Debt/equity rules to restrict the application of an integrity provision

In the 2011-12 Budget the government announced that it will amend the debt/equity rules to restrict the application of an integrity provision, contained in Division 974 of the Income Tax Assessment Act 1997 that considers an interest from an arrangement that funds a return through connected entities to be an equity interest under certain circumstances. The changes will ensure that the law operates as intended and will ensure that this provision will only apply to arrangements where the investor has an equity interest in the issuer company.

The integrity measure will not apply where the Commissioner considers that it would be unreasonable for the provision to apply.

The amendments will apply from 1 July 2001.

More information Refer to Budget Measures 2011-12.