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Edited version of private advice
Authorisation Number: 1052191945712
Date of advice: 15 November 2023
Ruling
Subject: Tier 1 capital raising
Question 1
Will each of the Securities be characterised as a 'non-share equity interest' in the Entity as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
Question 2
Will distributions payable on the Securities be frankable distributions under section 202-40 of the ITAA 1997?
Answer
Yes.
Question 3
Will section 204-15 of the ITAA 1997 apply to the issue of the Securities or to distributions made on the Securities?
Answer
No.
Question 4
Will the Commissioner make a determination under paragraph 204-30(3)(a) of the ITAA 1997 that a specified franking debit arises in respect of the issue of the Securities or distributions made on the Securities?
Answer
No.
Question 5
Will the Commissioner make a determination under paragraph 177EA(5)(a) of the Income Tax Assessment Act 1936 (ITAA 1936) that a franking debit arises in respect of distributions made on the Securities?
Answer
No.
Question 6
Will the Commissioner make a determination under subsection 45C(3) of the ITAA 1936 in respect of the payment of distributions or on a conversion, redemption or transfer of the Securities?
Answer
No.
Question 7
Will the Securities be subject to the commercial debt forgiveness provisions in Division 245 of the ITAA 1997?
Answer
No.
Question 8
Will a gain or profit be assessable under section 6-5 of the ITAA 1997 for the Entity in relation to the issue of the Securities, the issue of ordinary shares on conversion of the Securities, or on the redemption of the Securities?
Answer
No.
Question 9
Will the issue of the Securities, the issue of ordinary shares on conversion of the Securities, or the redemption of the Securities give rise to CGT event D1 pursuant to section 104-35 of the ITAA 1997?
Answer
No.
Question 10
Will the Entity be required to recognise gains and losses under Division 230 of the ITAA 1997 in respect of the Securities?
Answer
No.
Question 11
Will the share capital account of the Entity become tainted, within the meaning of Division 197 of the ITAA 1997, upon the issue of the Securities, the issue of ordinary shares on conversion of the Securities, or upon the redemption of the Securities?
Answer
No.
Relevant facts and circumstances
The Entity applied for a private ruling in respect of the issue of the Securities by the Entity for the purpose of raising Tier 1 Capital.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 104-35
Income Tax Assessment Act 1997 section 125-60
Income Tax Assessment Act 1997 Division 197
Income Tax Assessment Act 1997 section 202-5
Income Tax Assessment Act 1997 section 202-35
Income Tax Assessment Act 1997 section 202-40
Income Tax Assessment Act 1997 section 202-45
Income Tax Assessment Act 1997 section 204-5
Income Tax Assessment Act 1997 section 204-15
Income Tax Assessment Act 1997 section 204-30
Income Tax Assessment Act 1997 section 215-1
Income Tax Assessment Act 1997 Division 230
Income Tax Assessment Act 1997 Division 245
Income Tax Assessment Act 1997 Division 974
Income Tax Assessment Act 1997 section 975-300
Income Tax Assessment Act 1997 subsection 995-1(1)
Income Tax Assessment Act 1936 subsection 6(1)
Income Tax Assessment Act 1936 section 45B
Income Tax Assessment Act 1936 subsection 45C(3)
Income Tax Assessment Act 1936 section 177EA
Does IVA apply to this private ruling?
Part IVA of the Income Tax Assessment Act 1936 contains anti-avoidance rules that can apply in certain circumstances where you or another taxpayer obtains a tax benefit, imputation benefit or diverted profits tax benefit in connection with an arrangement.
If Part IVA applies, the tax benefit or imputation benefit can be cancelled (for example, by disallowing a deduction that was otherwise allowable) or you or another taxpayer could be liable to the diverted profits tax.
We have not fully considered the application of Part IVA to the arrangement you asked us to rule on, or to an associated or wider arrangement of which that arrangement is part.
If you want us to rule on whether Part IVA applies, we will need to obtain and consider all the facts about the arrangement which are relevant to determining whether Part IVA may apply.
For more information on Part IVA, go to our website ato.gov.au and enter 'part iva general' in the search box on the top right of the page, then select 'Part IVA: the general anti-avoidance rule for income tax'.