Edited version of private advice

Authorisation Number: 1052021620597

Date of advice: 16 September 2022

Ruling

Subject: Return of capital

Question 1

Will the return of capital constitute a 'dividend' in accordance with the definition in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936)?

Answer

No

Question 2

Will the Commissioner make a determination under subsection 45B(3) of the ITAA 1936 that section 45C of the ITAA 1936 applies in relation to the whole, or a part, of the return of capital received by Company B?

Answer

Yes.

Question 3

Will CGT event G1 (section 104-135 of the Income Tax Assessment Act 1997) happen when Company A pays the return of capital to Company B in respect of the ordinary shares in Company A owned by Company B?

Answer

Yes.

This ruling applies for the following period:

Income year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

Company A is a resident of Australia for income tax purposes and the head company of an income tax consolidated group. The Company A income tax consolidated group reported a profit for the current income year and has prior year tax losses.

Company A derives rental income and business income.

Company A has fully paid-up ordinary shares on issue, some of which were issued prior to 20 September 1985. Company A's share capital account is not tainted (within the meaning of Division 197).

All shares in Company A are held by Company B.

Company Bis a foreign resident for Australian tax purposes. Company B previously had Australian operations and land assets. Company B does not have any Australian capital losses.

As a result of a corporate restructure, Company A acquired Company B's Australian business for its book value and its land assets (Land Assets) (and liabilities), for their market value (Restructure). In satisfaction of Company A's obligation to pay the purchase price, Company A issued ordinary shares to Company B (each having a $X face value).

Company A did not hold any real property prior to the Restructure.

The majority of the capital was contributed to Company A by Company B for the purchase of all of Company B's Land Assets.

At the time Company A acquired the Land Assets, it also acquired the business of Company B. The purchase price for the total of the Land Assets and business acquired from Company B (and therefore the total capital contribution from Company B to Company A to fund the purchase price) was $X. Therefore, the majority of the purchase price (and share capital issued by Company A) was attributable to the Land Assets.

Further contributions of capital have been made since the Restructure to fund investments or to purchase additional properties.

Company A entered into a contract of sale (the Sale) with a third-party for the sale of property (Sale Assets). The Sale Assets comprised some of the Land Assets acquired by Company A under the Restructure.

The Sale Assets had a market value of $X at the time of the Restructure, therefore representing the amount of the capital contributed by Company B to those assets at the time of the Restructure.

The Sale was settled for cash consideration (Cash Consideration) and the contract of sale did not allocate the purchase price between the parcels of land (and buildings) sold under the contract.

The Sale represented a change in Company A's business operations as rental income significantly decreased.

Company A recognised a profit from the Sale of the Assets.

Following receipt of the Cash Consideration from the Sale of the Assets, Company A is intending to make a return of capital to Company B equal to the full amount of Company A's paid-up share capital.

The return of capital would be debited against Company A's share capital account.

Company A has never declared a dividend to Company B and does not forecast the declaration of a dividend to Company B in the short term. Company A's franking account balance does not (and is not expected to) have sufficient franking credits to exempt the full amount of the distribution from dividend withholding tax if it were paid by way of dividend.

Company A has never made a return of capital to Company B.

Company B does not intend to dispose of its Company A shares in the foreseeable future.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 6(1)

Income Tax Assessment Act 1936 subsection 45B(3)

Income Tax Assessment Act 1936 section 45C

Income Tax Assessment Act 1997 section 104-135

Income Tax Assessment Act 1997 subsection 995-1(1)

Reasons for decision

All legislative references are tothe Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997 unless otherwise indicated.

Question 1

Will the return of capital constitute a 'dividend' in accordance with the definition in subsection 6(1)?

Summary

No part of the return of capital will be a dividend as defined in subsection 6(1).

Detailed reasoning

The term 'dividend' is defined in subsection 6(1) and includes any distribution made by a company to any of its shareholders, whether in money or other property. Paragraph 6(1)(d) excludes from the definition of 'dividend' money or a distribution of property, where the amount of the money or the amount of the value of the property is debited against an amount standing to the credit of the share capital account of the company.

No part of the return of capital would be a dividend as defined in subsection 6(1) as the entire amount will be debited to an amount standing to the credit of Company A's share capital account when paid.

