INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 197 - Tainted share capital accounts  

Subdivision 197-A - What transfers into a company ' s share capital account does this Division apply to?  

SECTION 197-15   Exclusion for amounts transferred under debt/equity swaps  

197-15(1)  
Subject to subsection (2), this Division does not apply to the transferred amount if:


(a) the transfer is under an *arrangement under which:


(i) a person discharges, releases or otherwise extinguishes the whole or a part of a debt that the company owes to the person; and

(ii) the discharge, release or extinguishment is in return for the company issuing *shares (other than redeemable preference shares) in the company to the person; and


(b) the transfer is a credit to the *share capital account that is made because of the issue of the shares in return for the discharge, release or extinguishment of the debt.

197-15(2)  
If the transferred amount exceeds the lesser of:


(a) the *market value of the *shares issued by the company; and


(b) so much of the debt as is discharged, released or extinguished in return for the shares;

subsection (1) does not stop this Division from applying to the amount of the excess.



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