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Edited version of private advice
Authorisation Number: 1051779475958
Date of advice: 13 November 2020
Ruling
Subject: Capital raising
Question 1
Will the issue of an Instrument in Company X be an equity interest for the purposes of Division 974 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer: Yes
Question 2
Is Company X a franking entity under section 202-15 of the ITAA 1997?
Answer: Yes
Question 3
Will dividends paid by Company X on the Instrument be frankable distributions for the purposes of subsection 202-40(1) of the ITAA 1997?
Answer: Yes
Question 4
Will the Commissioner make a determination under paragraph 204-30(3)(a) of the ITAA 1997 that a specified franking debit arise in the franking account of Company X in respect of franked dividends paid on each Instrument?
Answer: No
Question 5
Will the Commissioner make a determination under paragraph 177EA(5)(a) of the ITAA 1936 that a specified franking debit arise in the franking account of Company X in respect of franked dividends paid on each Instrument?
Answer: No
Relevant facts and circumstances
Company X applied for a private binding ruling in respect of the issuing of an Instrument for the purpose of raising capital.
Relevant legislative provisions
Income Tax Assessment Act 1936 subsection 6(1)
Income Tax Assessment Act 1936 section 121AB
Income Tax Assessment Act 1936 section 177A
Income Tax Assessment Act 1936 section 177D
Income Tax Assessment Act 1936 section 177EA
Income Tax Assessment Act 1997 section 202-5
Income Tax Assessment Act 1997 section 202-40
Income Tax Assessment Act 1997 section 202-45
Income Tax Assessment Act 1997 section 204-30
Income Tax Assessment Act 1997 section 207-20
Income Tax Assessment Act 1997 section 207-145
Income Tax Assessment Act 1997 section 713-505
Income Tax Assessment Act 1997 section 974-20
Income Tax Assessment Act 1997 section 974-75
Income Tax Assessment Act 1997 section 960-120
Income Tax Assessment Act 1997 section 995-1(1)