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Taxation Determination

TD 92/137

Income tax: subsection 51AD(8) of the Income Tax Assessment Act 1936 specifies that section 51AD does not apply to property unless the whole or a predominant part of the cost of acquisition or construction of the property is financed directly or indirectly by non-recourse debt or debts: What is the meaning of 'predominant' in that context?

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FOI status:

may be releasedFOI number: I 1213076

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953, is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, the Determination applies to transactions entered into both before and after its date of issue.

1. The word 'predominant' is not defined in income tax law. Therefore it bears its common meaning.

2. The Macquarie Dictionary defines 'predominant' as:

'

1.
having ascendancy, power, authority, or influence or influence over others; ascendant.
2.
prevailing.'

3. In applying the dictionary definition to determine whether a predominant part of the cost of acquisition or construction of property has been financed by non-recourse debt, the closest meaning would be 'having ascendancy' i.e. more or greater than other costs. While technically that could be a percentage less than 50%, we take the view that, in the context of section 51AD, the section does not apply unless more than 50% of the cost of acquisition or construction of the relevant property has been financed by non-recourse debt as defined in subsection 51AD(8).

Commissioner of Taxation
20/08/92

References

ATO references:
NO Public Infrastructure Unit; PIU DTD 92/01

ISSN 1038 - 3158

Related Rulings/Determinations:

TD 92/138
TD 92/141

Subject References:
finance arrangements
non-recourse debt
predominant

Legislative References:
ITAA 51AD(8)

TD 92/137 history
  Date: Version: Change:
You are here 20 August 1992 Original ruling  
  31 July 1996 Withdrawn  

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