Part 3Multinational top-up tax
Chapter 4Calculation of adjusted profits of members of a multinational group
Elections to treat certain amounts differently
166Election in relation to hedging currency risk in ownership interests
1
The filing member of a multinational group may elect that the underlying profits of a member of the group specified in the election are to be adjusted to exclude qualifying gains or losses arising from fluctuations in exchange rates.
2
A gain or loss arising from fluctuations in exchange rates is “qualifying” to the extent—
a
the gain or loss is attributable to an instrument intended to act as a hedge against currency risk in ownership interests held by the member or another member of the group, other than an ownership interest in an entity falling within subsection (3),
b
the gain or loss is recognised in other comprehensive income in the consolidated financial statements of the ultimate parent,
c
the instrument is considered an effective net investment hedge under the authorised accounting standard upon which those statements are prepared,
d
where the instrument is held by the member, the economic and accounting effect of the hedge has not been transferred to any other entity, and
e
where the instrument is not held by the member, the economic and accounting effect of the hedge has been transferred to the member.
3
An ownership interest in an entity held by a member of a multinational group falls within this subsection if the members of that group do not, between them, have qualifying interests that entitle them to 10% or more of the entity’s —
a
profits,
b
capital,
c
reserves, and
d
voting rights.
4
Paragraph 1 of Schedule 15 (long term elections) applies to an election under this section.