Tax Laws Amendment (2010 Measures No. 4) Act 2010 (136 of 2010)

Schedule 3   Taxation of financial arrangements

Part 2   Extension of debt and equity transitional arrangements for Upper Tier 2 capital instruments

135   Extension of debt and equity transitional arrangements for Upper Tier 2 capital instruments

Definitions

(1) In this item:

CGT amendments has the same meaning as in item 118 of Schedule 1 to the New Business Tax System (Debt and Equity) Act 2001.

debt and equity test amendments means the amendments made by Schedule 1 to the New Business Tax System (Debt and Equity) Act 2001 (other than the CGT amendments), as amended from time to time.

Upper Tier 2 capital instruments

(2) This item applies to an interest:

(a) that is issued before 1 July 2001; and

(b) that is an instrument known as an Upper Tier 2 capital instrument; and

(c) to which an election under paragraph 118(6)(b) of the New Business Tax System (Debt and Equity) Act 2001 does not apply.

(3) For the purposes of subitem (2), an interest is taken to be issued on or after 1 July 2001 if:

(a) the interest is issued on or after that date; or

(b) the interest is issued before that date, and:

(i) the terms of the interest are altered on or after that date; or

(ii) the interest is rolled over on or after that date; or

(iii) the original term of the interest is extended on or after that date.

In applying subparagraph (b)(i), disregard:

(c) minor alterations that do not affect rights and obligations in relation to the interest; and

(d) alterations that permit or require any deferred payments under the interest to accumulate.

Application of debt and equity test amendments

(4) Despite paragraph 118(6)(a) of the New Business Tax System (Debt and Equity) Act 2001, the debt and equity test amendments apply only to transactions that take place in relation to the interest on or after 1 July 2010 if the issuer of the interest does not make an election under paragraph 118(6)(b) of that Act.

(5) If subitem (4) applies to an interest:

(a) the interest is disregarded for the purposes of paragraph 164-10(1)(b) and subsection 164-15(3) of the Income Tax Assessment Act 1997; and

(b) section 164-15 of the Income Tax Assessment Act 1997 applies to the interest as if references in paragraph 164-15(3)(b) and subsection 164-15(4) to 1 July 2001 were references to 1 July 2010.

(6) A reference in this item to a transaction includes a reference to:

(a) making a return; and

(b) paying a dividend or unit trust dividend; and

(c) making a distribution in relation to a unit trust; and

(d) paying, crediting or lending an amount; and

(e) making a non-share distribution; and

(f) forgiving a debt; and

(g) redeeming, cancelling or buying back an interest; and

(h) converting an interest.