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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your written advice

Authorisation Number: 1012730605644

Ruling

Subject: Offshore Banking Unit - hire purchase agreement

Question 1

Is the loan under Division 240 of the Income Tax Assessment Act 1997 ('ITAA 1997') as a result of entering into the Lease an "OB activity" of the company within the meaning of paragraph 121D(1)(a) of the Income Tax Assessment Act 1936 ('ITAA 1936'), by virtue of being a "lending activity" as described in subsection 121D(2) of the ITAA 1936?

Answer

Yes

Question 2

Will any amounts that are assessable income for the company under Division 240 of the Income Tax Assessment Act 1997 ('ITAA 1997') in respect of the Lease arrangement constitute "assessable OB income" of the company, as defined in subsection 121EE(2) of the ITAA 1936, where none of the money used by the company in respect of the Lease arrangement (including the payment of the Purchase Price) is non-OB money of the company?

Answer

Yes

Question 3

Will any amounts that are deductible for the company under Division 240 of the ITAA 1997 in respect of the hire purchase lease arrangement constitute "exclusive OB deductions", as defined in subsection 121EF(3) of the ITAA 1936, where none of the money used by the company in respect of the hire purchase lease arrangement (including the payment of the Purchase Price) is non-OB money of the company?

Answer

Yes

This ruling applies for the following periods:

Years ending XX/XX/XXXX to XX/XX/XXXX

The scheme commences on:

XX/XX/XXXX

Relevant facts and circumstances

The taxpayer applied for a ruling in relation to a hire purchase agreement. Relevant facts and documents were submitted.

Relevant legislative provisions

Income Tax Assessment Act 1936 paragraph121D(1)(a)

Income Tax Assessment Act 1936 subsection 121D(2)

Income Tax Assessment Act 1936 subsection 122EE(2)

Income Tax Assessment Act 1936 subsection 121EF(3)

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