Question 2

Will the Commissioner make a determination under subsection 45B(3) that section 45C applies in relation to the whole, or a part, of the return of capital received by Company B?

Summary

Yes. The Commissioner will make a determination under subsection 45B(3) that section 45C applies in relation to part of return of capital received by Company B.

Detailed reasoning

Section 45B applies where certain capital payments are made to shareholders in substitution for dividends. In broad terms, section 45B applies where:

•                     there is a scheme under which a person is provided with a capital benefit by a company (paragraph 45B(2)(a))

•                     under the scheme a taxpayer (relevant taxpayer), who may or may not be the person provided with the capital benefit, obtains a tax benefit (paragraph 45B(2)(b)), and

•                     having regard to the relevant circumstances of the scheme (as set out in subsection 45B(8)), it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for a purpose (whether or not the dominant purpose but not including an incidental purpose) of enabling a relevant taxpayer to obtain a tax benefit (paragraph 45B(2)(c)).

Where section 45B applies, the Commissioner may make a determination under section 45C that all or part of the capital benefit is taken to be an unfranked dividend paid by the company for income tax purposes.

The Commissioner has published Law Administration Practice Statement PS LA 2008/10 Application of section 45B of the Income Tax Assessment Act 1936 to share capital reductions which provides instruction and practical guidance to tax officers on the application of section 45B to a share capital reduction by a company. PS LA 2008/10 explains the application of section 45B to share capital reductions, covering the definitions and interpretation of relevant topics such as a scheme, capital benefit, obtaining a tax benefit, a more than incidental purpose and the making of a section 45B determination.

PS LA 2008/10 sets out that section 45B does not premise that a dividend would have been paid if the share capital had not been distributed. Rather, the reference in section 45B to dividend substitution is a reference to the distribution being more readily attributable to the company's profits than its share capital[1].

PS LA 2008/10 further explains that profits are a gain to the company which, when surplus to the company's needs, are meant to be divided amongst the shareholders. Share capital, on the other hand, is the money contributed by the company's members for carrying out its objects until some event or circumstance renders its retention unnecessary, whereupon it may be returned[2].

Scheme

Subsection 45B(10) states that, in section 45B, 'scheme' has the meaning given by subsection 995-1(1). That term means any arrangement[3], or any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise[4].

The return of capital is a scheme for the purposes of section 45B.

Capital benefit

For paragraph 45B(2)(b) to be satisfied, a taxpayer must obtain a capital benefit. The phrase 'provided with a capital benefit' is defined in subsection 45B(5) as:

(a)          the provision of ownership interests in a company to a person,

(b)          the distribution to the person of share capital or share premium, or

(c)           something that is done in relation to an ownership interest that has the effect of increasing the value of an ownership interest (which may or may not be the same interest) that is held by the person.

As the return of capital would be recorded as a debit in the share capital account of Company A and Company B would receive a distribution of share capital, Company A will provide Company B with a capital benefit under section 45B(5).

Tax benefit

A taxpayer must also obtain a tax benefit to satisfy paragraph 45B(2)(b). Pursuant to subsection 45B(9), a 'tax benefit' will be obtained from a capital benefit if the amount of tax payable by the relevant taxpayer would, apart from section 45B, be less than the amount that would have been payable if the capital benefit had been a dividend[5].

Where there is a distribution of share capital, a tax benefit would arise where a shareholder or the relevant taxpayer, would pay less tax on the distribution than they would have if the amount had instead been a dividend.

Generally, a return of capital on shares acquired post-CGT would be subject to CGT. A taxpayer makes a capital gain from CGT event G1 if the amount of the proceeds returned is more than the cost base of the share. Therefore, to the extent that the return of capital exceeds the cost base of Company B's post-CGT shares in Company A, a capital gain would arise, noting that the return of capital will be equal to the full amount of Company A's paid up share capital.

Fully franked dividends paid by Company A to Company B, as a non-resident, would not be subject to withholding tax (paragraph 128B(3)(ga)). However, Company A has provided that its franking account balance does not, and is not expected to, have sufficient franking credits to exempt the full amount of the distribution from withholding tax if it were paid by way of dividend. An unfranked dividend paid to Company B will be subject to withholding tax under section 128B at a rate of 30% as Company B is a tax resident of Country X and no double tax agreement exists between Australia and Country X.

