 2”) happens when an entity ceases to have a right to receive foreign currency (see 6.2);
& # 8226؛ forex realisation event 3 (“FRE 3”) happens when an entity ceases to have an obligation to receive foreign currency (see 6.3);
& # 8226؛ forex realisation event 4 (“FRE 4”) happens when an entity ceases to have an obligation to pay foreign currency (see 6.4); و.
& # 8226؛ forex realisation event 5 (“FRE 5”) happens when an entity ceases to have a right to pay foreign currency (see 6.5).
In addition, there are three further kinds of forex realization events which operate where certain choices have been made. Forex realisation event 6 (“FRE 6”) and forex realisation event 7 (“FRE 7”) relate to roll-over relief claimed in respect of a facility agreement under Subdiv 775-C (see 6.9). Forex realisation event 8 (“FRE 8”) relates to the retranslation election in respect of a qualifying forex account under Subdiv 775-E (see 6.11).
5.4 The Basic Rules and Their Exceptions.
Underpinning the operation of Div 775 are two basic rules:
& # 8226؛ The “basic rule” in s 775-15(1) provides that a taxpayer is required to include in assessable income, a “forex realisation gain” from a “forex realisation event” that happens during the year.
& # 8226؛ The “basic rule” in s 775-30(1) provides that a taxpayer can deduct a “forex realisation loss” from a “forex realisation event” that happens during the year.
These basic rules operate subject to the following exceptions:
& # 8226؛ Private or domestic exceptions. Forex realisation gains that are of a private or domestic nature are not assessable income unless they would be taken into account under the CGT provisions [47] and they relate to: (i) the disposal of a CGT asset that is foreign currency or a right to foreign currency; (ii) the discharge of a right acquired in return for the realisation of another kind of CGT asset; or (iii) the discharge of an obligation incurred to acquire a CGT asset. [48] Furthermore, forex realisation losses that are of a private or domestic nature are not deductible unless they relate to: (i) the discharge of a right acquired in return for realising another kind of CGT asset; or (ii) the discharge of an obligation incurred to acquire a CGT asset. [49]
Exempt income and non-assessable non-exempt income exceptions. Forex realisation gains are, respectively, exempt income or non-assessable non-exempt income to the extent that the gains, if they had been losses, would have been made in gaining or producing exempt income or non-assessable non-exempt income. [50] Also, forex realisation losses are not deductible to the extent that they are made as a result of: (i) FRE 1, FRE 2 or FRE 5 and are made in gaining or producing exempt income; or (ii) FRE 3, FRE 4 or FRE 6 and are made in gaining or producing exempt income or non-assessable non-exempt income provided the relevant obligation does not give rise to a deduction. [51]
Short-term forex realisation exceptions. Forex realisation gains are not assessable to the extent that they relate to “short-term forex realisation gains” as outlined in s 775-70 (see 6.8). [52] Likewise, forex realisation losses are not deductible to the extent that they relate to “short-term forex realisation losses” as outlined in s 775-75 (see 6.8). [53]
To prevent double taxation of gains, s 775-15(4) provides that to the extent that a forex realisation gain would otherwise be included in assessable income under another provision (eg under s 6-5), the gain is only included in assessable income under s 775-15. Similarly, to prevent double deductions for losses, s 775-30(4) provides that to the extent that a forex realisation loss would otherwise be deductible under another provision (eg under s 8-1), the loss is only deductible under s 775-30.
5.5 Calculating the Amount of a Forex Realisation Gain or Forex Realisation Loss.
The way in which a forex realisation gain or a forex realisation loss is calculated depends on the kind of forex realisation event involved. In general, the amount of the gain or loss is calculated according to one of the following two broad methods:
& # 8226؛ Currency exchange rate effect method. Under the first method, the gain or loss is based on the “currency exchange rate effect” as defined in s 775-105. Essentially, the “currency exchange rate effect” is the amount of the relevant currency fluctuation that has arisen under the event. This is usually the difference between the A$ cost of the foreign currency or right and the A$ proceeds for its disposal. It can also be the difference between an agreed currency exchange rate for a future date or time and the actual currency exchange rate at the date or time.
& # 8226؛ Alternative method. Under the second method, the gain or loss is based on the difference between the A$ cost of a right or obligation to receive or pay foreign currency at its “tax recognition time” and the A$ amount paid or received in satisfaction of that right or obligation. [54] The “tax recognition time” is generally the time that the right or obligation is first recognised under the tax system (eg as income, a deduction, a cost or disposal proceeds etc).
In undertaking the above calculations, the new currency translation rules discussed above (see 2) are used to convert foreign currency amounts into A$.
6. FOREX REALISATION EVENTS AND OTHER SPECIAL RULES.
As mentioned above (see 5.3), forex realisation gains and losses arise as a result of the happening of one of the eight different kinds of “forex realisation events”. These events are, therefore, the trigger for the operation of the currency exchange gain and loss provisions in much the same way as “CGT events” are the trigger for the operation of the capital gain and loss provisions. [55] The following discussion (see 6.1 to 6.11) examines each of the specific forex realisation events as well as various special rules that apply in relation to these events.
6.1 Forex Realisation Event 1 (Disposal of Foreign Currency): s 775-40.
FRE 1 arises where “CGT event A1” happens in relation to the disposal of foreign currency, or a right, or part of a right, to receive foreign currency. [56] The time of the forex realisation event is when the foreign currency, or right, or part of the right, to foreign currency is disposed of. [57]
CGT event A1 happens where there is a change in the beneficial ownership of a CGT asset from one entity to another. [58] Thus, FRE 1 arises when there has been a change in the beneficial ownership of foreign currency or a right, or part of a right, to receive foreign currency from one entity to another entity. [59] For example, FRE 1 will occur where a taxpayer sells foreign currency, or assigns its rights under an option to acquire foreign currency, to another entity. It is particularly important to realise that every time foreign currency is paid to another entity (eg as consideration under a contract), the foreign currency will be disposed of and it will therefore be necessary to consider the application of FRE 1. This forex realisation event is therefore extremely common.
