Commonwealth Consolidated Regulations Commonwealth Consolidated RegulationsNote: See item 12 of the table in subsection 960 - 50(6) of the Act, as modified, and section 960 - 50.01 of this instrument.
Part 1 -- Rules and requirements for item 12 of the table in subsection 960 - 50(6) of the Act
1 Exchange rate--consistency with accounting standards used by entity
For the purposes of item 12 of the table in subsection 960 - 50(6) of the Act, as modified by subsection 960 - 50.01(2) of this instrument, if:
(a) a financial report (within the meaning of the Corporations Act 2001 ) prepared by an entity:
(i) complies with the accounting standards under the Corporations Act 2001 ; and
(ii) translates amounts into Australian currency using particular exchange rates; and
(iii) has been audited in accordance with the Corporations Act 2001 ; and
(b) the entity, or another entity, wishes to translate an amount into Australian currency in accordance with that item, using the exchange rate used in that financial report to translate a corresponding amount;
the entity mentioned in paragraph (b) must translate all amounts into Australian currency using the exchange rates that were used in that financial report to translate corresponding amounts.
2 Choice of daily exchange rate
(1) For the purposes of item 12 of the table in subsection 960 - 50(6) of the Act, as modified by subsection 960 - 50.01(2) of this instrument, an entity may translate all amounts of a particular currency, relating to a particular day, into Australian currency using an exchange rate that is applicable at a time, on that day, chosen by the entity (a daily exchange rate ).
(2) If the entity chooses a daily exchange rate relating to a particular day, the entity must choose a daily exchange rate relating to each subsequent day in the income year using the same time of the day as the time to which the first daily exchange rate related.
(3) However:
(a) the entity is not permitted to translate amounts using a daily exchange rate if the use of the rate would not be appropriate having regard to the entity's business or activities; and
(b) the entity must obtain the rate from a source that is not an associate of the entity, and not the entity itself, unless the Commissioner notifies the entity that it may obtain the rate from one or more specified sources; and
(c) the entity must translate amounts relating to the relevant day using that rate.
Example : If an entity is a trader that takes currency positions as part of its business, the use of a single exchange rate for its activities on a day would not be appropriate having regard to its business.
Note: For associate , see subsection 995 - 1(1) of the Act.
3 Choice of average exchange rate
(1) For the purposes of item 12 of the table in subsection 960 - 50(6) of the Act, as modified by subsection 960 - 50.01(2) of this instrument, an entity may, in a period, translate an amount into Australian currency using an exchange rate that is an average of all of the exchange rates that are applicable during a period, not exceeding 12 months, that is chosen by the entity (an average exchange rate ).
(2) However:
(a) the entity is not permitted to translate an amount using an average exchange rate unless it appears to the entity on reasonable grounds that the rate would be a reasonable approximation of the exchange rate or rates that the entity would have used if the entity had used the exchange rate required by another appropriate item of the table in subsection 960 - 50(6) of the Act; and
(b) the entity must obtain:
(i) all of the exchange rates that it will use to work out the average exchange rate; or
(ii) an average exchange rate that has been worked out for a particular period;
from one or more sources that are not associates of the entity, and not the entity itself, unless the Commissioner notifies the entity that it may obtain the rate or rates from one or more specified sources; and
(c) the entity must translate amounts relating to the relevant period using the rate.
Note 1: Item 12 of the table in subsection 960 - 50(6) of the Act is available as an alternative to the special translation rules in items 1 to 11A (inclusive) in that table. Therefore, this subclause requires the entity to consider whether using the translation rules in item 12 would lead to a reasonable approximation with the translation rules in another appropriate item of the table.
Note 2: For associate , see subsection 995 - 1(1) of the Act.
Part 2 -- Translation of foreign currency amounts into Australian currency--rules and requirements for item 11A of the table in subsection 960 - 50(6) of the Act
4 Exchange rate--consistency with an entity's financial records
For the purposes of item 11A of the table in subsection 960 - 50(6) of the Act, as modified by subsection 960 - 50.01(2) of this instrument, if:
(a) an entity keeps financial records (within the meaning of the Corporations Act 2001 ) of the exchange rates that the entity uses to translate amounts into Australian currency; and
(b) the entity, or another entity, translates an amount to which the records correspond into Australian currency in accordance with item 11A;
the exchange rate that the entity mentioned in paragraph (b) uses must be the same as the exchange rate specified in those records for translating the amount into Australian currency.