It follows that Company B will obtain a tax benefit when the return of capital is paid as the amount of tax payable by Company B would, apart from section 45B, be less than the amount that would have been payable if the capital benefit had been paid as a dividend.

The relevant circumstances

Paragraph 45B(2)(c) states that section 45B applies if, having regard to the relevant circumstances of the scheme, as set out in paragraph 45B(8) it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for the purpose (whether or not the dominant purpose but not including an incidental purpose) of enabling the relevant taxpayer to obtain a tax benefit.

Paragraph 45B(8)(a) - the extent to which the capital benefit is attributable to capital and profits (realised and unrealised) of the company or of an associate (within the meaning in section 318) of the company.

The inquiry contemplated by the words 'attributable to' is essentially a practical one concerned with determining whether there is a discernible connection between the amount distributed as share capital and the share capital and profits that are realistically available for distribution, including the profits of an associate of the company. The connection need not be that of a sole, dominant, direct or proximate cause and effect; a contributory causal connection is sufficient[6].

If the composition of the capital benefit is inconsistent with the substance of the benefit (that is, the capital and profit it is attributable to), this would tend to support a conclusion that the requisite purpose exists.

A capital distribution that is attributable to share capital generally represents share capital that is genuinely surplus to the company's needs and not merely a distribution debited against share capital on the basis of a shareholder tax preference.

Paragraphs 63 and 68 of PS LA 2008/10 state that a distribution of profit would normally be expected to be a relatively ordinary business occurrence, whereas a distribution of capital would be a relatively extraordinary one. For instance, the capital distribution may coincide with the disposal of a significant part of the business structure which can be identified as releasing share capital. However, paragraph 63 of PS LA 2008/10 also highlights that if the disposal also realises a profit the ensuing distribution should, subject to all the other relevant circumstances, be considered in terms of its attribution to both share capital and the profit from the disposal.

The following facts are relevant to considering a capital/profit attribution:

•                     The return of capital will be paid exclusively from the Cash Consideration received from the sale of the Sale Assets.

•                     The return of capital is purportedly being made as a repayment of the capital contribution provided to Company A - including Company B's contribution under the Restructure whereby shares were issued in exchange for the acquisition of Company B's assets and the carrying on of its business.

•                     Company A's Board has determined the amount of $X is surplus to the needs of Company A and that Company A will change its business operations after the sale of the Sale Assets - thereby representing the disposal of part of the business structure.

Considering paragraph 45B(8)(a) in relation to the scheme, the facts support a finding that despite the return of capital taking the form of share capital, it is attributable in part to the profits Company A secured in disposing of the Sale Assets with the Cash Consideration serving as the source of funds for the return of capital.

Accordingly, this circumstance points towards the requisite purpose.

Paragraph 45B(8)(b) - the pattern of distributions of dividends, bonus shares and returns of capital or share premium by the company or by an associate (within the meaning in section 318) of the company

The inference in paragraph 45B(8)(b) is that an interruption to the normal pattern of profit distribution and its replacement with a distribution of capital may suggest dividend substitution[7].

Regard should also be had to the company's distribution culture and other relevant commercial exigencies that impact on the company's ability to make distributions, whether dividends or capital, in evaluating this relevant circumstance[8].

Company A has not previously made any distributions of profit or share capital. However, once Company A had determined the amount of $X was surplus to its needs and evaluated whether to make an ordinary dividend distribution or return of capital to Company B, factors such as insufficient franking credits and Company B's non-residency status may have influenced Company A's decision to propose a return of capital rather than pay a dividend.

As such, this factor points towards the requisite purpose.

Paragraph 45B(8)(c) - whether the relevant taxpayer has capital losses that, apart from the scheme, would be carried forward to a later year of income.

This circumstance considers whether the shareholders of a company receiving a capital benefit have any capital losses they could apply to the capital benefit as this would result in reduced or no CGT implications for shareholders. Where shareholders have capital losses that can be applied against the capital benefit, this would suggest that the capital benefit was provided for the purpose of securing a tax benefit[9].

Company A asserts that Company B does not have any Australian capital losses to be utilised.

