Draft Taxation Determination

TD 93/D197

Income tax: Offshore Banking Units (OBU) - does share capital subscribed by a resident owner to its subsidiary, before that subsidiary becomes registered as an OBU, constitute "OBU resident-owner money"?

• Please note that the PDF version is the authorised version of this draft ruling.
  This document has been finalised by TD 93/203.

FOI status:

draft only - for comment

Preamble

1. No. Section 121EC of the Income Tax Assessment Act 1936 sets out the meaning of the term "OBU resident-owner money". It is money 'paid to the OBU by a resident owner of the OBU by way of a subscription for, or a call on, shares in the OBU...' As the subsidiary is not an OBU at the time of the share subscription, section 121EC can have no application.

2. As share capital subscribed to a subsidiary before it becomes an OBU is not "OBU resident-owner money", section 121EK, which deems interest to apply to 90% of certain OBU resident-owner money has no application to that capital.

3. As the share subscription will constitute "non-OB money" as defined in section 121C, any assessable income derived from the use of that money cannot be "assessable OB income" for the purposes of subsection 121EE(2).

Commissioner of Taxation
19/8/93

References

BO 93/3707-5

Subject References:
Offshore banking
OBUs
OBU resident-owner money
deemed interest
non-OB money
assessable OB income

Legislative References:
ITAA 121EC
ITAA 121EK
ITAA 121EE
ITAA 121C