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Ruling

Subject: Part IVA of the ITAA 1936

Question 1

Will the Commissioner make a determination under section 177F of the Income Tax Assessment Act 1936 (ITAA 1936) in respect of the taxpayer, as head entity of the tax consolidated group, to deny a deduction for the Partnership Loss in connection with the scheme whereby the taxpayer participates in the Project through an unincorporated joint venture?

Answer: No.

Question 2

Will the Commissioner make a determination under section 177F of the ITAA 1936 in respect of the taxpayer to deny a deduction for the Partnership Loss or to include Partnership Income in connection with a scheme whereby Project UJV is granted the Licence by the Government, Project UJV agrees to make quarterly Licence Payments to the Government and the Licence Payments are assigned to Finance Trust by the Government in consideration for a lump sum securitisation payment?

Answer: No.

This ruling applies for the following periods:

Year ending 30 June 2012 - 30 June 2045

Relevant facts and circumstances

The taxpayer is the head company of a tax consolidated group, of which Entity A Pty Ltd is a wholly owned subsidiary. Entity A Pty Ltd as trustee for the Entity A Trust (Entity A) has entered into an unincorporated joint venture as part of the scheme on which this ruling is made. However, as the taxpayer is the head company of the tax consolidated group, under section 701-1 of the Income Tax Assessment Act 1997 (ITAA 1997), the taxpayer is taken to be the relevant entity for the purposes of this ruling.

The following description of the scheme is based upon information which has been provided by the taxpayer. The following documents, or relevant parts of them, form part of and are to be read with the description:

· Draft PPP Project Document (Draft Project Document);

· PPP Project Document (Project Document);

· Securitisation Document;

· Purchase Document; and

· Joint Venture Document.

Project overview

A public private partnership has been established for the design, construction and maintenance of a piece of public infrastructure (the Project).

The delivery of the Project broadly involves:

· The design, construction and commissioning of the facility;

· The design, construction and commissioning of associated infrastructure that is sufficient to allow the facility to be expanded;

· The provision of facility management and some other services at the facility; and

· The financing of the project over the duration of the term.

Tendering process

The Government undertook a competitive process to select a successful consortium which involved:

· A request for expressions of interest;

· A short listing process which involved the selection of three consortia to submit tenders for the Project;

· The release of detailed request for proposal (RFP) documentation; and

· The submission of tenders by short-listed consortia.

The RFP documentation stipulated certain requirements which were the considered and preferred position of the Government. The RFP documentation stated that there was a strong desire to preserve those requirements and that any departure from them would only be considered where there was a benefit to the Government.

The key requirements which constituted the considered and preferred position were outlined in the Draft Project Document.

The Draft Project Document provides:

1. A quarterly service payment (QSP) for the construction and operation of the facility will be paid by the Government;

2. The facility will be owned at all times by the Government;

a. The successful bidder will be permitted, as licensee only to enter, occupy and use land for the purposes of the Project.

The taxpayer, Entity C and Entity D (together the Consortium) tendered for the Project.

The Government announced that the Consortium was the preferred bidder for the Project. The Consortium was not able to identify any acceptable departure from the preferred position outlined in the RFP documentation in terms of the Government owning the Facility at all times, retaining title in the Furniture, Fittings and Equipment and access to the facility for the purpose of construction and operation of the facility being as a licensee. The proposal which was ultimately accepted ensured the achievement of the preferred position and objectives of the Government.

Entities established

The Consortium has established a number of Australian tax resident entities to undertake the Project.

Joint Venture Document

Entity A and Entity B Pty Ltd as trustee for the Entity B Trust (Entity B) opted to associate themselves as an unincorporated joint venture for the purposes of undertaking the Project and have entered into a Joint Venture Document (JV Document). The JV Document sets out the terms and conditions of the unincorporated joint venture and regulates the rights and obligations of the joint venturers in relation to the ownership, management and control of the Project.

The JV Document provides:

· That the Individual Share of the joint venturers as being the proportion, expressed as a percentage, which a joint venturer's interest bears to the total of all interests, at the date of the agreement and until financial close the percentages were provided as being:

o Entity A as to 50%; and

o Entity B as to 50%.

· That except as expressly provided for in the document, neither the document nor activities of the parties under the document will constitute a partnership, other relationship or imposes any financial obligations under which a joint venturer may be liable for any act or omission of another joint venturer.

