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Edited version of your written advice
Authorisation Number: 1012794196706
Ruling
Subject: Refinancing
In order to protect the privacy and commercial in-confidence components of this private binding ruling the following summary is provided.
Question 1
Will the arrangement that is a non-share equity interest (the Arrangement) give rise to an equity interest in XY Limited under section 974-70 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes, the Arrangement gives rise to an equity interest in XY Limited under section 974-70 of the ITAA 1997.
Question 2
If the answer to Question 1 above is "yes", will foreign equity distributions received by AB Limited from XY Limited in respect of the Arrangement be non-assessable and non-exempt (NANE) income of XYZ Limited under section 6-23 of the ITAA 1997 by virtue of being not assessable income, and not exempt income of XYZ Limited under section 768-5 of the ITAA 1997?
Answer
Yes, foreign equity distributions received by AB Limited from XY Limited in respect of the Arrangement will be NANE income of XYZ Limited under section 6-23 of the ITAA 1997 by virtue of being not assessable income, and not exempt income of XYZ Limited under section 768-5 of the ITAA 1997.
Question 3(a)
If the answer to Question 2 above is "yes", will foreign exchange gains on the repayment of the Principal Amount of the Arrangement not be assessable income of XYZ Limited under subsection 6-15(3) of the ITAA 1997, by virtue of being NANE income under section 775-25 of the ITAA 1997?
Answer
Yes, foreign exchange gains on the repayment of the Principal Amount of the Arrangement will not be assessable income of XYZ Limited under subsection 6-15(3) of the ITAA 1997, by virtue of being NANE income under section 775-25 of the ITAA 1997.
Question 3(b)
If the answer to Question 2 above is "yes", will foreign exchange losses on the repayment of the Principal Amount of the Arrangement be disregarded by XYZ Limited by virtue of section 775-35 of the ITAA 1997?
Answer
Yes, foreign exchange losses on the repayment of the Principal Amount of the Arrangement will be disregarded by XYZ Limited by virtue of section 775-35 of the ITAA 1997.
Question 4
Will the Commissioner confirm that no determination will be made pursuant to section 177F of the Income Tax Assessment Act 1936 (ITAA 1936) to cancel the whole or part of any tax benefit that might be obtained by XYZ Limited under section 177C, or that would but for section 177F be obtained, in connection with the implementation of the Arrangement, as defined herein?
Answer
Yes, having regard to the eight matters in subsection 177D(2) of the ITAA 1936, the Commissioner does not consider that any party to the scheme entered into the scheme for the sole or dominant purpose of obtaining a tax benefit. Accordingly, the Commissioner will not make a determination pursuant to section 177F of the ITAA 1936 to cancel the whole or part of any tax benefit that might be obtained in connection with the scheme.
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