The circumstances in which an entity makes a forex realisation gain or forex realisation loss under FRE 1 are as follows:
& # 8226؛ Forex realisation gain. An entity makes a forex realisation gain under FRE 1 if it makes a capital gain from CGT event A1 and some or all of that capital gain is attributable to a currency exchange rate effect. The amount of the forex realisation gain is that part of the capital gain (if any) which is attributable to a currency exchange rate effect. [60]
Forex realisation loss. An entity makes a forex realisation loss under FRE 1 if it makes a capital loss from CGT event A1 and some or all of that capital loss is attributable to a currency exchange rate effect. The amount of the forex realisation loss is that part of the capital loss (if any) which is attributable to the currency exchange rate effect. [61]
The following example illustrates the operation of FRE 1.
In January 2004 (when the exchange rate was A$1:US$0.80), X Co acquired US$10m. In February 2004 (when the exchange rate was A$1:US$0.50), X Co used the US$10m to purchase shares listed on the NASDAQ stock exchange.
The US$10m foreign currency is a CGT asset which has a cost base of A$12.5m (US$10m x 1.00/0.80). CGT event A1 happens when X Co disposed of the foreign currency to buy the shares. The capital proceeds from the disposal is A$20m (US$10m x 1.00/ 0.50), being the market value of the shares.
Accordingly, pursuant to FRE 1, X Co has made a forex realisation gain of A$7.5m (A$20m – A$12.5m)
6.2 Forex Realisation Event 2 (Ceasing to Have a Right to Receive Foreign Currency): s 775-45.
FRE 2 happens if the following three conditions specified in s 775-45(1) are fulfilled:
(a) an entity ceases to have a right, or part of a right, to receive foreign currency; [62]
the right, or part of the right, is:
& # 8226؛ a right, or part of a right, to receive, or that represents, ordinary income or statutory income (other than statutory income assessable under Div 775 or the CGT rules in Div 102);
& # 8226؛ a right, or part of a right, created or acquired in return for ceasing to hold a depreciating asset;
& # 8226؛ a right, or part of a right, created or acquired in return for paying or agreeing to pay Australian or foreign currency; أو.
& # 8226؛ a right, or part of a right, created in return for a “realisation event” [63] happening in relation to a CGT asset not covered by the previous classes of right; و.
(c) the entity did not cease to have the right, or part of the right because it was disposed of.
The time of the forex realisation event is when the entity ceases to have the right or part of the right to receive the foreign currency. [64]
FRE 2 commonly occurs when a right to receive foreign currency is satisfied by the actual receipt of the foreign currency. It is important to note that FRE 2 does not occur where the right to receive foreign currency is disposed of to another entity as, in such case, “FRE 1” would apply.
The circumstances in which an entity makes a forex realisation gain or forex realisation loss under FRE 2 are as follows:
& # 8226؛ Forex realisation gain. An entity makes a forex realisation gain under FRE 2 if the amount the entity receives in respect of the event exceeds the “forex cost base” [65] of the right, or part of the right (worked out at the “tax recognition time”) [66] and some or all of that excess is attributable to a currency exchange rate effect. The amount of the forex realisation gain is that part of the excess (if any) which is attributable to the currency exchange rate effect. [67]
Forex realisation loss. An entity makes a forex realisation loss under FRE 2 if the amount received for the right, or part of the right, falls short of the “forex cost base” of the right, or part of the right (worked out at the “tax recognition time”) and some or all of the shortfall is attributable to a currency exchange rate effect. The amount of the forex realisation loss is so much of the shortfall as is attributable to the currency exchange rate effect. [68] An entity also makes a forex realisation loss if the event happens because an option to buy foreign currency expires without having been exercised, or is cancelled, released or abandoned and the entity was capable of exercising the option immediately before the event. The amount of the forex realisation loss is the amount paid in return for the grant or acquisition of the option. [69]
The following example illustrates the operation of FRE 2:
Betty is a software exporter. On 1 April 2004 (when the exchange rate was A$1:US$0.80), she entered into a contract to supply products to a customer in the United States for US$1,000.
As a consequence of entering into the contract, Betty has a right to receive foreign currency (ie US$1,000). The forex cost base of the right is determined at the “tax recognition time”, which is when the income is derived (ie 1 April 2004). The forex cost base of the right in A$ is therefore A$1,250 (US$1,000 x 1.00/0.80). Betty is required to include this amount in her assessable income for the 2003/04 income year under s 6-5.
Betty’s customer pays Betty the US$1,000 on 1 October 2004 (when the exchange rate was A$1:US$0.50). As a consequence of the payment, Betty ceases to have the right to receive the foreign currency as the debt is satisfied. This results in FRE 2 happening on 1 October 2004. The A$ amount that Betty receives in respect of the event is A$2,000 (US$1,000 x 1.00/ 0.50).
As the amount Betty receives in respect of the event (A$2,000) is greater than the forex cost base of the right (A$1,250), Betty has made a forex realisation gain of $750. She must include this in her assessable income for the 2004/05 income year pursuant to s 775-15.
6.3 Forex Realisation Event 3 (Ceasing to Have an Obligation to Receive Foreign Currency): s 775-50.
FRE 3 happens under s 775-50(1) if:
(a) an entity ceases to have an obligation, or part of an obligation, to receive foreign currency; [70] and.
(b) the obligation, or part of the obligation, was incurred in return for the creation of a right to pay foreign currency [71] or Australian currency. [72]
The time of the forex realisation event is when the entity ceases to have the obligation or part of the obligation. [73]
FRE 3 commonly occurs where a taxpayer has granted another entity a “put option” that requires the taxpayer to acquire foreign currency and either: (i) the option is exercised or expires, or (ii) the taxpayer is released from its obligations under the option.