· That except as expressly provided for in the document, no joint venturer is authorised to:

o Bind or pledge the credit of another joint venturer;

o Sign, draw, accept or endorse any negotiable instrument on behalf of the other joint venturers;

o Compound, release or discharge any debt due or owing to the other joint venturers without receiving the full amount of the debt;

o Incur any liabilities on behalf of the other joint venturers or use any money or assets of the other joint venturers;

o Procure any borrowings or other financial accommodation on behalf of the other joint venturers, whether or not secured over any of the joint assets; or

o Do anything as a result of which the joint assets may be endangered, attached or taken in execution.

· That the joint venturers own the joint assets as tenants in common in proportion to their individual shares.

· That the obligations of each joint venturer under the transaction documents and in respect of the joint venture shall be several in the respective individual share and shall not be, or construed to be, either joint or joint and several.

· That the parties acknowledge that contractual counterparties with the joint venture may require the parties to contract on a joint or a joint and several basis in which case the indemnification directly below applies where any loss, claim, damage, liability or expense incurred by a joint venturer is in excess of its individual share.'

· That each joint venturer indemnifies every other joint venturer and the officers, employees, agents and representatives of every other corporate joint venturer, against any claim, action, damage, loss, liability, cost, expense or payment suffered, paid or incurred in respect of:

o any act or omission of the indemnifying joint venturer; and

o any obligations or responsibilities assumed by the indemnifying joint venturer or any of its officers, employers, agents or representatives,

· That each joint venturer, to the extent of its individual share, indemnifies every other joint venturer and the officers, employees, agents and representatives of every other corporate joint venturer, against any claim, action, damage, loss, liability, cost, expense or payment suffered, paid or incurred in respect of any claim by a person who is not a party to this agreement for any loss, damage, cost, expense or payment suffered, paid or incurred by that person as a result of any action of the joint venturers under this agreement, the transaction document or another document to which the parties to the joint venture are contracted.

· That an act or omission of, or assumption by, an officer, employee, agent or representative of a joint venturer is an act or omission of, or assumption by, that joint venturer.

· That the net proceeds from the joint venture are to be distributed in accordance with the priorities outlined in the document and then to the joint venturers proportionate to their Individual Shares.

· That losses from the joint venture will be shared, or borne by, the joint venturers in proportion to their Individual Shares.

· That any losses, liability, lost expense, damage or claim occasioned to a joint venturer or any other person by the dishonesty, default or neglect of another joint venturer must be indemnified by the joint venturer who has caused such losses, liability, lost expense, damage or claim.

Project Document

Entity A and Entity B as joint venturers entered into the Project Document with the Government.

The Project Document provides:

· That the facility will be owned at all times by the Government.

· That the Consortium will receive a licence to access the precinct for the purposes of constructing and operating the facility in exchange for a licence fee paid to the Government.

· That title to items defined as being Furniture, Fittings and Equipment will be retained at all times by the Government.

· That the Consortium will receive a quarterly service payment for operating the facility from the Government which will be either increased or decreased in accordance with the Project Document.

· That the Consortium will receive a construction payment on completing construction of the facility from the Government. However, no obligation to pay the construction payment will arise unless a securitisation payment has been received by the Government.

Securitised licence structure and flow of funds

A flow chart showing the flow of funds was submitted.

A securitised licence structure has been adopted as a feature of the Project. In this structure the right to receive Licence Payments from Entity A and Entity B as joint venturers in the unincorporated joint venture (Project UJV) is purchased for a single lump sum from the Government by Finance Company in its capacity as trustee of the Finance Trust (Finance Trust). Project UJV thereafter pays Licence Payments to Finance Trust.

The Government directs that the lump sum payment for the Licence Payments from Finance Trust be re-directed and paid to Project UJV. The payment satisfies the obligation of the Government to pay a construction payment on completion of the facility to Project UJV. Project UJV uses the lump sum payment to repay some of the construction costs.

Project UJV thereafter receives QSPs from the Government. The QSPs will be used to repay remaining construction costs, repay loans, pay operating costs and pay Licence Payments due to Finance Trust. Surplus amounts will be profit of Project UJV and will be distributed to the joint venturers in proportion to their Individual Share as per the JV Document.

The securitised licence structure has been established through a Securitisation Document and a Purchase Document. The key features of these agreements are outlined below.

