775‑145.01 Application of forex events t775‑145.01 Application of forex events to currency and fungible rights and obligations

775‑145.01 Application of forex events to currency and fungible rights and obligations

(1) For the purposes of subsection 775‑145(2) of the Act: (a) forex realisation event 1 applies to foreign currency, on a weighted average basis, in the circumstances in subsection (2) of this section; and (b) both of forex realisation events 1 and 2 apply to a fungible right, or a part of a fungible right, to receive foreign currency, on a weighted average basis, in the circumstances in subsection (2) of this section; and (c) forex realisation event 4 applies to a fungible obligation, or a part of a fungible obligation, to pay foreign currency, on a weighted average basis, in the circumstances in subsection (2) of this section. (2) For the purposes of paragraphs (1)(a), (b) and (c), the circumstances are that an election to use a weighted average basis: (a) has been made in writing; and (b) complies with subsection (3); and (c) has not been withdrawn in accordance with subsection (5). Requirements for election (3) An election complies with this subsection if it includes: (a) a commencement date of: (i) the date on which it is made; or (ii) if the election is made not later than 90 days after 27 April 2005—the applicable commencement date mentioned in section 775‑155 of the Act; or (iii) 1 July 2004; and (b) a statement that the election is for all of the forex realisation events that are applicable to the fungible thing to which the election relates to apply, on a weighted average basis, to: (i) all fungible things (other than a fungible thing in relation to which a choice under Subdivision 775‑E of the Act is in effect); or (ii) one or more specified classes of fungible things, other than a fungible thing in relation to which a choice under Subdivision 775‑E of the Act is in effect, in circumstances (explained in the statement) in which the effect of the election would reasonably be expected to be the reduction of the costs of compliance with the income tax law; or (iii) one or more specified fungible things in circumstances (explained in the statement) in which the effect of the election would be consistent with the treatment of those fungible things in the accounting records of the entity making the election, if those records were prepared in accordance with generally accepted accounting principles. (4) An election that complies with subsection (3) takes effect in accordance with subsection (3). When an election may be withdrawn (5) An entity may withdraw an election only if it does not appear, on reasonable grounds, that the election is being withdrawn for a principal purpose of obtaining a tax benefit and either: (a) if accounting records in relation to the treatment of fungible things to which the election applies are being kept by the entity and prepared in accordance with generally accepted accounting principles—the election is being withdrawn because there has been a change to the entity’s accounting practices; or (b) if: (i) accounting records in relation to the treatment of fungible things to which the election applies by the entity are not being kept by the entity and prepared in accordance with generally accepted accounting principles; and (ii) the election includes the statement mentioned in subparagraph (3)(b)(ii); there has been a change in the entity’s circumstances that makes the statement mentioned in subparagraph (3)(b)(ii) incorrect.