This circumstance does not point towards the requisite purpose.

Paragraph 45B(8)(d)- whether some or all of the ownership interests in the company or in an associate (within the meaning of section 318) of the company held by the relevant taxpayer were acquired, or are taken to have been acquired, by the relevant taxpayer before 20 September 1985.

Company B holds a small percentage of shares in Company A which were acquired prior to 20 September 1985.

The benefit received from the pre-CGT shares is small. Therefore, it cannot be said to incline towards a conclusion that the scheme will be entered into for a more than incidental purpose of enabling Company B to obtain a tax benefit.

This circumstance does not point towards the requisite purpose.

Paragraph 45B(8)(e) - whether the relevant taxpayer is a non-resident

Paragraph 87 of PS LA 2008/10 states that:

The implication of non-residency is that it would normally point towards a tax preference for a distribution of capital over profit. Non-residents are normally taxed on dividends at the rate of 15%, but they are not exposed to capital gains on the disposal of shares unless those shares are 'indirect Australian real property interests' as defined in section 855-25.

As Company B is a non-resident taxpayer and subject to withholding tax at a rate of 30% on unfranked dividends received, this suggests that there is a purpose which is more than incidental for Company B to prefer a distribution of capital over profit in view of the preferable tax treatment under CGT regime.

This circumstance points towards the requisite purpose.

Paragraph 45B(8)(f) - whether the cost base (for the purposes) of the relevant ownership interest is not substantially less than the value of the applicable capital benefit

This factor considers where the relevant ownership interest is not substantially less than the value of the capital benefit. Where the cost base of the ownership interest is similar or greater in value than the capital benefit provided, the capital distribution will not expose the relevant taxpayer to a capital gain under CGT event G1. This could point towards a tax preference for capital over profit[10].

The return of capital will be an amount equal to the paid-up capital of Company B's ownership interest in Company A.

This circumstance points towards the requisite purpose.

Paragraph 45B(8)(h) - nature of interest after return of capital

This relevant circumstance proceeds from the premise that when a dividend is paid the shareholder's interest remains unchanged, and that a distribution of capital made in similar circumstances may be performing the same function as a dividend and be made in substitution for it. It has regard not only to whether there has been a cancellation or variation in the shareholder's interest, but also to whether the shareholder's interest has remained the same comparative with other shareholders[11].

An equal share capital reduction under which no shares are cancelled (often called a pro-rata return of capital) does not affect the shareholder's substantive interests, either individually or inter se and thus the interests remain the same as if a dividend had been paid instead. From the shareholders' perspective a reduction of capital without a cancellation of shares is not dissimilar economically to a special dividend in that cash is distributed to them while they retain the share with all of its rights intact[12].

The return of capital will not involve the cancellation of any shares and there will be no impact on Company B's substantive interests or the proportion of Company B's interest in Company A.

As such, this circumstance points towards the requisite purpose.

Paragraph 45B(8)(i) - scheme involves the provision of ownership interests and the later disposal of those interest

The return of capital will not involve the later disposal of Company B's interests in Company A.

As such, this circumstance does not point towards the requisite purpose.

Paragraph 45B(8)(k) -any other matters referred to in subsection 177D(2)

The matters referred to in these subparagraphs are matters of reference for 'the dominant purpose' test in Part IVA. However, in the context of section 45B they facilitate the 'more than incidental purpose test' and do not introduce a different purpose test. Furthermore, they are matters by reference to which one is able to examine a return of capital from a broad, practical perspective in order to identify and compare its tax and non-tax objectives[13].

•         Paragraph 177D(2)(a) - the manner in which the scheme was entered into or carried out

The steps and events that combine to make up the scheme are:

•                     Company A's disposal of the Sale Assets,

•                     Company A's view that an amount of $X was surplus to its needs and its decision make a distribution to Company B for that amount, funded from the Cash Consideration,

•                     Company A's decision to debit the return of capital against Company A's untainted share capital account.

It is reasonable to conclude from the manner in which the scheme will be carried out, that the return of capital is akin, in part, to the distribution of profits to Company A's sole shareholder that are realised from the disposal of the Sale Assets.

This matter points towards the requisite purpose.

