Income Tax Assessment Act 1936

PART III - LIABILITY TO TAXATION  

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

SECTION 159GV   CONSEQUENCE OF VARIATION OF TERMS OF SECURITY  

159GV(1)   [Material variation after 22 May 1986]  

Where, after 22 May 1986, a material variation is made in the terms of a security, for the purposes of the application of this Division in relation to the security in respect of the period after the variation and before any subsequent material variation:

(a) the security shall be taken to have been issued on the terms on which it was originally issued as varied by the material variation and any prior variation;

(b) where consideration for the variation is paid or payable by the holder of the security - the issue price of the security shall be taken to be an amount equal to the amount that was the issue price of the security immediately before this application of this subsection increased by the amount of that consideration;

(c) where consideration for the variation is paid or payable by the issuer of the security - the issue price of the security shall be taken to be an amount equal to the amount that was the issue price of the security immediately before this application of this subsection reduced by the amount of that consideration; and

(d) paragraph (a) of the definition of ``qualifying security' ' in subsection 159GP(1) shall be disregarded.

159GV(2)   [Balancing adjustments]  

Where:

(a) subsection (1) applies in relation to a security held by a taxpayer in relation to a material variation in the terms of the security; and

(b) if:

(i) that subsection had effect not only in relation to the period after the variation but also in relation to the whole of the term of the security before the variation; and

(ii) any previous material variations were taken into account but any subsequent material variations were disregarded;

the sum (in this subsection referred to as the ``total notional taxable income'' ) of the taxable incomes of the taxpayer in respect of the year of income in which the variation is made and all previous years of income would have differed from the sum (in this subsection referred to as the ``total actual taxable income'' ) of the actual taxable incomes of the taxpayer of those years of income;

the following provisions have effect:

(c) where the total notional taxable income exceeds the total actual taxable income - an amount equal to the excess shall be included in the assessable income of the taxpayer of the year of income in which the variation is made;

(d) where the total actual taxable income exceeds the total notional taxable income - an amount equal to the excess shall be allowable as a deduction from the assessable income of the taxpayer of the year of income in which the variation is made.

159GV(3)   [Variations constituting material variations]  

In this section, a reference to a material variation of the terms of a security is a reference to a variation of the terms of the security:

(a) that has the effect that a security that was not a qualifying security before the variation would, if the security had been originally issued with the terms as varied and if paragraph (a) of the definition of ``qualifying security'' in subsection 159GP(1) were disregarded, have been a qualifying security when the security was issued;

(b) that has the effect that a security that is a qualifying security would, if originally issued with the terms as varied, not have been a qualifying security at the time of issue; or

(c) that has the effect that the amount, or time of making, of a payment under the security, or that the holder or issuer of the security, is varied.

159GV(4)   [Right or option exercised]  

Where any right or option under a security to extend the term of, or otherwise vary the effect of, the security is exercised, then, for the purposes of this section, the exercise of that right or option shall be taken to be a variation of the terms of the security to provide for the extension or other effect.