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Edited version of private advice
Authorisation Number: 1012650550679
Ruling
Subject: Asset lease and the interaction between Division 250 and Divisions 230 and 775
Question 1
Will Division 230 apply in relation to gains and losses arising for the company from the Lease (whether from the Lease itself or the "financial arrangement in the form of a loan" taken to exist by s.250-155)?
Answer
No
Question 2
Given that the company is deemed to have lent an amount to the "borrower" under s.250-155(3), and to receive amounts from the borrower under the deemed loan under s.250-155(6), does forex realisation event 2 (FRE 2) happen for the company each time the lessee makes a lease rental payment to the company on the basis that the company is receiving a notional loan principal repayment?
Answer
No
Question 3
Assuming that the lease rental payments are made by the lessee when the lease rentals become due and payable, will any gains/losses attributable to movements in foreign currency exchange rates in respect of the lease rental payments be taken into account in calculating the company's taxable income under Division 775 or otherwise under ss.6-5/6-10 or ss.8-1/8-5?
Answer
No
Question 4
Where the company makes a foreign exchange gain or loss from the amortising principal repayment of the CP Issue that has been designated as a hedge of the principal repayment portion of the overseas dollar lease rental payments, will any part of the gain or loss be reasonably attributable to a hedged item that is or produces non-assessable non-exempt income for the purposes of s.230-310(4)?
Answer
No
Question 5
Where the company makes a loss from the financial arrangement represented by the CP Issue that has been designated as a hedge of the principal repayment portion of the overseas dollars lease rental payments, will any part of the loss be made in gaining or producing non-assessable non-exempt income for the purposes of s.230-30(3)?
Answer
No
Question 6
Where the company makes a gain from the financial arrangement represented by the CP Issue that was designated as a hedge of the principal repayment portion of the overseas dollars lease rental payments, will any part of the gain be non-assessable non-exempt income by virtue of s.230-30(2)?
Answer
No
This ruling applies for the following periods:
Years ending XX/XX/XXXX to XX/XX/XXXX
The scheme commences on:
XX/XX/XXXX
Relevant facts and circumstances
The taxpayer applied for a ruling in relation to a financing transaction. Relevant facts and documents were submitted.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 6-10
Income Tax Assessment Act 1997 section 8-1
Income Tax Assessment Act 1997 section 8-5
Income Tax Assessment Act 1997 section 230-15
Income Tax Assessment Act 1997 section 230-30
Income Tax Assessment Act 1997 section 230-45
Income Tax Assessment Act 1997 section 230-50
Income Tax Assessment Act 1997 section 230-310
Income Tax Assessment Act 1997 section 230-335
Income Tax Assessment Act 1997 section 230-350
Income Tax Assessment Act 1997 section 230-460
Income Tax Assessment Act 1997 section 250-1
Income Tax Assessment Act 1997 section 250-5
Income Tax Assessment Act 1997 section 250-155
Income Tax Assessment Act 1997 section 250-185
Income Tax Assessment Act 1997 section 775-45