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ATO Interpretative Decision

ATO ID 2003/441

Income Tax

Infrastructure Borrowings: Direct and indirect - cancellation of Development Allowance Authority certificate - concessional treatment
FOI status: may be released
Status of this decision: Decision Current
CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Will the concessional treatment provided to the taxpayer by section 159GZZZZE of the Income Tax Assessment Act 1936 (ITAA 1936) be affected by any cancellation by the Development Allowance Authority (DAA) of the Direct Infrastructure Borrowing (DIB) Certificate or the Indirect Infrastructure Borrowing (IIB) Certificate given the terms of subsection 159GZZZZE(1A) of the ITAA 1936?

Decision

No. The concessional treatment provided to the taxpayer by section 159GZZZZE of the ITAA 1936 will not be affected by any cancellation by the DAA of the DIB Certificate or the IIB Certificate, given the terms of subsection 159GZZZZE(1A) of the ITAA 1936.

Facts

The project company currently holds a certificate from the DAA permitting it to issue DIBs with which it financed construction of an infrastructure project. In turn, the taxpayer holds a corresponding certificate from the DAA permitting it to issue IIBs to fund the taxpayer's subscription for the DIBs issued by the project company.

Reasons for Decision

In the event of cancellation of a certificate by the DAA, the holder of the certificate is subject to tax in accordance with section 159GZZZZH of the ITAA 1936.

Subsection 159GZZZZE(1A) of the ITAA 1936 provides that the non-assessability and non-deductibility of the DIBs and IIBs continues in the event of cancellation of the certificates.

Therefore, the concessional treatment provided to the taxpayer will apply under section 159GZZZZE of the ITAA 1936, in the event of the cancellation of the DIB and IIB certificates.

Date of decision:  31 March 2003

Year of income:  Year ended 30 June 2003

Legislative References:
Income Tax Assessment Act 1936
   section 159GZZZZE
   subsection 159GZZZZE(1A)
   section 159GZZZZH

Keywords
Infrastructure borrowings

Siebel/TDMS Reference Number:  3409866

Business Line:  Public Groups and International

Date of publication:  13 June 2003

ISSN: 1445-2782


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