•         Paragraph 177D(2)(b) - the form and substance of the scheme

The form of the scheme is the visible aspect of the scheme, whilst the substance of the scheme is its essential nature which can be determined from its commercial and economic implications.

Essentially, despite a distribution taking the form of a return of capital, it can nonetheless be attributable to either a company's share capital or the profits of the company or its associates[14].

Whilst Company A intends to return capital that is excess to its needs to Company B and the return of capital will be effected via a debit to Company A's share capital account, the substance of the return of capital is attributable, at least in part, to the profit Company A realised on the sale of the Sale Assets.

Accordingly, there is a discrepancy between the form and substance of the scheme and this matter points towards the requisite purpose.

•         Paragraph 177D(2)(c) - the time at which the scheme was entered into and the length of the period during which the scheme was carried out

This factor requires consideration of the extent to which, on the one hand, the timing and duration of the scheme go towards delivering the relevant tax benefit or, on the other hand, are related to commercial opportunities or requirements[15].

While the return of capital identifies as releasing share capital, it coincides with the disposal of the Sale Assets. Paragraph 63 of PS LA 2008/10 makes it clear that if the disposal of part of a business structure also realises a profit the ensuing capital distribution should, subject to all other relevant circumstances, be considered in terms of its attribution to both share capital and the profit from the disposal.

This matter points towards the requisite purpose.

•         Paragraph 177D(2)(d) -the result in relation to the operation of this Act that, but for this Part, would be achieved by the scheme

This factor considers the income tax outcome produced by the scheme if section 45B did not apply.

A distribution that is debited against the company's share capital account carries the tax advantage of falling outside the definition of dividend in subsection 6(1), and is not received as income in the shareholder's hands. Instead, a return of capital will be reduce the cost base of the affected shares under CGT event G1, and shareholders will only realise a capital gain to the extent that the capital distribution exceeds the shareholder's cost base in the shares[16].

In addition, a further tax outcome is that company can preserve franking credits by distributing share capital rather than paying a dividend. If the company has scarce franking credits, this would be significant and could suggest that the company has distributed capital and not profits on the basis of the shareholders' tax preference[17].

The return of capital will result in Company B obtaining a tax benefit as the distribution will be excluded from the definition of dividend in subsection 6(1) and as a result Company B will not be subject to withholding tax under section 128B. Instead, the return of capital will trigger the operation of CGT event G1.

As such, this matter points towards the requisite purpose.

•         Paragraph 177D(2)(e) - any change in the financial position of the relevant taxpayer that has resulted, will result, or may reasonably be expected to result from the scheme

When the return of capital is paid, Company B will continue to own the same number and proportion of shares in Company A, yet be in receipt of a tax-free distribution equal to the return of capital. That is, Company B's financial position will be increase as a result of the scheme with its economic exposure to Company A being unchanged.

As such, this factor points towards the existence of the requisite purpose.

•         Paragraph 177D(2)(f) - any change in the financial position of any person who has, or has had, any connection (whether of a business, family or other nature) with the relevant taxpayer, being a change that has resulted, will result or may reasonably be expected to result, from the scheme

The effect of the return of capital will be that Company A will be worth less than it was just before the return of capital as it will be divesting itself to the extent of $X which it will pay to Company B.

As such, this factor does not point towards the requisite purpose.

•         Paragraph 177D(2)(g) - any other consequence for the relevant taxpayer, or for any person referred to in subparagraph (vi), of the scheme having been entered into or carried out

This provision requires that regard be given to the nature of the company's business and how this impacts on its ability to pay dividends, as well as objective shareholder and 'market' expectations in relation to the company's distributions.

Company A does not forecast the declaration of a dividend to Company B in the short term. Notwithstanding this, the sale of the Sale Assets represented a change in Company A's business operations as its income will significantly decrease.

As such, this matter does not point towards the requisite purpose.

•         Paragraph 177D(2)(h) - the nature of any connection (whether of a business, family or other nature) between the relevant taxpayer and any person referred to in paragraph (f).

This factor requires consideration of the nature of any connection (whether of a business, family or other nature) between the shareholders and any person referred to in paragraph 177D(2)(f) - in this case the relationship between Company A and Company B.

