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Edited version of your written advice
Authorisation Number: 1051389606263
Date of advice: 28 August 2018
Ruling
Subject: Off-market share buy-back
Question 1
Will the Commissioner make a Determination pursuant to paragraph 204-30(3)(a) of the ITAA 1997 in respect of the franking account of the Company in relation to the Buy-Back?
Answer
No.
Question 2
Will the Commissioner exercise his discretion to make a Determination under paragraph 177EA(5)(a) of the ITAA 1936, which the Company will accept, that a franking debit arises in the franking account of the Company in respect of franked dividends paid as part of the Buy-Back?
Answer
Yes.
Question 3
Will the Commissioner make a Determination under paragraph 177EA(5)(a) of the ITAA 1936, which the Company will accept, that a franking debit arises in the franking account of the Company in respect of franked dividends paid as part of the Buy-Back, calculated in accordance with the following formula?:
Number of shares bought back |
x |
Franking Credit attaching to each share bought back |
x |
% non-residents in tax treaty nations |
x |
0.5 |
Answer
Yes.
Question 4
Will the Company be entitled to a deduction pursuant to section 230-15 of the ITAA 1997 in respect of interest on borrowings to fund payment of the Buy-Back price?
Answer
Yes.
Question 5
Will the Commissioner make a determination pursuant to subsection 45C(3) of the ITAA 1936 to debit the franking account of the Company in relation to the Buy-Back?
Answer
No.
Facts
The Company conducted an off-market share buy-back and requested a private ruling. The Commissioner has ruled on each of the questions in the private ruling application.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 45C
Income Tax Assessment Act 1936 section 177EA
Income Tax Assessment Act 1997 section 204-30
Income Tax Assessment Act 1997 section 230-15