The circumstances in which an entity makes a forex realisation gain or forex realisation loss under FRE 3 are as follows:
& # 8226؛ Forex realisation gain. An entity makes a forex realisation gain under FRE 3 if the amount received in respect of the event exceeds the “net costs of assuming the obligation” [74] or the part of the obligation (worked out at the “tax recognition time”) [75] and some or all of the excess is attributable to a currency exchange rate effect. The amount of the forex realisation gain is so much of the excess as is attributable to a currency rate exchange effect. [76] An entity also makes a forex realisation gain under FRE 3 if the event happens because an option to sell foreign currency expires without having been exercised, or is cancelled, released or abandoned; and, if the option had been exercised before the event, the entity would have been obliged to buy the foreign currency. The amount of the forex realisation gain is the amount the entity received in return for granting or assuming obligations under the option. [77]
Forex realisation loss. An entity makes a forex realisation loss under FRE 3 if the amount the entity receives in respect of the event falls short of the net costs of assuming the obligation or the part of the obligation (worked out at the “tax recognition time”) and some or all of the shortfall is attributable to the currency exchange rate effect. The amount of the forex realisation loss is so much of the shortfall as is attributable to the currency exchange rate effect. [78]
6.4 Forex Realisation Event 4 (Ceasing to Have an Obligation to Pay Foreign Currency): s 775-55.
FRE 4 happens if an entity ceases to have an obligation, or part of an obligation, to pay foreign currency and the obligation, or part of the obligation, is one which falls within the list in s 775-55(1)(b). [79] This list covers, a broad range of obligations. For instance, it covers: obligations that are deductible expenses; obligations that are elements in the calculation of certain net amounts included in assessable income or deductions; and obligations that form elements of the cost base of a CGT asset. It also covers obligations incurred in return for receiving Australian or foreign currency, or the right to receive such currency. The time of the forex realisation event is when the entity ceases to have the obligation or part of the obligation. [80]
FRE 4 commonly occurs when a taxpayer actually makes a payment of foreign currency. For example, FRE 4 would occur when a taxpayer pays an amount of foreign currency in relation to a deductible expense that it has incurred or where it pays an amount of foreign currency to acquire a CGT asset.
The circumstances in which an entity makes a forex realisation gain or forex realisation loss under FRE 4 are as follows:
& # 8226؛ Forex realisation gain. An entity makes a forex realisation gain under FRE 4 if the amount paid in respect of the event falls short of the “proceeds of assuming the obligation” [81] or part of the obligation (worked out at the “tax recognition time”) [82] and some or all of the shortfall is attributable to a “currency rate effect”. The amount of the forex realisation gain is so much of the shortfall as is attributable to a currency rate effect. [83] An entity also makes a forex realisation gain under FRE 4 if the event happens because an option to sell foreign currency expires without being exercised, or is cancelled, released or abandoned and, if the option had been exercised immediately before the event, the entity would have been obliged to sell the foreign currency. The amount of the forex realisation gain is the amount received in return for granting or assuming obligations under the option. [84]
Forex realisation loss. An entity makes a forex realisation loss under FRE 4 if the amount paid in respect of the event exceeds the proceeds of assuming the obligation, or part of the obligation, (worked out at the “tax recognition time”) and some or all of the excess is attributable to a “currency rate effect”. The amount of the forex realisation loss is so much of the excess as is attributable to a currency rate effect. [85]
The following example illustrates the operation of FRE 4:
Pamela operates a beauty parlour and imports make-up from overseas which she sells in the ordinary course of her business. On 1 April 2004 (when the exchange rate was A$1:US$0.80), she entered into a contract to purchase make-up from a supplier in the United States for $US1,000.
As a consequence of entering into the contract, Pamela has an obligation to pay foreign currency (ie US$1,000). The proceeds of assuming the obligation is determined at the “tax recognition time”, which is when the outgoing became deductible (ie 1 April 2004). The proceeds of assuming the obligation in A$ is therefore A$1,250 (US$1,000 x 1.00/0.80). Pamela is entitled to a deduction for this amount in the 2003/04 income year under s 8-1.
Pamela pays her supplier US$1,000 on 1 October 2004 (when the exchange rate was A$1:US$0.50). As a consequence of the payment, Pamela ceases to have an obligation to pay the foreign currency as she has satisfied the debt. This results in FRE 4 happening on 1 October 2004. The A$ amount that Pamela pays in respect of the event is A$2,000 (US$1,000 x 1.00/0.50).
As the amount Pamela pays in respect of the event (A$2,000) exceeds the proceeds of assuming the obligation (A$1,250), Pamela has made a forex realisation loss of $750. She is entitled to a deduction for this amount in the 2004/05 income year pursuant to s 775-30.
6.5 Forex Realisation Event 5 (Ceasing to Have a Right to Pay Foreign Currency): s 775-60.
FRE 5 happens if an entity ceases to have a right, or part of a right, to pay foreign currency [86] and the right, or part of the right, is created or acquired in return for the assumption of an obligation to pay foreign currency or Australian currency. [87] The time of the forex realisation event is when the taxpayer ceases to have the right or part of the right. [88]
FRE 5 commonly occurs where a taxpayer has a call option requiring another entity to acquire the taxpayer’s foreign currency and either: (i) the option is exercised or expires, or (ii) the taxpayer releases the other entity from the terms of the option.
