Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) You make a gain or loss for an income year from a * financial arrangement to which a * fair value election applies if:
(a) the principles or standards mentioned in paragraph 230 - 210(2)(a) require you to recognise a gain or loss in profit or loss for the income year from the asset or liability mentioned in paragraph 230 - 220(1)(c); or
(b) in the case of an arrangement to which subsection 230 - 220(2) applies--the principles or standards referred to in paragraph 230 - 220(1)(c) would have required you to recognise a gain or loss in profit or loss for the year from the asset or liability mentioned in paragraph 230 - 220(1)(c) if the arrangement had not been an intra - group transaction for the purposes of the standard referred to in paragraph 230 - 220(2)(b); or
(c) in the case of an arrangement to which subsection 230 - 220(3) applies--the principles or standards referred to in paragraph 230 - 220(1)(c) would have required you to recognise a gain or loss in profit or loss for the year from the asset or liability mentioned in paragraph 230 - 220(1)(c) if the arrangement had been between 2 separate entities.
Note: Subsection 230 - 40(7) provides that an election under Subdivision 230 - E (hedging financial arrangements method) or Subdivision 230 - F (method of relying on financial reports) may override a fair value election.
(1A) The gain or loss you make is the gain or loss the principles or standards require, or would have required, you to recognise in profit or loss as mentioned in subsection (1).
(2) Subsection (3) applies if:
(a) a * head company of a * consolidated group or * MEC group has a * financial arrangement; and
(b) a * fair value election applies to the arrangement; and
(c) a subsidiary member of the group ceases to be a member of the group at a particular time (the leaving time ); and
(d) immediately after the leaving time, the head company no longer has the arrangement because the subsidiary member ceased to be a member of the group.
(3) The gain or loss the group makes from the arrangement for the income year in which the leaving time occurs is taken to be the gain or loss that the principles or standards referred to in paragraph 230 - 210(2)(a) would require the group to recognise as at fair value through profit or loss for the income year from the asset or liability mentioned in paragraph 230 - 220(1)(c) if:
(a) the circumstances that existed in relation to the arrangement (including its value) immediately before the leaving time had continued to exist until the end of the income year; and
(b) any circumstances that arise in relation to the financial arrangement after the leaving time were disregarded.
Subdivision does not apply to extent gains or losses not recognised as at fair value
(4) This Subdivision does not apply to a gain or loss you make from the * financial arrangement, to the extent:
(a) you are required, as mentioned in paragraph 230 - 220(1)(c), to otherwise treat as at fair value through profit and loss the assets or liabilities that the financial arrangement is; and
(b) the principles or standards referred to in paragraph 230 - 210(2)(a) do not require you to recognise the gain or loss as at fair value through profit or loss.
Note: See also subsection 230 - 40(5).