Aust. Forex loan profits tax

Press, 20 February 1986, Page 25

Aust. Forex loan profits tax

NZPA-AAP Canberra

The Australian Government, has moved to make gains and losses from foreign exchange loans eligible for income tax assessment.

The Treasurer, Mr Keating, announced that the gains and losses would be assessable and deductible respectively for income tax purposes.

The move was heralded by tax consultants as an

important development for Australian corporations involved in overseas borrowings. Among these are Mr Alan Bond’s Bond Corporation, Robert Holmes a Court’s Bell group of companies and the mining giant, MIM Holdings. The late announcement was also greeted by foreign exchange markets, with news of the < Government’s decision < pushing the Australian <

dollar through the US7Oc after trading around 69.60 c yesterday. The decision relates to borrowings or loans contracted after midnight on Tuesday, all delayed payments for acquisition of assets, and delayed receipts for sales of assets under contracts entered into after yesterday. The taxation treatment of foreign exchange gains and losses was not included in the Govern-

ment’s September 19 announcement that a capital gains tax would be introduced immediately. Premiums and discounts associated with forward cover and other hedging contracts in respect of overseas borrowings or lendings from midnight, or in respect of sales or purchases of assets contracted from midnight on Tuesday night, will also be tax effective.