The circumstances in which an entity makes a forex realisation gain or forex realisation loss under FRE 5 are as follows:
& # 8226؛ Forex realisation gain. An entity makes a forex realisation gain under FRE 5 if the amount the entity pays in respect of the event falls short of the “forex entitlement base” [89] of the right or part of the right (worked out at the “tax recognition time”) [90] and some or all of the shortfall is attributable to a “currency rate effect”. The amount of the forex realisation gain is so much of the shortfall as is attributable to the currency rate effect. [91]
Forex realisation loss. An entity makes a forex realisation loss under FRE 5 if the amount the entity pays in respect of the event exceeds the forex entitlement base of the right or part of the right (worked out at the tax recognition time) and some or all of the excess is attributable to a currency rate effect. The amount of the forex realisation loss is so much of the excess as is attributable to the currency exchange rate effect. [92] An entity also makes a forex realisation loss under FRE 5 if the event happens because an option to sell foreign currency expires without having been exercised, or is cancelled released or abandoned and the entity was capable of exercising the option immediately before the event happened. The amount of the forex realisation loss is the amount the entity paid in return for the grant or acquisition of the option. [93]
6.6 Multiple Forex Realisation Events.
There are cases in which a particular transaction might give rise to more than one forex realisation event. For example, a transaction involving the future sale of one foreign currency in exchange for another foreign currency will involve both a right or obligation to receive foreign currency and a right or obligation to pay foreign currency. In order to prevent the duplication of forex realisation gains and losses in these cases, s 775-65 contains a table that specifies which forex realisation events are to be ignored. The aim of the provision is to ensure that a particular taxpayer can only make one forex realisation gain or loss from a single transaction. This principle is illustrated in the following example.
Trader holds an option to buy US$ in exchange for Euro at a particular price. Trader therefore has a right to buy foreign currency ($US) and an obligation to pay foreign currency (Euro) which is contingent on Trader exercising the option.
If Trader sells its option, FRE 1 (disposal of right to foreign currency) and FRE 4 (ceasing of obligation to pay foreign currency) would arise. In this situation the table in s 775-65 ignores FRE 4 (ie the forex realisation gain or loss will be calculated under FRE 1).
If Trader, instead, exercised its option, FRE 2 (ceasing of right to receive foreign currency) and FRE 4 (ceasing of obligation to pay foreign currency) would arise. In this situation the table in s 775-65 ignores FRE 4 (ie the forex realisation gain or loss will be calculated under FRE 2).
6.7 Application of Forex Realisation Events to Currency and Fungible Rights and Obligations.
Taking into account that currency is “fungible” in nature (ie a unit of currency is identical to any other unit of the same currency), this can pose difficulties in applying the forex rules to pools of currency. For example, part of the foreign currency held in a bank account may be used to make a payment to another entity. This constitutes FRE 1 as the foreign currency is disposed of. However, ordinarily, it may be difficult to work out the relevant forex realisation gain or loss from such a transaction as it may be difficult to determine the A$ cost of the foreign currency since amounts may have been deposited into the account at different times when different exchange rates applied.
To address this kind of problem, s 775-145(1) provides that FRE 1, FRE 2, or FRE 4 operate on a “first in first out” (“FIFO”) basis in relation to foreign currency or a fungible right or fungible obligation to pay foreign currency. [94] The following example illustrates how this rule operates.
X Co is an exporter that operates a US$ bank account. After opening the account, it receives the following payments from its customers:
On 1 July 2004 (when the exchange rate was A$1:US$0.50) – a payment of US$20,000. This amount is equivalent to A$40,000 (US$20,000 x 1.00/0/50).
On 15 July 2004 (when the exchange rate was A$1:US$0.80) – a payment of US$10,000. This amount is equivalent to A$12,500 (US$10,000. x 1.00/0.80).
On 20 July 2004 (when the exchange rate was A$1:US$0.60), X Co makes a payment from its bank account to one of its suppliers of US$25,000. This amount is equivalent to A$41,667 (US$25,000 x 1.00/0.60).
This payment results in FRE 1 happening to US$20,000 received on 1 July and US$5000 received on 15 July. The cost base of the foreign currency is A$46,250 (A$40,000 + A$6,250).
X Co therefore makes a forex realisation loss on 20 July of A$4,583 (A$46,250 - A$41,667).
6.8 Short-term Forex Realisation Gains and Losses.
As mentioned above (see 6), the basic rules that require forex realisation gains to be included in assessable income (s 775-15) and allow deductions for forex realisation losses (s 775-30) operate subject to special rules relating to “short-term forex realisation gains” (s 775-70) and “short-term forex realisation losses” (s 775-75).
The “short-term rules” apply to forex realisation gains and losses arising as a result of FRE 2 and FRE 4. More specifically, they apply to gains and losses on:
& # 8226؛ a right to receive foreign currency arising from disposing a CGT asset;
& # 8226؛ an obligation to pay foreign currency for acquiring a CGT asset; و.
& # 8226؛ an obligation to pay foreign currency for a depreciating asset.
The short-term rules operate in the first two cases if a CGT asset is acquired or disposed of and the time between the acquisition or disposal of the asset and the date for payment or receipt of the foreign currency is not more than 12 months. The short-term rules operate in the third case if the time between a depreciating asset beginning to be held and the date for payment of the foreign currency is not more than 12 months before or 12 months after the date the asset began to be held.
Where the short-term rules operate, any forex realisation gains and losses are not brought to account as assessable income or deductions under the basic rules. Instead, the gains and losses are integrated into the tax treatment of the underlying assets (see 6.8.2).
6.8.1 Policy Rationale.
The policy rationale for having special short-term rules is outlined in the following passage from the Explanatory Memorandum to the Bill which introduced the provisions:
This exception recognises that a forex realisation gain or loss may be seen as incidental, or closely related, to a gain or loss arising in respect of another asset on capital account. Therefore, for tax purposes, the foreign currency gains and losses are treated as having the same character as the gains and losses on the asset to which the foreign currency right or obligation relates. This approach is sometimes referred to as ‘character matching’.
However, character matching treatment will only apply where the forex realisation gain or loss is short-term in nature. Broadly, such a gain or loss arises where the time between the time of acquisition or tax recognition time and the due date for payment for that asset is 12 months or less. A 24-month rule applies to the acquisition of depreciating assets - character matching payments that are due in the 12 months before the asset comes to be held as well as the subsequent 12 months.
