On Wednesday 25.5.2016, the ATO issued Taxation Ruling TR 2016/2 which sets out the Commissioner’s views on the operation of s230-120 of the Income Tax Assessment Act 1997.

Section 230-120 modifies the manner in which the accrual/realisation provisions in Subdiv 230-B of the TOFA rules apply to certain “notional principal” arrangements like swaps. The Ruling notes that although s230-120 generally applies to swaps, the section does not operate on the basis of what an arrangement is called, so the arrangement needs to satisfy the test in s230-120(1) in order for s 230-120 to apply.

It was previously issued as Draft Taxation Ruling TR 2015/D3 and is unchanged.

DATE OF EFFECT: Applies to years of income commencing both before and after its date of issue.

[LTN 99, 25/5/16]