Further to our submission on 22 November 2OO7 and the discussion at the National Tax Liaison Group Finance and Investment Sub-Group meeting of 16 June 2008, we wish to raise the following points:
- We confirm that it is acceptable that any amendments in relation to functional currency elections for Australian resident trusts operate on a prospective rather than on a retrospective basis; and
- Although not covered by our earlier submission, the rationale for the amendment of the functional currency rules for Australian resident trusts is equally applicable for controlled foreign trusts and foreign hybrid entities
and we request that such an amendment for these entities also be made.
The object of the functional currency rules is, for the purposes of reducing compliance costs and reflecting commercial practice, to allow certain entities whose accounts are kept solely or predominantly in a particular foreign currency to calculate their net incomes by reference to the functional currency.