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Draft Taxation Determination

TD 93/D33

Income tax: Offshore Banking Units - is an OBU entitled to concessional tax treatment for income from OB activities which were entered into prior to the entity being registered as an OBU?

  • Please note that the PDF version is the authorised version of this draft ruling.
    This document has been finalised by TD 93/133.

FOI status:

draft only - for comment

Preamble

Draft Taxation Determinations (TDs) present the preliminary, though considered, views of the ATO. Draft TDs may not be relied on; only final TDs are authoritative statements of the ATO.

1. No, because the activities are not offshore banking (OB) activities.

2. Division 9A of the Income Tax Assessment Act 1936 concessionally taxes OB income of an OBU at an effective rate of 10%. OB income is derived from 'OB activities' which are listed in section 121D.

3. To be an 'OB activity', the transaction must be made by an OBU. Section 128AE states that trading and savings banks, State banks, other financial institutions and wholly owned subsidiaries of banks which are OBUs may be registered as OBUs. Therefore, where the transaction is entered into before registration as an OBU, the activity is not an OB activity and income from that activity does not get the concessional rate of tax. It also follows that transactions entered into before registration cannot subsequently become OB activity when the entiy is registered as an OBU.

Commissioner of Taxation
18 February 1993

References


BO 92/9494-5

ISSN 1038 - 8982

Subject References:
Offshore Banking Unit

Legislative References:
ITAA 121D


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