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Taxation Determination

TD 95/59

Income tax: infrastructure borrowings: is a rebate in accordance with section 159GZZZZG available where interest from infrastructure lending is exempt under section 159GZZZZE and is partially exempt under another provision?

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FOI status:

may be releasedFOI number: I 1014713

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. Yes. The rebate is available, but only in relation to the interest which is included in assessable income.

2. Division 16L provides that interest received by an investor in an infrastructure borrowing is exempt from income tax (section 159GZZZZE). The investor may choose that this provision does not apply. Section 159GZZZZG provides an option to the investor of including all the interest that would have been taxable but for section 159GZZZZE in assessable income and receiving a tax rebate. The rebate is available on the interest that would have been taxable if not exempt under section 159GZZZZE, and which is now included in the investor's assessable income. So, where a proportion of an investor's income is exempt under some other provision of the income tax law, the rebate is calculated by reference to the balance of the investor's interest income from infrastructure financing.

Example

A superannuation fund invests in infrastructure bonds (IB) and during the 1995-96 year of income derives interest from those bonds totalling $4,000. Assume section 283 exempts 25% of its income which is attributable to current pension liabilities. The fund decides to avail itself of the option offered by section 159GZZZZG. The IB amount included in the assessable income of the fund is $3,000 (i.e. 75% of $4,000). The fund is entitled to a rebate of $1,080 (i.e. 36% of $3,000).

Commissioner of Taxation
29/11/95

Previously issued as Draft TD 95/D17

References

ATO references:
NO NAT 95/2655-2; NAT 95/8036-1

ISSN 1038 - 8982

Subject References:
infrastructure borrowings;
public infrastructure projects;
rebate election

Legislative References:
ITAA 159GZZZZE;
159GZZZZG

TD 95/59 history
  Date: Version: Change:
You are here 29 November 1995 Original ruling  
  7 December 2016 Withdrawn  

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