Securitisation Document

The Government, Entity A, Entity B and the Finance Trust have entered into a Securitisation Document.

The Securitisation Document:

· Defines Receivables as being all of the Government's right, title to and interest in the Licence Payments payable to the Government.

· Provides that Finance Trust agrees to purchase the Receivables for the purchase price applicable to those Receivables.

· Provides that the Government agrees to sell Receivables to Finance Trust for the purchase price applicable to those Receivables.

Purchase Document

The Government, Entity A, Entity B and the Finance Trust have entered into a Purchase Document.

The Purchase Document provides:

· That Finance Trust is directed by the Government to pay the Purchase Price for each Receivable to, or as directed by, Entity A as a Joint Venturer in the Joint Venture and Entity B as a Joint Venturer in the Joint Venture. The clause further provides that this payment is intended to satisfy the obligation of the Government to pay a construction payment under the Project Document.

· That Entity A as a Joint Venturer in the Joint Venture and Entity B as a Joint Venturer in the Joint Venture are directed by the Government to pay Licence Payments to, or as directed by, Finance Trust.

Relevant legislative provisions

section 177A of the ITAA 1936

section 177C of the ITAA 1936

paragraph 177C(1)(b) of the ITAA 1936

section 177D of the ITAA 1936

paragraph 177D(b) of the ITAA 1936

section 177F of the ITAA 1936

section 701-1 of the ITAA 1997

Reasons for decision

Question 1

Detailed reasoning

Overview

Part IVA of the ITAA 1936 is a general anti-avoidance rule. Part IVA of the ITAA 1936 gives the Commissioner of Taxation the power to cancel a 'tax benefit' (or part of a 'tax benefit') that has been obtained, or would but for section 177F of the ITAA 1936 be obtained, by a taxpayer in connection with a 'scheme' to which Part IVA of the ITAA 1936 applies.

In broad terms, Part IVA of the ITAA 1936 will apply where the following elements are satisfied:

· A 'scheme' exists (section 177A of the ITAA 1936); and

· A taxpayer has obtained, or would but for section 177F of the ITAA 1936 obtain, a 'tax benefit' in connection with the 'scheme' (section 177C of the ITAA 1936); and

· The 'dominant purpose' of a person who entered into or carried out the 'scheme', or any part of the 'scheme', was to enable the relevant taxpayer to obtain a 'tax benefit' in connection with the 'scheme', or to enable the relevant taxpayer and another taxpayer or other taxpayers each to obtain a 'tax benefit' in connection with the 'scheme' (paragraph 177D(b) of the ITAA 1936).

Scheme

A 'scheme' for the purposes of Part IVA of the ITAA 1936 is defined in section 177A of the ITAA 1936. A 'scheme' includes:

· Any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; and

· Any scheme, plan, proposal, action, course of action or course of conduct.

The Commissioner has considerable latitude in identifying the relevant 'scheme' for the purposes of Part IVA of the ITAA 1936 as recognised by the High Court of Australia in Federal Commissioner of Taxation v Hart (2004) 217 CLR 216 (Hart). The breadth of the definition of a 'scheme' in section 177A of the ITAA 1936 and the ability of the Commissioner to identify alternative schemes or steps within a transaction as each being a separate 'scheme' effectively means that the operation of Part IVA of the ITAA 1936 is determined by a consideration of the 'tax benefit' and 'dominant purpose'.

The Project Document, JV Document, Securitisation Document and Purchase Document establish various arrangements for undertaking the Project and taken together would satisfy the definition of a 'scheme' for the purposes of section 177A of the ITAA 1936. A separate narrower 'scheme' could be found to exist in relation to each of the arrangements established in the Project Document, JV Document, Securitisation Document and Purchase Document. Alternatively, a separate even narrower 'scheme' could be found to exist in each of the actions or steps which are undertaken as part of the Project Document, JV Document, Securitisation Document and Purchase Document.

The 'scheme' for the purposes of considering this question is the 'scheme' under which the Project is undertaken through the use of an unincorporated joint venture as established under the Project Document and JV Document.

Tax benefit

A 'tax benefit' for the purposes of Part IVA of the ITAA 1936 is defined in section 177C of the ITAA 1936 to include the following:

· an amount not being included in the assessable income of the taxpayer where that amount would have been included, or might reasonably be expected to have been included, in the assessable income if the scheme had not been entered into or carried out; or

· a deduction being allowable to the taxpayer where the whole or a part of that deduction would not have been allowable, or might reasonably be expected not to have been allowable, if the scheme had not been entered into or carried out.

