ATO Interpretative Decision
ATO ID 2006/274
Income tax
Division 974: Section 128F - meaning of 'debt interest'FOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Does the term 'debt interest' in section 128F of the Income Tax Assessment Act 1936 (ITAA 1936) mean 'debt interest' as defined in Subdivision 974-B of Division 974 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes. The term 'debt interest' in section 128F of the ITAA 1936 means 'debt interest' as defined in Subdivision 974-B of Division 974 of the ITAA 1997.
Facts
An Australian resident company issues a debt interest to a non-resident investor.
Reasons for Decision
Section 128F provides that Division 11A of the ITAA 1936 does not apply to interest paid on certain publicly offered company debentures or debt interests that satisfy all of the requirements set out in subsection 128F(1).
The term 'debt interest' is not defined in section 128F of the ITAA 1936. However, subsection 6(1) of the ITAA 1936 states that 'debt interest' has the same meaning as in the ITAA 1997, and, subsection 995-1(1) of the ITAA 1997 defines 'debt interest' as having the meaning given by Subdivision 974-B of Division 974 of the ITAA 1997.
Accordingly, the term 'debt interest' in section 128F of the ITAA 1936 means 'debt interest' as defined in Subdivision 974-B of Division 974 of the ITAA 1997.
Date of decision: 16 August 2006Year of income: 30 June 2007
Legislative References:
Income Tax Assessment Act 1936
subsection 6(1)
section 128F
subsection 128F(1)
subsection 128F(3)
Subdivision 974-B
Division 974
subsection 995-1(1) Related ATO Interpretative Decisions
ATO ID 2006/272
ATO ID 2006/273
Keywords
Debt interest
International tax
ISSN: 1445-2782