Income tax look-through treatment for instalment warrants and similar arrangements

On 14 December 2013, the former Assistant Treasurer announced that this measure would proceed, as part of the announced but unenacted amendment process.

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill 2015, containing this measure, received royal assent on 16 September 2015.

These proposed changes provide income tax look-through treatment for certain:

  • instalment warrants, instalment receipts and other similar arrangements; and
  • limited recourse borrowing arrangements entered into by regulated superannuation funds.

This proposed look-through treatment ensures that, for most income tax purposes, the consequences of ownership of an instalment trust asset flow to the entity that has the beneficial interest in the asset, instead of to the trustee.

These proposed amendments apply to assets acquired by the trustee of an instalment trust in the 2007-08 or later income years. However, consistent with the Superannuation Industry (Supervision) Act 1993, these proposed amendments only provide income tax look-through treatment for certain limited recourse borrowing arrangements entered into by regulated superannuation funds on or after 24 September 2007.

The ATO would to like to extend our thanks to the following industry participants for their contribution to the development of this measure:

Allen & Overy, Australian Financial Markets Association, Baker & McKenzie, Clayton Utz, Deloitte, Ernst & Young, Greenwoods & Herbert Smith Freehills, King & Wood Mallesons, KPMG, Macquarie Bank, National Australia Bank, PricewaterhouseCoopers and The Tax Institute.

Administrative treatment

Earlier arrangements for which these amendments do not apply

Where a taxpayer has lodged their income tax return on the basis of looking through the relevant trust relationship and these amendments do not apply solely because of the timing of the arrangement, consistent with these amendments, no compliance action will be taken in respect of this look-through treatment. This applies for the following arrangements.

  • instalment warrants and instalment receipts (or similar arrangements) where the assets under these arrangements were acquired by the trustee prior to 2007-08 income year and the instalment trust criteria in paragraph 235-825(1)(a) are satisfied; and
  • limited recourse borrowing arrangements entered into by regulated superannuation funds before 24 September 2007, where the instalment trust criterion in paragraph 235-825(1)(b) would be satisfied if the arrangement were entered into after this date.

However, if the Commissioner is asked or required to state his view formally in relation to these earlier arrangements, then he will do so as he understands the law to operate.

AQUA Rules


  • a taxpayer invests in an asset via an instalment warrant or instalment receipt; and
  • that asset is admitted to trading status under the ASX Quoted Asset Rules (AQUA Rules);

the Commissioner does not intend to allocate compliance resources to review whether the asset is widely held for the purposes of Subdivision 235-I. However, the Commissioner will take appropriate compliance action if there is evidence of fraud, evasion or tax avoidance, if there are inappropriate tax outcomes or if any relevant parties seek to exploit the tax system, such as where the taxpayer knows, or reasonably ought to have known, that the asset is closely held.

For any queries relating to this measure, contact Tania Koit on (02) 9374 2434.

Find out more

Budget Measures 2011-12External Link

Budget Measures 2010-11External Link

Media release

For more information, refer to:

    Last modified: 15 Dec 2015QC 23539