Draft Taxation Determination

TD 1999/D11

Income tax: interest withholding tax exemption under section 128F of the Income Tax Assessment Act 1936 - for the purposes of the fifth public offer test, in paragraph 128F(3)(e), in what circumstances is a debenture taken to be 'offered for issue'?

  • Please note that the PDF version is the authorised version of this draft ruling.
    This document has been finalised by TD 1999/18.

FOI status:

draft only - for comment


Draft Taxation Determinations (DTDs) present the preliminary, though considered, views of the Australian Taxation Office. DTDs should not be relied on; only final Taxation Determinations represent authoritative statements by the Australian Taxation Office.

1. The public offer test in paragraph 128F(3)(e) (the 'fifth public offer test') enables a company to issue debentures to a dealer, manager or underwriter who agrees with the company to offer the debentures for sale, or procure subscription for the debentures, within 30 days in a way covered by any of paragraphs (a) to (d) of subsection 128F(3). In this case, dealers, managers or underwriters act on their own account as principals.

2. The 30 day period specified in paragraph 128F(3)(e) is taken to commence from the earlier of the day on which the dealer, manager or underwriter has an unconditional obligation to offer the debentures for sale, and the day on which the dealer, manager or underwriter actually offers the debentures for sale.

3. In relation to the public offer test under paragraph 128F(3)(a), both the company and the dealer, manager or underwriter have a responsibility for ensuring the debentures are offered for issue to at least 10 eligible persons who are not known or suspected to be associates. As pointed out in the explanatory memorandum to Taxation Laws Amendment Act (No 2) 1997, the company offering the debentures for sale does not need to undertake a detailed examination of the parties to whom the debentures are offered and may generally rely on the expectation the dealer, manager or underwriter has complied with the conditions set out in paragraph 128F(3)(a). The company cannot, however, ignore persons it knows to be an associate and use the defence that it relied on the dealer, manager or underwriter.

4. If dealers, managers or underwriters subscribe for the debentures on their own behalf and not on the basis they are to be onsold in the marketplace, the public offer test is satisfied if the debentures are offered for issue by the company in accordance with any of paragraphs (a) to (d) of subsection 128F(3). In such a case, the debentures are not required to be offered for issue in accordance with paragraph 128F(3)(e).

Your comments

5. If you wish to comment on this draft Determination, please send your comments promptly by Friday 26 February 1999 to:

Contact officer details have been removed following publication of the final ruling.

Commissioner of Taxation
27 January 1999