These time limits are a statutory rule-of-thumb which attempts to distinguish between those rights and obligations to receive and pay foreign currency which are considered to be incidental to another transaction (eg the purchase and sale of a depreciating asset) and those which, in themselves, represent a separate financing arrangement. [95]
6.8.2 Specific Consequences of Making Short-term Forex Realisation Gains and Losses.
The tables in s 775-70 and s 775-75 explain the specific consequences that flow where short-term forex realisation gains and losses arise. The main results are summarised below:
Short-term forex realisation gains.
& # 8226؛ Where a taxpayer makes a forex realisation gain as a result of FRE 2 and the right to receive foreign currency was created in return for the disposal of a CGT asset (other than a depreciating asset), the forex realisation gain is not included in assessable income under s 775-15. Instead, CGT event K10 occurs when the forex realisation event happens. This results in the taxpayer making a non-discountable capital gain equal to the amount of the forex realisation gain.
& # 8226؛ Where a taxpayer makes a forex realisation gain as a result of FRE 4 and the obligation to pay foreign currency was incurred in return for the acquisition of a CGT asset (other than a depreciating asset), the forex realisation gain is not included in assessable income under s 775-15. Instead, the cost base and reduced cost base of the CGT asset is reduced by the amount of the forex realisation gain.
& # 8226؛ Where a taxpayer makes a forex realisation gain as a result of FRE 4 and the obligation to pay foreign currency was incurred in return for acquiring a depreciating asset, the forex realisation gain is not included in assessable income under s 775-15. Instead, the asset’s cost, its adjustable value, or the opening value of the pool in which the asset resides is reduced by the forex realisation gain. [96] If the forex realisation gain is greater than the asset’s cost, opening adjustable value, or the opening value of the pool, the excess is included in the taxpayer’s assessable income.
Short-term forex realisation losses.
& # 8226؛ Where a taxpayer makes a forex realisation loss as a result of FRE 2 and the right to receive foreign currency was created in return for the disposal of a CGT asset (other than a depreciating asset), the forex loss is not deductible under s 775-30. Instead, CGT event K11 occurs when the forex realisation event happens. This results in the taxpayer making a capital loss equal to the amount of the forex realisation loss.
& # 8226؛ Where a taxpayer makes a forex realisation loss as a result of FRE 4 and the obligation to pay foreign currency was incurred in return for the acquisition of a CGT asset (other than a depreciating asset), the forex realisation loss is not deductible under s 775-30. Instead, the cost base and reduced cost base of the CGT asset is increased by the amount of the forex realisation loss.
& # 8226؛ Where a taxpayer makes a forex realisation loss as a result of FRE 4 and the obligation to pay foreign currency was incurred in return for acquiring a depreciating asset, the forex realisation loss is not deductible under s 775-30. Instead, the asset’s cost, its adjustable value, or the opening value of the pool in which the asset resides is increased by the amount of the forex realisation loss.
6.8.3 Election Not to Use the Short-term Rules.
A taxpayer can make an irrevocable written choice under s 775-80 for the short-term rules not to operate. [97] The effect of making such a choice is that the basic rules in s 775-15 and s 775-30 operate in respect of any forex realisation gains and losses instead of the special rules in s 775-70 and s 775-75.
6.9 Roll-over relief for facility agreements.
Special roll-over relief is available under Subdiv 775-C to the issuer of “eligible securities” under a “facility agreement”. The circumstances in which this relief operates and the effect of the relief are discussed below (see 6.9.1 to 6.9.5).
6.9.1 Facility Agreements and Eligible Securities.
A “facility agreement” is an agreement between an entity and one or more other entities under which the first entity has a right to issue “eligible securities” and the other entity or entities acquire those securities. The economic effect of the agreement must be such that it enables the first entity to obtain finance in a particular foreign currency up to the foreign currency amount specified in the agreement during the term of the agreement. [98]
“Eligible securities” are bills of exchange and promissory notes that are non-interest bearing, issued at a discount, denominated in a foreign currency, and are for a fixed term. They can also include securities specified in the regulations that are denominated in a foreign currency and are for a fixed term. [99]
6.9.2 Roll-over Choice.
Roll-over relief is only available under Subdiv 775-C if the issuer of the eligible securities has made a choice [100] seeking roll-over relief for a particular facility agreement. [101]
Furthermore, roll-over relief is only available if the issuer discharges an obligation to pay foreign currency under an eligible security and at the same time issues a new eligible security pursuant to the agreement. [102] The issue of the new security must be related to the discharge of the issuer’s liability under the rolled over security in one of the following ways:
& # 8226؛ the issuer’s obligation to discharge the liability under the rolled over security must be wholly or partly set-off against the issuer’s right to receive the foreign currency issue price of the new security; أو.
& # 8226؛ the issuer’s obligation to discharge the liability under the rolled over security must be wholly or partly satisfied by the issue of the new security.
6.9.3 Consequence of Choice.
There are two important consequences of making a choice under s 775-195:
1. The first consequence is that any forex realisation gain or forex realisation loss that would otherwise arise to the issuer as a result of FRE 4 (ie from the issuer discharging its obligations to pay foreign currency in relation to the rolled over eligible security) is disregarded. [103]
The second consequence is that the issuer is treated as having been provided with a “notional loan”. [104] This recognises the fact that a facility agreement comprising a series of discounted instruments is often economically analogous to a continuous loan. [105] The effect of the roll-over on the notional loan is based on the rules stated in the table in s 775-210(3) which depend upon how the foreign currency face value of the new security compares to that of the rolled over security. Broadly, and in simplistic terms, the table operates as follows:
& # 8226؛ Where the face value of a new security is the same as that of the rolled over security, the notional loan is treated as having been extended.
& # 8226؛ Where additional capital is raised under the facility (ie there is a new “draw-down”), a new notional loan is taken to arise for the increased amount.
& # 8226؛ Where there is a reduction in the capital outstanding under the facility (ie the foreign currency face value of the rolled over security is less than the foreign currency value of the rolled-over security), the issuer is taken to have paid a foreign currency amount in order to discharge its obligation. In this circumstance, forex realisation gains and losses may be triggered under FRE 6 (see 6.9.4).