The identification of a 'tax benefit' as defined in section 177C of the ITAA 1936 requires a comparison of the 'scheme' identified to what would have been expected to happen if that 'scheme' had not been implemented. The requirement for an alternative hypothesis or counterfactual is consistent with decided cases (Hart and Macquarie Finance Ltd v FCT [2005] ATC 4829 (Macquarie Finance)).

An alternative hypothesis or counterfactual to the identified 'scheme' must be reasonable and should take into account the commercial purposes of the taxpayer and any other parties as well as the commercial benefits obtained by the taxpayer and any other parties. That is, an alternative hypothesis or counterfactual cannot be a mere theoretical possibility but must be based upon a real likelihood that it could have been implemented and could have achieved the same commercial outcomes (Peabody v Commissioner of Taxation (1993) 40 FCR 531 (Peabody) and Macquarie Finance).

In assessing whether an alternative hypothesis or counterfactual to a 'scheme' is reasonable, regard must be had to any objective evidence which could support the existence, or lack thereof, of the suggested alternative transaction (Hart and Macquarie Finance).

The commercial arrangement between the Government and the Consortium is that the Government will engage the Consortium to design, construct, commission, manage and finance the Project. The Government is to retain ownership of the facility at all times throughout the duration of the Project.

A company or unit trust structure

The applicant has submitted as an alternative hypothesis or counterfactual that if an unincorporated joint venture had not been established it is reasonable to accept that a unit trust or company structure would have been established for the purposes of undertaking the Project. In a unit trust or company structure the participants would have contributed capital and maintained control over the Project by subscribing for units in the unit trust or shares in the company.

The identification of a 'tax benefit' requires a comparison of the tax treatment of the unincorporated joint venture with that of the alternative hypothesis or counterfactual, being establishment of a unit trust or company.

The primary difference in the tax treatment between the unincorporated joint venture which has been established and a unit trust or company structure is that tax losses of the unincorporated joint venture, being a tax partnership, can be claimed as deductions by the partners in the year that they are incurred and potentially against unrelated assessable income of the partners or other members of their respective tax consolidated group. In a unit trust or company structure the tax losses would be carried forward by the entity to potentially be utilised against assessable income in future years of income subject to certain loss utilisation rules.

During the first five years it is expected that losses will be incurred by the Project. The taxpayer, through its wholly owned subsidiary Entity A, is expected to be entitled to deductions for its share of the expected tax losses which would be offset against the assessable income of the taxpayer income tax consolidated group. The taxpayer would not be able to claim these deductions immediately in the year in which they were incurred had a unit trust or company structure been utilised and they would need to be carried forward in the unit trust or company structure to be offset against future assessable income.

A deduction for losses being allowable where it would not have been allowable, or might reasonably be expected not to have been allowable, had the 'scheme' not been entered into or carried out is a 'tax benefit' for the purposes of paragraph 177C(1)(b) of the ITAA 1936.

Dominant Purpose

In order for Part IVA of the ITAA 1936 to apply it must be established that the 'dominant purpose' of one of the parties entering into the 'scheme' was for the relevant taxpayer to obtain the identified 'tax benefit'. The High Court of Australia in Federal Commissioner of Taxation v Spotless Services Limited (1996) 186 CLR 404 (Spotless) considered at 416 that much

…turns upon the identification, among various purposes, of that which is "dominant". In its ordinary meaning, dominant indicates that purpose which was the ruling, prevailing, or most influential purpose.

The 'dominant purpose' is determined by objectively considering the eight matters identified in paragraph 177D(b) of the ITAA 1936. Section 177D of the ITAA 1936 requires that all eight matters be taken into account having regard to available evidence and then weighed together in arriving at a conclusion as to 'dominant purpose' but it is not the case that all matters will be equally relevant in every case considered (Peabody)..

In determining 'dominant purpose' and objectively considering the eight matters it is both necessary and appropriate to compare the 'scheme' with the alternative hypothesis or counterfactual. This comparison requires a consideration of what could have been done as an alternative to the immediate 'scheme' which has given rise to the identified 'tax benefit'.