There is an identifiable connection between Company A and Company B that could lead to the conclusion that there is a non-incidental purpose of obtaining a tax benefit. Given this connection, it is reasonable to assert that, following the sale of the Sale Assets, Company A, in the knowledge of Company B's tax preference, determined that distributing the surplus funds as a return of capital would be preferable to the payment of an unfranked dividend.

As such, this matter points towards the requisite purpose.

Conclusion

Based on the above analysis, the Commissioner will make a determination under section 45B(3), upon payment of the return of capital that section 45C applies in relation to the part of the capital benefit paid by Company A to Company B that represents the profits generated by the sale of the Sale Assets. Subsection 45C(3) will apply to treat that amount as an unfranked dividend in the hands of Company B.

There is no compelling, objective and commercial reason why Company A would choose to wholly distribute share capital where profits from the sale of Sale Assets are available to be distributed to Company B in the form of a dividend.

Whilst no circumstance is definitive of the requisite purpose on its own, there is a discernible connection between the return of capital and the profits made on the sale of the Sale Assets that are realistically available for distribution. The facts support a finding that the circumstances surrounding the return of capital indicate that part of the capital invested in the Land Assets at the time of the Restructure can be traced directly to the Sale Assets which were disposed of by a contract of sale. However, while the return of capital coincides with the disposal of the Sale Assets and therefore identifies as releasing share capital, paragraph 63 of PS LA 2008/10 makes it clear that if the disposal of part of a business structure also realises a profit the ensuing capital distribution should, subject to all other relevant circumstances, be considered in terms of its attribution to both share capital and the profit from the disposal.

Paragraph 70 of PS LA 2008/10 notes that the term 'profits' is not defined in the income tax law and takes its ordinary meaning. Given the wide scope of the ordinary meaning of the term, the Commissioner considers that a part of the return of capital is proportionally attributable to the profits of Company A.

The Commissioner further considers that given the nature of the Sale Assets and the ability to directly calculate the profit made on disposal, that the more appropriate approach in the present circumstances is to determine what profit proportion arises on the Sale Assets by adopting a 'tracing approach' rather than adopting a 'slice approach' method (as discussed at paragraph 73 of PS LA 2008/10).

Accordingly, under section 45C part of the return of capital will be taken to be an unfranked dividend paid by Company A to Company B out of Company A's profits, and subject to withholding tax under section 128B, unless excluded by another provision.

Question 3

Will CGT event G1 (section 104-135) happen when Company A pays the return of capital to Company B in respect of the ordinary shares in Company A owned by Company B?

Summary

Yes. CGT event G1 (section 104-135) will happen to the deemed capital component of the return of capital when it is paid by Company A to Company B, in respect of the ordinary shares in Company A owned by Company B.

Detailed reasoning

CGT event G1 happens if a company makes a payment to a taxpayer in respect of a share the taxpayer owns in the company, and some or all of the payment is not a dividend (subsection 995-1(1)), or an amount that is a distribution by a liquidator which is taken to be a dividend, and is not included in the taxpayer's assessable income (subsection 104-135(1)).

CGT event G1 will happen to the deemed capital component when Company A pays the return of capital to Company B in respect of the Company A shares Company B owns (section 104-135). CGT event G1 will not happen to the deemed dividend component which will be an unfranked dividend.

[1] paragraph 31 of PS LA 2008/10

[2] paragraph 34 of PS LA 2008/10

[3] defined by subsection 995-1(1) as any arrangement, agreement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable (or intended to be enforceable) by legal proceedings

[4] paragraph 40 of PS LA 2008/10

[5] paragraph 48 of PS LA 2008/10

[6] paragraph 61 of PS LA 2008/10

[7] paragraph 77 of PS LA 2008/10

[8] paragraph 79 of PS LA 2008/10

[9] paragraph 85 of PSLA 2008/10

[10] paragraph 88 of PS LA 2008/10

[11] paragraph 90 of PS LA 2008/10

[12] paragraph 91 of PS LA 2008/10

[13] paragraph 98 of PS LA 2008/10

[14] paragraph 102 of PS LA 2008/10

[15] paragraph 104 of PS LA 2008/10

[16] paragraph 109 of PS LA 2008/10

[17] paragraph 113 of PS LA 2008/10