6.9.4 Forex Realisation Event 6.
FRE 6 happens where the issuer discharges its obligation, or part of its obligation, to pay the foreign currency principal amount of a notional loan attached to an eligible security issued under a facility agreement. [106] The time of the event is when the obligation (or part thereof) is discharged. [107]
The rationale for having FRE 6 is that the roll-over relief under Subdiv 775-C is only designed to defer forex realisation gains and losses arising under a facility agreement while foreign currency amounts remain outstanding on the notional loans. To the extent that a notional loan has been discharged, it is necessary to determine the extent to which forex realisation gains and losses have arisen. FRE 6 is the mechanism used to calculate such gains and losses.
The circumstances in which the issuer makes a forex realisation gain or forex realisation loss under FRE 6 are as follows:
& # 8226؛ Forex realisation gain. The issuer makes a forex realisation gain under FRE 6 if the amount of the obligation (or part thereof) at the start time of the notional loan exceeds the amount paid in order to discharge the obligation (or part thereof), and some or all of the excess is attributable to a currency exchange rate effect. The amount of the gain is so much of the excess as is attributable to the currency exchange rate effect. [108]
Forex realisation loss. The issuer makes a forex realisation loss under FRE 6 if the amount of the liability (or part thereof) at the “start time” of the notional loan, falls short of the amount paid in order to discharge it (or part thereof) and some or all of the excess is attributable to a currency exchange rate effect. The amount of the loss is so much of the shortfall as is attributable to the currency exchange rate effect. [109]
6.9.5 Forex Realisation Event 7.
FRE 7 arises where there is a material variation to the terms or conditions or effect of a facility agreement or to the types of securities that can be issued under it. [110] The time of the event is when the material variation happens. [111]
FRE 7 is designed to apply where the relevant facility agreement is no longer analogous to a continuous loan because its terms have changed. Where FRE 7 happens in relation to a facility agreement, the notional loan effectively ceases and forex realisation gains and losses can therefore potentially arise under FRE 4 every time an obligation to pay foreign currency in respect of the security is discharged under the facility. [112]
The circumstances in which an issuer makes a forex realisation gain or forex realisation loss under FRE 7 are as follows:
& # 8226؛ Forex realisation gain. The issuer makes a foreign exchange gain under FRE 7 if (assuming it had discharged its liabilities under each notional loan arising under the facility agreement and not rolled-over any eligible security) the total forex realisation gains it would have made as a result of FRE 6 would have exceeded the total forex realisation losses it would have made as a result of FRE 6. The amount of the forex realisation gain is the excess. [113]
Forex realisation loss. The issuer makes a foreign exchange loss under FRE 7 if (assuming it had discharged its liabilities under each notional loan arising under the facility agreement and not rolled over any eligible security) the total forex realisation losses it would have made as a result of FRE 6 would have exceeded the total forex realisation gains it would have made as a result of FRE 6. The amount of the forex realisation loss is the excess. [114]
6.10 Limited Balance Election for “Qualifying Forex Accounts”
A number of different forex realisation events can arise in relation to foreign currency denominated bank accounts. In particular:
& # 8226؛ FRE 1 arises when an entity deposits foreign currency into such an account as the entity has disposed of foreign currency.
& # 8226؛ FRE 2 arises when an entity withdraws foreign currency from such an account with a credit balance as the entity’s right to receive foreign currency from the bank cease to the extent of the withdrawal.
& # 8226؛ FRE 4 arises when an entity deposits foreign currency into such an account with a debit balance as the entity’s obligations to pay foreign currency to the bank cease to the extent of the deposit.
To reduce the compliance costs associated with the general forex rules, taxpayers can elect under s 775-230 to have Subdiv 775-D apply to one or more “qualifying forex accounts”. In simple terms, where a taxpayer makes an election, forex realisation gains and forex realisation losses that arise as a result of FRE 2 or FRE 4 (but not FRE 1) are disregarded if the account passes the “limited balance test” set out in the Subdivision. [115]
6.10.1 Qualifying Forex Account.
A “qualifying forex account” is a credit card account, or an account held for the primary purpose of facilitating transactions, that is denominated in a foreign currency and is maintained in Australia with an ADI or in a foreign country with an ADI or similar institution. [116]
6.10.2 The Limited Balance Test.
To pass the limited balance test, the combined credit and debit balances [117] of all the accounts covered by the taxpayer’s election must not be more than the foreign currency equivalent of A$250,000. [118] This rule operates subject to a “buffer” provision, which allows the combined balance of the accounts to be no more than A$500,000 for up to no more than two 15-day periods in any income year. [119]
Where an entity breaches the limited balance test, FRE 2 and FRE 4 can apply to subsequent withdrawals from, and deposits to, the foreign currency denominated accounts. Forex realisation gains and losses that arise in these circumstances are calculated from the date of the breach. [120]
An entity can re-test after a breach and if it satisfies the limited balance test, the special treatment under the Subdivision will re-commence without the need for the entity making a fresh election. A notional realisation rule, however, applies in this situation to ensure that any gain or loss which accrued during the intervening breach period is brought to account on re-entry. [121]
6.11 Retranslation Election for “Qualifying Forex Accounts”
As an alternative form of relief to the limited balance exemption (see 6.10), an entity may make a choice under s 775-270 that the “retranslation rule” under Subdiv 775-E apply in relation to its qualifying forex accounts.
In essence, the retranslation rule allows an entity to account for the foreign currency gains and losses arising in respect of a qualifying forex account by simply restating the account balance annually by reference to deposits, withdrawals, and the relevant exchange rate at the beginning and end of the retranslation period (usually the income year).
6.11.1 Retranslation Choice.
The choice under s 775-270 must be made in writing and continues until: (i) the entity ceases to hold the qualifying forex account, (ii) the account ceases to be a qualifying forex account, or (iii) the choice is withdrawn.
