INCOME TAX (TRANSITIONAL PROVISIONS) ACT 1997 (ARCHIVE)
CHAPTER 4
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INTERNATIONAL ASPECTS OF INCOME TAX
PART 4-5
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GENERAL
Division 820
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Application of the thin capitalisation rules
SECTION 820-40 (ARCHIVE)
Transitional provision
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transitional equity interests
820-40(1)
This section applies to an interest for the period starting from 1 July 2001 and ending immediately before 1 July 2004 (the transitional period ) if:
(a) the interest was issued before 1 July 2001; and
(b) disregarding the debt and equity test amendments (within the meaning of Part 4 of Schedule 1 to the New Business Tax System (Debt and Equity) Act 2001 ), the interest would be:
(c) the interest is an equity interest; and
(d) the arrangement giving rise to the interest is not an arrangement covered by paragraphs (a), (b), (c) and (d) of subsection 974-75(4) of the Income Tax Assessment Act 1997 before that subsection ceases to have effect on 1 January 2003 (as provided by that subsection).
For the issuer
820-40(2)
The interest must be treated as an equity interest at any time during the transitional period for the purposes of applying Division 820 of the Income Tax Assessment Act 1997 to an entity that is the issuer of that interest at that time.
For the holder
820-40(3)
Except as provided by subsection (4), the interest must be treated as a debt interest at any time during the transitional period for the purposes of applying that Division to an entity that is the holder of the interest at that time.
820-40(4)
Despite subsection (3), that interest must be treated as an equity interest at that time for the purposes of applying that Division to that holder at that time if:
(a) apart from this section, the interest would be included in the associate entity equity of that holder at that time for those purposes; and
(b) at that time, the issuer of the interest is not an Australian controlled foreign entity for which that holder is an Australian controller.
This section applies to an interest for the period starting from 1 July 2001 and ending immediately before 1 July 2004 (the transitional period ) if:
(a) the interest was issued before 1 July 2001; and
(b) disregarding the debt and equity test amendments (within the meaning of Part 4 of Schedule 1 to the New Business Tax System (Debt and Equity) Act 2001 ), the interest would be:
(i) an asset of an entity comprised by a debt owed to the entity by the issuer of the interest; or
(ii) a debt owed by the issuer of the interest to another entity; and
(c) the interest is an equity interest; and
(d) the arrangement giving rise to the interest is not an arrangement covered by paragraphs (a), (b), (c) and (d) of subsection 974-75(4) of the Income Tax Assessment Act 1997 before that subsection ceases to have effect on 1 January 2003 (as provided by that subsection).
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Hide history noteFor the issuer
820-40(2)
The interest must be treated as an equity interest at any time during the transitional period for the purposes of applying Division 820 of the Income Tax Assessment Act 1997 to an entity that is the issuer of that interest at that time.
For the holder
820-40(3)
Except as provided by subsection (4), the interest must be treated as a debt interest at any time during the transitional period for the purposes of applying that Division to an entity that is the holder of the interest at that time.
820-40(4)
Despite subsection (3), that interest must be treated as an equity interest at that time for the purposes of applying that Division to that holder at that time if:
(a) apart from this section, the interest would be included in the associate entity equity of that holder at that time for those purposes; and
(b) at that time, the issuer of the interest is not an Australian controlled foreign entity for which that holder is an Australian controller.
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