INCOME TAX ASSESSMENT ACT 1997

CHAPTER 6 - THE DICTIONARY  

PART 6-1 - CONCEPTS AND TOPICS  

Division 974 - Debt and equity interests  

Subdivision 974-B - Debt interests  

SECTION 974-60   Debt interest arising out of obligations owed by a number of entities  

974-60(1)  
This section deals with the situation in which a *scheme, or a number of *related schemes together, would, apart from this section, give rise to the same *debt interest in 2 or more entities.

Note:

A scheme may give rise to the same debt interest in 2 or more entities if each of those entities has non-contingent obligations to provide financial benefits under the scheme.

974-60(2)  
The *debt interest:


(a) is a debt interest in the entity identified under subsection (3) or (4); and


(b) is not a debt interest in the other entity or entities.

974-60(3)  
The *debt interest is a debt interest in the entity identified using the following method statement: Method statement


Step 1.

Work out, for each of the entities, the total value of the *financial benefits that the entity is under an *effectively non-contingent obligation to provide under the *scheme or schemes: this is the entity's obligation value .


Step 2.

The *debt interest is taken to be a debt interest in the entity with the greatest obligation value.


Step 3.

If it is not possible to determine which entity has the greatest obligation value (whether because of an equality of, or uncertainty as to, obligation values or otherwise), the *debt interest is taken to be a debt interest in the entity agreed on by all the entities.


Step 4.

If the entities do not agree, the interest is taken to be a *debt interest in the entity determined by the Commissioner.

974-60(4)  
Despite subsection (3), the Commissioner may determine that the *debt interest is a debt interest in the entity specified in the determination.

974-60(5)  
The Commissioner may make the determination only if satisfied, having regard to the economic substance of the relevant transactions, that the *debt interest is properly considered from a commercial point of view to be an interest in the entity specified in the determination.


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