6.11.2 Consequences of Choice.
There are two consequences of making a choice under s 775-270:
1. The first consequence is that any forex realisation gain or forex realisation loss arising under FRE 2 or FRE 4 in respect of the qualifying forex account is disregarded. [122]
The second consequence is that FRE 8 applies for the relevant “retranslation period” (see 6.11.3). [123]
6.11.3 Forex Realisation Event 8.
Under FRE 8 it is necessary to apply the following formula, contained in s 775-285(4), to determine the relevant “retranslation amount” (which may be either a positive or negative amount) for the “retranslation period”:
The relevant exchange rates to be used in order to calculate the elements in the above formula are as follows: [124]
& # 8226؛ closing balance – the exchange rate at the end of the retranslation period;
& # 8226؛ opening balance – the exchange rate at the beginning of the retranslation period;
& # 8226؛ deposits – the exchange rate at the time the relevant deposit is made; و.
& # 8226؛ withdrawals – the exchange rate at the time the relevant withdrawal is made.
The circumstances in which an entity makes a forex realisation gain or forex realisation loss under FRE 8 are outlined below:
& # 8226؛ Forex realisation gain. An entity makes a forex realisation gain under FRE 8 if there is a positive retranslation amount for the account for the retranslation period. The amount of the forex realisation gain is the positive retranslation amount. [125]
Forex realisation loss. An entity makes a forex realisation loss under FRE 8 if there is a negative retranslation amount for the account for the retranslation period. The amount of the forex realisation loss is the negative retranslation amount. [126]
7. CONCLUSION.
Like most other forms of recent taxation legislation, the forex rules are based on provisions which are highly technical in nature, peppered with cross-references to other provisions within the statute, and riddled with lengthy tables and new forms of “jargon”. In this respect, the provisions can naturally appear quite daunting at first glance and certainly take some time getting used to. It is important to realise, however, that underpinning these complex rules are a set of relatively basic general principles.
One of the cornerstones upon which the forex regime is founded is the general translation rule. This rule generally requires each amount that is relevant to a tax calculation to be translated into A$ so that a constant unit of account is used to calculate a taxpayer’s tax liabilities for an income year. Subject to any special rules prescribed in the regulations, Parliament has chosen to use “spot” translation rules for this purpose as outlined in the table in s 960-50(6). The general translation rule, of course, does not apply where a functional currency choice has been made by an entity that keeps its accounts solely or principally in a foreign currency. In these circumstances, tax calculations can be made in the relevant foreign currency and the net amount for the year is simply translated into A$. This is a sensible and convenient exception to the general translation rule.
Another key principle that underscores the forex regime is that foreign currency exchange gains and losses are generally required to be brought to account on a “realisation basis” according to “event” based rules. This approach is similar to the style adopted under the CGT provisions and should, therefore, not appear all that unusual.
As with the currency translation rules, the general forex realisation gain and loss rules operate subject to various elections, such as those relating to facility agreements and qualifying forex accounts. These elections are also designed to overcome some of the practical problems and inconveniences that may otherwise be caused by the application of the general provisions and should, therefore, be viewed as a positive feature of the regime.
The new forex regime is, in effect, a comprehensive codified scheme for dealing with transactions relating to foreign currency and has been designed to replace the ad hoc set of rules for dealing with such transactions that existed in the past and that were scattered throughout the tax legislation. Leaving aside the limited number of exceptions to the regime (most importantly the exceptions relating to ADIs and non-ADI financial institutions), the new rules will now usually be relevant any time that transactions take place in foreign currency. Accordingly, they are of great importance to anyone practising in taxation.
[*] Associate Professor, Monash University and Consultant, Blake Dawson Waldron.
[1] The forex regime was introduced pursuant to amendments contained in the New Business Tax System (Taxation of Financial Arrangements) Bill (No 1) 2003, which received assent on 17 December 2003 and became Act No 133 of 2003.
[2] Review of Business Taxation, A Tax System Redesigned (1999) 56-59 and 335-367.
[3] Treasurer, Commonwealth of Australia, The New Business Tax System: Stage 2 Response , Press Release No 74 (November 1999) (Attachment N).
[4] For a general discussion of this regime, see R Woellner, S Barkoczy, S Murphy and C Evans, Australian Taxation Law (2004) 1,134-1,146 and R Deutsch, M Friezer, I Fullerton, M Gibson, P Hanley and T Snape, Australian Tax Handbook (2004) 873-891.
[5] ITAA97, ss 775-155 and 960-55(1).
[7] The concepts of an “ADI” and a “non-ADI financial institution” are defined in s 128A(1) of the ITAA36: ITAA97, s 995-1.
[8] The general translation rule applies for both the purposes of the ITAA97 and the ITAA36.
[9] In translating an amount into Australian currency, an entity must comply with the regulations which may, for instance, prescribe a particular translation method: ITAA97, s 960-50(8).
[10] It does not, however, affect the operation of the provisions specified in s 960-50(10).
[13] ITAA97, s 960-50(4). This rule does not, however, apply to another amount which is a “special accrual amount”. In other words, amounts taken into account in calculating a “special accrual amount” are not translated – it is only the result of the calculations (ie the special accrual amount) which is translated: ITAA97, s 960-50(5). A “special accrual amount” is an amount that is included in assessable income or allowed as a deduction under one of the following Divisions: Div 42A in Sch 2E of the ITAA36; Div 240 of the ITAA97; Div 16D of Pt III of the ITAA36; and Div 16E of Pt III of the ITAA36: ITAA97; s 995-1.
[14] ITAA97, s 960-50(7). For example, the regulations might allow an “average” rather than a “spot” rate to be used for translation purposes.
[15] ITAA97, ss 960-56 and 960-59.
[18] Defined in s 960-65 of the ITAA97.
[19] ITAA97, s 960-60(3) to (4).
[40] See, eg, ss 118-20 and 118-55 of the ITAA97.
