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Ruling
Subject: Issue Floating Rate Notes
Question 1
Will the financial benefits be equity interests under section 974-70 of the ITAA 1997?
Answer
No
Question 2
Will the Notes constitute a financial arrangement pursuant to section 230-45 of the ITAA 1997?
Answer
Yes
Question 3
Will the loss from the financial arrangement constituting the Notes be deductible pursuant to subsection 230-15(2) of the ITAA 1997?
Answer
Yes
Question 4
Will the loss be treated on an accruals basis pursuant to subsection 230-100(2) of the ITAA 1997?
Answer
Yes
This ruling applies for the following periods:
The scheme commences on:
Relevant facts and circumstances
The Taxpayer is seeking to raise funds from the Australian retail market by issuing securities. The securities will be issued in accordance with specified Terms and Conditions. During the term of the securities, the Taxpayer will make interest payments quarterly in arrears. Upon maturity and/ or redemption of the securities, the principal amount of the securities will also be paid by the Taxpayer.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 974
Income Tax Assessment Act 1997 Division 230
Reasons for decision
Question 1
Will the financial benefits be equity interests under section 974-70 of the ITAA 1997?
Answer
As the taxpayer has not satisfied all of the requirements of section 974-70 of the ITAA 1997, the arrangement will not be treated as "equity interests" under section 974-70 of the ITAA 1997
Question 2
Will the arrangement constitute a financial arrangement pursuant to section 230-45 of the ITAA 1997?
Answer
As the taxpayer's arrangement satisfies all of the requirements of section 230-45 of the ITAA 1997, it will constitute a financial arrangement under this provision.
Question 3
Will the loss from the financial arrangement be deductible pursuant to subsection 230-15(2) of the ITAA 1997?
Answer
As the taxpayer has satisfied all of the requirements of subsection 230-15(2) of the ITAA 1997, it will be entitled to claim losses from the financial arrangement under this provision.
Question 4
Will the loss be treated on an accruals basis pursuant to subsection 230-100(2) of the ITAA 1997?
Answer
As the gains/ losses of the taxpayer have met all of the requirements of subsection 230-100(2) of the ITAA 1997, the taxpayer will be entitled to treat such gains/ losses in respect of the financial arrangement on an accruals basis.