ATO Interpretative Decision
ATO ID 2003/443
Income Tax
Infrastructure Borrowings: Direct and indirect - infrastructure period - relevant event - first act or omissionFOI status: may be released
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Is the 'relevant event' for the purposes of section 159GZZZZH of the Income Tax Assessment Act 1936 (ITAA 1936) in relation to a cancellation of the Indirect Infrastructure Borrowings (IIB) Certificate that is held by the taxpayer, the cancellation by the Development Allowance Authority (the DAA) of the Direct Infrastructure Borrowings (DIB) Certificate and is the amount of the 'Factor' in subsection 159GZZZZH(1) of the ITAA 1936 to be determined accordingly, with the 'Part of the Infrastructure Period after the Act or Omission' commencing from the date of the actual cancellation of the DIB Certificate?
Decision
No. The 'relevant event' for the purposes of section 159GZZZZH of the ITAA 1936 in relation to the cancellation of an IIB Certificate is the 'first act or omission' that was a ground relied upon by the DAA for cancelling the certificate and not the DAA's actual cancellation of the DIB Certificate.
The 'Factor' in subsection 159GZZZZH(1) of the ITAA 1936 should therefore be calculated having regard to the timing of the occurrence of that act or omission and not the date of the cancellation of the DIB certificate.
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 subscription for the DIBs issued by the project company.
Reasons for Decision
The definition of 'Factor' in subsection 159GZZZZH(1) of the ITAA 1936 refers to 'the first act or omission that was the ground' for the cancellation.
The DAA's actual cancellation of the DIB certificate is not the ' first act or omission' relied on as the ground for cancellation. The 'Factor' in subsection 159GZZZZH(1) of the ITAA 1936 should be calculated having regard to the year of income in which the 'first act or omission' occurred.
Accordingly, 'the relevant event' for the purposes of section 159GZZZZH of the ITAA 1936, is the ground relied upon by the DAA that lead to the cancellation of the IIB certificate.
Date of decision: 31 March 2003Year of income: Year ended 30 June 2003
Legislative References:
Income Tax Assessment Act 1936
subsection 159GZZZZH(1)
subsection 93ZB(2)
Keywords
Infrastructure borrowings
ISSN: 1445-2782