Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-10 - FINANCIAL TRANSACTIONS  

Division 240 - Arrangements treated as a sale and loan  

Subdivision 240-H - Application of Division 16E to certain arrangements  

SECTION 240-112   Division 16E applies to certain arrangements  

240-112(1)    
Division 16E of Part III of the Income Tax Assessment Act 1936 applies in relation to an arrangement (the assignment arrangement ) between the notional seller and another person (the holder ) to transfer the right to payments (the Division 240 payments ) under an arrangement that is treated as a sale and loan by this Division (the sale and loan arrangement ).

240-112(2)    
In applying Division 16E, the following assumptions are to be made:

(a) the assignment arrangement is the qualifying security;

(b) the notional seller is the issuer;

(c) the qualifying security is issued when the assignment arrangement is entered into;

(d) the issue price is consideration provided to the notional seller under the assignment arrangement;

(e) the Division 240 payments are payments made by the notional seller under the assignment arrangement;

(f) no part of the payments represent periodic interest.

240-112(3)    
This Subdivision does not apply if the assignment arrangement gives rise to a termination of the sale and loan arrangement for the purposes of this Division.

240-112(4)    
To avoid doubt, Division 6A of Part III of the Income Tax Assessment Act 1936 does not apply to an assignment arrangement to which this Subdivision applies.