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Taxation Determination

TD 93/203

Income tax: Offshore Banking Units (OBU) - does share capital subscribed by a resident owner to its subsidiary, before that subsidiary becomes registered as an OBU, constitute "OBU resident-owner money"?

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FOI status:

may be releasedFOI number: I 1216371

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, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

1. No. Section 121EC of the Income Tax Assessment Act 1936 sets out the meaning of the term "OBU resident-owner money". It is money 'paid to the OBU by a resident owner of the OBU by way of a subscription for, or a call on, shares in the OBU ...' As the subsidiary is not an OBU at the time of the share subscription, section 121EC can have no application.

2. As share capital subscribed to a subsidiary before it becomes an OBU is not "OBU resident-owner money", section 121EK, which deems interest to apply to 90% of certain OBU resident-owner money has no application to that capital.

3. As the share subscription will constitute "non-OB money" as defined in section 121C, any assessable income derived from the use of that money cannot be "assessable OB income" for the purposes of subsection 121EE(2).

Commissioner of Taxation
28/10/93

Previously issued as Draft TD 93/D197

References

ATO references:
NO NAT 93/3707-5

ISSN 1038 - 8982

Subject References:
Offshore banking;
OBUs;
OBU resident-owner money;
deemed interest;
non-OB money;
assessable OB income

Legislative References:
ITAA 121EC;
ITAA 121EK;
ITAA 121EE;
ITAA 121C

TD 93/203 history
  Date: Version: Change:
You are here 28 October 1993 Original ruling  
  13 October 2021 Consolidated ruling Addendum

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