Income Tax Assessment Act 1936

PART III - LIABILITY TO TAXATION  

Division 16E - Accruals assessability, etc., in respect of certain security payments  

SECTION 159GP   INTERPRETATION  

159GP(1)    

In this Division, unless the contrary intention appears:

accrual amount
has the meaning given by subsection 159GQB(1) .

accrual period
has the meaning given by section 159GQA .

adjusted term
(Omitted by No 82 of 1994)

agreement
has the same meaning as in Subdivision D of Division 3 .

annuity
has the same meaning as in section 10 of the Superannuation Industry (Supervision) Act 1993 .

associate
has the same meaning as in Subdivision D of Division 3 .

deferred superannuation income stream
has the same meaning as in the Income Tax Assessment Act 1997 .

eligible notional accrual period
(Omitted by No 82 of 1994)

eligible return
has the meaning given by subsection (3).

fixed return security
means a qualifying security under which the amount or amounts payable are or consist of:

(a) a specified amount or specified amounts;

(b) an amount or amounts the method of calculation of which does not involve an interest or indexation rate or other factor, being a rate or factor that varies or may vary during the term of the security; or

(c) any combination of amounts referred to in paragraph (a) or (b).

holder
, in relation to a security at a particular time, means the person who, if the amount or amounts payable under the security were due and payable at that time, would be entitled to receive payment of the amount or amounts.

implicit interest rate
has the meaning given by subsection 159GQB(2) .

ineligible annuity
means:

(a) an annuity that is issued by a life assurance company to or for the benefit of a natural person other than in the capacity of trustee of a trust estate; or

(b) an annuity that is issued by a life assurance company to a complying superannuation fund if:

(i) the annuity is held by the fund for the sole purpose of meeting its liabilities to provide one or more deferred superannuation income streams to one or more members of the fund; and

(ii) the value of the annuity and the one or more deferred superannuation income streams is the same or substantially the same; and

(iii) the terms on which the annuity and the one or more deferred superannuation income streams are payable are the same or substantially the same; or

(c) an annuity that is issued by a life assurance company to an RSA provider if:

(i) the annuity is held by the RSA provider for the sole purpose of meeting its liabilities to provide one or more deferred superannuation income streams to one or more holders of the RSA; and

(ii) the value of the annuity and the one or more deferred superannuation income streams is the same or substantially the same; and

(iii) the terms on which the annuity and the one or more deferred superannuation income streams are payable are the same or substantially the same.

issue
, in relation to a security other than a bill of exchange, means the creation of the liability to pay an amount or amounts under the security.

issue price
, in relation to a security, means the consideration (if any) for the issue of the security.

issuer
, in relation to a security (other than a bill of exchange) at a particular time, means the person who, if the amount or amounts payable under the security were due and payable at that time, would be liable to pay the amount or amounts.

non-varying element
(Omitted by No 82 of 1994)

notional accrual amount
(Omitted by No 82 of 1994)

notional accrual period
(Omitted by No 82 of 1994)

partial redemption
, in relation to a security, means the discharging of a part (other than the final part) of a liability to pay an amount or amounts under the security representing a return of the issue price of the security.

partial redemption payment
, in relation to a security, means a payment that has the effect of partially redeeming the security.

qualifying security
means any security:

(a) that is issued after 16 December 1984;

(b) (Repealed by No 47 of 2016)

(ba) that is not part of an exempt series (see subsection (9A));

(c) the term of which, ascertained as at the time of issue of the security will, or is reasonably likely to, exceed 1 year;

(d) that has an eligible return; and

(e) where the precise amount of the eligible return is able to be ascertained at the time of issue of the security - in relation to which the amount of the eligible return is greater than 1 ½ % of the amount ascertained by multiplying the amount of the payment or the sum of the payments (excluding any periodic interest) liable to be made under the security by the number (including any fraction) of years in the term of the security;

but does not, except as provided by subsection (10), include an annuity.

redemption
, in relation to a security, means the discharging of all liability to pay any amount or amounts under the security representing a return of the issue price of the security.

redemption payment
, in relation to a security, means any payment that has the effect of redeeming the security.

security
means:

(a) stock, a bond, debenture, certificate of entitlement, bill of exchange, promissory note or other security;

(b) a deposit with a bank or other financial institution;

(c) a secured or unsecured loan; or

(d) any other contract, whether or not in writing, under which a person is liable to pay an amount or amounts, whether or not the liability is secured.

