Debt and equity rules

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The debt and equity rules (Division 974 of the ITAA 1997) broadly operate to characterise certain interests as either debt or equity. For some tax law purposes, equity interests are treated in the same way as shares, even though they are not shares in legal form. These interests are called 'non-share equity interests'. They include some income securities and some stapled securities.

For an overview of the debt and equity rules and an explanation of what constitutes a non-share equity interest see Debt and equity tests: guide to the debt and equity tests.

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For the purposes of the imputation system, generally non-share equity interests are treated in the same way as shares that are not debt interests. Non-share dividends on these types of interests may be franked or unfranked. Show any amount of non-share dividend, whether franked or unfranked, or any amount of franking credit attached to the non-share dividend at the appropriate place on the tax return as if it were for a share.