Taxes Consolidation Act, 1997
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Foreign currency: computation of income and chargeable gains. [CTA76 s12A; FA94 s56(a); FA96 s45(1)] |
79.—(1) (a) In this section— | |
“profit and loss account” means— | ||
(i) in the case of a company (in this definition referred to as the “resident company”) resident in the State, the account of that company, and | ||
(ii) in the case of a company (in this definition referred to as the “non-resident company”) not resident in the State but carrying on a trade in the State through a branch or agency, the account of the business of the company carried on through or from such branch or agency, | ||
which, in the opinion of the auditor appointed under section 160 of the Companies Act, 1963 , or under the law of the State in which the resident company or non-resident company, as the case may be, is incorporated and which corresponds to that section, presents a true and fair view of the profit or loss of the resident company or the business of the non-resident company, as the case may be; | ||
“rate of exchange” means a rate at which 2 currencies might reasonably be expected to be exchanged for each other by persons dealing at arm's length or, where the context so requires, an average of such rates; | ||
“relevant contract”, in relation to a company, means any contract entered into by the company for the purpose of eliminating or reducing the risk of loss being incurred by the company due to a change in the value of a relevant monetary item, being a change resulting directly from a change in a rate of exchange; | ||
“relevant monetary item”, in relation to a company, means money held or payable by the company for the purposes of a trade carried on by it; | ||
“relevant tax contract”, in relation to an accounting period of a company, means any contract entered into by the company for the purpose of eliminating or reducing the risk of loss being incurred by the company due to a change in the value of money payable in discharge of a liability of the company to corporation tax for the accounting period, being a change resulting directly from a change in a rate of exchange of the functional currency (within the meaning of section 402 ) of the company for the currency of the State. | ||
(b) The treatment of a contract entered into by a company as a relevant contract for the purposes of this section shall be disregarded for any other purpose of the Tax Acts. | ||
(2) Notwithstanding section 76 , for the purposes of corporation tax, the amount of any gain or loss, whether realised or unrealised, which— | ||
(a) is attributable to any relevant monetary item or relevant contract of a company, | ||
(b) results directly from a change in a rate of exchange, and | ||
(c) is properly credited or debited, as the case may be, to the profit and loss account of the company, | ||
shall be taken into account in computing the trading income of the company. | ||
(3) (a) Notwithstanding section 78 , for the purposes of corporation tax, where any gain or loss arises to a company in respect of— | ||
(i) a relevant contract of the company, or | ||
(ii) money held by the company for the purposes of a trade carried on by it, | ||
so much of that gain or loss as results directly from a change in a rate of exchange shall not be a chargeable gain or an allowable loss, as the case may be, of the company. | ||
(b) This subsection shall not apply as respects any gain or loss arising to a company carrying on life business within the meaning of section 706 (1), being a company which is not charged to corporation tax in respect of that business under Case I of Schedule D. | ||
(4) Notwithstanding section 78 , so much of the amount of any gain or loss arising to a company which carries on a trade in the State in an accounting period as— | ||
(a) is attributable to any relevant tax contract in relation to the accounting period, | ||
(b) results directly from a change in a rate of exchange, and | ||
(c) (i) where it is a gain, does not exceed the amount of the loss which, if the company had not entered into the relevant tax contract, would have been incurred by the company, and | ||
(ii) where it is a loss, does not exceed the amount of the gain which, if the company had not entered into the relevant tax contract, would have arisen to the company, | ||
due to a change in the value of money payable in discharge of a liability of the company to corporation tax for the accounting period, | ||
shall not be a chargeable gain or an allowable loss, as the case may be, of the company. |