INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 11A - Dividends, interest and royalties paid to non-residents and to certain other persons  

Subdivision A - General  

SECTION 128E   INTEREST PAID BY COMPANIES TO NON-RESIDENTS ON CERTAIN MONEYS  

128E(1)   [Interest not included]  

This Division does not apply to interest where:

(a) the interest is paid by a company on or after 1 January 1968;

(b) the moneys on which the interest is paid were lent to the company:

(i) before 5 May 1967 (in this section referred to as the prescribed date );

(ii) on or after the prescribed date in pursuance of a contractual obligation entered into before that date to lend to the company a specific amount; or

(iii) on or after the prescribed date in pursuance of a contractual obligation entered into on or after that date to lend to the company a specific amount as a result of negotiations relating to the lending of that amount carried on between the company and the other party or parties to the contractual obligation, being negotiations that the Commissioner is satisfied were being carried on immediately before the prescribed date and were being so carried on on the basis that section 125 of the Income Tax Assessment Act as in force immediately before the prescribed date would not, by reason of subsection (3) of that section, apply to interest on moneys proposed to be lent to the company by the other party or parties to the negotiations;

(c) the interest was not payable, in whole or in part, by reason of the amount of interest payable in respect of the loan having been increased, or some other act or thing having been done, otherwise than in pursuance of a contractual obligation entered into before the prescribed date or on or after the prescribed date as a result of negotiations that were being carried on immediately before the prescribed date;

(d) the interest is interest of a kind referred to in subsection 125(1) of the Income Tax Assessment Act as in force immediately before the prescribed date but the Commissioner is satisfied that section 125 of that Act as so in force, if it had remained in force, would not have applied to the interest by reason of subsection 125(3) of that Act as so in force, or, in the case of interest paid on moneys lodged at interest with a company otherwise than in Australia, the interest would be interest of that kind if the moneys had been lodged at interest with a company in Australia but the Commissioner is satisfied that section 125 of that Act as so in force, if the interest had been interest of that kind and if section 125 of that Act as so in force had remained in force, would not have applied to the interest by reason of subsection 125(3) of that Act as so in force; and

(e) in the case of interest on moneys lent before the prescribed date or interest on moneys lent on or after the prescribed date in pursuance of a contractual obligation to lend to the company a specific amount entered into before the prescribed date - the Commissioner is satisfied that paragraph (d) would not apply in relation to the interest but for a contractual obligation entered into before the prescribed date.

128E(2)   [Reference to Tax Act]  

In subsection (1), a reference to the Income Tax Assessment Act as in force immediately before the prescribed date shall be read as a reference to the Income Tax Assessment Act 1936 as amended and in force immediately before that date.

128E(3)   [Extension of lending period]  

Where the period for which moneys have been lent is extended, the extension shall, for the purposes of subsection (1), be deemed to be a loan of the moneys to which the extension applies on the day as from which the extension has effect.