Income Tax Assessment Act 1997

CHAPTER 6 - THE DICTIONARY  

PART 6-1 - CONCEPTS AND TOPICS  

Division 974 - Debt and equity interests  

Subdivision 974-F - Related concepts  

SECTION 974-130   Financing arrangement  

974-130(1)  
A *scheme is a financing arrangement for an entity if it is entered into or undertaken:


(a) to raise finance for the entity (or a *connected entity of the entity); or


(b) to fund another scheme, or a part of another scheme, that is a *financing arrangement under paragraph (a); or


(c) to fund a return, or a part of a return, payable under or provided by or under another scheme, or a part of another scheme, that is a financing arrangement under paragraph (a).

974-130(2)  
The following are examples of *schemes that are generally entered into or undertaken to raise finance:


(a) a bill of exchange;


(b) income securities;


(c) a *convertible interest that will convert into an *equity interest.

Note:

Paragraph (a) is likely to be relevant for debt interests, paragraph (b) for equity interests and paragraph (c) for both.

974-130(3)  
The following are examples of *schemes that are generally not entered into or undertaken to raise finance:


(a) a derivative that is used solely for managing financial risk;


(b) a contract for personal services entered into in the ordinary course of a business.

Note:

These may be relevant for both debt interests and equity interests.

974-130(4)  
For the purposes of subsection (1), the following *schemes are taken not to be entered into or undertaken to raise finance:


(a) a lease or bailment that satisfies all of the following:


(i) the property leased or bailed is not property to which Division 16D of Part III of the Income Tax Assessment Act 1936 (arrangements relating to the use of property) applies;

(ii) the lease or bailment is not a relevant agreement for the purposes of section 128AC of that Act (deemed interest in respect of hire-purchase and certain other arrangements);

(iii) the lease or bailment is not an *arrangement to which Division 240 of this Act (about arrangements treated as a sale and loan), or Division 242 of this Act (about luxury car leases), applies;

(iv) (Repealed by No 79 of 2010 )

(v) the lessee or bailee, or a *connected entity of the lessee or bailee, is not to, and does not have an obligation (whether contingent or not) or a right to, acquire the leased or bailed property;

(vi) Division 250 of this Act does not apply to a person and the property leased or bailed;


(b) a securities lending arrangement under section 26BC of the Income Tax Assessment Act 1936 ;


(c) a life insurance or general insurance contract undertaken as part of the issuer ' s ordinary course of business;


(d) a scheme for the payment of royalties (within the meaning of the Income Tax Assessment Act 1936 ) other than:


(i) a qualifying arrangement for the purposes of Division 16D of Part III of the Income Tax Assessment Act 1936 ; or

(ii) a relevant agreement for the purposes of section 128AC of that Act; or

(iii) a scheme or arrangement for the payment of royalties in relation to an asset if Division 250 of this Act applies to a person and the asset.

974-130(5)  
The regulations may:


(a) specify that particular *schemes are not financing arrangements ; and


(b) specify circumstances in which a scheme will not be a financing arrangement .


 

Disclaimer and notice of copyright applicable to materials provided by CCH Australia Limited

CCH Australia Limited ("CCH") believes that all information which it has provided in this site is accurate and reliable, but gives no warranty of accuracy or reliability of such information to the reader or any third party. The information provided by CCH is not legal or professional advice. To the extent permitted by law, no responsibility for damages or loss arising in any way out of or in connection with or incidental to any errors or omissions in any information provided is accepted by CCH or by persons involved in the preparation and provision of the information, whether arising from negligence or otherwise, from the use of or results obtained from information supplied by CCH.

The information provided by CCH includes history notes and other value-added features which are subject to CCH copyright. No CCH material may be copied, reproduced, republished, uploaded, posted, transmitted, or distributed in any way, except that you may download one copy for your personal use only, provided you keep intact all copyright and other proprietary notices. In particular, the reproduction of any part of the information for sale or incorporation in any product intended for sale is prohibited without CCH's prior consent.