[41] ITAA97, s 775-155.
[42] ITAA97, ss 775-150 and 775-165. For most taxpayers this election had to be made by 16 January 2004. See further N Ward, (2004) 1 Tax Week 1.
[43] ITAA97, s 775-165.
[44] ITAA97, ss 775-15(4) and 775-30(4).
[47] In other words, they would not be disregarded under any CGT exemptions such as the personal use asset exemption in s 118-10 of the ITAA97.
[50] ITAA97, ss 775-20 and 775-25.
[54] A constructive receipts and payments rule ensures that if an entity (the “payer”) did not actually pay an amount to another entity (the “recipient”), but the amount was applied or dealt with in any way on the recipient’s behalf as the recipient directs, then the payer is taken to have paid and the recipient is taken to have received the relevant amount as soon as it is applied or dealt with: ITAA97, s 775-110.
[55] The forex regime and the CGT regime also overlap in places. See, for instance, the overlap between FRE 1 and CGT event A1 (see 6.1). Note also the interaction between the short-term forex realisation gain and loss rules and CGT event K10 and CGT event K11 (see 6.8.2).
[58] ITAA97, s 104-10. Note that in applying FRE 1, certain modifications are made to the way in which the CGT provisions operate. In particular, there is a special rule which provides that if the capital proceeds from the event are more or less than the market value of the foreign currency, right, or part of the right, the capital proceeds are taken to be the market value: ITAA97, s 775-40(9). Special rules also require certain CGT provisions that would otherwise be relevant for the purposes of calculating capital gains and losses to be disregarded. The provisions that must be disregarded are: s 118-20 (which reduces a capital gain by certain amounts that are otherwise assessable), Div 114 (which relates to indexation) and s 118-55 (which disregards certain foreign currency hedging gains and losses): ITAA97 s 775-40(5), (7) and (8).
[62] A right to receive foreign currency may be contingent and it includes a right to receive an amount of A$ that is calculated by reference to an exchange rate: ITAA97, s 775-135(1) and (2).
[63] Defined in Div 977 of the ITAA97.
[65] The “forex cost base” of a right, or part of a right, to receive foreign currency is, broadly, the sum of the money paid and the market value of any non-cash benefit provided in respect of acquiring the right or part of the right reduced by any amounts that are deductible outside Div 775: ITAA97, s 775-85.
[66] For the purposes of s 775-45, the “tax recognition time” is worked out according to the table in s 775-45(7). Essentially, it is the time that the right, or part of the right, is recognised under the tax law (eg where the right is ordinary income, it is the time when the ordinary income is derived).
[70] An obligation to receive foreign currency may be contingent and includes an obligation to receive an amount of A$ that is calculated by reference to an exchange rate: ITAA97, s 775-140(3) and (4).
[71] A right to pay foreign currency may be contingent and includes a right to pay an amount of A$ that is calculated by reference to an exchange rate: ITAA97, s 775-135(3) and (4).
[72] A right to pay Australian currency may be contingent: ITAA97, s 775-50(8).
[74] The net costs of assuming an obligation, or part of an obligation, to receive foreign currency is worked out in accordance with s 775-100.
[75] For the purposes of s 775-50, the “tax recognition time” is the time when the entity received an amount in respect of the event happening.
[79] Note that FRE 4 operates subject to the roll-over relief available under Subdiv 775-C in relation to “facility agreements” (see 6.9).
[81] The proceeds of assuming an obligation to pay foreign currency is the sum of the money received and the market value of non-cash benefits acquired in return for incurring the obligation, reduced by any amounts that are deductible outside Div 775: ITAA97, s 775-95.
[82] For the purposes of s 775-55, the “tax recognition time” is worked out according to the table in s 775-55(7). Essentially, it is the time that the obligation, or part of the obligation, is recognised under the tax law (eg where the obligation is a deductible expense, it is the time when the expense becomes deductible).
[86] A right to pay foreign currency may be contingent and includes a right to pay an amount of A$ that is calculated by reference to an exchange rate: ITAA97, s 775-135(3) and (4).
[89] The forex entitlement base of a right, or part of a right, to pay foreign currency is worked out under s 775-90.
[90]0 For the purposes of s 775-60, the “tax recognition time” is the time when an amount in respect of the event is paid: ITAA97, s 775-60(7).
[94] Note that, in spite of the FIFO principle, the regulations may prescribe that the relevant forex realisation events are to apply on a “weighted average basis”: ITAA97, s 775-145(2).
[96] But not below zero.
[97] A choice to opt out of the short term rules must be made within the time periods specified in the section.
[98] ITAA97, s 775-185.
[99] ITAA97, s 775-190.
[100] The choice must be made within 90 days of the first time the entity issues an eligible security under the facility, within 90 days of the “applicable commencement date” (as defined in s 775-155), or within 30 days of the commencement of the section (ie by 16 January 2004). The choice must be made in writing and is irrevocable. It operates from immediately before the first time a security is issued or the applicable commencement date and continues until the facility agreement ends.
[115] ITAA97, s 775-250(1). Capital gains and losses that are attributable to currency fluctuations and which might otherwise arise pursuant to CGT event C1 or C2 are also disregarded: ITAA97, s 775-250(2).
[117] Debit balances are expressed as positive amounts (eg if a taxpayer owes US$10,000 on a credit card account, the debit balance of the account is US$10,000): ITAA97, s 775-245(5).
[118] ITAA97, s 775-245(1). Compliance with the A$250,000 amount is determined by translating the amount into an equivalent amount of foreign currency in which the account is denominated using the average exchange rate for the third month that preceded the income year. The combined credit and debit balances in the relevant accounts are then measured against this translated amount: ITAA97, s 775-245(4).
[122] ITAA97, s 775-280. Capital gains and losses that are attributable to currency fluctuations and which might otherwise arise pursuant to CGT event C1 or C2 are also disregarded: ITAA97, s 775-280(2).