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Edited version of private advice
Authorisation Number: 1051638571708
Date of advice: 30 July 2020
Ruling
Subject: Capital raising
Question 1
Will each Note be treated as a non-share equity interest (as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997)) for the purposes of Division 974 of the ITAA 1997?
Answer
Yes.
Question 2
Will the Distributions made on the Notes be frankable non-share dividends within the meaning of sections 202-30 and 202-40 of the ITAA 1997?
Answer
Yes.
Question 3
Will a franking debit arise as a result of the application of the linked distribution provisions in section 204-15 of the ITAA 1997?
Answer
No.
Question 4
Will the Commissioner make a determination under paragraph 204-30(3)(a) of the ITAA 1997 to give rise to a franking debit to Entity A in relation to distributions paid in respect of the Notes?
Answer
No.
Question 5
Will the Commissioner make a determination under paragraph 177EA(5)(a) of the Income Tax Assessment Act 1936 (ITAA 1936) to give rise to a franking debit for Entity A in relation to Distributions paid in respect of the Notes?
Answer
No.
Question 6
Will the Commissioner make a determination under subsection 45C(3) of the ITAA 1936 in relation to the transaction?
Answer
No.
Question 7
Will the Notes be subject to the commercial debt forgiveness provisions in Division 245 of the ITAA 1997?
Answer
No.
Question 8
Will an assessable profit or gain arise for Entity A in relation to the issue of the Notes or the issue of Ordinary Shares on Exchange or Redemption?
Answer
No.
Question 9
Will Entity A be required to recognise gains and losses under Division 230 of the ITAA 1997 in relation to the Notes?
Answer
No.
Question 10
Will the share capital accounts of Entity A, Entity B and Entity C become tainted within the meaning of Division 197 of the ITAA 1997 upon the issue of the Notes or by the issue of Ordinary Shares on Exchange or Redemption?
Answer
No.
Question 11
Will issuing the Note cause Entity B to cease to be a 'wholly-owned subsidiary' of Entity A under section 703-30 of the ITAA 1997?
Answer
No.
Relevant facts and circumstances
The head entity of a tax consolidated group (Entity A) applied for a private binding ruling in respect of the issuance of Notes by Entity B (wholly-owned subsidiary of Entity A) for the purpose of raising Additional Tier 1 capital. The issuance also involved Entity C (a related entity of Entity A).
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