Explanatory Statement

Issued by the authority of the Assistant Treasurer

Explanatory Statement

Income Tax Assessment Act 1936

Income Tax Regulations (Amendment)

Subsection 128F(8) of the Income Tax Assessment Act 1936 (the Act) provides an Australian resident company with the option of raising finance through a nonresident borrowing subsidiary under the section 128F interest withholding tax exemption. Under paragraph 128F(8)(c) the finance must be raised in a country listed in the income tax regulations, and at the time the debentures are issued the non-resident borrowing subsidiary must be treated as a resident of that country for tax purposes.

The purpose of the amendment is to insert new Regulation 14AA into Part 3 of the Regulations.

Details of Amendment of Income Tax Regulations

New Regulation 14AA lists the United States of America as a country specified under paragraph 128(8)(c) of the Act. The new regulation commences from 1 January 1996.