taxpayer ' s maximum term
, in relation to a security held by a taxpayer, means:

(a) if the security was issued to the taxpayer - the term of the security; or

(b) if the security was transferred to the taxpayer - the part of the term remaining after the transfer.

taxpayer ' s yield to redemption
(Omitted by No 82 of 1994)

term
, in relation to a security, means the period from the issue of the security until the time at which the liability to make the payment or final payment or payments, as the case requires, under the security arises.

transfer
, in relation to a security, means transfer, sell, assign or dispose in any way of the security or of the right to receive payment of the amount or amounts payable under the security, but does not include a redemption or partial redemption of the security.

transfer price
, in relation to the transfer of a security, means the consideration (if any) for the transfer of the security.

variable return security
means a qualifying security that is not a fixed return security.

varying element
(Omitted by No 82 of 1994)

159GP(2)    
Where:

(a) the Commissioner, having regard to any connection between the parties to the issue or transfer of a security and to any other relevant circumstances, is satisfied that the parties were not dealing with each other at arm ' s length in relation to the issue or transfer; and

(b) the Commissioner determines that this subsection should apply in relation to the issue or transfer;

then, for the purposes of the application of the definition of issue price or transfer price , as the case may be, in subsection (1) in relation to the issue or transfer, the consideration for the issue or transfer shall be taken to be equal to:

(c) the consideration that might reasonably be expected for the issue or transfer if the parties to the issue or transfer were independent parties dealing at arm ' s length with each other in relation to the issue or transfer; or

(d) where, for any reason (including an insufficiency of information available to the Commissioner), it is not possible or not practicable for the Commissioner to ascertain the amount referred to in paragraph (c) - such amount as the Commissioner determines.

159GP(3)    
For the purposes of this Division, there shall be taken to be an eligible return in relation to a security if at the time when the security is issued it is reasonably likely, by reason that the security was issued at a discount, bears deferred interest or is capital indexed or for any other reason, having regard to the terms of the security, for the sum of all payments (other than periodic interest payments) under the security to exceed the issue price of the security, and the amount of the eligible return is the amount of the excess.

159GP(4)    
(Omitted by No 82 of 1994)

159GP(5)    
(Omitted by No 82 of 1994)

159GP(6)    
For the purposes of this Division, where an amount of interest is payable under a security, the amount shall be taken to be periodic interest if the period between the commencement of the period in respect of which the interest is expressed to be payable and the time at which the interest is payable is less than or equal to one year.

159GP(7)    
Where:

(a) but for this subsection, an amount of interest payable under a security would, by reason of the application of subsection (6), be taken, for the purposes of this Division, to be periodic interest; and

(b) the Commissioner, having regard to the amount of the interest, considers that it is properly attributable to a period in excess of one year;

then, for purposes of the application of this Division:

(c) the amount of interest shall not be taken to be periodic interest; and

(d) the amount of interest shall be taken to be attributable to the period to which the Commissioner considers it is properly attributable.

159GP(8)    
Where 2 or more of the amounts payable under a security are payable to different persons and in return for consideration given by different persons, the 2 or more amounts shall, for the purposes of this Division, be taken to be payable under a separate security having such of the terms of the first-mentioned security as are relevant.

159GP(9)    
For the purposes of the application of this Division in relation to the holding of a security acquired by a taxpayer on transfer, any prior holding of the security by the taxpayer, whether on issue or transfer, shall be disregarded.

159GP(9A)    

For the purposes of paragraph (ba) of the definition of qualifying security in subsection (1), if:

(a) after 16 December 1984, a person issues a security (the first in the series ) that is not a qualifying security; and

(b) during the period from the end of 16 December 1984 until the issuing of the first in the series, the person did not issue any qualifying security with exactly the same payment dates, payment amounts and other terms as the first in the series; and

(c) after issuing the first in the series, the person issues another security (the later security ) with exactly the same payment dates, payment amounts and other terms as the first in the series;

the later security is part of an exempt series .

159GP(9B)    

In determining for the purposes of paragraph (9A)(b) or (c) whether a security has exactly the same other terms as another security, the fact that the first-mentioned security has a different issue price than the second-mentioned security is to be disregarded.

159GP(10)    

Where:

(a) an annuity is issued on or after 29 October 1987;

(b) the requirements of paragraphs (b) to (e) (inclusive) of the definition of qualifying security in subsection (1) are satisfied in relation to the annuity; and

(c) the annuity is not an ineligible annuity;

the annuity is a qualifying security for the purposes of this Division.