Conclusion

Objective consideration of all eight matters contained in paragraph 177D(b) of the ITAA 1936 supports a conclusion that the 'dominant purpose' of the taxpayer and of the other persons who entered into the 'scheme' was not to obtain a 'tax benefit'.

The 'scheme' is reflective of the preferred relationship between the parties in performing obligations and satisfying rights under the Project Document.

The Commissioner will not make a determination under section 177F of the ITAA 1936 in respect of the taxpayer, as head entity of the tax consolidated group, to deny a deduction for the Partnership Loss in connection with the 'scheme' whereby the taxpayer enters into an unincorporated joint venture for the purposes of undertaking the Project.

Question 2

Detailed reasoning

Overview

As discussed above, Part IVA of the ITAA 1936 is a general anti-avoidance rule. Part IVA of the ITAA 1936 gives the Commissioner the power to cancel a 'tax benefit' (or part of a 'tax benefit') that has been obtained, or would but for section 177F of the ITAA 1936 be obtained, by a taxpayer in connection with a 'scheme' to which Part IVA of the ITAA 1936 applies.

Part IVA of the ITAA 1936 will apply where the following elements are satisfied:

· A 'scheme' exists (section 177A of the ITAA 1936); and

· A taxpayer has obtained, or would but for section 177F of the ITAA 1936 obtain, a 'tax benefit' in connection with the 'scheme' (section 177C of the ITAA 1936); and

· The 'dominant purpose' of a person who entered into or carried out the 'scheme', or any part of the 'scheme', was to enable the relevant taxpayer to obtain a 'tax benefit' in connection with the 'scheme', or to enable the relevant taxpayer and another taxpayer or other taxpayers each to obtain a 'tax benefit' in connection with the 'scheme' (paragraph 177D(b) of the ITAA 1936).

Scheme

As discussed above, a 'scheme' for the purposes of Part IVA of the ITAA 1936 is defined in section 177A of the ITAA 1936. A "scheme" includes:

· Any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; and

· Any scheme, plan, proposal, action, course of action or course of conduct.

The 'scheme' for the purposes of considering this question is the arrangement established under the Project Document, Securitisation Document and Purchase Document where a Licence is granted by the Government to Project UJV, Project UJV agrees to make quarterly Licence Payments to the Government and the Licence Payments are assigned to Finance Trust by the Government in consideration for a lump sum securitisation payment.

Tax benefit

As discussed above, a 'tax benefit' for the purposes of Part IVA of the ITAA 1936 is defined in section 177C of the ITAA 1936 to include the following:

· an amount not being included in the assessable income of the taxpayer where that amount would have been included, or might reasonably be expected to have been included, in the assessable income if the scheme had not been entered into or carried out; or

· a deduction being allowable to the taxpayer where the whole or a part of that deduction would not have been allowable, or might reasonably be expected not to have been allowable, if the scheme had not been entered into or carried out.

The identification of a 'tax benefit' as defined in section 177C of the ITAA 1936 requires a comparison of the 'scheme' identified to what would have been expected to happen if that 'scheme' had not been implemented. The requirement for an alternative hypothesis or counterfactual is consistent with decided cases (Hart and Macquarie Finance).

The commercial arrangement between the Government and the Consortium is that the Government will engage the Consortium to design, construct, commission, manage and finance the Project. The Government is to retain ownership of the facility at all times throughout the duration of the Project.

Build own operate and transfer

The applicant has submitted that the only possible alternative hypothesis or counterfactual to a securitised license structure is a structure under which the private sector would finance, construct and own the Project and then, for the operational period of the transaction, make the assets available to the Government with title to the facility only transferring to the Government on conclusion of the Project. This type of public private partnership structure is commonly known as build, own, operate and transfer (BOOT).

The applicant contends that this is not a reasonable alternative hypothesis or counterfactual as it does not fulfil a key commercial objective of the Project outlined in the initial RFP Document issued by the Government which was that the facility must be owned, at all times, by the Government. The applicant contends that a tender on the basis of this alternative hypothesis or counterfactual was unlikely to be successful and thus it cannot be considered a reasonable alternative hypothesis or counterfactual to the 'scheme'.

We consider that objectively a BOOT structure would not be a reasonable alternative hypothesis or counterfactual to the 'scheme' for the purposes of identifying a 'tax benefit' under paragraph 177C(1)(b) of the ITAA 1936.

Long term construction contract

We consider that a further possible alternative hypothesis or counterfactual is a structure under which the private sector would finance, construct and operate the facility whilst ownership of it remained with the Government. This type of public private partnership structure is commonly known as a long term construction contract (LTCC).

The applicant contends that a LTCC is not a reasonable alternative hypothesis or counterfactual to the 'scheme' as it would have lacked a number of commercial benefits that are only considered to arise in relation to the 'scheme', such as:

· Debt provided via a securitisation trust may allow funds to be borrowed at a lower cost of funds over the life of the Project;

· Third party lenders have a strong preference to provide finance to a bankruptcy remote securitisation vehicle such as a securitisation trust rather than a project vehicle;

· A securitisation trust is more easily rateable (and is likely to have a better credit rating than a project vehicle);

· Using the securitisation vehicle makes it easier to raise new finance or change the capital structure of the vehicle during the course of the Project (for instance, when the initial loans are due to be refinanced);

· Market practice is such that third party lenders expect to provide loans to a bankruptcy remote securitisation vehicle (rather than a project construction vehicle); and

· Using a securitisation vehicle is simpler from an administrative compliance perspective.

The applicant contends that at no time did they consider entering into the Project through a LTCC. Nevertheless, a LTCC would have achieved a key commercial objective which a BOOT structure would not; specifically, ownership of the facility would have been retained throughout the Project by the Government.

We consider that a LTCC may be considered an objectively reasonable alternative hypothesis or counterfactual to the 'scheme' for the purposes of identifying a 'tax benefit' under paragraph 177C(1)(b) of the ITAA 1936.

The primary difference in the tax treatment between the 'scheme' which has been established and a LTCC is that the taxpayer will incur a greater amount of deductible expenses, being deductions for the payment of the gross license fees under the 'scheme'. This is offset, at least in part, by increased QSPs under the 'scheme'. In a LTCC a deduction would only be available to the taxpayer for interest paid on any loan which was obtained and used to fund the construction of the facility during performance of the Project.

Ultimately, it would appear that the overall taxable position of the taxpayer may be similar throughout the life of the Project whether the 'scheme' as established were implemented or an LTCC. As such, it may well be that no significant 'tax benefit' arises for the purposes of paragraph 177C(1)(b) of the ITAA 1936. Nevertheless, given the type of entities involved and the structures which have been put in place it is more likely than not that some degree of 'tax benefit' could arise in relation to the amount of deductible expenses and the timing of the availability of those deductions as a result of the 'scheme'.

A deduction for losses being allowable where it would not have been allowable, or might reasonably be expected not to have been allowable, or an amount not being included in assessable income where that amount would have been included, or might reasonably be expected to have been included had the 'scheme' not been entered into or carried out is a 'tax benefit' for the purposes of paragraph 177C(1)(b) of the ITAA 1936.

Dominant Purpose

As discussed above, in order for Part IVA of the ITAA 1936 to apply it must be established that the 'dominant purpose' of one of the parties entering into the 'scheme' was for the relevant taxpayer to obtain the identified 'tax benefit'. The High Court of Australia in Spotless considered at 416 that much

…turns upon the identification, among various purposes, of that which is "dominant". In its ordinary meaning, dominant indicates that purpose which was the ruling, prevailing, or most influential purpose.

In determining 'dominant purpose' and objectively considering the eight matters it is both necessary and appropriate to compare the 'scheme' with the alternative hypothesis or counterfactual. This comparison requires a consideration of what could have been done as an alternative to the immediate 'scheme' which has given rise to the identified 'tax benefit'.

Conclusion

Objective consideration of all eight matters contained in paragraph 177D(b) of the ITAA 1936 supports a conclusion that the 'dominant purpose' of the taxpayer and of the other persons who entered into the 'scheme' was not to obtain a 'tax benefit'.

The 'scheme' is reflective of the preferred relationship between the parties in terms of financing the Project and fulfilling a number of key commercial objectives established in the Project Document, particularly ownership of the facility remaining at all times with the Government.

The Commissioner will not make a determination under section 177F of the ITAA 1936 in respect of the taxpayer to deny a deduction for the Partnership Loss or to include Partnership Income in connection with a scheme whereby Project UJV is granted a Licence by the Government, Project UJV agrees to pay quarterly Licence Payments to the Government and the Licence Payments are assigned to Finance Trust by the Government in consideration for a lump sum securitisation payment paid by the Finance Trust.